ATLANTA, April 27, 2005 /PRNewswire-FirstCall via COMTEX/ -- 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 and home
appliances and accessories, today announced record revenues and earnings for
the first quarter of 2005.
For the three months ended March 31, revenues increased 15% to
$279.3 million compared to $242.5 million for the first quarter in 2004. Net
earnings increased 44% to $18.4 million versus $12.8 million a year ago.
Diluted earnings per share were $.36 compared to $.26 per share last year.
"These results exceeded our expectations and are a great start to what we
feel will be another record year for the Company," said R. Charles Loudermilk,
Sr., Chairman and Chief Executive Officer of Aaron Rents. "All aspects of our
business showed strong growth during the quarter, and based upon these results
we are raising our profit forecast for the remainder of the year."
The Aaron's Sales & Lease Ownership division increased its revenues 16% to
$248.7 million compared to $214.5 million last year. 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 8.3% during
the first quarter of 2005 compared to the first quarter of 2004. Same store
revenues also increased 4.9% for Aaron's Sales & Lease Ownership stores open
over two years at the end of March 2005.
Rentals and fees for the quarter increased 21% and franchise royalties and
fees increased 22%. These revenue increases were offset by a slight decline
in sales, most significantly non-retail sales to Aaron's Sales & Lease
Ownership franchisees. Non-retail sales are low margin sales to franchisees
of rental merchandise from the Company's fulfillment centers, and vary from
quarter to quarter based upon product demand and availability.
The increase in the Company's franchise revenues is the result of an
increase in revenues of the Company's franchisees, who collectively had
revenues of $108.3 million during the first quarter of 2005, a 24% increase
over the comparable prior year period. Revenues of franchisees, however, are
not revenues of Aaron Rents, Inc.
During the first quarter the Aaron's Sales & Lease Ownership division
opened 22 new Company-operated stores and 12 new franchised stores. In
addition, during the quarter the Company acquired eight franchised stores,
acquired one store from an independent rental operator, and acquired the
accounts from five other third party stores, with one of the account purchases
being sold to one of the Company's franchisees.
During 2005 the Company awarded area development agreements to open
29 additional franchised stores. At the end of March there were 316 franchise
stores awarded that are expected to open over the next several years.
At March 31 the Aaron's Sales and Lease Ownership division operated
646 Company-operated stores and 361 franchise stores. In addition, the
Company had 58 rent-to-rent stores.
During the quarter the Company's bank debt declined from $45.5 million at
December 31, 2004 to $13.9 million at March 31, 2005. The Company has Board
authorization to purchase 2,670,502 of Aaron Rents common shares.
"Our guidance for the second quarter of 2005 is to expect revenues in
excess of $270 million and diluted earnings per share in the range of $.30 to
$.32, compared to $.24 per share, excluding a one time gain, in the second
quarter of 2004," Mr. Loudermilk continued. "For the entire 2005 year we are
raising our earnings guidance and expect Company revenues in excess of
$1.1 billion (excluding revenues of franchisees) and diluted earnings per
share in the range of $1.20 to $1.25. Our new store opening plans remain as
planned, increasing our store count between 15% and 20% per year over the next
several years."
Diluted earnings per share for the second quarter and fiscal year of 2004
included a $.07 per share gain from the disposition of the Company's Rainbow
Rentals, Inc. stock when Rainbow merged with Rent-A-Center, Inc. in May, 2004.
"At current stock price levels and based upon our future outlook, we also
plan to reinitiate our stock buyback program," said Mr. Loudermilk.
Aaron Rents will hold a conference call to discuss its quarterly financial
results on Wednesday, April 27, 2005, at 4:30 pm 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 1,065 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
2004, which discussion is incorporated herein by this reference. Statements
in this release that are "forward-looking" include without limitation Aaron
Rents' projected revenues, earnings, store openings, and stock repurchase
program.
Aaron Rents, Inc. and Subsidiaries
Consolidated Statements of Earnings
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
2005 2004
Revenues:
Rentals and Fees $209,145 $172,372
Retail Sales 16,043 16,471
Non-Retail Sales 45,571 46,499
Franchise Royalties and Fees 7,191 5,916
Other 1,398 1,235
Total 279,348 242,493
Costs and Expenses:
Retail Cost of Sales 10,736 11,710
Non-Retail Cost of Sales 42,633 43,306
Operating Expenses 119,631 102,093
Depreciation of Rental Merchandise 75,130 63,470
Interest 1,600 1,208
Total 249,730 221,787
Earnings Before Taxes 29,618 20,706
Income Taxes 11,196 7,889
Net Earnings $18,422 $12,817
Earnings Per Share $.37 $.26
Earnings Per Share Assuming Dilution $.36 $.26
Weighted Average Shares Outstanding (1) 49,767 49,324
Weighted Average Shares Outstanding
Assuming Dilution (1) 50,747 50,259
(1) Shares outstanding adjusted for a 3-for-2 partial stock split
effective August 16, 2004.
Selected Balance Sheet Data
(In Thousands)
(Unaudited)
March 31, December 31,
2005 2004
Cash $4,473 $5,865
Accounts Receivable, Net 36,774 32,736
Rental Merchandise, Net 437,716 425,567
Property, Plant and Equipment, Net 114,725 111,118
Other Assets, Net 115,577 125,002
Total Assets 709,265 700,288
Bank Debt 13,916 45,528
Senior Notes 50,000 50,000
Total Liabilities 315,962 325,110
Shareholders' Equity $393,303 $375,178
SOURCE Aaron Rents, Inc.
Gilbert L. Danielson
Executive Vice President
Chief Financial Officer of Aaron
Rents, Inc.
+1-404-231-0011, ext. 3334