Business Context and Reporting Period
This Form 8-K is a current report filed by Rent-A-Center, Inc. on May 1, 2017. The filing addresses corporate events occurring on this date, specifically regarding debt covenant compliance and the release of financial results for the quarter ended March 31, 2017.
Key Financial Metrics
The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. It references a press release (Exhibit 99.1) containing earnings information and EBITDA (a non-GAAP measure) for the quarter ended March 31, 2017, but the specific figures are not included in the body of this report.
Material Changes and Events
- Covenant Waiver: On May 1, 2017, the Company entered into a Third Amendment and Waiver with JPMorgan Chase Bank, N.A., and other lenders.
- Covenant Breach: The waiver permits the Company to exceed required fixed charge coverage ratio and total leverage ratio covenants for the quarter ending March 31, 2017.
- Financial Reporting: The Company furnished results of operations and financial condition for the quarter ended March 31, 2017, via an attached press release.
Guidance, Outlook, and Risks
The filing notes that EBITDA is a critical metric for evaluating the Company's compliance with financial covenants under its senior credit facilities and indentures governing its 6.625% senior unsecured notes due November 2020 and 4.75% senior unsecured notes due May 2021. Management considers EBITDA useful for investors but emphasizes it is supplemental to GAAP financial information. The necessity of the waiver indicates a risk of covenant non-compliance for the reported period.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release) for specific Q1 2017 revenue, earnings, and EBITDA figures.
- Examine Exhibit 10.1 (Third Amendment and Waiver) for details on the specific covenant breaches and any new terms imposed by lenders.
- Verify the Company's current status regarding the fixed charge coverage ratio and total leverage ratio post-waiver.
- Assess the impact of the covenant waiver on the Company's ability to access future credit facilities.