ATLANTA, Oct. 28 /PRNewswire-FirstCall/ -- Aaron Rents, Inc. (NYSE: RNT),
the nation's leader in the sales and lease ownership, specialty retailing and
rental of residential and office furniture, consumer electronics, home
appliances and accessories, today announced record revenues and earnings for
the third quarter of 2004.
For the three months ended September 30, 2004 revenues increased 23% to
$231.6 million compared to $188.4 million for the third quarter of 2003. Net
earnings for the third quarter also increased 23% to $10.6 million versus
$8.7 million in 2003. Diluted earnings per share were $.21 compared to
$.17 per share last year.
For the first nine months of this year, revenues increased 26% to
$704.4 million compared to $557.4 million for the same period of 2003. Net
earnings for the nine months were $38.8 million versus $26.2 million for the
same period a year ago, a 48% increase. Diluted earnings per share for the
first nine months were $.77 for 2004 compared to $.53 in 2003.
"Once again we have delivered outstanding results consistent with past
results and expectations," said R. Charles Loudermilk, Sr., Chairman and Chief
Executive Officer of Aaron Rents. "Our Aaron's Sales & Lease Ownership
division continues to outperform all its competitors. We expect our rapid
expansion and the resulting increase in market penetration to continue in
upcoming periods."
Same store revenues (revenues earned in Company-operated stores open for
the entirety of both periods) in the Aaron's Sales & Lease Ownership division
increased 10.9% during the third quarter of 2004 compared to the third quarter
of 2003. Same store revenues also increased 7.4% for Aaron's Sales & Lease
Ownership stores open over two years at the end of September 2004.
Non-retail sales, which are primarily sales of rental merchandise to
franchisees, increased to $36.8 million for the third quarter from
$25.5 million for the quarter a year ago and to $118.6 million for the first
nine months compared to $81.9 million for the same period last year. Also,
included in the Company's other revenues is royalty income from franchisees,
which in 2004 increased to $4.5 million for the third quarter from
$3.5 million for the quarter a year ago and to $12.8 million for the first
nine months compared to $10.5 million for the nine month period last year.
The increases in non-retail sales and royalty income are attributable to an
increase in revenues of the Company's franchisees, who collectively had
revenues of $89.3 million during the third quarter and $261.5 million for the
nine months of 2004, 30% and 25% increases from the comparable prior year
periods, respectively. Revenues of franchisees, however, are not revenues of
Aaron Rents, Inc.
Also included in other revenues for the first nine months is a pre-tax
gain of $5.5 million, or $.07 per diluted share, realized in the second
quarter resulting from the previously announced disposition of the Company's
Rainbow Rentals, Inc. stock when Rainbow merged with Rent-A-Center, Inc. in
May.
For the third quarter the Aaron's Sales & Lease Ownership division
increased its revenues 27% to $204.3 million compared to $161.2 million last
year, and for the first nine months revenues were $617.2 million, a 30%
increase over the $473.4 million recorded a year ago.
During third quarter the Company awarded area development agreements to
open an additional 65 franchised stores. For the first nine months of this
year 146 additional franchised stores have been awarded to existing and new
franchise operators. At the end of September there were 314 franchised stores
in the pipeline scheduled to open over the next several years.
Also, during the quarter the Aaron's Sales & Lease Ownership division
opened 14 new Company-operated stores and 22 new franchised stores. For the
first nine months of the year a net of 85 Company-operated and 56 franchised
sales and lease ownership stores have been added, including the opening of
43 new Company-operated stores and 55 new franchised stores.
At September 30 the Aaron's Sales and Lease Ownership division operated
585 Company-operated stores and 343 franchised stores. In addition, the
Company had 59 rent-to-rent stores for a total of 987 stores, an increase of
17% in store count from the 847 stores open at the end of December 2003.
"Our guidance for 2004 remains unchanged, expecting Company revenues to
exceed $950 million for the year (excluding revenues of franchisees)," Mr.
Loudermilk continued. "For the fourth quarter of 2004 we expect diluted
earnings per share to be in the range of $.23 to $.26 per share with diluted
earnings per share for the full 2004 year in a range of $1.00 to $1.03. Our
guidance for 2005 is also unchanged, anticipating Company revenues in excess
of $1.1 billion and diluted earnings per share in the range of $1.13 to $1.20.
Our continuing goal is to increase our combined Company-operated and
franchised store base over the next several years in excess of 15% per year."
Aaron Rents will hold a conference call to discuss its quarterly financial
results on Friday, October 29, 2004, at 11:00 am Eastern Time. The public is
invited to listen in to the conference call by webcast accessible through the
Company's website, http://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 995 Company-
operated and franchised stores in 45 states, Canada, 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
2003, which discussion is incorporated herein by this reference. Statements
in this release that are "forward-looking" include without limitation Aaron
Rents' projected revenues, earnings, and store openings for 2004 and 2005.
Aaron Rents, Inc. and Subsidiaries
Consolidated Statements of Earnings
(In thousands, except per share amounts)
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
Revenues:
Rentals and Fees $173,721 $141,405 $516,318 $403,861
Retail Sales 13,651 15,672 42,700 54,318
Non-Retail Sales 36,831 25,499 118,602 81,926
Other 7,445 5,830 26,807 17,302
Total 231,648 188,406 704,427 557,407
Costs and Expenses:
Retail Cost of Sales 9,785 11,900 30,158 40,146
Non-Retail Cost of Sales 34,253 23,571 110,268 76,050
Operating Expenses 104,864 88,111 307,615 252,607
Depreciation of Rental
Merchandise 63,845 49,630 189,377 142,536
Interest 1,350 1,461 3,824 4,522
Total 214,097 174,673 641,242 515,861
Earnings Before Taxes 17,551 13,733 63,185 41,546
Income Taxes 6,904 5,082 24,336 15,386
Net Earnings $10,647 $8,651 $38,849 $26,160
Earnings Per Share $.21 $.18 $.78 $.53
Earnings Per Share
Assuming Dilution $.21 $.17 $.77 $.53
Weighted Average
Shares Outstanding (1) 49,711 49,077 49,557 48,905
Weighted Average
Shares Outstanding
Assuming Dilution (1) 50,681 50,136 50,500 49,728
(1) Shares outstanding adjusted for a 3-for-2 partial stock split
effective August 16, 2004.
Selected Balance Sheet Data
(In Thousands)
(Unaudited)
September 30, December 31,
2004 2003
Cash $150 $95
Accounts Receivable 32,561 30,878
Rental Merchandise, Net 405,784 343,013
Property, Plant and Equipment, Net 105,729 99,584
Other Assets, Net 95,683 81,722
Total Assets 639,907 555,292
Bank Debt 44,286 13,870
Senior Notes 50,000 50,000
Total Liabilities 278,949 235,106
Shareholders' Equity $360,958 $320,186
CONTACT:
Gilbert L. Danielson
Executive Vice President, Chief Financial Officer
Aaron Rents, Inc.
+1-404-231-0011 ext. 3314
Web site: http://www.aaronrents.com