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Aaron's, Inc. Reports Second Quarter 2016 Results

ATLANTA, July 29, 2016 /PRNewswire/ --

  • Total Revenues $789.4 Million
  • Net Earnings $38.5 Million; Diluted EPS $.53
  • Non-GAAP Diluted EPS $.59
  • Progressive Revenues Up 17%; Active Doors Up 19%
  • Updates 2016 Outlook

Aaron's, Inc. (NYSE: AAN), a leader in the sales and lease ownership and specialty retailing of furniture, consumer electronics, home appliances and accessories, today announced financial results for the three and six month periods ended June 30, 2016.

Aaron's logo. (PRNewsFoto/Aaron's, Inc.) (PRNewsFoto/AARON'S, INC.)

For the second quarter of 2016, revenues increased 2.6% to $789.4 million compared with $769.0 million for the second quarter of 2015. Net earnings decreased 5.0% to $38.5 million compared with $40.5 million in the prior year period. Diluted earnings per share were $.53 compared with $.56 per share a year ago. Non-GAAP diluted EPS were $.59 compared with $.61 last year. The results for the second quarter ended June 30, 2016 include the effects of a $2.3 million loss before income taxes at the Company's Dent-A-Med ("DAMI") segment, which was acquired in October 2015.

"We are pleased with our overall quarterly results and the progress we are making on our strategic objectives. Revenues increased, as compared to the second quarter of 2015, fueled by strong growth at Progressive," said John Robinson, President and Chief Executive Officer of Aaron's. "We achieved solid margins in the quarter, underscoring our commitment to profitably grow our business."

"Progressive had an exceptional quarter," continued Mr. Robinson. "Invoice volume and door growth each increased at double digit rates, and the EBITDA margin reached 14%, aided by strong lease portfolio performance. The team is executing well across all aspects of the business, and we believe the acceleration in door growth is a positive indicator of future revenue."

"A soft demand environment for the core business continued to impact lease activity, which was below our expectations," said Mr. Robinson. "In light of the core results, we're taking steps to further address our expense structure, including a thorough review of our store base. We are encouraged by stabilizing trends in comparable store revenues and merchandise write offs over the last few quarters. During the quarter, we also completed the sale of the assets of HomeSmart, which will enable us to sharpen our focus on the performance of our Aaron's store business."

"Our balance sheet remains strong. We ended the quarter with $242 million in available cash and net debt to capitalization of approximately 13%, which leaves us well positioned to invest in future growth and increase shareholder value," Mr. Robinson concluded.

Financial Summary

During the first six months of 2016, revenues increased 3.3% to $1.644 billion compared with $1.591 billion for the prior year period. Net earnings were $88.2 million versus $89.8 million last year. Diluted earnings per share were $1.20 compared with $1.23 per share a year ago. The results for the six months ended June 30, 2016 include the effects of a $5.2 million loss before income taxes at our DAMI segment. The effective tax rate for the comparable quarters ending on June 30 was 37.0% in both periods.

On a non-GAAP basis, net earnings for the first six months of 2016 were $95.3 million compared with $98.1 million for the same period in 2015 and diluted earnings per share were $1.30 compared with $1.35 in 2015. Non-GAAP net earnings and diluted earnings per share in 2016 exclude the effects of amortization expense resulting from the 2014 acquisition of Progressive, a gain on the sale of the Company's headquarters building, retirement and severance charges and loss resulting from the Company's previously announced disposition of the assets of its HomeSmart business. In 2015, non-GAAP results exclude the effects of Progressive amortization. See "Use of Non-GAAP Financial Information" and the related non-GAAP reconciliation accompanying this press release.

Adjusted EBITDA for the Company, which excludes the aforementioned other charges and adjustments, was $192.2 million for the six months ended June 30, 2016 compared with $193.5 million for the same period in 2015. Adjusted EBITDA is a non-GAAP measure that is calculated as the Company's earnings before interest, depreciation on property, plant and equipment, amortization of intangible assets, income taxes and other charges and adjustments.

Core Results

For the second quarter of 2016, overall revenues for the core business decreased 5.4% to $485.5 million from $513.1 million in the second quarter of 2015. Revenues for the first six months of 2016 decreased 5.1% to $1.028 billion compared with $1.083 billion for the same period a year ago. The core business is our traditional lease-to-own store-based business, and represents all of the operations of Aaron's, Inc., excluding Progressive and DAMI.

On May 13, 2016, the Company completed the sale of the assets of its HomeSmart division. Revenues for the HomeSmart business through May 13, 2016 were $7.5 million for the second quarter and $25.4 million for the year-to-date period through May 13, 2016, compared with $15.5 million and $32.3 million, respectively, for the three and six months ended June 30, 2015. Additionally, the Company recognized charges in connection with the sale totaling $5.6 million, of which $1.0 million were recognized during the second quarter. The charges recognized during the quarter primarily related to the write-down to fair value of certain HomeSmart assets that were not included in the May 13th disposition, but that are expected to be sold in the near future.

Revenues of the Aaron's Sales & Lease Ownership division decreased 4.1% in the second quarter of 2016 to $476.2 million compared with $496.7 million in the second quarter of 2015. This decline was driven by a 1.7% decrease in store revenues and a 15.1% decline in non-retail sales. Non-retail sales are primarily sales of merchandise to Aaron's Sales & Lease Ownership franchisees.

Earnings before income taxes for the core business were $34.3 million and $95.0 million for the three and six months ended June 30, 2016, respectively, compared with $41.0 million and $103.0 million for the same periods a year ago. Adjusted EBITDA for the core business in the three and six months ended June 30, 2016 was $47.5 million and $118.4 million, respectively, compared with $53.8 million and $129.2 million for the same periods a year ago. As a percentage of revenues, Adjusted EBITDA was 9.8% and 11.5% for the three and six months ended June 30, 2016, respectively, compared with 10.5% and 11.9% for the same periods in 2015. Write offs for damaged, lost or unsaleable merchandise were 3.7% of revenues in the quarter compared to 3.6% in the year ago period.

Same store revenues (revenues earned in Company-operated stores open for the entirety of both quarters) decreased 1.2% during the second quarter of 2016, compared with the second quarter of 2015, and customer count on a same store basis was down 0.6%. Company-operated Aaron's stores had 1,004,000 customers at June 30, 2016, a 1.1% decline from the end of the second quarter a year ago, excluding Homesmart customers for both periods.

Progressive Results

Progressive's revenues in the second quarter of 2016 increased 16.7% to $298.6 million from $255.9 million in the second quarter of 2015. Progressive's revenues for the first six months of 2016 increased 19.2% to $605.2 million from $507.6 million for the same period of 2015. Invoice volume per active door declined 3.6% as the segment experienced a 19% increase in the number of active doors in the quarter to 13,930, up from 11,749 last year. Progressive had 526,000 customers at June 30, 2016, an 11% increase from the second quarter a year ago.

Earnings before income taxes for the Progressive business were $29.1 million and $51.0 million for the three and six months ended June 30, 2016, respectively, compared with $23.3 million and $39.1 million for the same periods a year ago. EBITDA for the second quarter and first six months of 2016 were $41.8 million and $76.5 million, respectively, compared with $36.0 million and $64.3 million, for the same periods of 2015. As a percentage of revenues, EBITDA was 14.0% and 12.6%, respectively, for the second quarter and first six months of 2016 compared with 14.0% and 12.7% for the same periods in 2015. Write offs for damaged, lost or unsaleable merchandise were 4.5% of revenues in the second quarter compared to 6.1% in the same period of 2015.

DAMI Results

Revenues for DAMI were $5.3 million in the second quarter of 2016 and $10.1 million for the first six months of 2016. DAMI's loss before income taxes was $2.3 million for the quarter and $5.2 million for the six months ending June 30, 2016, in line with our expectations. Its pre-tax, pre-provision loss was $773,000 in the quarter and $2.0 million for the first six months of the year. Pre-tax, pre-provision loss is a non-GAAP measure that represents loss before income taxes adjusted so that loan charge-offs and recoveries are recognized in earnings as they occur by excluding the effect on earnings of changes to management's provision for estimated future loan losses. See "Use of Non-GAAP Financial Information" and the related non-GAAP reconciliation accompanying this press release for more information regarding the calculation of pre-tax, pre-provision loss.

Significant Components of Revenue

Consolidated lease revenues and fees for the second quarter and first six months of 2016 increased 4.3% and 5.5%, respectively, over the same prior year periods. In addition, franchise royalties and fees decreased 4.6% in the second quarter of 2016 and 4.4% for the first six months of 2016 compared to the same periods a year ago. The decrease in the Company's franchise royalties and fees are the result of a decrease in revenues of the Company's franchisees, which collectively had revenues of $228.1 million during the second quarter and $477.8 million during the first six months of 2016, a decrease of 3.8% and 4.0%, respectively, from the same periods last year. Same store revenues for franchised stores were up 0.4% and same store customer counts were up 1.4% for the second quarter of 2016 compared with the same quarter last year. Franchised stores had 560,000 customers at the end of the second quarter of 2016, a 3.3% decline from a year ago (revenues and customers of franchisees are not revenues and customers of Aaron's, Inc.). Non-retail sales, which are primarily sales of merchandise to Aaron's Sales & Lease Ownership franchisees, decreased 14.0% for the second quarter and decreased 15.8% for the first six months of 2016 compared with the prior-year periods.

Store Count

During the second quarter of 2016, three Company-operated Aaron's Sales & Lease Ownership stores, five franchised Aaron's Sales & Lease Ownership stores and one franchised HomeSmart store were consolidated or closed. The Company acquired one franchised store and sold 82 Company-operated HomeSmart stores.

At June 30, 2016, the Company had 1,221 Company-operated Aaron's Sales & Lease Ownership stores, 721 franchised Aaron's Sales & Lease Ownership stores, and one remaining franchised HomeSmart store. The total number of stores open at June 30, 2016 was 1,943.

2016 Outlook Update

The Company is updating its outlook for the 2016 year to reflect the sale of the assets of HomeSmart and current trends in the business. The Company currently expects to achieve the following:

Core Business

  • Total revenues of approximately $1.95 billion to $2.05 billion compared with the previous outlook of $2.05 billion to $2.15 billion;

  • Lease revenues for 2016 in the range of $1.50 billion to $1.60 billion compared with the previous outlook of $1.55 billion to $1.65 billion;

  • Quarterly same store revenues of approximately negative 3% to flat for the remainder of 2016;

  • Adjusted EBITDA in the range of $195 million to $215 million compared with the previous outlook of $210 million to $230 million;

Progressive

  • EBITDA in the range of $135 million to $145 million compared with the previous outlook of $125 million to $135 million;

Consolidated Results

  • Revenues for 2016 in the range of $3.15 billion to $3.35 billion compared with the previous outlook of $3.25 billion to $3.45 billion, excluding revenues of franchisees;

  • Adjusted EBITDA in the range of $325 million to $355 million compared with the previous outlook of $330 million to $360 million;

  • GAAP diluted earnings per share in the range of $1.92 to $2.12 compared with the previous outlook of $2.03 to $2.23; and

  • Non-GAAP diluted earnings per share in the range of $2.13 to $2.33 compared with the previous outlook of $2.20 to $2.40.

The above outlook does not include the impact of any store consolidations or closures resulting from the review of our store base.

Conference Call and Webcast

Aaron's will hold a conference call to discuss its quarterly financial results on Friday, July 29, 2016, at 8:30 a.m. Eastern Time. The public is invited to listen to the conference call by webcast accessible through the Company's Investor Relations website, investor.aarons.com. The webcast will be archived for playback at that same site.

About Aaron's, Inc.

Headquartered in Atlanta, Aaron's, Inc. (NYSE: AAN) is a leader in the sales and lease ownership and specialty retailing of furniture, consumer electronics, home appliances and accessories, and currently has more than 1,940 Company-operated and franchised stores in 47 states and Canada.  Progressive Leasing, a leading virtual lease-to-own company, provides lease-purchase solutions through approximately 17,000 retail locations in 46 states. Dent-A-Med, Inc. (DAMI), d/b/a the HELPcard®, provides a variety of second-look credit products that are originated through a federally insured bank.  Aaron's was founded in 1955, has been publicly traded since 1982 and owns the Aarons.com, ProgLeasing.com, and HELPcard.com brands. For more information, visit www.aarons.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this news release regarding Aaron's, Inc.'s business that are not historical facts are "forward-looking statements" that involve risks and uncertainties which could cause actual results to differ materially from those contained in the forward-looking statements. Such forward-looking statements generally can be identified by the use of forward-looking terminology, such as "may," "expect," "expectations," "forecast," "guidance," "intend," "believe," "could," "project," "estimate," "anticipate," "should" and similar terminology. These risks and uncertainties include factors such as changes in general economic conditions, competition, pricing, legal and regulatory proceedings, customer privacy, information security, customer demand, the integration of the  Dent-A-Med acquisition, the execution and results of our new strategy  and expense reduction initiatives, risks related to Progressive's "virtual" lease-to-own business, the outcome of Progressive's pilot or test programs with various retailers, and the other risks and uncertainties discussed under "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015 as updated in its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2016. Statements in this release that are "forward-looking" include without limitation: Aaron's projected results (including Progressive's results) for future periods, the statements in this press release under the heading 2016 Outlook Update,  statements on cash flow, cost and leverage reductions and strategic initiatives, expectations regarding our ability to invest in future growth, and expectations regarding shareholder value. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances after the date of this press release.

 


Aaron's, Inc. and Subsidiaries

Consolidated Statements of Earnings

(In thousands, except per share amounts)







(Unaudited)
 Three Months Ended

(Unaudited)
 Six Months Ended



June 30,

June 30,



2016

2015

2016

2015

Revenues:






Lease Revenues and Fees


$

688,677


$

660,472


$

1,430,288


$

1,355,754


Retail Sales


6,460


7,073


17,415


19,067


Non-Retail Sales


72,610


84,449


151,915


180,486


Franchise Royalties and Fees


14,772


15,491


31,067


32,495


Interest and Fees on Loans Receivable


5,302



10,065



Other


1,532


1,564


3,030


3,061


Total


789,353


769,049


1,643,780


1,590,863








Costs and Expenses:






Depreciation of Lease Merchandise


321,969


294,362


670,271


610,348


Retail Cost of Sales


3,892


4,849


10,957


12,553


Non-Retail Cost of Sales


63,984


76,463


135,369


163,315


Operating Expenses


330,601


325,555


679,025


653,475


Other Operating Expense (Income), Net


755


277


(5,974)


(1,183)


Total


721,201


701,506


1,489,648


1,438,508








Operating Profit


68,152


67,543


154,132


152,355


Interest Income


507


792


928


1,231


Interest Expense


(5,904)


(5,622)


(12,216)


(11,591)


Other Non-Operating (Expense) Income, Net


(1,631)


1,641


(1,992)


189


Earnings Before Income Taxes


61,124


64,354


140,852


142,184








Income Taxes


22,623


23,808


52,664


52,395








Net Earnings


$

38,501


$

40,546


$

88,188


$

89,789








Earnings Per Share


$

.53


$

.56


$

1.21


$

1.24


Earnings Per Share Assuming Dilution


$

.53


$

.56


$

1.20


$

1.23








Weighted Average Shares Outstanding


72,761


72,572


72,697


72,544


Weighted Average Shares Outstanding
Assuming Dilution


73,279


72,965


73,248


72,910


 

 

Selected Balance Sheet Data
(In thousands)






(Unaudited)




June 30, 2016


December 31, 2015 1








Cash and Cash Equivalents


$

242,239



$

14,942



Investments


20,863



22,226



Accounts Receivable, Net


84,091



113,439



Loans Receivable, Net


83,260



85,795



Lease Merchandise, Net


1,027,635



1,138,938



Property, Plant and Equipment, Net


214,623



225,836



Other Assets, Net


868,736



1,053,995









Total Assets


2,541,447



2,655,171









Debt


493,507



606,746



Total Liabilities


1,081,799



1,288,553









Shareholders' Equity


$

1,459,648



$

1,366,618




1 $3.7 million of capitalized deferred debt issuance costs were reclassified from Other Assets, Net to be a deduction from Debt as of December 31, 2015 to conform with the current period presentation upon adoption of ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs in the first quarter of 2016.

 

 

Selected Cash Flow Data

(In thousands)






(Unaudited)
 Six Months Ended



June 30,



2016


2015






Cash Provided by Operating Activities


324,339



219,347


Cash Provided/(Used) by Investing Activities


20,874



(20,046)


Cash (Used)/Provided by Financing Activities


(117,916)



(111,706)







Increase in Cash and Cash Equivalents


227,297



87,595


Cash and Cash Equivalents at Beginning of Period


14,942



3,549


Cash and Cash Equivalents at End of Period


$

242,239



$

91,144


 

 

Aaron's, Inc. and Subsidiaries

Quarterly Revenues by Component & Segment

(In thousands)

(Unaudited)


THREE MONTHS ENDED

June 30, 2016


Sales and
Lease
Ownership

Progressive

HomeSmart

DAMI

Franchise

Manufacturing

Other

Consolidated Total

Lease Revenues and Fees

$

382,705


$

298,574


$

7,398


$


$


$


$


$

688,677


Retail Sales

6,314



146






6,460


Non-Retail Sales

71,266






1,344



72,610


Franchise Royalties and
Fees





14,772




14,772


Manufacturing Revenue






20,246


(20,246)



Interest and Fees on
Loans Receivable




5,302





5,302


Other

1,179







353


1,532



$

461,464


$

298,574


$

7,544


$

5,302


$

14,772


$

21,590


$

(19,893)


$

789,353


 

 


THREE MONTHS ENDED

June 30, 2015


Sales and
Lease
Ownership

Progressive

HomeSmart

DAMI

Franchise

Manufacturing

Other

Consolidated Total

Lease Revenues and Fees

$

389,240


$

255,946


$

15,286


$


$


$


$


$

660,472


Retail Sales

6,817



256






7,073


Non-Retail Sales

83,913






536



84,449


Franchise Royalties and
Fees





15,491




15,491


Manufacturing Revenue






24,692


(24,692)



Interest and Fees on
Loans Receivable









Other

1,238



(1)





327


1,564



$

481,208


$

255,946


$

15,541


$


$

15,491


$

25,228


$

(24,365)


$

769,049


 

 


Aaron's, Inc. and Subsidiaries
Six Months Revenues by Component & Segment
(In thousands)

(Unaudited)


SIX MONTHS ENDED 
June 30, 2016


Sales and
Lease
Ownership

Progressive

HomeSmart

DAMI

Franchise

Manufacturing

Other

Consolidated Total

Lease Revenues and Fees

$

800,261


$

605,239


$

24,664


$


$


$


$

124


$

1,430,288


Retail Sales

16,687



728






17,415


Non-Retail Sales

149,450






2,465



151,915


Franchise Royalties and
Fees





31,067




31,067


Manufacturing Revenue






44,048


(44,048)



Interest and Fees on
Loans Receivable




10,065





10,065


Other

2,517







513


3,030



$

968,915


$

605,239


$

25,392


$

10,065


$

31,067


$

46,513


$

(43,411)


$

1,643,780


 

 

SIX MONTHS ENDED

June 30, 2015


Sales and
Lease
Ownership

Progressive

HomeSmart

DAMI

Franchise

Manufacturing

Other

Consolidated Total

Lease Revenues and Fees

$

816,732


$

507,565


$

31,457


$


$


$


$


$

1,355,754


Retail Sales

18,207



860






19,067


Non-Retail Sales

179,433






1,053



180,486


Franchise Royalties and
Fees





32,495




32,495


Manufacturing Revenue






52,981


(52,981)



Interest and Fees on
Loans Receivable









Other

2,367



(1)





695


3,061



$

1,016,739


$

507,565


$

32,316


$


$

32,495


$

54,034


$

(52,286)


$

1,590,863


 

Use of Non-GAAP Financial Information:

Non-GAAP net earnings, non-GAAP diluted earnings per share, EBITDA and Adjusted EBITDA are supplemental measures of our performance that are not calculated in accordance with generally accepted accounting principles in the United States ("GAAP"). Non-GAAP net earnings and non-GAAP diluted earnings per share for the second quarter of 2016 each exclude $6.6 million in Progressive-related intangible amortization expense and a $1.0 million loss related to the HomeSmart asset sale. For the first six months of 2016 Non-GAAP net earnings and non-GAAP diluted earnings per share exclude $13.2 million in Progressive-related intangible amortization expense, an $11.1 million gain from the sale of the Company's headquarters building, $3.7 million in retirement and severance charges and a $5.6 million loss related to the HomeSmart asset sale. Non-GAAP net earnings and non-GAAP diluted earnings per share for 2015 exclude $6.6 million and $13.2 million in Progressive-related intangible amortization expense for the second quarter and first six months of 2015, respectively.

The EBITDA and Adjusted EBITDA figures presented in this press release are calculated as the Company's earnings before interest, depreciation on property, plant and equipment, amortization of intangible assets and income taxes. Adjusted EBITDA also excludes the other adjustments described in the calculation of Non-GAAP net earnings above.

Management believes that Non-GAAP net earnings, non-GAAP diluted earnings per share, EBITDA and Adjusted EBITDA provide relevant and useful information, and are widely used by analysts, investors and competitors in our industry as well as by our management in assessing both consolidated and business unit performance.

Non-GAAP net earnings and non-GAAP diluted earnings provides us with an understanding of the results from the primary operations of our business by excluding the effects of certain items that generally arose from larger, one-time transactions that are not reflective of the ordinary earnings activity of our operations. This measure may be useful to an investor in evaluating the underlying operating performance of our business.

EBITDA and Adjusted EBITDA also provides us with an understanding of one aspect of earnings before the impact of investing and financing charges and income taxes. These measures may be useful to an investor in evaluating our operating performance and liquidity because the measures:

  • Are widely used by investors to measure a company's operating performance without regard to items excluded from the calculation of such measure, which can vary substantially from company to company depending upon accounting methods, book value of assets, capital structure and the method by which assets were acquired, among other factors.
  • Are a financial measurement that is used by rating agencies, lenders and other parties to evaluate our creditworthiness.
  • Are used by our management for various purposes, including as a measure of performance of our operating entities and as a basis for strategic planning and forecasting.

Finally, this press release presents pre-tax, pre-provision loss for DAMI, which is also a supplemental measure not calculated in accordance with GAAP. Management believes this measure is useful because it gives management and investors an additional, supplemental metric to assess DAMI's underlying operational performance for the period, particularly for periods in which we expect growth in DAMI's loan portfolio and corresponding growth in our provisioning for future loan losses. Management uses this measure as one of its bases for strategic planning and forecasting for DAMI.

Non-GAAP financial measures, however, should not be used as a substitute for, or considered superior to, measures of financial performance prepared in accordance with GAAP, such as the Company's GAAP basis net earnings and diluted earnings per share and the GAAP earnings before income taxes of the Company's segments, which are also presented in the press release. Further, we caution investors that amounts presented in accordance with our definitions of non-GAAP net earnings, non-GAAP diluted earnings per share, EBITDA, Adjusted EBITDA and pre-tax, pre-provision loss may not be comparable to similar measures disclosed by other companies, because not all companies and analysts calculate these measures in the same manner.

 

 

Reconciliation of Net Earnings and Earnings Per Share Assuming Dilution to Non-GAAP

Net Earnings and Earnings Per Share Assuming Dilution

(In thousands, except earnings per share)





(Unaudited)
 Three Months Ended

(Unaudited)
 Six Months Ended


June 30,

June 30,


2016

2015

2016

2015

Net Earnings

$

38,501


$

40,546


$

88,188


$

89,789


Add Progressive-Related Intangible Amortization Expense (1)(2)

4,150


4,150


8,249


8,320


Less Gain on Sale of Building (3)



(6,932)



Add Retirement and Severance Charges (4)



2,306



Add Loss on Sale of HomeSmart (5)

619



3,509



Non-GAAP Net Earnings

$

43,270


$

44,696


$

95,320


$

98,109







Earnings Per Share Assuming Dilution

$

.53


$

.56


$

1.20


$

1.23


Add Progressive-Related Intangible Amortization Expense (1)(2)

.05


.05


.11


.12


Less Gain on Sale of Building (3)



(.09)



Add Retirement and Severance Charges (4)



.03



Add Loss on Sale of HomeSmart (5)

.01



.05



Non-GAAP Earnings Per Share Assuming Dilution (6)

$

.59


$

.61


$

1.30


$

1.35


Weighted Average Shares Outstanding Assuming Dilution

73,279


72,965


73,248


72,910











(1)  Net of taxes of $2,438 and $4,926 for the three and six months ended June 30, 2016 calculated using the effective tax rate for the three and six months ended June 30, 2016.


(2)  Net of taxes of $2,437 and $4,855 for the three and six months ended June 30, 2015 calculated using the effective tax rate for the three and six months ended June 30, 2015.


(3)  Net of taxes of $4,139 for the six months ended June 30, 2016 calculated using the effective tax rate for the six months ended June 30, 2016.


(4)  Net of taxes of $1,377 for the six months ended June 30, 2016 calculated using the effective tax rate for the six months ended June 30, 2016.


(5)  Net of taxes of $363 and $2,096 for the three and six months ended June 30, 2016 calculated using the effective tax rate for the three and six months ended June 30, 2016.


(6)  In some cases the sum of individual EPS amounts may not equal total EPS calculations.


 

 

DAMI Pre-tax, Pre-provision Loss

(In thousands)





(Unaudited)
 Three Months Ended

(Unaudited)
 Six Months Ended


June 30,

June 30,


2016

2015

2016

2015

Loss Before Income Taxes

$

(2,280)


$


$

(5,162)


$


Add: Adjustment to Increase Allowance for Loan Losses
    During Period

1,507



3,159



Pre-tax, Pre-provision Loss

$

(773)


$


$

(2,003)


$


 

 

Aaron's, Inc. and Subsidiaries

Non-GAAP Financial Information

Quarterly Segment EBITDA

(In thousands)

(Unaudited)


Three Months Ended June 30, 2016


Sales and Lease Ownership

Progressive

HomeSmart

DAMI

Franchise

Manufacturing

Other1

Consolidated Total

Net Earnings

$


$


$


$


$


$


$


$

38,501


Income Taxes








22,623


Earnings (Loss)

Before Income Taxes

38,947


29,083


(694)


(2,280)


11,781


536


(16,249)


61,124


Interest Expense (Income)

2,067


5,090


73


988



2


(2,316)


5,904


Depreciation

7,156


990


198


101


297


318


3,964


13,024


Amortization

448


6,588


8


145





7,189


EBITDA

$

48,618


$

41,751


$

(415)


$

(1,046)


$

12,078


$

856


$

(14,601)


$

87,241


Loss on Sale of HomeSmart



982






982


Adjusted EBITDA

$

48,618


$

41,751


$

567


$

(1,046)


$

12,078


$

856


$

(14,601)


$

88,223


 

 

Three Months Ended June 30, 2015


Sales and
Lease
Ownership

Progressive

HomeSmart

DAMI

Franchise

Manufacturing

Other1

Consolidated Total

Net Earnings

$


$


$


$


$


$


$


$

40,546


Income Taxes








23,808


Earnings (Loss)

Before Income Taxes

40,690


23,314


48



11,993


376


(12,067)


64,354


Interest Expense (Income)

1,949


5,595


214




7


(2,143)


5,622


Depreciation

7,328


464


619



375


351


3,722


12,859


Amortization

363


6,587


3






6,953


EBITDA

$

50,330


$

35,960


$

884


$


$

12,368


$

734


$

(10,488)


$

89,788



1Other segment is primarily revenues attributable to (i) leasing space to unrelated third parties in the corporate headquarters building and (ii) several minor unrelated activities. The pre-tax losses or earnings in the Other segment are the net result of the activity mentioned above, net of the portion of corporate overhead not allocated to the reportable segments for management purposes.

 

 

Aaron's, Inc. and Subsidiaries

Non-GAAP Financial Information

Six Months Segment EBITDA

(In thousands)

(Unaudited)


Six Months Ended June 30, 2016


Sales and
Lease
Ownership

Progressive

HomeSmart

DAMI

Franchise

Manufacturing

Other1

Consolidated Total

Net Earnings

$


$


$


$


$


$


$


$

88,188


Income Taxes








52,664


Earnings (Loss)

Before Income Taxes

$

95,525


$

50,997


$

(3,653)


$

(5,162)


$

24,900


$

1,404


$

(23,159)


$

140,852


Interest Expense (Income)

3,994


10,292


294


1,985



2


(4,351)


12,216


Depreciation

14,331


2,065


810


203


610


660


7,935


26,614


Amortization

868


13,175


19


280





14,342


EBITDA

$

114,718


$

76,529


$

(2,530)


$

(2,694)


$

25,510


$

2,066


$

(19,575)


$

194,024


Gain on Sale of Building

$


$


$


$


$


$


$

(11,071)


$

(11,071)


Retirement Charges







3,683


3,683


Loss on Sale of
HomeSmart



5,605






5,605


Adjusted EBITDA

$

114,718


$

76,529


$

3,075


$

(2,694)


$

25,510


$

2,066


$

(26,963)


$

192,241




















Six Months Ended June 30, 2015


Sales and
Lease
Ownership

Progressive

HomeSmart

DAMI

Franchise

Manufacturing

Other1

Consolidated Total

Net Earnings

$


$


$


$


$


$


$


$

89,789


Income Taxes








52,395


Earnings (Loss)

Before Income Taxes

$

99,731


$

39,144


$

574


$


$

25,891


$

1,658


$

(24,814)


$

142,184


Interest Expense (Income)

3,881


11,064


454




17


(3,825)


11,591


Depreciation

15,037


918


1,247



741


733


7,165


25,841


Amortization

731


13,175


9






13,915


EBITDA

$

119,380


$

64,301


$

2,284


$


$

26,632


$

2,408


$

(21,474)


$

193,531



























1Other segment is primarily attributable to (i) leasing space to unrelated third parties in the corporate headquarters building and (ii) several minor unrelated activities. The pre-tax losses or earnings in the Other segment are the net result of the activity mentioned above, net of the portion of corporate overhead not allocated to the reportable segments for management purposes.

 

 

Reconciliation of 2016 Projected Outlook for EBITDA




Fiscal Year 2016


Aaron's Sales &
Lease Ownership

Progressive

Consolidated2

(in thousands)

Range

Range

Range

Estimated Net Earnings



140,000 - 157,000

Taxes1

80,000 - 93,000

Projected Earnings Before Taxes

145,000 - 165,000

84,000 - 94,000

220,000 - 250,000

Interest Expense (Income)

21,000

24,000

Depreciation

50,000

4,000

54,000

Amortization

2,000

26,000

29,000

Projected EBITDA

197,000 - 217,000

135,000 - 145,000

327,000 - 357,000

Projected Other Adjustments, Net

(2,000)

(2,000)

Projected Adjusted EBITDA

195,000 - 215,000

135,000 - 145,000

325,000 - 355,000







1 Taxes are calculated on a consolidated basis and are not identifiable by company divisions.

2 For the reconciliation above Consolidated data includes other divisions and is not the sum of Aaron's Sales & Lease Ownership and Progressive data.

 

 

Reconciliation of 2016 Projected Outlook for Earnings Per Share

Assuming Dilution to Non-GAAP Earnings Per Share Assuming Dilution



Fiscal Year 2016


Low Range

High Range

Projected Earnings Per Share Assuming Dilution

$

1.92


$

2.12


Add Projected Progressive-Related Intangible Amortization Expense

.23


.23


Less Sum of Other Adjustments

(.02)


(.02)


Projected Non-GAAP Earnings Per Share Assuming Dilution

$

2.13


$

2.33


 

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/aarons-inc-reports-second-quarter-2016-results-300306131.html

SOURCE Aaron's, Inc.

Aaron's, Inc., Garet Hayes, Director of Public Relations, 678.402.3000, or SCR Partners, Jeff Black, 615.760.3679, JBlack@scr-ir.com