ATLANTA, April 22 /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 revenues and earnings for the
three months ended March 31, 2008.
For the first quarter of 2008, revenues increased 13% to $437.3 million
compared to $387.9 million for the same quarter a year ago. Net earnings were
$24.8 million versus $29.2 million last year. Diluted earnings per share were
$.46 compared to $.53 per diluted share in the first quarter of 2007.
Included in the Company's other revenues in the first quarter of 2007 was
a $4.9 million gain from the sale of a parking deck at the Company's corporate
headquarters. Excluding this gain, net earnings on a non-GAAP basis for the
first quarter of 2007 would have been $26.2 million or $.48 per diluted share.
"We are pleased that the first quarter exceeded our earnings
expectations," said R. Charles Loudermilk, Sr., Chairman and Chief Executive
Officer of Aaron Rents. "As previously announced we have slowed down our new
store expansion plan in 2008 to concentrate on achieving better execution and
improving overall profitability, and we believe the earnings results are
evidence that we have started to see some positive results from this plan.
Earnings in the quarter were negatively affected by start-up costs of
approximately $.09 per diluted share associated with the rapid expansion of
our store base throughout 2007."
"Our franchised stores once again outperformed Company-operated stores in
same store revenue growth and collection efforts, however, we are pleased that
we are making progress with our Company store level execution," Mr. Loudermilk
added. "Net write-offs in the quarter at the Company-operated stores were
lower as a percentage of revenue compared to the several previous quarters."
For the first quarter, the Aaron's Sales & Lease Ownership division
increased its revenues 16% to $406.3 million compared to $351.2 million for
the first quarter last year. Same store rental revenues (rental revenues
earned in Company-operated stores open for the entirety of both periods) in
the Aaron's Sales & Lease Ownership division increased 2.6% during the first
quarter of 2008 compared to the first quarter of 2007.
Consolidated rentals and fees increased 12% and franchise royalties and
fees increased 11% during the first quarter of 2008 compared to the same
period in 2007. Non-retail sales, which are primarily sales of merchandise to
Aaron's Sales & Lease Ownership franchisees, increased 22% for the quarter
compared to the first quarter of last year. The increases in the Company's
franchise revenues and non-retail sales are the result of an increase in
revenues of the Company's franchisees, who collectively had revenues of $167.4
million during the first quarter of 2008, a 13% increase over the 2007
quarter. Same store revenues for franchised stores were up 13% for the first
quarter compared to the same quarter last year. Revenues of franchisees,
however, are not revenues of Aaron Rents, Inc.
During the first quarter the Aaron's Sales & Lease Ownership division
opened 14 new Company-operated stores, eight new franchised stores, two
Company-operated RIMCO stores and two franchised RIMCO stores. The division
also closed 20 Company-operated and three franchised stores during the
quarter, merging their operations with other stores. In addition, the Company
acquired 13 franchised stores and sold 11 Company-operated stores to
franchisees. Also, during the quarter two new corporate furnishings stores
were opened and two stores were closed.
The Company recorded a $2.3 million gain in the first quarter of 2008
relating to the sales of the Company-operated stores to franchisees. Included
in operating expenses was $1.6 million for future lease obligations and other
expenses related to the store closings.
Area development agreements were awarded during the quarter to open 50
additional franchised stores. At the end of March there were 300 franchised
stores awarded that are expected to open over the next several years.
At March 31, 2008 the Aaron's Sales & Lease Ownership division had 983
Company-operated stores, 483 franchised stores, 29 Company-operated RIMCO
stores and six franchised RIMCO stores. The Company also had 62 corporate
furnishings stores.
The Company generated over $30 million of cash flow from operations during
the first quarter and bought 387,545 shares of its Common Stock. There are
currently 3,920,413 shares remaining under the Company's Board repurchase
authorization.
"Our plans to open less than 75 new Company-operated and between 70 and 90
new franchised stores during 2008 are unchanged. Overall store count
increased only slightly during the first quarter primarily due to closing and
merging some stores not meeting our profit goals, and we will continue to do
additional mergers and realignments throughout the year as deemed appropriate
to improve profitability," Mr. Loudermilk continued. "Our guidance for the
second quarter of 2008 is to expect revenues in excess of $405 million and
diluted earnings per share in the range of $.34 to $.39. For the entire 2008
year expectations remain to achieve Company revenues of approximately $1.7
billion (excluding revenues of franchisees) and diluted earnings per share in
the range of $1.40 to $1.55."
Aaron Rents will hold a conference call to discuss its quarterly financial
results on Wednesday, April 23, 2008, 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 1,565
Company-operated and franchised stores in 48 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 Annual
Report on Form 10-K for the fiscal year ended December 31, 2007. 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)
Three Months Ended
March 31,
2008 2007
Revenues:
Rentals and Fees $319,838 $285,797
Retail Sales 17,149 15,626
Non-Retail Sales 85,417 70,253
Franchise Royalties and Fees 11,039 9,914
Other 3,888 6,344
Total 437,331 387,934
Costs and Expenses:
Retail Cost of Sales 11,022 10,307
Non-Retail Cost of Sales 77,896 64,130
Operating Expenses 192,002 161,677
Depreciation of Rental Merchandise 113,597 103,051
Interest 2,435 1,889
Total 396,952 341,054
Earnings Before Taxes 40,379 46,880
Income Taxes 15,626 17,673
Net Earnings $24,753 $29,207
Earnings Per Share $.46 $.54
Earnings Per Share Assuming Dilution $.46 $.53
Weighted Average Shares Outstanding 53,492 54,161
Weighted Average Shares Outstanding
Assuming Dilution 54,156 54,992
Selected Balance Sheet Data
(In Thousands)
(Unaudited)
March 31, December 31,
2008 2007
Cash $7,092 $5,249
Accounts Receivable 53,189 52,025
Rental Merchandise, Net 657,274 623,452
Property, Plant and Equipment, Net 246,690 247,038
Other Assets, Net 186,757 185,412
Total Assets 1,151,002 1,113,176
Bank Debt 80,000 82,884
Senior Notes 80,000 80,000
Total Liabilities 459,845 439,796
Shareholders' Equity $691,157 $673,380
Reconciliation of Revenues and Earnings
Excluding Asset Sale of Parking Deck
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2008 2007
Total Revenues $437,331 $387,934
Less Revenues from Asset Sale - 4,878
Revenues Excluding Asset Sale 437,331 383,056
Net Earnings 24,753 29,207
Less Gain from Asset Sale - 3,034
Net Earnings Excluding Gain From Asset Sale $24,753 $26,173
SOURCE: Aaron Rents, Inc. 04/22/2008
CONTACT: Gilbert L. Danielson, Executive Vice President, Chief Financial
Officer of Aaron Rents, Inc., +1-404-231-0011
Web site: http://www.aaronrents.com
(RNT)