Rent-A-Center stays on track for leverage goal despite share buybacks

By Devika Patel

Knoxville, Tenn., Dec. 3 – Rent-A-Center Inc. plans to keep its long-term leverage target at 1.5x, despite its plans to spend up to $500 million of cash on share buybacks, increase the dividend and keep funding the business’ growth.

The company authorized up to $500 million of common stock repurchases, according to a Thursday press release. This follows $250 million of share repurchases completed in August.

The board of directors also approved an approximately 10% increase in the quarterly cash dividend to $0.34 for the first quarter of 2022, Thursday’s release stated.

“We didn’t change our long-term leverage targets [when authorizing the repurchases and dividend increase],” executive vice president and chief financial officer Maureen Short said at the 2021 Stephens Annual Investment Conference in Nashville on Friday.

“We still expect to be around 1.5x long-term,” she said.

The repurchases and dividend increase won’t affect the company’s growth.

“We should have plenty of liquidity and cash flow to fund our [business],” Short said,

“So, we’ll fund it through balance sheet, cash flow, cash on the balance sheet.

“We don’t think that that hurts our growth opportunities,” she said.

“We’re growth first, but there is a lot of cash flow and the position of our balance sheet, we’re able to grow and do those kinds of returns to shareholders,” chief executive officer Mitchell Fadel said at the conference

Rent-A-Center is a Plano, Tex.-based omni-channel lease-to-own provider for the credit constrained customer.

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