Upbound Group (UPBD) risk factors, FY2024 10-K

Risks Relating to Economic Conditions

1. 01The success of our business is dependent on factors affecting consumer spending and payment behaviors that are not under our control

Risks Relating to Our Vendors, Suppliers and Products

1. 02Disruptions in our supply chain and other factors affecting the distribution of our merchandise could materially and adversely affect our business
2. 03Our arrangements with our suppliers and vendors may be materially and adversely affected by changes in our financial results or financial position or changes in consumer demand, which could materially and adversely affect our business
3. 04We rely on the receipt of information from third-party data vendors, and inaccuracies in or delays in receiving such information, or the termination of our relationships with such vendors, could have a material adverse effect on our business, operating results and financial condition
4. 05We must successfully manage our inventory to reflect customer demand and anticipate changing consumer preferences and leasing trends or our revenue and profitability could be materially and adversely affected
5. 06Allegations of or actual product safety and quality control issues, including product recalls, could harm our reputation, divert resources, reduce sales and increase costs

Risks Relating to Our Strategy and Operations

1. 07Our success depends on the effective implementation and continued execution of our strategies
2. 08If we are unable to successfully appeal to and engage with our target consumers and third-party retailers, our business and financial performance may be materially and adversely affected
3. 09We must maintain corporate brands that are recognized and trusted by consumers and third-party retailers
4. 10Our proprietary algorithms and customer decisioning tools used to approve customers are subject to unexpected changes in behavior caused by macroeconomic conditions, which could cause these tools to no longer be indicative of our customers’ ability to perform under their agreements with us
5. 11We may take advantage of merger and acquisition opportunities from time to time with the intent of advancing our key initiatives, but such activities may not prove successful and may subject us to additional risks
6. 12Failure to effectively manage our costs could have a material adverse effect on our profitability
7. 13Our strategy to grow the third-party retailer business depends on our ability to develop and offer robust virtual lease-to-own technology, including algorithmic decisioning programs and waterfall integrations
8. 14If we are unable to compete effectively within the growing e-commerce sector, our business and results of operations may be materially and adversely affected
9. 15Our operations are dependent on effective information management systems. Failure of our systems or those of our host retailers could negatively impact our business, financial condition and results of operations
10. 16Failure to achieve and maintain effective internal controls could have a material adverse effect on our business
11. 17The industries in which we operate are highly competitive, which could impede our ability to maintain lease volumes and pricing and have a material adverse effect on our operating results
12. 18We may be unable to retain key employees
13. 19If we are unable to attract, train and retain managerial personnel and hourly associates in our stores and staffed Acima locations, our reputation, sales and operating results may be materially and adversely affected
14. 20Acts of nature, whether due to climate change, pandemic or otherwise, can disrupt our operations and those of our third-party retailers
15. 21The risks associated with climate change and other environmental impacts and increased focus by stakeholders on environmental issues, including those associated with climate change, could adversely affect our business, financial condition and operating results
16. 22The success of our Franchising segment is dependent on the ability and success of our third-party franchisees, over which we have limited control
17. 23Our businesses are typically subject to seasonality, which causes our revenues and operating cash flows to fluctuate and may adversely affect our ability to borrow on our credit facilities, service our debt obligations and fund our operations
18. 24Our current insurance program may expose us to unexpected costs and negatively affect our financial performance
19. 25If we were not able to send or accept electronic payments, our business and financial results could be adversely affected
20. 26The integration and use of AI and similar technology in our business presents risks and challenges that could adversely affect our business, reputation, and results of operations
21. 27If our Brigit business’s present or any future key banking relationships are terminated and Brigit is not able to secure or successfully migrate client portfolios to a new bank partner or partners, Brigit’s business would be adversely affected

Risks Relating to Legal and Compliance Matters

1. 28We may be subject to legal or regulatory proceedings from time to time that result in damages, penalties or other material monetary obligations or material restrictions on our business operations, and our use of arbitration agreements may not allow us to avoid costly litigation
2. 29The outcome of the previously disclosed investigations by the CFPB, multi-state attorneys' general group and the New York Attorney General into certain of Acima’s business practices is uncertain and may materially and adversely affect our business
3. 30Our lease‑to‑own transactions are regulated by and subject to the requirements of federal and state laws and regulations that vary by jurisdiction, which require significant compliance costs and expose us to regulatory action or other litigation
4. 31Laws and regulations regarding information security and data collection, use and privacy are increasingly rigorous and subject to change, which may cause us to incur significant compliance costs and subject us to adverse impacts in the event of actual or alleged compliance failures
5. 32Our reputation, ability to do business and operating results may be impaired by improper conduct by any of our employees, agents or business partners, including third-party retailers
6. 33Disputes with or involving our franchisees may lead to litigation with our franchisees, which may materially and adversely affect our relationships with franchisees or our reputation, or cause us to incur significant expenses that materially and adversely affect our results of operations
7. 34We may face liability or reputational harm for the actions, omissions and liabilities of our franchisees, which could materially and adversely affect our results of operation
8. 35We may be unable to protect our intellectual property, or may be alleged to have infringed upon the intellectual property rights of others, which could result in a loss of our competitive advantage, a diversion of resources and a material adverse effect on our business and results of operations
9. 36invalid or unenforceable. Any litigation or claims relating to our intellectual property and proprietary information brought by or against us, whether with or without merit, or whether successful or not, could result in substantial costs and diversion of our resources, which could have a material adverse effect on us
10. 37The taxes applicable to our operations can be difficult to determine and are subject to change, and our failure to correctly calculate and pay such taxes could result in substantial tax liabilities and a material adverse effect on our results of operations
11. 38Brigit previously entered into a settlement with the FTC under which it continues to have ongoing compliance obligations, noncompliance with which could result in material regulatory enforcement
12. 39Our Brigit business is subject to extensive regulation and oversight in a variety of areas under federal, state and local laws
13. 40If our Brigit business was determined to be operating without having obtained necessary state or local licenses, registrations, or similar regulatory filings or approvals, it could adversely affect Brigit’s business, results of operations, financial condition, and future prospects
14. 41Brigit has also received inquiries from certain state regulatory agencies regarding requirements to obtain licenses from or register with those states, and Brigit may receive additional such inquiries in the future
15. 42Due to Brigit’s bank partnership model, Brigit is and will continue to be subject to third-party risk management obligations, its business model may need to be substantially altered and Brigit may not be able to continue to operate its business as it is currently operated

Risks Relating to Our Indebtedness and Other Financial Matters

1. 43We have significant indebtedness, and the level of our indebtedness could materially and adversely affect us
2. 44As of December 31, 2024, our total indebtedness was approximately $1.3 billion. We also had undrawn commitments available for borrowings of an additional $428.3 million under the ABL Credit Facility (after giving effect to approximately $46.7 million of outstanding letters of credit)
3. 45Restrictive covenants in certain of the agreements and instruments governing our indebtedness may materially and adversely affect our financial and operational flexibility
4. 46event of default that, if not cured or waived, could result in the acceleration of certain of our debt, which could have a material adverse effect on our business, financial condition and results of operations
5. 47Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly
6. 48A change in control could accelerate our obligation to pay our outstanding indebtedness, and we may not have sufficient liquid assets at that time to repay these amounts
7. 49Our organizational documents and our current or future debt instruments contain or may contain provisions that may prevent or deter another group from paying a premium over the market price to Upbound Group, Inc.’s stockholders to acquire its stock
8. 50If our goodwill or other intangible assets become impaired, we may be required to record a significant charge to earnings

Risks Relating to Our Structure or an Investment in Our Common Stock

1. 51We are a holding company and are dependent on the operations and funds of our subsidiaries
2. 52Our stock price is volatile, and you may not be able to recover your investment if our stock price declines
3. 53There can be no assurance as to the dividends that we may pay on our common stock or as to future stock repurchases
4. 54A lowering or withdrawal of the ratings assigned to Upbound Group, Inc.’s debt by rating agencies may increase our future borrowing costs and reduce our access to capital

Risks Relating to Our Acquisition of Brigit

1. 55We may be unable to realize the anticipated benefits of the Brigit acquisition, including synergies, and expect to incur substantial expenses related to the acquisition, which could have a material adverse effect on our business, financial condition and results of operations
2. 56We may be unable to retain key personnel hired as a result of the Brigit acquisition