Upbound Group, Inc. (UPBD) Earnings Call Transcript & Summary

Ladies and gentlemen, this call is not for media representatives or Bank of America Securities investment bankers or commercial bankers, including corporate and commercial FX. All individuals are instructed to disconnect now. A replay will be available for Bank of America Securities investment bankers and commercial bankers, including corporate and commercial FX. The replay is not available to the media. Good day, and welcome to the Bank of America Securities Rent-A-Center call. Today's call is being recorded. For opening remarks and introductions, I'd like to turn the call over to Mr. Jason Haas. Please go ahead, sir.

Thank you. Good morning, and thank you all for joining us today. This is Jason Haas from Bank of America, and I'm really lucky to be joined today by Mitch Fadel, who is the CEO of Rent-A-Center and Maureen Short, who is their CFO. They're going to give a brief presentation, and then I have a few prepared questions. After which, we'll be able to open the line for Q&A. So Mitch and Maureen, thank you again so much for joining us, and please feel free to get started once you're ready.

Thank you, Jason, and thank you, everyone, for taking the time this morning to join us. We appreciate it and appreciate your support, and I'll get started on the presentation that I think everybody has in front of them or hope everybody has in front of them. If not, I'll try to be precise enough for you to be able to follow what we're talking about. So we do believe we have a compelling -- that Rent-A-Center's a compelling investment and growth, as Slide 3 talks about. And I'm not going to read all those slides. But just the key points we've got, we've been doing this for many, many years. We've served banked and unbanked customers, under-banked customers. We've got really a couple of different verticals of segments, I should say, that we operate. We have our Rent-A-Center business, which is including some franchisees, about 2,300 stores, which -- and then also, our e-com business goes through that. It's a fastest growing segment of the business. You'll see on one of the slides, it's up about 15% of our overall Rent-A-Center business, that was 10% a year ago. So that's 50% growth in a year as it continues to grow. Our 2,300 stores provide the final mile solution. So unlike a lot of retailers who are struggling for a final mile solution as more and more people order over the internet, we've got it built in to our stores. Sort of walk-in traffic, they're the final mile for e-com traffic and then they service the accounts afterwards or any returns and re-rent it to somebody else. So business model that's getting better and better with e-com growth. And we've got the retail partner business that we now call Preferred Lease. We got the only different -- we got the most differentiated offering in the space. We do bank and unbank customers there as well, unlike any of our competition. And we've staffed the stores or go virtual. Our big growth opportunity is certainly in the virtual, but both sides continue to grow staffed or virtual. Again, the only ones in that space that do business with unbanked customers and -- successfully do business with unbanked customers. Improved the balance sheet pretty dramatically over the last couple of years as you'll see in some of the slides. This first slide talks about our dividend yield being 4-plus percent. I guess you could put plus-plus after last couple of weeks of what's happened in the stock market. I think maybe it's like a 6% dividend yield this morning or something like that. So we're proud of that, to be able to return that kind of yield to our shareholders. Our EBITDA growth has been really good over the last couple of years, and we don't see that changing as we go forward. And again, strong cash flow generation. I think we ended the year, and Maureen will talk about in a few minutes, at 0.7x debt to EBITDA. So things have gone well for us the last couple of years. The next slide shows what we -- the segments we rent and how we provide that path of ownership for cash and credit constrained customers, full transparent transaction with our consumers. We operate under rent on laws, leased on laws in 47 states, all state regulated. We haven't seen any state reverse their law. Some of them have been in place almost 40 years now. So a regulated business for when we operate under those state regulatory laws very well. You see the segment breakdown on the slide. We're over 50% furniture, not a tremendous amount of exposure in the consumer electronics category, less than 20% in the -- what you might call, television category, television and stereos and game systems. But -- and even though that split a couple of points last year as it is to your product deflation is only a couple of points, and we more than made up for it in the other categories as we focused on furniture. And some of our emerging categories you see, 2 years ago, would have been 0, and that was 3% of our business last year, emerging categories like handbags and tools and testing some things like tires and jewelry right now. So we have a lot of opportunity to even add product verticals into our business lineup. The next slide talks about who our customer is, 1/3 of the U.S. population is considered below prime credit with FICO scores below 650 and 2/3 of U.S. consumers -- U.S. families who have incomes of below $75,000. So tremendous market opportunity for us. It's one that's proved resilient through any economic cycle as -- even in the recession, we'll talk more about this here in a minute. But even through a recession as lending drives -- as prime lenders move up -- some prime lenders move up, there's more business for lease-to-own. So that's proven. We've proven to very recession-resilient. And if you can see that growth all the way back to -- from 1999 to last year, it's more than doubled in the industry, even though there's been a couple of recessions in that time frame. Solid long-term performance, Slide 6 shows it even more graphically, you can eyeball in there 2008 -- 2007, 2008. You don't see big drops in EBITDA or anything like that. Our losses don't spike during a recession because the -- it's a rental and not a sale equity that's entrenched to the end. So if somebody can't afford it, we pick it up and rent it to somebody else. And we usually have plenty of people being pushed towards a transaction as lending drives up in a recession. So it's kind of taken care of itself. You can see how in the last couple of years, the last 2 years, we're getting back to historical levels of EBITDA after some -- after a downturn with a different management team for a couple of years. And when I say different management team, long story short, our founder retired in 2014. I left the company in 2015. The new management struggled, made a lot of changes to the business model. I came back at the beginning of 2018, took a lot of expense out that they had added to the business and put the business model, not back to where it was because the world changed, but tweak the business model back to -- with my 30-years-plus experience in the industry. And between the expense cuts and our same-store sales growth by making some of those changes, we've gotten back to historical EBITDA levels and continued to be able to add on top of that with our growth vehicle that we have now, which are e-com and, of course, the retail partner business. Big market. As the next slide shows, over $25 billion industry, less than half of it is with the industry, so now $11 billion out of the $25 billion plus. So a lot of white space for the preferred lease side. I already mentioned how our model is so differentiated from others based on unbanked and banked customers, our flexibility to staff or not staff or just staff on weekends. And then in the rest of our business side, the growth opportunity on the e-com. I mentioned this earlier, you could see it's 15% of our sales. It goes through our stores that provide the final mile, and that grew by 50% last year from 10% to 15%, and we'll -- we expect that to get over 20% in 2020. So tremendous growth opportunities, not going backwards like traditional retailers. Again, I think primarily because we've got the e-com business kind of built into our stores as they provide the final mile. And more and more people becoming aware of the lease-to-own transaction as more and more retail stores have that option and more and more retail stores want that option. It just seems to be broadening the exposure to lease-to-own and even helping our stores at the same time. Positioned for growth as the LTO sector evolves on the next page, you can see our EBITDA growth as we've come back the last couple of years since I came back and kind of repositioned the management team at the beginning of 2018. Both in EBITDA and cash flow took our debt down. It actually was like 9x at one point because the EBITDA was so low and the debt was high. So dropped that down to 0.7 at the end of last year. So strong cash flows to grow as well as return capital to shareholders through the dividend, I already mentioned, through share repurchase and growth. And we've got plenty of money for all of those in our model. It's not like we have to pick one over the other. Okay. Our strategic goals on Page 9 of the presentation, and we've talked about these publicly recently in our earnings calls. $1.2 billion in annual revenue on the Preferred Lease segment, the retail partner segment in the next 3 years. It's about an $800 million run rate going into this year. So we expect it to be at least $1.2 billion by 2022. And that doesn't even include if we get any national -- any large national players in that, and it only contemplates continuing to grow with local and regional. We certainly expect to have national accounts, but that just means the numbers get better. Low single-digit, same-store sales in the Rent-A-Center business segment, again, driven primarily through e-com and being able to achieve adjusted EBITDA margins of 11% to 13%, especially once we're scaled on that Preferred Lease business. And Maureen will talk a little more about margins here in a minute. The next slide gets in a little more detail about how we go from $800 million to $1.2 billion. You can see that on the next slide between this year and next year in 2022, as we build the sales team. We already do have some large furniture retailers, 5 out of the top 6 conventional furniture retailers and continue to grow in that business as well as looking for the national accounts. Just brought in a national accounts manager or VP of national accounts, I should say, from TD Bank, a gentleman by name of Paul Hamilton, only been with us about a month, started to hit the ground running. We've added someone to the Board in the last couple of months, that was a top executive at Synchrony. So getting a lot of help on the retail partner business from a lot of different angles. The next page talks about what our model advantages are. And I mentioned a couple of these, how we have options for pure virtual or staffed or hybrid solutions to staff just during weekends or high-traffic periods. We've got all kinds of options. We can be in the retailer's point of sale. We can go around the point-of-sale with text to apply. We -- if they're in the third-party waterfall, we're integrated with all of those that are in our industry. So full tech stack of options for our retailers, and they're all just a little bit different. Serving the banked and unbanked customers with decades of experience in both is certainly an advantage. And you can see in the middle pie chart there, the majority of our business in the preferred lease side is furniture. But there's other verticals that are just starting to be added on to that, like, as we look at things like tires and jewelry that I mentioned before as well as tires and jewelry for our Rent-A-Center business. A lot of growth opportunities there, and I've already mentioned most of those. On the Rent-A-Center business side on the next slide, again, you see the pie chart of the -- how this segment breaks down from a category standpoint and how the emerging categories are growing, which is very exciting. So we're not anywhere near the end of our growth vehicle, there's still products to add at the end of our growth time line, I should say. There's still products to add. And again, as I've mentioned a couple of times, e-com continues to grow. And so we're really excited about our opportunities both in the retail partner business as well as the Rent-A-Center business segment. And on Slide 13 talks about those e-com strategies and how we leverage our store base for same-store delivery in the collections process. It's already built-in. If somebody puts an order in, we can -- we got the final mile covered. We got the return covered if they want to return it. And we've got the collections covered because we handle that out of each store on the Rent-A-Center side. So something that we just could see continuing to grow and grow and grow as more people order online. And we improved the customer experience online as well. And that's something that we're always focused on, like any retailer with an e-com program. And we just see nothing but growth in that from here. With that, the last couple of financial slides, I'll let Maureen talk about our capital strategy and our 2020 guidance before we open it up to questions.

Thanks, Mitch. Thanks, everyone, for joining us this morning. We are really excited about the business. We had a great fourth quarter. There's more detailed information available on our website regarding our results. But today, I'm just going to focus on, as Mitch mentioned, the capital allocation framework and priorities and then talk about the 2020 guidance. So on Slide 14, we outlined our capital allocation framework. After achieving 8 consecutive quarters of positive same-store sales and successfully implementing over $150 million of cost savings initiatives over the last couple of years, our focus has now shifted to growing the business in a disciplined way. Our priorities for cash are to first invest in our business, followed by opportunistically taking advantage of potential M&A opportunities, maintaining a conservative balance sheet and returning cash to shareholders. 2019 reflected these priorities as we invested in the business. We had an acquisition in August of Merchants Preferred. We paid down a significant amount of debt, and we increased our dividend by 16%. And it's a pretty healthy dividend as well. Investments in 2020 will help us capitalize on the significant untapped market opportunity as lease-to-own expands into virtual and e-commerce solutions. These investments include expanding our sales team, enhancing our technology to grow the digital channels and then improving the customer experience, really both -- in both channels. We also believe we can maintain our conservative balance sheet as we execute on our long-term financial and operational goals. Our net debt-to-EBITDA was, as Mitch mentioned, 0.7x, and we have a total liquidity of over $235 million at the end of the year. As has been our practice historically, we intend to return excess cash to shareholders. We increased the dividend, as I mentioned. We've repurchased some shares in the fourth quarter. And we have a share repurchase authorization of over $220 million. Over the last 10 years, we've returned nearly $800 million to shareholders in the form of share repurchases and dividends, and we continue to opportunistically allocate capital to augment returns. Now turning to guidance for 2020 on Slide 15. We expect mid-single-digit revenue and adjusted EBITDA growth, modest EBITDA margin expansion, partially due to some of the investments that we've talked about within the virtual channel and we expect double-digit EPS growth. We have a significant benefit from the debt reduction and the lower interest. Capital expenditures are expected to be $40 million to $45 million in order to grow digital channels to support both the retail partner business as well as our e-commerce platform. And free cash flow is expected to be between $105 million and $135 million, which includes investments in working capital to fund our invoice volume growth. We believe these investments will generate a high rate of return and support profitability and cash flow. Within our operating segments, we're expecting Preferred Lease revenues to be up 18% over last year if you look at the midpoint of our guidance, driven by the addition of virtual retail partner locations, organic expansion in existing staff locations and growing our retail partners' e-commerce channels. We expect to maintain a low double-digit adjusted EBITDA margin for Preferred Lease, which is influenced by mix shift to virtual, the dilution of the Merchants Preferred acquisition and additional investment to support growth. A higher mix of virtual will result in a lower gross profit and higher skip/stolen losses, offset by reduced operating expenses versus the staffed model. For the Rent-A-Center business, our revenue guidance assumes a low single-digit increase in same-store sales as we benefit from growth in the portfolio and e-commerce expansion offsets by a lower store count, including the refranchising impact. We're projecting adjusted EBITDA of $265 million to $285 million for the segment. And we'll benefit from an additional $10 million to $15 million in cost initiatives, which we believe should more than offset the higher skip/stolen losses from the growth in e-commerce. Thanks for your time today. We're encouraged by our continued performance and optimistic about prospects to see further growth in 2020. Now I'll turn the call back over to Jason for questions.

So starting with something very topical. Could you discuss what impact, if any, you've seen from the coronavirus on your supply chain?

Sure, Jason. Good news is we haven't seen any impact on our supply chain. Certainly, not yet. We don't expect any significant or any material change either as we talk to our vendors. So we get -- most of our furniture, you saw on the slides that furniture's the biggest part of our business. Primarily, most of that comes from Ashley Furniture, as a manufacturer. They moved to Vietnam years ago and of course, a lot of their stuff's made in the U.S. as well. So between U.S. and Vietnam. They get a few parts out of China but don't manufacture in China. So not much going on there. We've been talking to appliance and electronics vendors. We don't see any disruption in supply chain coming. We also know and understand that even -- and I should add, our inventory is in really good shape at the end of the year, we actually ended the year with a little more inventory than we wanted. So that's probably for then to help us in case there is any supply chain issues. If there's any increased costs because people are getting product out of different places or parts out of different places than China, our business model's very flexible, very elastic pricing. The pricing breaks down, the weekly price -- average weekly price is above $25 per customer. You can have a -- and our margins, as you know, our gross profit is in the 70% range. So for every percent of price increase, you could get on supply chain, you only need about 1/3 of that from a pricing standpoint to breakeven. So I mean, a 5% price increase takes 1% to 1.5% -- I'm sorry, yes, cost increase takes about 1% to 1.5% price increase a customer, which is a $0.25 on $25 items. So I mean, it's -- you can add $1 to the pricing, only $1, and that adds 4% to the pricing, and you could take a 12% or 13% supply chain price increase and still be even on it, and we certainly don't expect any of the impact. So good news is we don't see anything coming from that standpoint. And then the worst-case scenario, if we're wrong about that, our business model and our pricing is elastic enough to absorb quite a bit.

And then just to speak to the demand, we've gotten some questions about have you seen any decline in the revenue, and we've taken a look at some of the first hit markets like Seattle to see is there anything that's materially different. And we haven't seen any major shifts or declines in demand because people have stopped shopping or gotten their hours cut back or having to stay at home. Haven't seen anything regarding increases in that sort of behavior driving lower revenue at this point.

Great. That's really helpful color. And then I think that segues well into my next question. So I'm curious to know how you performed during the last recession.

Yes. I mentioned, as we're going through the presentation, we did very well. And there's a couple of reasons for that, not only through the last recession, but I'll age myself. I've been through quite a few recessions in this industry, in this business that I have done most of my adult life. And the worst one, of course, be in 2008. But the reason we're so recession-resilient, our losses don't spike up because it's a rental and not a sale. So there's no credit out there. Customer only has to return it where we have to pick it up and rent it to somebody else versus a -- we're never trying to get money out of somebody that doesn't have any money. All we got to do is get our product back and rent it to somebody else. So then you say, well, but in a recession, doesn't demand go down? No. Actually, demand increases as -- you might lose some customers on one side -- out of one side of the funnel, the other side fills up even faster as prime lenders move up -- subprime lenders move up, and there's even -- credit tightens, and there's even more business for lease-to-own. People don't want to -- if they're scared about making commitments, whether it's coronavirus-related or recession-related, lease-to-own makes a lot more sense. It's a lot more flexible than buying something and being on the hook for it. So for all those reasons, the coronavirus would have less impact on us than traditional retail, which kind of -- as you said, Jason, it kind of leads into your recession question. For those same reasons, the recession, we've been very recession-resistant even in the deep recession of 2008.

Great. That's really helpful. And maybe too early to really tell, but I'm curious to know if you've seen any of those, let's call them, higher tier lenders start to pull back as some economists are nervous that the coronavirus could lead us into a recession?

Yes. We haven't seen that yet. Our business has been strong. The -- where we would see that first is in the retail partner business because we're -- in most of our retail partners, we're the third option in their funnel from prime lending to -- a lot of them will have a subprime lender and then to us. And business has been about where we expected it to be. There hasn't been any fall off. We haven't seen an increase yet, which would lead us to believe that once we see an increase, that would be because higher tier lenders pull back on credit. So we haven't seen that yet. I won't tell you -- if I only had my Rent-A-Center hand on, I'd say I'm rooting for it because that would be good for us. I won't tell you I'm rooting for the country to fall into a recession. But if I just look at with my Rent-A-Center glasses on, I'd be rooting for that. So I'd be hoping the economists are right about that because it only helps our business, but we have not seen that yet to directly answer your question, Jason.

Great. That makes sense. And then switching topics a bit. Could you discuss -- you mentioned it a little bit during your presentation, but could you discuss what sort of impact you've seen from the deflation in consumer electronics?

Yes. It's a headwind, just really a slight one, though, for us. We've done this a long time, and we've had to switch from analog TVs to digital, to plasma to LCD and the LED and so forth. So we've had to do this plenty of times, and what you have to do is just get to the latest technology, which we're doing now. Half our product that we buy now going forward is the things like Samsung's QLED TV rather than just a regular HD TV, or LED TVs. We buy the QLED. We buy the NanoCell from LG and things like that. So you have to get to that next segment because I mentioned how the price elasticity in our business, you get the QLED instead of a regular TV, and it's only going to be like $5 more a week for the customer. It's not $500 more like if all of us were standing at Best Buy or Walmart or Costco to buy a TV, we -- it's going to be $5 more a week. So it's an easier upsell in our business because of the weekly payments. And the fact that if they can't afford it, they can return it at any time. So it's an easy upsell. And when you just have to get to that product so that you can manage the deflation that way, we also know how to price the product differently as we're moving into more of the QLED and NanoCell and OLED TVs from LG and things like that. You have the short near-term and get those older ones through the system. People take ownership sooner. You got a lot of levers you can pull on rates and so forth. So if you alter your value proposition, you can make it less of a headwind and then your product mix. And it's been very -- a little bit of a headway. I can't say it's no headwind at all, something we have to deal with. And our other product verticals have more than made up for it because we've been able to keep the headwind at a pretty low breeze, if you will, and more than made up for with other product categories.

That's great. So I think this may be a good stopping point to pause and see if we have any questions from our listeners. I have plenty of other questions, but I think it just might be a good stopping point. So Aaron, do you mind opening the line and queuing the, I guess, polling the audience for questions.

[Operator Instructions] We have no questions in queue at this time, sir.

All right. That's okay. Well, we can pull again at the end after I ask a few more. And then I should have mentioned this earlier, but also if any listeners want to e-mail me any questions, I'd be happy to ask them. So yes, if you do have a question and want to e-mail to me, happy to answer it that way. But -- so next question that I wanted to ask was just really -- again, you touched on this a little bit during your presentation, but I'm curious if you could walk us through the rationale for the Merchants Preferred acquisition and just give us an update on how that integration is progressing.

Sure. The rationale was we have a very successful staffed retail partner business in acceptance now, and we want -- but the growth is really so much more in the virtual side because you can scale so much faster. And more retailers don't have enough LTO opportunities every day to staff than the ones that do have enough opportunities to staff. And I say staff, why would you ever staff? That's cheaper if you never staffed. Well, the ones with a lot of LTO volume, you can close a lot more of the transactions, if you have dedicated staff in there to do it versus the salesperson for the retailer doing that. So if you got enough -- if you have enough volume, the staff can more than pay for itself. But you got to have a lot of volume. So the virtual is going to be more prominent and certainly more scalable. So we wanted to get in the virtual business. Again, even though we had a successful foundation, the step is we need to get in a virtual as a growth vehicle. And it felt like Merchants Preferred was the right size, the right foundation for us, good technology, good infrastructure from a call center standpoint and the kind of things that support you need. A good foundation of a sales team. Certainly, we've probably multiplied it by about 4 since then, 4 to 5x as big and continue to grow the sales team as we gear up, as Maureen mentioned earlier. So -- but it was the right foundation for us, and it's really our springboard in the virtual. We could have done all of that ourselves, but it sped us up anywhere from 12 to 24 months. And the integration, the second part of your question, Jason, the integration's gone fine. We're 6 months into it. As we're integrating, we continue to open stores. We have about 300 new doors, even before we were ready to, not that we weren't ready to take on those stores but before we were even planning on getting any growth out of it. So the demand's there and integration's gone fine. Now I'd say, at this point, we're pretty much fully integrated within Rent-A-Center. And we've rebranded the staffed Acceptance Now business with the Merchants Preferred business and our new brand name is Preferred Lease. And it's Preferred Lease because that's really what the product's called. It's preferred for the retailer because we can add to their business by doing bank, your own bank. That's preferred because we're staffed certain days of the week if you want or not at all. And it's preferred for the customer because it's the best value proposition out there in the industry.

Thanks. And that, again, segues well into my next question, which is just about what the selling process is like as you go out there with the Preferred Lease offering and try to win business with new retailers. I'm curious to know just how long it takes and kind of what the pitch is and what the process is there.

Well, it depends. It depends how big the retailer is. Small local regional players, you can -- if they had 4 furniture stores in the city, you could be in there the same week once you show them our business model. The national players, certainly are going to have more hoops to jump through, more people to talk to and so forth, and those are going to take a while. So what we're selling is, as I mentioned, the most differentiated offering in the industry, banked and unbanked customers and then staffed or not staffed or hybrid staffing sometimes. So we've got -- we're not -- not that we're better than the competition, in my opinion, we all are pretty much the same when it comes to the technology, call center support. We don't go in and start telling people how our call center handles calls better than somebody else's. Maybe they do. But I don't know that anybody's going to really listen or believe you if you tell we're just that much better. But what we are is different. And we can show them statistically how much we add to the business by improving unbanked customers, that you don't need a bank account to apply with us. And then, of course, if they have enough volume, how much the staffing can add to their business. So we're much different. So we have something much different to sell than the rest of our competition. And from a timing standpoint, it can take a week in the small ones. And I mean, some of the national players are going to take us 6 months to sign some of them.

Got it. And then overall, are you seeing increased interest from retailers and lease-to-own? I know to some extent, it's somewhat of a new thing, this type of offering. So I'm curious what sort of reception or interest you're seeing out there.

Yes. It absolutely is. It's still a new thing. It's amazing how many retailers are still -- that aren't familiar with even having the lease-to-own option in the store. But it really is a momentum issue at this point. And the more they do it -- a couple of national retailers are doing it. So the more retailers are reading about it, and I think it's just building on itself, so yes, we're seeing much more interest than just a couple of years ago. And I think it's just feeding on itself, like most things do, the more people talk about it.

Great. And then switching over to another new topic. I just wanted to ask about the regulatory environment and how you're thinking about that risk as you go about managing your business, and just if there's anything on the horizon that investors in space should be aware of.

Yes. No, we operate under state regulation and virtually every state -- 47 states plus the district, plus Puerto Rico have state or territorial laws on how we operate. None of them have ever reversed or that, oh, we don't want lease-to-own law anymore. They're primarily disclosure laws on what we need to disclose to the customer. We don't see anything on the horizon that scares us. The CFPB, a lot of people want to talk about, and they're certainly an important division of our government in the lease-to-own. Lease-to-own was not part of the original charter written years ago when Elizabeth I was there. It was included in their charter as leases of 3 months or more, and ours can be terminated weekly. So we haven't been included in that. We operate under a very steady, consistent regulatory environment that hasn't changed. And we'll continue to do that and follow off in every state.

Great. So operator, do you mind opening -- or I guess, polling the audience one more time for question because we're reaching end of our slot here?

[Operator Instructions] Currently no questions in queue, sir.

Okay, great. Well, one more question, I guess, to wrapping up here. Just curious to know, and again, something you spoke about during your presentation a little bit. But I'm curious to know what areas of the business you're focusing the most on in terms of investments at this point currently.

The investments we're focusing on primarily are around the digital channels. So things like enhancing our website for e-commerce on rentacenter.com. We're even looking at using technology to read out some fraud and improve the customer experience for web agreements that will allow us to speed up the application process within our stores locations. And then another big part of our investments are centered around the virtual growth opportunity. It's such a big white space opportunity and have -- things have gone well with the integration with Merchants Preferred. And we've got the technology now to be able to offer that hybrid or staffed, either part-time staffed or virtual-only solutions to all of the retail partners. But it's been some technology investments. And then as Mitch spoke to you, we've added quite a few people to our sales team, and then the call centers as well. We've integrated the call centers and have some cost savings efficiencies there. So it's really centered around all of the digital channels, since that's where we see the biggest growth opportunity for the company.

Great. That makes sense. And I think that's a good stopping point. We've hit the end of the allotted times spot here. Thank you again so much for your participation today, and thank you for everyone for listening.

Thank you, Jason. We appreciate it.

Thank you.

Ladies and gentlemen, this does conclude today's conference. We thank you for your participation. You may now disconnect.