Welcome to Rent-A-Center's first quarter 2014 earnings release conference call. (Operator Instructions) Your speakers today are Mr. Robert Davis, Chief Executive Officer of Rent-A-Center; Mr. Mitch Fadel, President and Chief Operating Officer; Mike Wilding, Senior Vice President, Accounting and Global Controller and Interim Chief Financial Officer; and Mr. David Carpenter, Vice President of Investor Relations. I would now like to turn conference over to Mr. Carpenter. Please go ahead, sir.

Thank you, Jay. Good morning, everyone, and thank you for joining us. You should have received a copy of the earnings release distributed after the market closed yesterday that outlines our operational and financial results that were made in the first quarter. For some reason you did not receive a copy of the release, you can download it from our website at investor.rentacenter.com. In addition, certain financial and statistical information that will be discussed during the conference call will also be provided on the same website. Also, in accordance with SEC rules, we're concerning non-GAAP financial measures, a reconciliation of EBITDA is provided in our earnings press release under the statement of Earnings Highlights. Finally, I must remind you that some of the statements made in this call, such as forecast, growth in revenues, earnings, operating margins, cash flow and profitability, and other business or trend information, are forward-looking statements. These matters are of course subject to many factors that could cause actual results to differ materially from our expectations reflected in the forward-looking statements. These factors are described in the earnings release issued yesterday as well as our Annual Report on Form 10-K for the year ended December 31, 2013. Rent-A-Center undertakes no obligation to publicly update or revise any forward-looking statements. I'd now like to turn the conference call over to Robert. Robert?

Thank you, David. Good morning, everyone, and thank you for joining us. Suffice it to say, it's been a very busy first quarter here for us. And our first quarter after the retirement of our former CEO, Mark Speese, has found us generally pleased with our results. First quarter adjusted earnings per diluted share of $0.57 are ahead of consensus expectations and sets a stage for 2014 to be the transformational year for our company. Let me provide a high-level update on our primary business segments and some updates on our strategic initiatives, laid out at our February Investor Day, then Mitch and Mike will dive a little deeper with their updates. In our Core segment, during the quarter, we have focused primarily on the quality of our portfolio, the health of our inventory levels and ensuring a steadfast focus on our expenses. As such, we have changed our promotional tactics which has resulted in increased average ticket in our Core. Further, we have lowered the level of idle in-store inventory, which unlock some cash flow during the quarter, enabling us to lower our leverage by reducing indebtedness by over $41 million. We do believe these were initial necessary steps to begin to stabilize the Core. And finally, I'm sure we remain focused on providing total returns for our shareholders and the long-term health of the company. As announced in the press release, we do intend to finalize the execution of the store optimization plan during the second quarter by consolidating approximately 150 locations with existing Core RAC stores. In our Acceptance Now segment, we continue to perform quite well, a segment that contributes over 20% of our total revenues and continues to excite. Our average kiosk in Acceptance Now is producing revenues well over $40,000 per month, which we…

Thanks, Robert, and good morning, everyone. As Robert mentioned, we are generally pleased with how the first quarter ended. In the Core segment, we have altered our promotional tactics that we use and now have our average ticket up on a sequential basis. We ended last year with too much inventory after a disappointing December, but we now have our inventory in line and set up the way we want it going forward, all while driving enough traffic to improve our sequential rental and fee comp in the Core by approximately 30 basis points. And we expect this sequential improvement to continue throughout the course of the year. On the collection side, our weekly performance metrics remain generally on target with our goal, and our skip and stolen losses came in at 2.8% for the quarter, a 10 basis point improvement from last quarter. As I mentioned a moment ago, we did a very good job managing our inventory back in line in the quarter, as the core's held for rent percentage at the end of the quarter came in at 24.2%, 210 basis points better than the same time last year. Regarding Acceptance Now, we remain pleased about the growth and the profitability of that segment. With 60 more locations opened in the quarter and a 26.1% comp, things look very good year. Our collections metric and our customer keep rate metric also remain steady and where we expect them. As Robert mentioned, we're excited about the development of our virtual technology. That will allow even more profitable expansion in this segment. Acceptance now continues to help us grow the overall U.S. rent-to-own market, which for most retailers is not an easy thing to do right now. In fact, when you're at the core, the U.S. Core and Acceptance…

Thanks, Mitch. I'll walk you through our financial results for the quarter and review our 2014 annual guidance, after which we'll open the call for questions. I'd like to mention that much of the information I provide, whether it is historical results or forecasted results, will be presented on a recurring and comparable basis, and therefore exclude the $0.03 charge related to our senior credit facility refinancing. As outlined in the press release, our total revenues were $833.7 million during the first quarter of 2014, an increase of $14.4 million or 1.8% as compared to the first quarter of last year. Our net earnings in the quarter were $30.1 million. Diluted earnings per share equated to $0.57, ahead of Street consensus. These results include dilution related to our Mexico growth initiative of approximately $0.07 per share. Both operating and EBITDA margins declined 240 basis points in the quarter. This was expected, as we began to invest in our strategic growth initiatives in order to improve the profitability of the Core U.S. segment, which initiatives were outlined back in February at our Investor Day, and as Robert has updated you on just a few moments ago. We generated a positive net cash provided by operating activities in the quarter of $120 million, which was an increase compared to last year of $6.6 million, primarily due to our lower merchandise purchases and focus on renting existing merchandise. During the quarter, the company completed the refinancing of a new $900 million senior credit facility consisting of $225 million term loan and $675 million revolving credit facility. We believe the increased liquidity provided by the larger revolving credit facility and moderation of mandatory principal payments over the next seven years will further enhance our financial flexibility, as we continue to execute on our strategic…

(Operator Instructions) Our first question comes from Brad Thomas with KeyBanc Capital Markets.

First, just a couple of questions about the store closures. Robert, just thinking about this at a high level, you all are starting to generate such a large percentage of sales and operating income from the virtual side of your business and the kiosk side of your business. And so just stepping back, I mean, how do you think about the importance of the retail segments? And could this be the start of potentially some more prunings that we see on the retail side?

Well, as you heard in my prepared comments, a couple of things that will play a factor in that question. One is, we do have new capability and tools, which we've developed over the last 90 days that did play a role in informing us as to our optimal footprint within the markets we serve today. On the same hand, I also alluded to the fact that there maybe markets that we're not currently serving today that at some point we'll want to investigate with these new tools and capabilities. The first step was just ensuring that our current footprint was optimized. So your question is a good one. I can't sit here and predict today as to these ultimate outcome. However, suffice it to say the expected growth and success of Acceptance Now in the virtual platform will certainly play a role in that ultimate outcome in terms of footprint. We've got to have that channel to help facilitate the growth of those two arenas. So more to come, so to speak, but certainly are pleased with the tools and capabilities that we now have to make us more scientific and data-driven in our approach to market optimization.

I know you talked about a number of those initiatives for the retail segment at your Analyst Day. With the first quarter in the bag, what's the outlook now for same-store sales for the back half of the year for the U.S. retail segment?

Mitch, you talked about that in your comments, if you want to.

Well, for the Core business, Brad, we certainly see it sequentially getting better every quarter. As I mentioned the rental and fee piece of it was 30 basis points improvement sequentially from the fourth quarter. Our exercising of early purchased option for the merchandized sales category was down compared to year before, which isn't necessarily a bad thing. So that made the comp 6.1% the retail and fee comp towards the negative 3.8%. And again, 30 basis points better. That's going to continue, which should be internally where we get to flat in our same-store sales in the Core business by the fourth quarter. And you see that in our guidance, because that starting the first quarter at negative 0.8 versus ending the year at what, 3 to 5.5. That's a trajectory, where it gets better as the year goes on. Not dramatically, not overnight, but as the year goes on. So yes, we do expect it to get better at the year goes on in the Core business.

And then just one last question on the closures. What are you assuming in terms of the revenue implications, in terms of total topline implications of closing the stores and what kind of comp impact that could have? And what's the operating income benefit that you could get from the closures?

What we're assuming right now for '14, and that's one of the contributing factors to the current guidance for total revenue, from 4.5% to 7.5%. We are now projecting 3% to 6%. So a portion of that is a byproduct of store consolidations. We are forecasting $12 million-plus in revenue deterioration this year or revenue that would go away after the mergers for this year. And then in the operating income to offset the impact of the interest carry on the refinancing, which is why at this point in the year we were comfortable leaving our EPS guidance alone. And then, obviously the benefit from an operating income perspective increases next year, but the revenue deterioration also increases, just given the retention curve on stores after they consolidate. So we haven't given guidance for next year, but we believe that the operating income impact could be roughly $10 million to $12 million next year.

The next question comes from John Baugh with Stifel.

I wanted to follow up on that last point about the store closures. So could you walk us through, I know there was some commentary in the release about lease expense. It wasn't clear to me how much was a commentary around the one-time expense, ongoing lease expense versus cash, timing of lease payments. But really, what I want to drive at is how you see '14 and '15 playing out in terms -- and let's just take '14 for the moment, you gave us, I think the same EBITDA guidance, so there's no change there. How will this one action, closing of 150 stores impact the core profitability relative to your previous thinking for calendar '14?

Well, relative to our initial thinking, it's going to be beneficial. But as you will note in our first quarter results, our revenue was a little bit behind expectations, and so there was some impact to profitability overall in Core in the first quarter. Suffice it to say that the range of EBITDA of $325 million to $345 million is a $20 million range. And the impact that we're referring to is only a portion of that. So we were comfortable leaving the range where it was.

And as we said when we talked about EPS, John, it offsets that $0.05 of dilution from the extra interest. So that will give you some guidance on what the positive impact is for this year that's offsetting that higher interest from the refinancing from an EPS standpoint. And from an EBITDA standpoint, obviously the interest isn't part of that, but it's a $20 million range, so it's just in there.

And Mitch, how typically, so if I closed a store on July 1. Can you give us some rules of thumb or updates on how you would expect, on a one-store example, the revenue to transfer over the next, I don't know, 12 months. What expenses would transfer in? And I understand every situation is different, so just some kind of range or normal experience?

We've talked about it before. We keep over a year -- on the year trend, about half of the revenue does transfer in. And we end up with normal profitability flow onto that in that 40% to 50% range, John, based on some of the expenses transfer and others not, it gets more profitable next year as some of the leases drop off. The question you asked earlier, the one-time charges for fixed assets, I think that's $4 million. And then there is $8 million worth of lease exposure, but that gets paid out over the leases, so its not like that's part of one-time charge or anything, so that gets paid out over the next couple of years as those lease expire. Of course, some of them are expiring next month and some of them go a couple of years, but that's the $1 million total. So that's part of the expense. But still, the accretion is better the second year than what we have factored in here for the first year.

And then my second question is, just quickly, on Mexico. I know, we've got Mexico City opening up. Of course, you mentioned the comp, but the comp gets a lot of help from the opening of new stores and moving into years two and then three after that. Are there metrics excluding Mexico City that you could give us on the rest of Mexico? And update us on how that's progressing? And what key metrics you're looking at in terms of the business excluding Mexico City ramp?

Well, we're on target in general. And I'd refer you back to every year we update the model, the new store model on our website based on another years worth of information. And as you can see, there wasn't much change to it this year relative to the past year as far as the return and so forth coming out of those stores. So we're on track, so we just updated our new store model in January, I guess, late January. So I said, from a return standpoint, it didn't change very from prior. So with another, years worth of data and looking all the metrics we look at we're still on track and that's the best thing for you to look at, is what changes we've made to the new store model every year as we posted it. What we're seeing different a year later in trends is really built into every time we update that model.

And I believe that, Mitchell, if I'm not mistaken that model shows a lot lower year-one revenue than your old model, yet you've been able to more or less keep to returns similar. Could you tell us if that's right or how that's working?

I think from the very first stores we opened down the border, the ramp was little faster in the first year and as we've gone more in-country, it spread out a little longer. They're not ramping up quite as fast as those initial stores. That's why there's more in the second year of that model, but the return rates, I'm not talking about IRR, the return rates by the customer are running better down there to our benefits, so it gives you a little more elongated growth curve than we have originally had planned. So it is a little slower to start, but it grows longer before it levels off. And that's what kept the IRR where it was.

The next question comes from Laura Champine with Canaccord.

This is Jason Smith on for Laura. I just had a couple of questions. First, if you could kind of give us a little bit more color on your expectations for ticket and agreements. Just basically do you think you guys can hit full-year guidance on ticket alone or what kind of ramp-up in agreements do you expect?

Well, certainly not on ticket alone. Although in our forecast, we don't have the demand jumping up or anything like that in our internal forecast. We have continued relatively soft demand going forward, with the ticket continuing to improve, but again, not dramatically in either case. Demand gets a little better as the year goes on, and the ticket impact just gets a little better as the years go on. So I don't think we're drastic in either one of those cases, Jason.

And then, it's just a clarification question referring to Q2, the implied guidance that you were speaking on earlier about the historical ratios with full year. Am I reading that correctly or hearing that correctly that we're looking at 300 basis points below the average from 2009 to '13, so just in somewhere in the 50% or in the $0.50 range?

Not below the average, below the lowest historical one between '09 and '13. And just to provide a little color on that, given the fact that we provided annual guidance, obviously the street expectations are set by you folks and we just try to make sure that your quarters are more consistent with our internal expectations given our guidance is not quarterly. So we try to provide a little bit more information on our website to provide that color for you.

The next question comes from Budd Bugatch with Raymond James.

This is David Vargas on for Budd. I was just wondering if you could elaborate on the demand and ticket metrics you talked about earlier. Just wondering what caused the lower demand in the quarter. Was it due to the higher ticket price or was there another factor that came into play?

We don't believe it was related to the higher ticket. Again, it wasn't like it increased dramatically or we changed prices dramatically. We just promoted a little more on term discounts versus rate discounts. And the lower demand we have planned on based on the way last year ended up, we forecasted. That's why I said that as expected. We forecasted the demand, with the customer being under pretty severe pressure, the lower/middle income being under the pressure, I know we forecasted a little lower demand, and it's about where we expected it to be. We also ended up last year, as I mentioned with too much inventory, because it was still soft in December. We had to work through that in the first quarter. So though that helped cash flow, we had to work through the old inventory. That could have affected demand a little bit. But it wasn't like it was the way-off where we were expecting. We know the customer is under pressure. We've worked through our inventory, promoted a little more off-term versus rate. And demand was about where we expected it, based on those things.

Which as we talked about in our opening comments, just focusing on the quality of the portfolio.

And a quick question on the store closers. Can you just give us split about how many took place, how many sort of have closed during Q1 and how many are you expecting in Q2?

Well, out of these 150 that we're talking about that really was driven by the market planning tool that Robert referred to earlier, will all be in the second quarter. There was a few in the first quarter in the press release. Does it say 10?

Yes, 19 merged in the first quarter. The 150 will take place during the second quarter.

I'm sorry, did you say, 150, will take place in the second quarter or the remaining?

Yes. The 150 will take place. Not additional 150.

The next question comes from Carla Casella with JPMorgan

I have a couple of housekeeping items. One, you paid down some debt in the quarter. Can you just tell us which debt you paid down?

That would have been debt outstanding under our revolver at yearend.

It also looks though that with term loan or any of the bonds or can you just give us the balance on the term loan, the new term loan?

I have those right in front of me.

I'd just follow-up?

Term loans are $225 million.

That hasn't changed.

So at $331 million, Carla -- I'm sorry, a $100 million outstanding under the revolver and $225 million under the term loans. And the bonds are unchanged.

And then how much cash was used to buy rental merchandise in the quarter? Have you disclosed that?

That will be in the queue later this week when we file.

And then, you have had a lot of questions already on the stores you are closing. Are you currently paying to any dark store rent on previous closings? Can you give us a total amount of dark store rent at this point?

There would be a few out there, it wouldn't be a material number, but there would be a few out there, Carla. I would say there's $8 million maybe or might be 10% higher than that if you factor in past closings, but not a material difference versus that $8 million that's in the press release.

And the reason for that is because normally when there's closures, it's at the expiration of the lease.

And you said the $8 million rolls off over, what was the term and the date?

Primarily, over two years. I mean there could be a couple or that trickle past two years, but really we're just about there, might get by the end of 2016.

2016, yes.

Over the next 24 months is really when the majority, any longer leases than that are one of the reasons why we wouldn't close that store.

Your next question comes from Bill Baldwin with Baldwin Anthony Securities.

Could you kind of refresh my memory as to what is basically the drivers behind the pretty significant increases we're seeing year-over-year in the G&A expense line?

Well, it's a couple of things. One, it's a byproduct of new store growth in both Mexico and Acceptance Now and infrastructure here. But it's also being driven by the investments that we laid out at Investor Day. We talked about there being $25 million of investment starting at the end of last year, carrying through 2014 that we are incurring. So that's the primary drivers behind that increase.

So in 2015 then we could see a moderation in the G&A category?

We would expect that, yes.

Your next question comes from John Rowan with Sidoti & Company. John Rowan - Sidoti & Company: I just wanted to make sure I understand the second quarter guidance. So you said it was going to be 3 percentage points below the lowest point from 2009 through 2013, as far as second quarter's contribution to the full year. And that would show, and just going back, it looks like 23% is the lowest over that period. So let's say 20% of the full year. That would imply $0.46 to $0.50 of earnings, which to me looks like it's a somewhat seasonal number, given the decline from the March quarter. So just curious does that include any charges from the store closings? And are we seeing greater seasonality in the business than you guys thought? We had kind of in the past talked about business getting less seasonal, with more, the Acceptance Now kiosks. I just want to make sure I understand it and how it fits with how the seasonality of your business is changing.

I think your comments are spot-on in terms of it looking seasonal relative to prior years. I would tell you that the difference from last year to this year is to some extent, the seasonality has softened a little bit this first quarter compared to last, and that we normally get a lot of EPS and cash from payouts and early purchased option merchandise sales in the first quarter. This year's first quarter was not as significant, and so the delta or change between Q1 and Q2 might be a little bit different than what you've seen in prior years. John Rowan - Sidoti & Company: The implied EPS guidance range, that doesn't include charges related to store closing, does it? Or is that an operating number?

It's an operating number.

That's an operating number, John. And then I also add to Robert's comment, it's not too much seasonality in the second quarter as it is the way within our recurring revenue stream, what's happened over the last year is drives, what looked like seasonality in our business more than anything. If the second quarter we put on many more agreements or get more on the ticket than we currently forecast, than the third quarter look better than the second quarter not because the third quarter itself is a great seasonal quarter, but because we built up the portfolio more than we anticipated in the second quarter, so a lot of it is just you're seeing the ebbs and flows of the past 12 months in there too. John Rowan - Sidoti & Company: And then unrelated to guidance, I just want to understand kind of how you are seeing the early results from the virtual kiosk model. I know it's obviously early stages, but you did mention that your kiosk business, the manned kiosk business generates $40,000 per month per kiosk in revenue. And one of your peers made an acquisition, and the implied revenue per kiosk for them is way below that in the virtual model. Where do you think your virtual model falls out as far as revenue per month per kiosk?

Well, somewhere in between the numbers you just mentioned, because we don't think it will be, an unmanned kiosk can do as much as a manned kiosk. We think it will be better than the unmanned kiosks that are out there now, because it will soon include an unbanked consumer rather than just a banked consumer. So I think for those reasons, it will be somewhere in between. There's also an application of using the virtual software, John, in a manned kiosk, a hybrid, if you will that maybe allows us to take the labor down in the manned kiosk and end up at a hybrid operation, in that you don't need as much labor, because it speeds up the operation so much. But there maybe enough volume, in the most of our kiosks there is enough volume, where we'd want an employee there, at least during peak times. So I think the clear unmanned will be somewhere in between what you've seen in unmanned numbers out there from others and where we are in the manned. I think a hybrid model could even be better than our manned, just because it makes us more efficient. John Rowan - Sidoti & Company: Do you think that the hybrid model gets better acceptance from retailers. I mean, if you're having less people, you are taking up the square footage on the floors. I know that that's somewhat of a constraint to growth for you. Do you think you'll get another leg of growth and Acceptance Now because you're taking up less square footage?

I do think that, yes.

Your next question comes from Barry Haimes with Sage Asset Management.

Congrats on all the good strategic moves that you are making, it all makes sense. The one part I'm just struggling with a little bit is the minus 3.8% comp in the quarter, even not counting the 2.3% attributable to the merchandise sales. To sort of get from that minus 3.8% to flat, in effect you'd have to improve over a 125 basis points each quarter to get there. You talked about sort of a 30 bps sequential improvement fourth quarter to first. And it seems like the core customer -- sorry, its core business -- it seems like the core customer has some additional issues in terms of the food stamp change, the long-term unemployment insurance lapsing. So are you seeing some things in the core customer to give you that confidence that you can continue to see even bigger sequential improvement as we go through the balance of the year?

Well, certainly, the demand level that we had in the first quarter, while we were raising ticket and while we were reducing our inventory levels from the excess inventory we ended the year at, gives us a lot of confidence. Because when you can work through your old inventory, and raise your ticket and still see the demand that was coming in before that, it gives us confidence that the rest of the year, we are going to be able to do what we just said for the rest of the year. Another thing I throw out there, Barry, is the 150 stores we've closed are not as you would guess, not our top performers. So they come out of the comp. That's a little bit of help, nothing dramatic. It's not like that's the number one reason, but that gives us a little help. Not that the stores giving the accounts are in the comp, they are not. But the ones that come out are underperforming stores in the first place. So that helps a little bit as we go forward. But the positive things we're seeing and what we could accomplish in the first quarter, even though we're working through older inventory and changing the way we promote, gives us a lot of confidence going forward.

The next question comes from Budd Bugatch with Raymond James.

This is David. One more question on your full-year 2014 EPS guidance of $2.30 to $2.50. When you put out the release regarding the refinance of debt, you called out a total of $0.08 of impact to earnings for the year. I know $0.03 of that was the one-time charge and the other $0.05 was interest expense. And I'm just wondering if this guidance takes that remaining $0.05 impact into account or if that's still going to impact the full-year number?

Yes, I think if we missed it during the conversation earlier, the $2.30, $2.50 will be impacted by $0.05 in interest carry on the refinancing, but will also be benefited by the store consolidation. So those sort of offset each other and give them a $0.20 range. Management felt comfortable continuing with our current EPS guidance of $2.30 to $2.50.

The next question comes from William Reuter with Bank of America Merrill Lynch.

I apologize if I missed this, but I didn't hear any commentary regarding the affirmation of your free cash flow guidance of negative $65 million from, I guess the fourth quarter call. Is that still your expectation?

That is correct, William. We still have the same negative $65 million for free cash flow.

And then, is working capital a part of I guess, how large is the use of cash for working capital in that simple math?

Working capital is a byproduct of that calculation and we can follow-up specifically offline if we need to give you the breakdown of those component. But yes, working capital is a factor in that.

And then just my last question. I can't remember if you guys have historically provided what your maintenance CapEx as a portion of this year's $100 million?

I'm not sure we have disclosed that here recently. Historically, however, I will tell you that maintenance CapEx has been the primary component of our CapEx dollars, just given stores up for renewal the paint, and carpet, and things of that nature, replacing computers, et cetera. So we haven't given that breakdown specifically, but historically it's been primarily maintenance CapEx that's driven the number.

Your next question comes from John Baugh with Stifel.

Just a quick follow-up on the cash flow. You made a comment in the prepared remarks about $120 million of positive net cash in Q1. Is that the same calculation that relating to the negative $65 million for the year or are we talking about two different numbers?

We are talking about two different numbers. The $120 million is operating. The $65 million is free cash after investing. And giving the investing number is de minimus in terms of making acquisitions during the first quarter, that's normally the acquisitions or even PP&E investments. The majority of that number generally falls through to allow you to service your debt. And so that was really the big driver behind us being able to reduce our debt in Q1. However, the full-year forecast of $65 million is after investing, which will take into consideration the CapEx we just referred to.

One more when will we see the cash flow statement again?

It will be in the queue on Friday, if you are talking about the first quarter.

Your next question comes from James Ellman with Ascend Capital.

I was hoping you could comment on the Progressive acquisition by Aaron's. Just looking at their number of stores they are in and the type of stores they are in, could you comment on why is it they are in so many other classes of stores besides furniture versus Acceptance Now? And how have they been able to get into so many more stores than Acceptance Now?

Well, I think the virtual platform is easier to get into stores, because it doesn't take up any space. It just as you put it on somebody's computer and then you call it a location. And I think as far as getting into additional types of businesses outside of furniture or electronics, some of them would make sense to us, things like mattress stores or phone stores. But there is other stores that we wouldn't want that used product coming back in. I think Progressive has not been in a position to pick up any used product, if people aren't paying. I think when you look at the public numbers there that have been put out there in the last week or so you'll see that in the margins that I think it implies a pretty higher loss rate than what we're having. So we rather than have that higher loss rate, where the customer ends up keeping the product, we end up picking it up and running it back through our core business. So we have to be a little more careful to only do it with products that we can bring back in our core business. Now, having said all that, our virtual application that just started last week and this past week is going to allow us to get into a lot more stores. But probably still staying within the mainstream of our products, whether it's furniture, mattresses or phones and things like that. And I think just to add, James, a couple of comments here. We are obviously quite complemented by the fact that our number one competitor want to get into the same space that we are in through our manned kiosks, given our success. We've created value, the market is taking notice and imitation is the best form of flattery, so to speak. So we applaud them on that. We are also pleased that Progressive, which had previously been a private company, now we've got some information at our disposal that we can demonstrate through our potential partners in the future that our manned kiosk model is by far and away the most opportunistic for our retail partners to drive real value in their location. So there will be those that want the virtual platform, which is fine, which is why we spent a great deal of focus this last quarter on our virtual platform, which we have now launched. So we believe we have the mix of all options for our retail partners and look forward to growing this business in the future.

And Acceptance Now, just to be clear, is that an installment sale or is that a rental agreement?

It remains a rental transaction similar to our core business. It's just a new channel for us to reach a different customer.

Because when I look over the Acceptance Now website, I see a lot mentioned of ownership, but I don't see the word rental anywhere on the website or any discussion of being able to return the product.

I think the contract and the information out there is pretty clear, that it's a rental and not a sale. But certainly it's rent-to-own, so you can take ownership, and that is important to the customer to be able to own it. But it's clear in the contract and in our materials that it's a rent-to-own versus the straight rental.

And what about the keep rate, do you expect the keep rate to be different on Acceptance Now with a manned kiosk versus a virtual presence in a store?

We would expect them to be similar or even better. A lot of the virtual business is banked consumers versus unbanked, so it's a little higher. Again, we'll have unbanked, but the majority of it's going to be a banked consumer. So if that improves a little bit that the income level or the banking ability of the consumer should improve the keep rate even a little better, at least the same or better than what we give in the manned kiosk now.

There are no additional questions. I'd like to hand the call back to Mr. Robert Davis for any closing comments.

Thank you, Jay, and thank you all for joining us this morning. As we said on the opening comments, we're generally pleased with the quarter. We have a lot of activity going on and we are focused on continuing to progress throughout the year and drive value to all of our shareholders and all of our constituents. So thank you for joining us and we look forward to reporting back to you next quarter.

This concludes today's conference call. You may now disconnect.