Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Rent-A-Center First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question- and- answer session. To ask a question during the session, you'll need to press Star, then one on your telephone keypad. As a reminder, this conference call is being recorded. If you require any further assistance, please press Star, then zero. At this time, I would like to turn the conference over to Mr. Brendan Metrano. Good morning, and thank you all for joining the Rent-A-Center team to discuss our results for the first quarter of 2022. We issued our earnings release after the market closed yesterday. The release and all related materials, including a link to the live webcast, are available on our website at investor.rentacenter.com. On the call today from Rent-A-Center, we have Mitch Fadel, our CEO, and Maureen Short, our CFO. As a reminder, some of the statements provided on this call are forward-looking statements, which are subject to factors that could cause actual results to differ materially from our expectations. These factors are described in our earnings release, as well as in the company's SEC filings. Rent-A-Center undertakes no obligation to publicly update or revise any forward-looking statements except as required by law. This call will also include references to non-GAAP financial measures. Please refer to our first quarter earnings release, which can be found on our website, for a description of the non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures. With that, I'll turn the call over to Mitch. Thank you, Brendan. Good morning, everyone, and thank you for joining the call today to review our results for the first quarter of 2022. I'll begin today's call with some high-level comments on the company's key objectives and progress, followed by a review of financial and operational highlights, and then an update on our plans for the year. After that, Maureen will provide a more detailed review of our financial results, and then we'll finish, of course, with Q&A. Following the challenges we had at Acima in the second half of 2021, our primary objective for this year is getting the company back in a position to successfully execute the growth strategy we developed last year with the acquisition. Over the past number of months, we identified issues that drove Acima's underperformance, developed a plan of action, and began implementing solutions. In addition, as previously announced, we've recently completed a leadership transition at Acima. We are encouraged with our start to the year with early indications that our adjustments are having the desired effect and first-quarter financial results coming in above the midpoint of our guidance ranges. While there are growing external headwinds this year, including the wind-down of government stimulus programs, we believe the operational and financial progress we have made thus far have the company on a path to achieve 2022 financial targets, and we've reaffirmed our full-year guidance. Consolidated revenues were $1.16 billion, down 5.8% year-over-year on a pro forma basis, with Acima down 8.1% and the Rent-A-Center business segment down 1.2%. We believe the decline in revenue was attributable to the performance of Acima lease vintages underwritten in the latter part of 2021 using assumptions that lag worsening customer payment behavior, negative effects on customer incomes from government stimulus programs winding down in 2021, and the Omicron breakout in January. Consolidated adjusted EBITDA was $99.5 million, with a margin of 8.6%, negatively impacted by elevated loss rates and delinquencies that we believe largely resulted from Acima underwriting practices in the second half of 2021, as well as post-stimulus changes in customer payment behavior. Higher labor costs in Rent-A-Center stores and higher corporate costs related to investments also contributed to margin contraction. Non-GAAP diluted earnings per share of $0.74 for the first quarter was above the midpoint of our guidance range of $0.65-$0.80. We generated almost $189 million of free cash flow in the quarter compared to about $124 million in the prior year period, providing us with the flexibility to invest in our business and reduce debt. In our business, lower growth periods result in higher free cash flow, which underscores the strong cash flow attributes of our business and provides us with that significant flexibility. Focusing in on segment performance, Acima's first quarter top-line trends were generally in line with the assumptions behind our first-quarter guidance. GMV of $398 million declined 21% year-over-year on a pro forma basis, reflecting the effect of tighter underwriting, the January Omicron outbreak, and cycling over strong GMV growth in the prior year period that benefited from government stimulus. In fact, our first quarter two-year GMV growth is a positive 10%. The shift in underwriting is part of a broader set of changes at Acima to address the issues that occurred in the latter portion of 2021. As previously noted, we did not anticipate the extent or pace of the declines in customer payment activity. Although we made adjustments to our underwriting, the initial changes in 2021 were, in hindsight, not sufficient to address developments in the external environment. Because we're a portfolio business, these earlier vintages, lease vintages take time to cycle through our results, and we expect to see the impacts of those vintages through the end of the second quarter. The changes in underwriting that were implemented during this past first quarter drove significant improvement in first payment missed or what we call FPM rates, which is the best early indicator of future loss rates in yield. Overall, FPM rates declined over 30% in March from their peak in December. We believe we are clearly on the right track when it comes to adjusting to the current macro environment. The Rent-A-Center business segment started the year off with another good quarter. Revenues of $519 million declined 1.2% year-over-year and were above the assumptions behind our first quarter guidance, with same-store sales down 1.1%. Importantly, we are cycling over 15.4% revenue growth in the prior year, which translates to an impressive two-year stack revenue growth of 14%. This momentum was reflected in the lease portfolio also, which ended the quarter 5.6% above last year. E-commerce continued to contribute to growth with revenues up about 4% and now accounting for about 23% of segment revenues in the quarter. Adjusted EBITDA margin was 20.7% for the quarter, even with cost pressure from losses and wages, fuel prices, and inflation in the cost of certain products we lease and sell. On the strategy front, we continue to advance our omni-channel capabilities by improving the customer experience with enhancements to our digital checkout process and launching functionality that allows customers to make payments via text messages or SMS. We also expanded our Endless Aisle partnership initiative and added thousands of SKUs to our e-commerce platform available at other retailers in local markets. Looking forward to the rest of the year, the objectives we outlined in February remain in place. For Acima, we will continue to focus on initiatives that can benefit both near-term results and long-term capabilities, like putting more resources and emphasis behind underwriting to optimize yield and loss improvements this year, but also to benefit our future underwriting. We will also continue to develop high potential growth opportunities like the Digital Ecosystem and other new offerings in a manner consistent with our internal profitability goals. For the Rent-A-Center business, the team has put together a compelling commercial plan that we believe can sustain and grow the portfolio beyond 2021 levels. The value proposition we provide our customers continues to support solid transaction volumes and renewal rates despite the more challenging macro environment. In addition, we think our commitment to the local retail centric RTO model, coupled with an improving e-commerce offering, is enhancing our competitive position. Additionally, we've proven in the past to be very resilient to recessionary pressures. Regarding our financial outlook, when we issued full year 2022 guidance back in February, it did not incorporate improvement in the macro environment over the year because there was so much uncertainty. Even with continued uncertainty, given the solid start to the year, progress with the changes of Acima and consistent performance of the Rent-A-Center business segment, we are reiterating our guidance of full year consolidated revenues of $4.45 billion-$4.6 billion, adjusted EBITDA of $515 million-$565 million, diluted earnings per share of $4.50-$5, and free cash flow of $390 million-$440 million. In addition, given the extent of noise and variability and trends related to the effects of government stimulus programs in 2021, we have provided guidance for the second quarter that was highlighted in our earnings press release. Also, I'm very pleased to announce that the company has taken a step forward in its ESG efforts with the production of our inaugural sustainability report for 2021, which will be available on our investor relations website. In closing, first quarter results were in line with our guidance, and we believe changes to the Acima have placed the business back on a path of longer-term profitable growth. We believe we have a solid game plan for the year that we think will allow us to effectively navigate a more uncertain business environment, while also positioning us for longer-term success. I want to thank the entire team for their continued effort and dedication as I continue to see tremendous opportunity in our future. With that, I'll turn the call over to Maureen. Thank you, Mitch. The first quarter was a step in the right direction for the company following a challenging second half of 2021. We achieved quarterly guidance targets, made good progress on key operational objectives, and reaffirmed full year 2022 financial targets. Looking forward, we are cautiously optimistic about the rest of the year. Although there are external headwinds from macroeconomic uncertainty and pressure on customers' income from the wind down of government stimulus programs, we believe that we have a solid plan to get the business back on the path of strong, profitable growth and achieve our financial targets. First quarter revenues of $1.16 billion increased 11.9% year over year on a reported basis and decreased 5.8% on a pro forma basis, with both merchandise sales revenues and rental and fees revenues down year over year. Merchandise sales revenues decreased as a result of fewer customers electing early payouts this year compared to the prior year period when government stimulus programs boosted discretionary income. Rental and fee revenues were down because of the poor performance of Acima's lease vintages that entered the portfolio during the second half of 2021 prior to recent underwriting adjustments, which caused an increase in delinquencies that significantly outpaced top line growth. This required us to increase our provision for delinquencies, which is treated as a reduction in revenue and caused rental and fees revenues to decrease year-over-year. Adjusted EBITDA of $99.5 million decreased 28.3% on a reported basis and 42.9% on a pro forma basis. Adjusted EBITDA margin was 8.6% in the first quarter compared to 14.2% for the prior year period on a pro forma basis. The margin contraction was the result of higher loss rates for both the Acima and Rent-A-Center segments, higher delinquencies at Acima, and higher operating costs, mostly from labor. Below the line, net interest expense was $18.9 million compared to $11.9 million in the prior year, reflecting a higher debt balance in the current year. The effective tax rate on a non-GAAP basis was 25.2% compared to 19.7% in the prior year period. Ignoring the effects of a net operating loss, diluted average share count was 60.1 million in the quarter compared to 66.3 in the prior year period. GAAP loss per share was $0.08 in the first quarter compared to a diluted earnings per share of $0.64 in the prior year period and included one-time costs related to the Acima transaction and integration. After adjusting for special items that we believe do not reflect the underlying performance of our business, non-GAAP diluted EPS was $0.74 in the first quarter of 2022 compared to $1.32 in the prior year period. We generated $188.9 million of free cash flow in the quarter compared to $124.4 million in the prior year period, mainly due to a beneficial swing in working capital in the current year. We returned $21.1 million to shareholders through a $0.34 per share quarterly dividend. At quarter end, the company had approximately $360 million remaining on its current share repurchase authorization. In addition, we had a cash balance of $95.7 million, gross debt of $1.4 billion after paying down $170 million of the revolver, net leverage of 2.3x, and available liquidity of $439 million. Turning to segment performance, Acima GMV was down 21.2% year-over-year on a pro forma basis, although it was up 10% on a 2-year stacked basis. The decrease was an expected result of the underwriting adjustments we initiated to reduce losses and improve yields, which had the effect of lowering approval rates, conversion rates, and funded leases. GMV was also negatively impacted by less activity for merchant partners compared to the prior year, which appears to stem from the wind down of government stimulus that boosted customer discretionary income in 2021. The Omicron variant likely further pressured merchant activity in January. These GMV headwinds were partially offset by year-over-year growth in Acima's active merchant count. Acima revenues declined 8.1% year-over-year on a pro forma basis. The biggest factor behind the decline was poor performance of lease vintages from the second half of 2021 that I described earlier in the comments for consolidated results. Similarly, merchandise sales revenues also declined due to elevated payouts last year. On a positive note, our digital growth initiatives, including e-commerce and the ecosystem, continued to contribute incremental revenues in the quarter. Skip/stolen losses in the Acima segment increased approximately 400 basis points year-over-year to 12.6%, driven by a return to more normalized loss rates following the wind down of government stimulus programs and higher charge-off rates on poor performing lease vintages from the latter part of 2021. As Mitch noted, the changes we have made in underwriting in recent months are showing strong indications that loss rates should improve in the back half of the year once the vintages from last year cycle through the portfolio. As you may recall, the average length of a lease at Acima is approximately six months. Adjusted EBITDA margin declined 690 basis points on a pro forma basis to 4.8%. The key factors that drove margin contraction were higher loss rates and a 220 basis point decline in gross margin related to a higher provision on delinquencies, primarily due to lease vintages written in the second half of 2021. Rent-A-Center segment revenue decreased 1.2% in the first quarter, with same-store sales down 1.1%. Rental and fees revenue increased year-over-year, benefiting from the lease portfolio finishing the quarter 5.6% higher than last year. However, rental revenue trends were more than offset by a decline in merchandise sales revenues. As noted earlier, merchandise sales were negatively impacted by fewer people electing early payout options in the current year. Skip/stolen losses increased 120 basis points year-over-year to a more normal level of 3.9%. Adjusted EBITDA margin was 20.7% and declined 330 basis points year-over-year due to higher loss rates and wage increases for certain in-store positions. Turning to the outlook for the year, my comments will focus on providing supplemental information for the full-year financial targets that Mitch discussed and have been disclosed in our earnings release. I will also provide comments on quarterly trends. Starting with full-year comments, for Acima, we expect recent tightening in underwriting, the effect of cycling over 2021 stimulus programs, and macro headwinds will result in a high single-digit to low double-digit decrease in GMV on a pro forma basis. Pro forma revenue for Acima is expected to be down mid- to high single-digits and adjusted EBITDA margin is expected to be in the low double-digits. This assumes elevated delinquencies and loss rates on poor performing leases from 2021 will continue through the first half of 2022 and then improve during the second half of the year when leases originated under new and more conservative assumptions comprise more of the lease portfolio. For the Rent-A-Center business segment, we expect revenues and same-store sales will be down in the low single-digit range. Adjusted EBITDA margin is expected to be in the low 20s and modestly lower year-over-year, driven by normalized loss rates and higher labor costs. The Mexico and franchising businesses are expected to generate similar results to 2021, while corporate costs are expected to increase mid single digits. The second quarter is also expected to be challenging from a year-over-year perspective, facing many of the same headwinds experienced in the first quarter. We expect revenues of $1.045 billion-$1.075 billion, adjusted EBITDA of $114 million-$127 million, excluding stock-based compensation of approximately $5 million, and non-GAAP diluted EPS of $0.95-$1.10. Acima's GMV growth is expected to be similar to the first quarter as we plan to maintain relatively tight underwriting assumptions and are comping over 43% pro forma growth in the second quarter of 2021. To put that in perspective, we expect second quarter GMV will be up around 20% on a two-year stacked basis, which we think is at least in line with the market. GMV growth should improve progressively in the second half of the year, with the fourth quarter getting back to roughly flat year-over-year. We expect the revenue growth for the Rent-A-Center business segment to be down low single digits year-over-year and Acima to be down double digits. EBITDA margin for both of the key business segments should improve sequentially from the first quarter. For the back half of the year, we expect consolidated revenues will be modestly skewed to the fourth quarter, with trends improving from the third quarter to fourth quarter for both the Acima and Rent-A-Center business segments. We expect earnings will be more skewed to the fourth quarter than revenues, reflecting progressively better delinquencies and loss rates. Lastly, reaffirming our 2022 guidance today reflects modest upside to first quarter guidance being essentially offset by the softer macro environment that has evolved over the past couple of months. Accordingly, the projections underlying our guidance assumes the current macroeconomic conditions will continue for the rest of the year. There's no change in capital allocation priorities since our last earnings call. We plan to use most of our free cash flow to pay down our revolver and make progress towards our longer-term leverage target of 1.5x or lower net debt to EBITDA. In terms of returning capital to shareholders, our quarterly dividend of $0.34 offers a very compelling yield to investors, and we evaluate opportunistic share repurchases. Thank you for your time this morning. I'll now turn the call over for your questions. Ladies and gentlemen, if you have a question or comment at this time, please press star then one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press the pound key. Again, if you have a question or comment at this time, please press star then one on your telephone keypad. Our first question or comment comes from the line of Kyle Joseph from Jefferies. Your line is open. Hey, good morning, guys. Thanks for taking my questions and thanks for all the color provided in the presentation and release. Obviously, a lot going on, both macro and at Acima, so just kinda trying to dig through the weeds here. In terms of GMV growth, can you kinda give us a high-level breakdown of, you know, how much of that is kind of macro or how much of that is more specifically the underwriting changes? Kinda give us a reminder of the timing of the underwriting changes so we can kinda think about how trends improve there over the remainder of the year and into 2023. Sure, Kyle. Good morning. You know, on the GMV growth, when you think year-over-year, the biggest certainly the tightening of underwriting was an issue and is an issue when it comes to GMV. We've tightened starting last fall. Obviously, it wasn't tight enough in the vintages. Then really additional tightening started in the first quarter, early in the first quarter and throughout the first quarter. You know, when we think about it, one of the bigger issues besides the tightening of underwriting is what we're comping over. As we mentioned in the prepared comments, our two-year comp in the first quarter is 10% on GMV. Our two-year stack number for the second quarter is forecasted to be over 20%. You know, still very, very high numbers when you think about it on a two-year basis. As the comps ease in the latter half of the year, I think Maureen said in her prepared comments, we'd expect to be flat by the fourth quarter. You know, long term, you know, we would still anticipate double-digit growth when you think about 2023 and beyond, maybe higher than that, depending on if we get larger account wins and so forth. Be in the double-digit range, you know, going forward after we get over these tougher comps, the tighter underwriting, as well as, you know, the. When I say tougher comps, obviously the stimulus last year is driving a lot of that. Still a lot of growth out there. You know, we added almost 1,300 net active merchants in the first quarter, so still a lot of growth out there, just some tough comps. Like I said, the two-year numbers, you know, seem to be, you know, as Maureen said, where we'd like to see them in market. Got it. Just on the Rent-A-Center side, obviously losses are up there, but, you know, a lot of that can be ascribed to macro factors. Can you give us a sense for where you see long-term losses at the Rent-A-Center segment shaking out, kind of once we lap all the stimulus and everything? Yeah. I think we've always said the normalized range is 3-4. They came in at 3.9 in the quarter, so a little higher than we'd want because they're at the high end of the range. They're in that range and, you know, we'd expect them to be in the middle of that range for the year, in that 3%-4% range. It really is just a normalization, maybe, you know, 30 or 40 basis points higher than the midpoint of that range with all the growth they've had the last couple of years. Really in line, really a good quarter on the Rent-A-Center side when you think about where the portfolio ended. You know, a flat comp roughly, you know, coming off of what? What's the last two years? 15% last year. I'm talking about for the year. 10% in 2020. You know, you're talking about 25% growth over two years, and then to be flat this year. To be forecasted roughly flat, maybe down a little bit for the year, you know, is pretty impressive when you consider, you know, what holding on all that, all that base that we added the last two years. Yep. Yep, totally agree. Last one for me, just modeling, Maureen. I think you gave us some share count guidance or a share count for guidance. Is that consistent? Can you remind us what number that is for 2022? Sure. The share count in the first quarter was 60.1 million. For 2022, the adjusted EPS number, do you have a number of what that's based on for the share count? It's pretty similar. It's 60.5 for the full year. Okay. Got it. Thanks very much for answering all my questions. Thanks, Kyle. Thanks, Kyle. Thank you. Our next question or comment comes from the line of Bobby Griffin from Raymond James. Your line is open. Good morning, everybody. Thanks for taking my questions. Morning, Bobby. Mitch and Maureen, I want to first check, I mean, obviously tightening trends here in Acima, to kind of get the portfolio back in line. Just curious what feedback has been from your customers. You know, I know, you know, customers focus on approval rates, purchasing dollars of approval that you can do. So these tightening trends is definitely a different environment versus what they're used to with Acima. So just any anecdotal feedback from customers as you kind of go through this process to get the portfolio back in line. Yeah, good question, Kyle. I mean, Bobby, excuse me. When you think—I know when you say customers, you're talking about our retail partners. Yep. It's all about where you start from. I mean, our tightening rate, our tightening underwriting and our approval rates are in line historically where Acima was, you know, when you look at 2018, 2019, even 2020, it really was a matter of what happened in 2021. Like I mentioned in my prepared comments, the FPM rates, first payment missed rates being down 30% in March from the peak in December, those are just historically in line with where they always are, and the same thing with approval rates. It's not like we're hearing from retail partners that, "Oh my gosh, you're tighter than your competition," or things like that. I think in this environment, everybody's probably tightened a little bit, but we're still not. It's not like we're tighter than we were in, you know, going back and looking 3 years before 2021. Okay. Yeah, that was actually the second part of the question. Do you think now it kind of seems like everybody across the space, at least on the virtual side, is tightened a little bit because the portfolio's got a little bit, you know, out of whack as we came back into normalization. Have you seen any favorable trends kind of in the competitive environment where maybe it's a little less competitive and everybody can kind of grow into this virtual business a little bit more friendly, or is it still probably every bit as competitive for new customers and dollars out there as it always has been? You know, I think it's. It does feel, and just listening to comments of other companies, public companies certainly, there is an overall tightening. You know, I think it's pretty similar though as far as the competitive environment. You know, what we haven't seen yet, but we, as you know, we historically see is the tightening above us helps us when we get into these times with higher interest rates and as the economy tightens up. Even though we haven't seen it yet, you know, we're optimistic, at least cautiously optimistic we'll see some of that as the year goes on and the funnel widens, and there's really no reason to think that those counter-cyclical attributes relating to tighter credit above us wouldn't apply going forward. Like I said, we haven't seen them yet, but I think that's coming when you think about interest rates and spreads and so forth. Like I said, we're optimistic we'll see that again. Although it's not like that's forecasted in our plan either, but we are expecting to see that. Okay. Yeah, maybe, you know, if that was to happen and play out. Right now, consumer spending still remains pretty resilient. There's obviously some shifts going on between durables and services. If that tightening impact plays out as the potential with interest rates and inflation running through the economy, you know, when you start to see the pool, the customers get pushed down in your rent-to-own pool, how long does it take to really flow through the P&L where you see that benefit? Is it a six-month lag, nine-month lag from when we start to see the changes in the economy? No, I think you start to see them. You know, they build over that 6-9 months, but you start to see them right away. I mean, every month you write a lease, you fund a lease, you start to make a little money on that lease. So I think it builds, you know, maybe to a crescendo in 6-9 months, but it starts pretty much as soon as you start seeing that pushing down, you start adding, you know, beating your GMV numbers and so forth. I think, you know, when you think about the spending, it is very resilient, and it's everything you hear on the news and so forth. Although the reason we would expect to see tightening above us, when you get down below prime and get in near prime and certainly subprime, that customer, you know, is not in the same shape as, you know, what we might hear every morning on CNBC or something, right? That customer we deal with is not with the inflation and gas prices and that kind of stuff, they're not in the same shape. When you get down into near prime and, you know, below prime, and especially the subprime, you know, you're gonna have to be careful if you're writing loans. Mm-hmm. That's why we normally see the tightening, and we would expect to see it sometime this year as well. Okay. I appreciate all the details here. Best of luck in 2Q and end of the year. Thanks, Bobby. Thank you. Our next question or comment comes from the line of Jason Haas from Bank of America. Your line is open. Hey, good morning, and thanks for taking my questions. Morning. The first one's on the guidance. It does imply a pretty big acceleration in the back half of the year, and I appreciate all the color that you gave, but I'm curious just what gives you confidence that you will see that acceleration through the year and maybe by segment. I mean, is a lot of that acceleration gonna come from Acima, or is there gonna be some acceleration across the Rent-A-Center business and franchise in Mexico as well? Sure. I can take that. What gives us the confidence is a lot of what needs to happen to make the improvement from the first half to the second half is simply getting the leases, the underperforming leases from the latter half of 2021, for them to cycle through the system. That will improve provisions for delinquencies as well as loss rates in the Acima segment. The average lease lasts about 6 months, so we know that by the second quarter, we'll have worked those through most of the system. We also expect the second half will have more profitable leases due to the underwriting improvements that we've made. New leases that we write in even the beginning of this year and all throughout the second quarter will be more profitable leases, so we'll have higher revenue, lower delinquency rates, so lower provision adjustments. We should be through the adjustment period our customers went through when stimulus ran out. That should also help lease performance. We've also got the Acima leadership team very focused on improving merchant acquisition and productivity, so we'll see better GMV growth rates in the second half versus the front half. As Mitch mentioned, we may see some of the near-prime customers falling into our funnel. The main improvements are in the Acima segment, reducing Acima loss rates by about 400 basis points between the first and second quarters and reducing the provision for delinquencies by about 200 basis points in the Acima segment. There is some improvement in the Rent-A-Center segment, not nearly as much as Acima, but we are expecting the Rent-A-Center portfolio to increase in the fourth quarter like it normally does. There's better seasonality in the fourth quarter for both segments, and then we're expecting collections to improve in the second half in the Rent-A-Center segment. There's also some cost efficiencies we're expecting, but generally, big buckets are Acima improvement and lease performance. Yeah, that is the big one, Jason. I would just add on to that. There's really nothing to add to what Maureen said, except just to do a little math when you think about, you know, the 400 basis point improvement in losses as these leases from last year run through Acima. I mean, just think about what 400 basis points is per quarter or on an annual basis because, you know, people wanna take our current number and look at run rates and so forth. If you think annual basis, you're talking 400 basis points high, even in the second quarter, and that's, you know, based on our guidance, just call it a dollar run rate. You know, 400 basis points is, you know, on an annual basis, if you use it as a run rate, you can see. You know, with Acima a $2 billion business roughly from a revenue standpoint. So it adds quite a bit. You know, you think about last summer, too. The third quarter last year, we were, what? $1.52 in diluted EPS. I'm using the third quarter, not the first. The first or second quarter last year was even higher, but obviously stimulus-driven. There was still obviously some stimulus in the third quarter last year, but it's not like we haven't done those numbers before. When you just put a normalized loss rate in there, even a, you know, not a low normalized loss rate when you say 400 basis points under 12.5%. I mean, 8.5% is not like that's the lowest. We always said the range on the virtual business is 6%-8%. So just take that 400 basis points and you start to get back to those numbers. The same way those losses in the delinquency reserves that Maureen's talking about took $1.50 down, you know, below $1 really quickly. You know, it snaps back when you don't have to put those reserves up or have those higher losses just as quickly. Thanks. That's been a really helpful caller. As a follow-up question, I think Maureen just mentioned it, but I was curious about the leadership change at Acima. Could you just talk through what the rationale was for having that leadership change and any plans to run that business differently? Appreciate what you've said about being a little more tighter with the decision there, but curious if there's gonna be any other changes to expect from that business. I think, you know, we felt like it was just time to make some changes, and it was really not just about any one person. It was a team change as well. Obviously, with the founder being more involved now, Aaron Allred. We also brought back a key engineer, the tech leader that was part of growing the company from the beginning, elevated a few people that have been there for many years. We're really trying to build, you know, a long-term sustainable team. Again, it's not just about any one person. It's really more team building. I would expect besides the tighter underwriting that's already providing good results for us, as we mentioned. Yeah, I think we'll see improvement from a sales standpoint, and as the newer team works on the sales function and so forth. Yeah, I don't think there's massive changes like the business is gonna change. We're still testing the Digital Ecosystem. You know, we have looked at that to make sure we're getting the right profit margins, as we mentioned. We're testing very thoroughly to make sure we get the right profit out of it, but we're still excited about what it can become and so forth. That's not changing. It's not so much a change, Jason, as I think we can get better in all aspects of the business. Thank you. That's great to hear. Thanks, Jason. Thank you. Our next question or comment comes from the line of Anthony Chukumba from Loop Capital Markets. Your line is open. Good morning. Thanks for taking my questions. I guess my first question, you know, it's kind of a follow-up to the prior question. With the change in leadership at Acima, and obviously with the Acima change you're making in terms of tightening credit and getting the lease portfolio back in shape, is it safe to assume that the Acima LeasePay card stuff that you guys were talking about, like the virtual card, that's kind of more on the back burner now? I wouldn't say back burner. We've slowed the testing a little bit just to make sure we're at the right profit margins. We don't wanna run too fast. This year's about fixing the underwriting, getting a sustainable long-term team in place, but continuing to test it. I wouldn't say back burner, Anthony, as much as just a good thorough test and. You know, we're still excited about what it can become. That there's still a lot of opportunity there for us to evaluate with the new leadership team there and figure out what the best way to use it is. No, I wouldn't call it back burner, just, we're still excited about it and maybe a little more prudent testing from a profitability standpoint. Got it. One just somewhat related follow-up. You know, one of your retail partners, Conn's, you know, recently announced that they're gonna bring you know, lease to own in-house. I know that's an account you guys were sort of sharing with American First Finance, but just so how does we think about the you know. I know that it's not gonna something that's gonna happen overnight, but just like long-term, how should we think about you know, the potential you know, headwind of you know, losing the Conn's account? Yeah, you're right, Anthony. It's not gonna happen overnight if it does happen. You know, I think the key to Acima is how diversified the almost 40,000 retail partners are. We are very diversified. No one, two, or three partners makes that much of an impact. Obviously we want some of those bigger national accounts, but I guess the other, the flip side of that coin is we don't have any accounts that are so large that any one or two accounts would be a headwind that would be all that noticeable in the numbers. I'm not saying we wanna lose any accounts. We'd love to do business with Conn's for forever. Hopefully we will find a way to do business with them forever. The point is, it's a very diversified portfolio, and we really don't have that risk of any one or two or three partners really having that big of an impact. Uh-huh. Got it. You know, good luck with the remainder of the year. Thanks, Anthony. Thank you. Our next question or comment comes from the line of John Rowan from Janney. Your line is open. Good morning. Hi, John. I'm gonna stick with a similar theme questions. You know, as far as, you know, six months ago or nine months ago, you were talking about national partners with Acima. I'm wondering, you know, what the status there is with the management change and, you know, whether or not, you know, the change in underwriting affects the sales process of trying to onboard a new large retail partner. No, I don't think so. Again, we're still very competitive. Maybe we don't have the highest approval rates like we did probably mistakenly had for six months last year. You know, I wouldn't go out there and say we have the highest approval rates like we could have been saying last year. You never really know what all the competition's approval rates are anyhow. You know, it's not that we're not competitive. We can be as competitive as anybody. Again, our approval rates are not substantially lower than where they were before last year. They're not. It's not like we're lower than 2019 or 2020. Yeah, before we bought Acima. I don't think that has any impact on that. Again, our approval rates are still very competitive and, you know, just large retailers in general. As you know, John, it's a very long cycle. The new management team is focused on, just as focused on, you know, national accounts as we have been prior. We haven't had a lot of any big signings yet. We're talking to a lot of people. It's a very long cycle. The good news is we expect retailers to get more focused on it now that their comps are gonna be tougher than, you know, maybe the last couple of years. It was hard to get larger retailers focused on it when they couldn't fulfill all the business they had. Tech resources were under pressure for integrations and things like that. We expect retailers to be more focused now, talking to tons of them. It's a long cycle and we're gonna continue to work, but there's no less emphasis on it than ever. Okay, thank you. Thanks, John. Thank you. Our next question or comment comes from the line of Brad Thomas from KeyBanc Capital Markets. Your line is open. Hi. Thanks for taking my question. Wanted to just follow up on the, you know, dialogue and trends with retailers. I would think with us entering a backdrop where consumers may need lease-to-own and financing options more readily here, that your retail partners may be more interested in working with you. Can you just comment a little bit more about what you're seeing from a door count perspective and how that pipeline of potential activations looks? Yeah, I think you're spot on with those comments. We think all retailers, small and large ones, are more interested now than they were a year ago, or obviously two years ago when the pandemic first started. I think I mentioned we added about 1,300 active locations in the first quarter, so it's not like there's not a lot of sales going on out there. That's part of how even with the tighter underwriting, as Maureen said, in a GMV number in the second quarter similar to the first quarter, that our two-year GMV numbers still be over 20%. We're still adding a lot of locations, like I said, almost around 1,300 in the first quarter. There is more interest. Not that we weren't adding them last year, but there does seem to be at least a little bit more interest from retailers, and we're optimistic we're gonna be able to continue to add the regionals, and we're gonna work real hard on those national accounts as well. Mitch, can you just remind us, is the decisioning in your Acima segment all on one process now versus the legacy business you had and Acima? Can you just talk about what you've done to try to further enhance, you know, the accuracy and the ability to predict well with your decisioning? Yeah, it's all the virtual business is on the same system. Some of the store business, there's still a few store partners to convert to the Acima software, and therefore, their decisioning. It's mostly all on one system, but there is still a few retail partners to convert over. I think the tools have been there. We've added a few tools to the underwriting process as well. There's always new tools. We could probably add tools every week. You gotta be careful not to chase every single one of them. It's when I say tools, things they can add into the process, you know, fraud detectors and all those kind of things. The team out there is adding things they think they need. You know, a lot of it, most of what our missteps were, Brad, were just philosophical and from a leadership standpoint, just pushing too hard for volume. It's not like they didn't have enough tools. Again, they're still adding tools and different products to it. I'm not the tech guy, although I could throw out a couple of names even though I'm not exactly positive what they do. I could sound smart if I wanted to throw out a couple of brand names of things they've added to the decisioning. You know, we got a great team out there in Salt Lake, and they're adding the fraud detectors that they think they need to add. Obviously, the numbers are working really well, even though our approval rates are in line with where they were pre-2021. The FPM rates have come right back in line. You know, as I mentioned, they're 30% lower than they were when they peaked in December. Obviously, we were about 30% out of line as the year came to an end. I'm sure as the year goes on, we'll add one or two more tools, because like I said, in the tech world, there's always some new product to add that can maybe get us a little bit smarter, and they're always working on that, the team out there. We're really pleased with what's happened with the underwriting, obviously, and the numbers so far this year. It's very helpful, Mitch. If I could squeeze one more in just on the Acima outlook for margins. Obviously, we're in an unusual period here as we're lacking stimulus and you've done some tightening. How should we think about what the medium-term margin outlook is for Acima? I think maybe more of a 2023 sort of number. And do you still think mid-teens adjusted EBITDA margin is a reasonable target, maybe longer term after you get past some of the growth initiatives that you're still making in the business? Yeah, Brad. As you can see in our guidance, we expect substantial improvement in margins from the front half of the year, which is still negatively impacted by the underperforming leases, to the back half. We'll average around a 12.5% EBITDA margin if you look at our guidance to get to that double-digit EBITDA margin for the full year. You can see we'll end the year not quite to mid-teens. I would say our longer-term rate is in the 12%-13% range for the Acima segment with how we're viewing things right now. That could change. We're obviously not giving 2023 guidance, but as we stand right now it's probably closer to 12%-13%. That's very helpful. Thank you so much. Thanks, Brad. Thank you. Our next question or comment comes from the line of Carla Casella from JP Morgan. Your line is open. Hey, good morning. This is Mike on for Carla, and thanks for taking our question. Just two quick ones from us, and hopefully quick. I recognize you guys paid down a little bit of the revolver balance this quarter. Do you guys expect to pay more either in the second quarter or by the year-end? Then I'll ask my second question after that. We are more focused this year on reducing our leverage just given the macro uncertainty. There's a chance that we pay down debt further throughout the rest of the year. Great. Thank you. The second one is can you guys give us any sort of parameters to help forecast or think about the purchase of rental merchandise for the core business? Recognize that, you know, Acima kind of moves directly with sales. And kind of as a touch onto that, are your stores, you know, would you say that they're under inventoried in certain categories just given that as well? Any context there would be helpful there. Thank you. No, good question, Mike. No, we don't feel like we're short in any products in the stores. Like any retailer with electronics in their stores, we could sure use a few more PS5 on the shelves. I think Anthony would agree with that, Anthony Blasquez that runs the Rent-A-Center segment. I think he'd take a lot more PS5 if he could get them. Other than that, no. In fact, as I mentioned in my prepared comments, we added thousands of SKUs to our website recently, Endless Aisle, if you will, through other retail partners. No, from an inventory standpoint, our Rent-A-Center's in really good shape. Great. Thank you. Thanks, Mike. Thank you. I'm showing no additional questions in the queue at this time. I'd like to turn the conference back over to Mr. Mitch for any closing comments. Thank you very much, and thank you everyone for your time this morning, for your interest in us. We certainly are happy to report numbers in line with our guidance and to reiterate our annual guidance. You know, it was a tough latter half of last year and a tough start to this year from the standpoint of the having to add to the delinquency reserves and losses and so forth. We know what we did wrong, we know what we need to fix, and we're on the right track, and a lot of the metrics are coming in line really well, and we're pleased with that, and we look forward to reporting back to you next quarter. Thank you, everyone. Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.