View all news

Aaron Rents, Inc. Reports Third Quarter Results; Revenues Up 14%; Net Earnings Up 97%

10/25/2006

ATLANTA, Oct. 25 /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 and home appliances and accessories, today announced revenues and earnings for the three and nine months ended September 30, 2006.

For the third quarter of 2006, revenues increased 14% to $317.7 million compared to $278.7 million for the same period a year ago. Net earnings were $17.4 million versus $8.8 million for the third quarter last year, a 97% increase. Diluted earnings per share were $.32 compared to $.17 per share in 2005.

For the first nine months of this year, revenues advanced 19% to $986.7 million compared to $829.4 million for the same period of 2005. Net earnings for the nine months were up 37% to $59.6 million versus $43.4 million for the corresponding period last year. Diluted earnings per share for the first nine months were $1.13 for 2006 and $.85 for 2005.

"We are again pleased with our operating performance," said R. Charles Loudermilk, Sr., Chairman and Chief Executive Officer of Aaron Rents. "Our rapid store expansion continues as planned and we are on track to add approximately 350 stores, a combination of Company-operated and franchised stores, over the 18 month period ending on December 31, 2007. We look forward to the remainder of 2006 and 2007 with great optimism."

The Company's net earnings in the third quarter and nine months of 2005 were negatively affected by the loss of merchandise, damage to stores, and other costs resulting from Hurricanes Katrina and Rita.

The Aaron's Sales & Lease Ownership division increased its third quarter revenues 15% to $286.2 million compared to $249.2 million last year. First nine months sales and lease ownership revenues increased 20% to $890.7 million compared to $739.3 million a year ago.

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 6.9% during the third quarter of 2006 compared to the third quarter of 2005. Same store revenues also increased 4.0% for Aaron's Sales & Lease Ownership stores open over two years at the end of September 2006.

The Aaron's Corporate Furnishings division increased revenues 6% during the third quarter to $30.4 million compared to $28.7 million a year ago. Corporate furnishings revenues were up 7% for the nine months to $93.8 million compared to $87.4 million in 2005.

Consolidated rentals and fees increased 16% for the third quarter and 19% for the first nine months compared to the previous year. In addition, franchise royalties and fees increased 8% for the third quarter and 11% year- to-date. Non-retail sales, which are primarily sales of rental merchandise to Aaron's Sales & Lease Ownership franchisees, increased 13% to $49.4 million for the third quarter from $43.7 million in the comparable period in 2005, and 22% to $159.8 million for the first nine months compared to $131.5 million for the same period last year. The increases in the Company's franchise revenues and non-retail sales are the result of the increase in revenues of the Company's franchisees, who collectively had revenues of $118.4 million for the third quarter and $363.7 million for the first nine months of 2006, a 15% and 16% increase, respectively, over the comparable prior year periods. Revenues of franchisees, however, are not revenues of Aaron Rents, Inc.

Included in operating expenses was $907,000 for the third quarter and $2.8 million for the first nine months of expense resulting from the Company's adoption on January 1, 2006 of accounting for stock options as compensation expense under the guideline of Statement of Financial Accounting Standards No. 123R.

During the third quarter the Aaron's Sales & Lease Ownership division opened 13 new Company-operated stores, 16 new franchised stores and three RIMCO stores. In addition, during the quarter the Company acquired 11 franchised stores, four stores from independent rental operators, consolidated three stores, and purchased the accounts of four other third party stores.

For the first nine months of 2006 the Company opened 38 new Company- operated stores and 42 new franchised stores, four RIMCO stores, acquired 22 franchised stores, acquired seven stores from independent rental operators, and purchased the accounts from ten other third party operators that were then merged into Aaron's stores.

Through the three months and nine months ended September 30, the Company awarded area development agreements to open 17 and 25 additional franchised stores, respectively. At the end of September there were a total of 229 franchised stores awarded that will open over the next several years.

At September 30 the Aaron's Sales and Lease Ownership division had 791 Company-operated stores and 411 franchised stores, as well as 13 RIMCO stores. In addition, the Company operated 59 corporate furnishings stores. The total number of stores open at the end of September was 1,274.

At the end of September 2006 the Company had no borrowings under its $140 million revolving credit agreement and had $54.7 million of cash on hand.

"We expect in the fourth quarter of 2006 to record revenues in excess of $335 million and diluted earnings per share in the range of $.32 to $.36, and plan to add approximately 70 more stores," Mr. Loudermilk continued. "For the 2006 fiscal year we expect Company revenues in excess of $1.3 billion (excluding revenues of franchisees) and diluted earnings per share in the range of $1.45 to $1.49, which includes a $.06 per diluted share gain in the second quarter from the sale of our Puerto Rico stores. Our guidance for 2007 is to add approximately 250 more stores, a combination of Company-operated and franchised stores, and to achieve diluted earnings per share in the range of $1.55 to $1.65."

Aaron Rents will hold a conference call to discuss its quarterly financial results on Thursday, October 26, 2006, at 10:30 am Eastern Time. The public is invited to listen in to the conference call by webcast accessible through the Company's 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 1,280 Company- operated and franchised stores in 47 states and Canada 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 12 facilities in five 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 "Risk Factors" in the Company's Registration Statement on Form S-3, file number 333-133913, filed with the Securities and Exchange Commission on May 9, 2006, 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 future periods.

                      Aaron Rents, Inc. and Subsidiaries
                     Consolidated Statements of Earnings
                   (In thousands, except per share amounts)

                               (Unaudited)                    (Unaudited)
                               Three Months                   Nine Months
                                  Ended                          Ended
                               September 30,            September 30,

                              2006        2005            2006          2005
    Revenues:
     Rentals and Fees       $243,649   $210,951        $743,689      $626,722
     Retail Sales             14,330     14,442          49,432        43,799
     Non-Retail Sales         49,429     43,709         159,813       131,492
     Franchise Royalties
      and Fees                 8,322      7,627          24,770        22,119
     Other                     1,979      1,938           9,019         5,221
    Total                    317,709    278,667         986,723       829,353
    Costs and Expenses:
     Retail Cost of Sales      9,553      9,449          32,826        29,077
     Non-Retail Cost of
      Sales                   45,210     40,639         148,308       122,361
     Operating Expenses      143,601    136,003         430,375       377,236
     Depreciation of
     Rental Merchandise       89,806     76,727         273,408       226,231
      Interest                 1,914      2,343           7,860         5,680
    Total                    290,084    265,161         892,777       760,585

    Earnings Before Taxes     27,625     13,506          93,946        68,768

    Income Taxes              10,242      4,663          34,352        25,383

    Net Earnings             $17,383     $8,843         $59,594       $43,385

    Earnings Per Share          $.32       $.18           $1.15          $.87

    Earnings Per Share
     Assuming Dilution          $.32       $.17           $1.13          $.85

    Weighted Average
      Shares Outstanding      53,989     49,861          52,034        49,807

    Weighted Average
      Shares Outstanding
      Assuming Dilution       54,767     50,844          52,874        50,786



                         Selected Balance Sheet Data
                                (In thousands)

                                                   (Unaudited)
                                                   September 30,  December 31,
                                                       2006          2005

    Cash                                              $54,681         $6,973
    Accounts Receivable, Net                           41,341         42,812
    Rental Merchandise, Net                           554,097        550,932
    Property, Plant and
      Equipment, Net                                  143,961        133,759
    Other Assets, Net                                 153,053        124,039
    Total Assets                                      947,133        858,515

    Bank Debt                                               0         91,336
    Senior Notes                                       90,000        100,000
    Total Liabilities                                 361,052        424,044
    Shareholders' Equity                             $586,081       $434,471

SOURCE Aaron Rents, Inc.

CONTACT:
Gilbert L. Danielson,
Executive Vice President, Chief Financial Officer of Aaron Rents, Inc.
Web site: http://www.aaronrents.com
(RNT)

Multimedia Files:

Categories: Press Releases
View all news