Thanks for joining us today. I'm Bobby Griffin, Managing Director here at Raymond James, where I cover the consumer hard lines retail sector. Inside that, we cover the lease-to-own providers. Today we're pleased to have Upbound Group with us, which is a leading fintech company that provides consumer financial products. With us from the company today are CFO Fahmi Karam, Stephen Kohrs, Principal of Finance and IR in the back. Today's format's gonna be a fireside chat between myself and Hal. First, Hal, thank you for joining us. Thanks for having me. You guys have been long supporters of the conference. We really do appreciate that. You know, a lot's changed about Upbound Group, really from the name and a bunch of stuff over the last couple of years. I think what will probably be helpful to start is maybe just spend a few minutes unpacking the business. What is Upbound Group? What does it provide for consumers? Kind of the different areas that you guys participate in and, you look at across the kinda consumer products finance sector? Yeah. Thanks, Bobby. First of all, thanks for having us at the conference here. Much appreciated. For those of you who might not be familiar with Upbound, going through a bit of a transformation, I would say, of the company overall, offering up a financial platform to the underserved consumer. Typically non-prime, subprime consumers that have not had their needs necessarily met by traditional banking or financial services companies. For us, the ecosystem, the platform consists of three main business segments that we operate today. One, the legacy business that we've had for over 50-plus years in Rent-A-Center. It's an omni-channel distribution model for rent-to-own financing, and that would consist of furniture, appliances, electronics, and that is distributed across 2,200 locations, store locations that we have across the US and Mexico, and also through our online portal. In addition to that, we've got our largest business segment also in the lease-to-own space, but more so virtual-based offerings through retail merchants that we have across the US. Approximately 35,000 distribution points through retailers, all through a virtual model. In addition to that, we have what's called the Acima Marketplace. That's our direct-to-consumer online portal for consumers looking for, again, goods and through that channel. Lastly, and we're quite excited about this one, our most recent addition, in a company called Brigit, in the financial health and liquidity space, offering up subscription-based financial services to the customer base of approximately 1.6 million subscribers that we have on board today. Offering up earned wage advance, budgeting tools, and credit-related tools as well. Through all of that, great platform, 3.5 million overall, total customers on file, and we continue to gain ground. Awesome. Well, there's a lot there to unpack. I think we'll spend a little time probably on each one of those. Before I guess we dive into each business unit, let's talk a little bit about the core customer. What are you seeing today from the customer? How does today's environment compare to maybe three or six or nine months ago? Great, great question, Bobby. First of all, I'd say for those who aren't familiar with the customer segment, the non-prime, subprime customer is generally pretty resilient actually, in managing through times of macroeconomic stress, that be, you know, with cost of living on the rise, inflation, certainly pressure points overall. What we have seen, particularly in 2025, is some of that pressure coming through, and we've maintained robust credit decisioning and underwriting models in place. I'd say generally speaking today, you know, we're seeing good performance, a lot of demand coming through from that customer, generally good payment performance and good delinquencies, good loss rates. We would expect that to continue through, recognizing we're still not out of the woods from a macro standpoint yet. maybe just on that, across the platform, how does the customer differ a little? I mean, I think there is some overlap. There's probably a little bit different a credit profile across them. Just talk a little bit about that. Yeah, definitely similarities and differences. I'd say, mostly on our Brigit and our Acima side, there's a fair bit of overlap. Those two customer segments generally skew a little bit closer to the prime base, I would say. On our Rent-A-Center business, generally speaking, that would skew a little bit more downstream in terms of the credit spectrum. All, you know, within a certain ecosystem of customers that don't have their traditional needs met by the traditional players that I'd referenced. Very good. I think that's a great overview. Maybe let's start with Acima. A lot to unpack in that segment itself. I guess maybe to connect the dots, let's talk a little bit about the growth algorithm of that business, kinda what you're working towards in 2026, and kinda what do you think the long-term opportunity is for Acima? Yeah, thanks. Great foundation there for sure. I'd say we're continuing to make wholesale investments in digital technologies that underpin that ecosystem, if you will, with our merchant base to make it a more seamless customer experience, a more seamless merchant experience in order to eliminate some of the friction points that our customers might experience otherwise. Beyond that, we've got a great network and a pipeline of potential new merchants that we're bringing on. I'd say the Acima name and brand continues to gain great recognition out there in the marketplace. Our ability to land larger national retailers, we're quite excited about that. I'd say also our direct-to-consumer, Acima Marketplace, where a customer can actually go into our Acima website or through the app, and actually unlock access to a number of merchants directly through the applications to actually locate certain goods and to be able to transact right there and then, based on pre-approved credit, that we would offer up to the customer as well to make that, again, a seamless customer experience. Unpacking the growth side of that. You have, you have a door side of the business where you can grow new leasing doors. You can see the ticket mix up. I mean, I guess talk about what are you seeing from the health of the retail network? You know, is inbounds or, you know, thoughts on adding new doors there? I guess, yeah, taking that a step further, are there areas of the retail channel today that you don't think utilize the product enough that, you know, really is a big opportunity maybe sometime expand down the road? Yeah. I'd say we've got a pretty robust set of product categories that we're in today, Bobby. Likely, we could probably go deeper into those categories, either through expansion of our merchant partners and network that I referred to earlier, or alternatively, again, back to the online space. That allows us to kind of open up more avenues for the customer, greater selection for the customer in that respect as well. I think digital and digital technology, the e-com portal website, app-enabled lease-to-own is likely the way to go in that respect. What we've seen, you know, healthy door growth, but we've also seen some of the inside the channel, obviously with furniture and the heavy, you know, durable goods, some of the retailers themselves have shifted or moved around. Maybe just what's the health of kind of Acima's retail partners today, and what you're hearing from them? Yeah. I'd say generally speaking across the board, you know, the whole retail environment now is under a little bit of pressure. You know, certainly there are some tariff implications in there as well. I'd say customer demand continues to be extremely strong. You know, across the board, we're seeing a little bit more flow-through of activity now coming through from furniture, which is nice to see. I think that was a bit compressed going into the tail end of last year. I don't think we're out of the woods from a macro environment yet, you know, in terms of the overall retail environment, inflation factors coming in, tariffs, et cetera. I think the merchants have been managing that effectively, and we continue to service them and our customers as best as we can. We had some tightening actions, I believe, taking place throughout 25, which will impact probably the shape of this year a little bit. I wanna touch on that. you know, also just more in the sense of ex those tightening actions, what is the normal, you know, growth algorithm, EBITDA margin profile that you think Acima can contribute to the overall Upbound Group? Yeah. I think it's very strong, actually. As part of our continuous credit monitoring, credit underwriting activity, we will tweak, we will manage performance of the overall portfolio as required. Back into the tail end of last year, we did some additional tightening in certain categories. We were experiencing a little bit heavier delinquency activity as well. I think that will flow through into the first half of the year, perhaps where the comp growth won't be quite as strong on the top-line side because of that credit containment. Certainly towards the back end of the year as those cohorts flow through, expect that comp growth to be quite significant and on the year, in the range of, you know, mid-single digit and perhaps a little bit stronger than that, going to the high single digit, territory if all the cards align. That's on a GMV basis you're talking about how or? That's on a GMV basis and, you know, continue to have very strong EBITDA contributions across the business, double-digit EBITDA contributions overall. If we get into this period where let's say we grow consistently mid-single-digit GMV, you know, is there investment cycle has to come with Acima or you can maintain that type of low double-digit EBITDA margin, you know, profile throughout a three or five-year cycle of good GMV growth? Yeah. I think you have to constantly invest in your overall business, and that's what I touched upon earlier. I think the investments that we're making in our digital transformation, digital technologies, again, that ecosystem overall and customer experience, where today, as we look at our segments that we operate today, perhaps a little bit more fragmented, I'd say. The opportunity there to create synergies across the board, interconnecting those customers across our operating segments, and to meet their overall needs. A Brigit customer can be an Acima customer who can also be a Rent-A-Center customer, and ensuring that we're servicing, originating, and making that customer experience seamless across the board. Very good. Maybe let's switch. Before we go to the core business, let's talk a little bit about Brigit. You know, I guess maybe to help some of the newer investors here in the room kind of talk about the strategic rationale about acquiring it. You now owned it for about a year or so, what you've learned in the first year, and then what you see some of the long-term opportunities of the Brigit acquisition. We really like the Brigit segment. It's a great new addition for us. It's a transformation beyond rent-to-own, lease-to-own, which we've operated for quite some time. I think it offers up a new customer base for us. As we think about the non-prime consumer and the needs of the non-prime consumer, they are more than lease-to-own or earned wage advance lines of credit. We think that the opportunity set is quite strong. Brigit enables us to access a customer base that we wouldn't have otherwise had previously and to create more synergies across that overall platform. What is, if you kind of look at the near-term goals, long-term kind of growth goals and what's the growth profile of Brigit versus the other areas of Upbound Group? I think Brigit is going to be our strongest growth segment for quite some time. Last year, we would've had a 40% comp growth. This year, our trajectory, I think we've shared, is somewhere in the 30% range aspiration for Brigit overall. We see that momentum continuing, and as we continue to unlock additional products and features, we think that we can continue to compound quite nicely. When you look at the Brigit profile, like what does Brigit bring maybe to the other areas of the business that could be called the reverse synergy aspect? Yeah. Great, great question there. I think the one area of focus for us, I think is quite unique to Brigit is we actually use cash flow underwriting through a tool called Plaid, where we actually access the customer's banking information in order to facilitate the underwriting of that particular customer and understand their needs better and more effectively. I think we can actually leverage that cash flow modeling, and we're contemplating that as part of our other parts of our business where it would just enhance, one, the ability to manage credit performance and losses but also unlock some additional line assignments that we would offer up and to grow those businesses more effectively as well. The new customer growth has been pretty impressive so far at Brigit. Just in terms of what's the marketing plans or how do you go about kind of maintaining that funnel, and is there a, is there a capital aspect now that you guys own them to help actually accelerate that growth? Yeah. I mean, we continue to invest quite heavily in the Brigit business, whether that's through our marketing and advertising, where we're actually looking to onboard new customers, retention portfolio management. I think the big piece is we've actually brought on a new chief growth officer in Rebecca Wooters, who joined our company recently, and she brings on a wealth of experience in the digital space as well. I think that and partnering up with the Brigit team will allow us to unlock additional capability, as I've been mentioning earlier, about how we bring on, how we service, reduce the cost of bringing on those customers, add in additional retention offering as well. I think those are the main areas of focus, I would say. Yeah. Let's talk a little bit maybe about the core business, the oldest business you guys have been into. Probably doesn't get as much questions anymore given the higher growth of Acima and Brigit, but still a very good cash flow-generating business. As you look at the portfolio across now what you have, like what role does the core play going forward, and like what do you see some of the opportunities are in just the standard Rent-A-Center store business? Yeah. I mean, I think Rent-A-Center still remains and has been a core and integral part of our overall business. Continues to generate very strong and healthy cash flows overall. I think we've also looked to stabilize that business overall, where this year we're looking at flat or positive comp growth overall. I'd say that in concert with the other parts of our business, continues to generate very, very healthy cash flows for us this year. You know, we're looking at about $200 million of free cash flow coming into the business. In terms of capital allocation overall, first and foremost, continue to invest in organic growth, I would say. We would also look to pay down our overall debt as we had taken on a little bit more leverage as part of the Brigit acquisition last year. Still offering up a healthy dividend to our shareholders who have been with us for quite some time. We would also look at, you know, other growth opportunities, perhaps more downstream, if the timing is right around additional acquisition, downstream or JV or distribution partnerships as well. It seems like that, the core is kind of the cash generation engine that can kind of funnel the higher growth aspects going forward in the other business units. Maybe when you think about the core and the store opportunity, you guys have done a great job of kind of, I would say, I don't wanna call it pruning, but kind of finding the best store footprint that matches, you know, the new growth of e-commerce and stuff. How do you think about that involving over the next couple years? I mean, I think our store footprint and complement, generally speaking, we've got great presence across the U.S. overall with our Rent-A-Center business. I'd say it's probably optimization of our store footprint in the United States. We continue to invest in Mexico and build out some additional stores in that location. We like that market as well. But generally speaking, I think we've got a good complement of stores that's well concentrated across the U.S. Yeah. Let's Mexico is a good point. Let's maybe talk on that briefly before we switch to more some overall Upbound questions. You know, you guys have been in Mexico for a while. You know, you mentioned building out a little bit more stores. What do you think the long-term opportunity is of that business, and how does that customer profile or business case different than maybe what the core U.S. business is that we're used to? Yeah. We really like the Mexico Mexico operation, notwithstanding current conditions in the state that they're at. What we've seen is increasing wage growth, which actually allows our customers more affordability in the space as well. We've got a nice presence there overall. Business continue to do extremely well. Not a ton of competition, I would say, within the rent-to-own, lease-to-own space. You know, we'll continue to actively invest in Mexico. We'll think through the pace of that growth, obviously, given broader macro conditions and other opportunities that might present themselves. It's a key part of our business today. Very good. Maybe let's switch gears a little. I mean, how... I don't wanna call you new to conferences already in your First six months. you know, when you kinda came here and joined the business, what excited you about the business? B, kinda where did you see the opportunities from your seat that you could really push into across the multiple business units? Yeah, great question, Bobby. You know, I've been a fan of the Upbound Group organization for quite some time, and I'd been following Rent-A-Center for quite a number of years. You know, what really excited to me was, you know, extremely strong, rock-solid foundation in the business in the core that's been around for a very long time. Putting out, as we've talked about, very, very strong cash flows in the business. The management team, extremely competent, very experienced, very supportive board overall. I also felt that perhaps, you know, the business was undervalued. You know, perhaps there was still a lack of understanding of the Upbound Group organization and platform and what that could mean over time. I was very excited about the roadmap for the business, what this could actually mean. Being part of, over my career, a number of growth-oriented companies, I felt that, you know, there was extremely a large opportunity to continue to grow the organization, add shareholder value, and bring some of the experience that I've had over the past three years to bear as a supporter of the roadmap. We touched on a little bit about the, I guess, call it the underwriting differences at Brigit versus some of the core and what could maybe be used back in that. What about from some of the other cross-sell opportunities? I mean, I believe there's probably a small% of Brigit customers that are Acima customers. That seems like a pretty big cross-sell opportunity there. Anything else that stands out? Yeah. Yeah, huge, huge opportunity there, I would say, in terms of the cross-pollination. You'd be surprised, there's actually a fair bit of overlap, of customers that are existing Acima customers that are also Brigit customers today. Again, I think that's a huge opportunity set for us to offer up proactively some of the additional products and services that we have across the enterprise that perhaps has been a bit lagging to date. I think with, as I'd said, with the advent of the digital technologies that we're bringing to bear, bringing in, you know, a better view of our overall customer base across the board. What are the needs of those customers, I think, is more important as well. Because we know our customers have credit cards today, they have loans today, they're doing buy now, pay later offerings. They have, you know, bank accounts and debit cards. I think as we look at the expansion of the product set over time, right-sizing that for, you know, our non-prime consumer and bringing out a value proposition with them, and then being able to seamlessly offer that up across the enterprise is a huge area of opportunity for us. Switching gears a little bit on the regulation front. Seems like, I don't wanna call it the sky's getting clear, but it does actually seem like it is, at least from my perception. Be curious kinda your comments on where we stand today from the regulatory front and kind of what? Yeah. I think it's actually the best regulatory slash position that the company's been in in quite a few years to quite honest with you. I think we've made some really great strides around the litigation that we had around our multi-state discussions that we've had with the regulators on that front. Still not over the finish line, but cautiously optimistic in that regard as well as some of the other actions that we've had. I think the conversations that we've had with regulators around our earnings advance product have been very positive to date as well. To say, and we discussed this during our earnings release, the expectation to clear out the bulk of our historical accruals that we would have had in this area and really to be on a clean slate going forward, I think is terrific for the business. That's good to hear. Maybe, you know, last year at this conference, the topic was all about tariffs. This year it's AI and tariffs. Let's just maybe hit the one AI question. How do you, how do you see that, A, in your business today? More importantly, how do you see AI impacting kinda how you go about the customer selling experience or the, or the risk management side of the business? What could we see there for the next couple of years? So many areas of opportunity around AI, as you know. I think picking the right pockets for investment within the business, that really makes sense. I think you touched upon one of them in terms of the customer experience and leveraging that to better understand our customers, to better meet their needs, to leverage that within our credit environment as well. I mean, we do that to some degree today with machine learning and some AI tools in that respect. Also to become more efficient as an organization, where we can leverage AI tools to take out some cost in the business and improve our operating leverage. So many opportunities in that regard, but I think the big one, again, back to the digital transformation and servicing our customer would be the number one on my list. When you look at the financial, kinda you put it all together, the different parts of Upbound's business and look at, call it a normal cycle financial algorithm of this business. Like its top line is, how would you unpack the top line versus EBITDA growth? Is there margin expansion opportunities or is it more of an EBITDA dollar growth opportunity? How do you frame that up for investors? Yeah, I mean, I definitely think there's more across the board, to be quite honest with you, Bobby. I think that comp growth on top line, top line revenue won through all of the things that we talked about earlier. I think the product expansion would really resonate as well and the offerings that we're bringing to bear. Excited about our line of credit offering within our Brigit business, the Acima Marketplace, I think, and some of the shifts that we're making within our Rent-A-Center business to more online. Again, I think the complement of products and services that we're offering today is not full. I definitely think there's an opportunity there in terms of gaining additional ground. you know, we've already got our costs sort of sunk in, as well for the most part. Adding in incremental top line just creates more operating leverage within the business. I'd say those are the main areas I'd focus in on and the EBITDA contribution as the business continues to scale. Obviously, from an operating leverage economies of scale, I would expect that expansion and overall margin, all things being equal. Can you maybe briefly before we hit on, capital allocation and kind of the end, the last few questions, just the line of credit offering in Brigit? You kinda call that out, maybe unpack what exactly that is. How does that kind of, I guess, go into their product offering? What additional capabilities might that give the team there? Yeah. I mean, the line of credit, quite simply is... It's under a subscription-based model, as are all of our offerings within Brigit. Effectively, that unlocks additional advanced dollars to the customer, up to $500. Currently, we'll explore that. We'll explore that over time. Also allows the customer to make those subscription payments towards the line of credit advance over a longer duration. Typically, 9 to 12 months is the timeframe. I'd say that is another arrow in our quiver to, one, bring on new customers, retain the customers, but also make sure that, you know, we're also ensuring their ability to pay is extremely important and that we're not stretching the customer too far as part of that exercise. That comes within the same tier offerings that you guys offer now, or do you think it eventually evolves into a different tier, subscription offering? Yeah, great question. I think it would be an additional tier offering as part of the line of credit exercise. As part of our base offerings on our earned wage advance and our other budgeting and credit tools that we offer in place. This would be another subscription in the mix. I think it's clear, transparent in terms of the pricing that we're offering through Brigit, through this model, relative to perhaps some others that would, you know, kind of float depending on, you know, how much you're advancing, term, et cetera. I'd say this is a much clearer and transparent offering to the customer. When you wrap all this up, I mean, you got a core business that generates a ton of cash. You got a couple other high growth avenue businesses that, you know, have a really long pathway for growth with some investment. How do you think about the overall capital allocation strategy of Upbound Group? Well, the first priority is the free cash flow and where it goes from there. What I'd say is we continue to drive very healthy and strong cash flows, and those numbers continue to move. As I'd referenced, roughly $200 million of free cash flow coming into 2026. First priority, continue to fuel the engine, the growth overall across the platform. That's number one. Continuing to invest in technology, infrastructure to support the evolution of our business and transformation of our business. I think beyond that, we'd be looking to bring down debt and overall leverage. That was a commitment that we had made when we had acquired Brigit about a year ago or so. you know, our stakeholders, our rating agencies, our banks, our investors would also look to bring that number down over time. Then beyond that, really looking at being opportunistic, I'd say, around, you know, whether that's product expansion, opportunities to continue to accelerate growth. We haven't talked a whole lot about M&A, but I think downstream, likely that might be another opportunity, either directly through acquisition or, as I'd said, through partnership or some distribution arrangements. We'll continue to monitor the market around our share price. We still strongly believe that, you know, we're undervalued at this point, and we'll continue to monitor that and deploy appropriate capital at the time. Very good. Well, I think we're right on time. I would also say I agree. You guys are undervalued at this point too, so I'll throw that out there. Yeah, thank you for joining us, and we appreciate the support. Thanks very much.