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)