Same Store Revenues Up 11.3%; Earnings Up 31%; Announces More AcquisitionsATLANTA, Jul 29, 2003 /PRNewswire-FirstCall via COMTEX/ -- Aaron Rents, Inc. (NYSE: RNT),
the nation's leader in the rental, sales and lease ownership, and specialty
retailing of residential and office furniture, consumer electronics and home
appliances and accessories, today announced record revenues and earnings for
the second quarter and first half of 2003.
The Company's major division, Aaron's Sales & Lease Ownership, increased
revenues 25% for the second quarter and 28% for the first half of the year.
The division's same store revenue growth for the second quarter was 11.3%.
"We continue to meet our performance expectations," said R. Charles
Loudermilk, Sr., Chairman and Chief Executive Officer of Aaron Rents, Inc.
"The growth within the Aaron's Sales & Lease Ownership division has been
exceptional and we see further strong results in upcoming quarters."
For the three months ended June 30, revenues increased 18% to a record
$177.7 million compared to $151.2 million for the second quarter of 2002. Net
earnings for the second quarter this year increased 31% to $8.8 million versus
$6.7 million last year. Diluted earnings per share for the quarter were $.40
compared to $.32 per share for the second quarter a year ago.
For the first six months of this year, revenues advanced 20% to a record
$369.0 million compared to $307.8 million for the first half of 2002. Net
earnings for the six months were $17.5 million versus $12.6 million for the
corresponding period. Diluted earnings per share for the first half were
$.80 for 2003 and $.62 for 2002.
Systemwide revenues for the Company, which includes gross revenues of
franchised stores, advanced 17% to $243.0 million for the quarter versus
$208.0 million a year ago. For the six-month period systemwide revenues were
$502.4 million, up 19% from the $423.3 million last year. Systemwide revenues
is a non-GAAP financial measurement calculated by adding Company revenues
determined in accordance with GAAP to the revenues of the Company's
franchisees and subtracting the Company's royalty revenues. Franchisee
revenues, however, are not revenues of Aaron Rents, Inc. A schedule
reconciling Company revenues to systemwide revenues appears below.
Same store revenues (revenues earned in Company-operated stores opened for
the entirety of both periods) in the Aaron's Sales & Lease Ownership division
increased 11.3% during the second quarter of 2003. Same store revenues
increased 6.0% for stores open over two years in both the second quarter of
2003 and 2002.
The Aaron's Sales & Lease Ownership division increased its second quarter
revenues 25% to $150.3 million versus $120.1 million for the second quarter
last year. Systemwide revenues for this division rose 22% to $215.5 million
versus $177.0 million compared to the second quarter a year ago. First half
sales and lease ownership revenues increased 28% to $312.2 million compared to
$243.4 million last year, and systemwide revenues for the division advanced
24% to $445.6 million compared to $358.9 million for the first half of last
year. A schedule reconciling Aaron's Sales & Lease Ownership revenues to the
division's systemwide revenues also appears below.
The Aaron's Sales & Lease Ownership division increased its store count
during the second quarter by 21 stores, 12 Company-operated stores and nine
franchised stores, bringing the total of stores open at June 30 to 686. At
the end of June the Company also had 66 rent-to-rent stores open
The Company's Sight & Sound stores, acquired in 2002, negatively affected
earnings in the second quarter by approximately $.04 per diluted share and
$.11 per diluted share for the first six months of the year. Currently the
Company is operating 12 Sight & Sound stores.
On July 2 the Company announced the purchase of 37 rental stores in three
different transactions. Of the 37 stores acquired, 19 have become new Aaron's
Sales & Lease Ownership stores with the remaining 18 stores merged into
existing Aaron's locations. In addition, ten more rental stores in Ohio were
purchased as of today from Showplace, Inc. The Company will merge five of
these stores into existing Aaron's locations. All of the acquisitions were
asset purchases for cash.
"We continue to actively look for opportunistic acquisitions to compliment
the opening of our Company-operated and franchised stores," Mr. Loudermilk
continued. "In addition to seeking the acquisition of independent rental
stores, we also anticipate purchasing up to 50 of our better performing
franchise stores within the next several months, assuming there are willing
sellers. All franchise store acquisitions are expected to be accretive to
earnings."
A 3-for-2 stock split effected in the form of a 50% stock dividend on both
Common Stock (RNT) and Class A Common Stock (RNT.A) was announced by the
Company on July 21. New shares will be distributed on August 15, 2003 to
shareholders of record as of the close of business on August 1, 2003. The
accompanying table presents the second quarter results as if the split
occurred prior to this date.
"We are revising our guidance for 2003, expecting revenues during the year
in excess of $750 million with systemwide revenues exceeding $1 billion," Mr.
Loudermilk added. "We plan to aggressively open stores, opening at least 30
Company-operated and 50 franchised Aaron's Sales & Lease Ownership stores
during the current year. On a pre-split basis for the third quarter of 2003
we expect diluted earnings per share to be in the range of $.38 to $.40 per
share with earnings per share for the full 2003 year in a range of $1.60 to
$1.65 per diluted share. Our initial outlook for 2004 is achieving diluted
earnings per share, on a pre-split basis, between $1.85 to $1.95. We are
obviously very positive on the future for the Company."
Estimated 2003 systemwide revenues includes the Company's estimated
revenues, other than approximately $14 million to $15 million in royalties,
plus anticipated revenues of franchisees of approximately $265 million to over
$285 million.
Aaron Rents will hold a conference call to discuss its quarterly financial
results on Wednesday, July 30, 2003, at 10:00 am Eastern Time. The public is
invited to listen in to the conference call by webcast accessible through our
website, www.aaronrents.com, in the "Investor Relations" section. The webcast
will be archived for playback at that same site.
Aaron Rents, Inc. based in Atlanta, currently has more than 775
Company-operated and franchised stores across the United States and Puerto
Rico for the rental and sale of residential and office furniture, accessories,
consumer electronics and household appliances. The Company also manufactures
furniture, bedding and accessories at 10 facilities in four states.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: Statements in this news release regarding Aaron Rents, Inc.'s
business which 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. These
risks and uncertainties include factors such as changes in general economic
conditions, competition, pricing, customer demand and other issues, and the
risks and uncertainties discussed under "Certain Factors Affecting Forward
Looking Statements" in the Company's Annual Report on Form 10-K for fiscal
2002, which discussion is incorporated herein by this reference.
Aaron Rents, Inc. and Subsidiaries
Consolidated Statements of Earnings
(In thousands, except per share amounts)
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
Revenues:
Rentals and Fees $131,419 $113,643 $262,456 $226,145
Retail Sales 15,608 14,150 38,646 31,165
Non-Retail Sales 24,870 18,801 56,427 41,264
Other 5,844 4,568 11,472 9,251
Total 177,741 151,162 369,001 307,825
Costs and Expenses:
Retail Cost
of Sales 11,391 10,388 28,246 22,766
Non-Retail
Cost of Sales 23,077 17,348 52,479 38,176
Operating Expenses 81,377 71,654 164,496 144,788
Depreciation
of Rental
Merchandise 46,517 40,036 92,906 79,736
Interest 1,473 1,070 3,061 2,236
Total 163,835 140,496 341,188 287,702
Earnings Before
Taxes 13,906 10,666 27,813 20,123
Income Taxes 5,145 3,970 10,304 7,506
Net Earnings $ 8,761 $ 6,696 $ 17,509 $ 12,617
Earnings Per
Share $ .40 $ .33 $ .81 $ .63
Earnings Per
Share Assuming
Dilution $ .40 $ .32 $ .80 $ .62
Weighted Average
Shares
Outstanding 21,708 20,353 21,697 20,134
Weighted Average
Shares Outstanding
Assuming
Dilution 22,057 20,761 22,000 20,489
Aaron Rents, Inc. and Subsidiaries
Selected Balance Sheet Data
(In Thousands)
(Unaudited)
June 30, December 31,
2003 2002
Cash $ 10,458 $ 96
Accounts Receivable 24,814 26,973
Rental Merchandise, Net 313,775 317,287
Property, Plant and
Equipment, Net 90,496 87,094
Total Assets 494,626 483,648
Bank Debt 7,325
Senior Notes 50,000 50,000
Total Liabilities 195,079 203,103
Shareholders' Equity $299,547 $280,545
Aaron Rents, Inc. and Subsidiaries
Earnings Per Share Pro Forma Presentation (1)
(In thousands, except per share amounts)
(Unaudited) (Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2003 2002 2003 2003
Net Earnings $8,761 $6,696 $17,509 $12,617
Earnings Per Share $.27 $.22 $.54 $.42
Earnings Per Share
Assuming Dilution $.26 $.22 $.53 $.41
Weighted Average
Shares
Outstanding 32,562 30,530 32,545 30,201
Weighted Average
Shares
Outstanding Assuming
Dilution 33,085 31,142 33,000 30,734
(1) Pro forma presentation gives prior-period effect to the 3-for-2
partial stock split effective August 15, 2003.
Aaron Rents, Inc. and Subsidiaries
Reconciliation of Company Revenues to Non-GAAP Systemwide Revenues
(In thousands, except per share amounts)
(Unaudited) (Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2003 2002 2003 2003
Total Company
Revenues $177,741 $151,162 $369,001 $307,825
Royalty Revenues (3,433) (2,993) (7,023) (6,079)
Franchisees' Revenues 68,660 59,864 140,460 121,585
Systemwide Revenues $242,968 $208,033 $502,438 $423,331
Sales & Lease
Ownership Revenues $150,297 $120,100 $312,195 $243,395
Sales & Lease Ownership
Royalty Revenues (3,433) (2,993) (7,023) (6,079)
Sales & Lease Ownership
Franchisees'
Revenues 68,660 59,864 140,460 121,585
Sales & Lease Ownership
Systemwide
Revenues $215,524 $176,971 $445,632 $358,901
SOURCE Aaron Rents, Inc.
Gilbert L. Danielson, Executive Vice President, Chief Financial
Officer of Aaron Rents, Inc., +1-678-402-3334
http://www.aaronrents.com