ATLANTA, July 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 and home
appliances and accessories, today announced revenues and earnings for the
three months ended June 30, 2008.
For the second quarter of 2008, revenues rose 15% to $411.2 million
compared to $359.0 million for the second quarter of 2007. Net earnings were
$23.3 million versus $19.7 million for the same period a year ago, an 18%
increase. Diluted earnings per share were up 19% to $.43 compared to $.36 per
share last year.
For the first six months of this year, revenues were up 14% to $848.5
million compared to $746.9 million for the first six months of 2007. Net
earnings for the first half of 2008 were $48.0 million versus $48.9 million
for the corresponding period last year. Diluted earnings per share for the
first six months were $.89 for both 2008 and 2007.
Included in the Company's other revenues in the second quarter of 2008 was
a $3.4 million gain from the sale of four Company-operated stores to a
franchisee and the rental accounts of three stores to a third party operator.
Excluding this gain, net earnings on a non-GAAP basis for the second quarter
of 2008 would have been $21.2 million, or $.39 per diluted share. The
Company also recorded a $2.3 million gain included in other revenues in the
first quarter of 2008 relating to the sale of Company-operated stores to
franchisees. Included in the Company's other revenues in the first six months
of 2007 was a $4.9 million gain from the sale in last year's first quarter of
a parking deck at the Company's corporate headquarters. See the attached
table for a reconciliation of revenues, net earnings, and diluted earnings per
share to non-GAAP revenues, earnings, and diluted earnings per share excluding
the aforementioned asset sales.
"We feel our second quarter results are exceptional," said R. Charles
Loudermilk, Sr., Chairman of Aaron Rents. "The Company continues to grow and
we are pleased that we service the large market of credit-constrained
consumers who need and desire our products and services even in these
difficult economic times."
"Our goal is to continue to grow the business and at the same time
increase profitability," added Robert C. Loudermilk, Jr., President and Chief
Executive Officer of Aaron Rents. "In the second quarter we saw an improvement
in same store revenues, collection efforts and overall store level execution,
and our profitability exceeded expectations. Earnings for the quarter were
positively impacted by better performance even with the start-up expenses
associated with the opening of new stores negatively impacting results by
approximately $.06 per diluted share."
Aaron's Sales & Lease Ownership division second quarter revenues increased
16% to $381.4 million compared to $327.6 million last year. First six months
sales and lease ownership revenues also increased 16% to $787.7 million
compared to the $678.8 million of 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 4.1% during the second quarter of 2008 compared to the same quarter
a year ago.
Consolidated rentals and fees for the second quarter and first half
advanced 14% and 13% over the comparable previous year periods, respectively.
In addition, franchise royalties and fees were up 13% for the second quarter
and 12% year-to-date. Non-retail sales, which are primarily sales of rental
merchandise to Aaron's Sales & Lease Ownership franchisees, increased to $66.1
million for the second quarter from $56.7 million in the comparable period in
2007 and to $151.5 million for the first six months compared to $126.9 million
for the first six months last year. The increases in the Company's franchise
revenues and the shipments of non-retail sales are the result of the increase
in revenues of the Company's franchisees, who collectively had revenues of
$160.3 million during the second quarter and $327.7 million for the first six
months of 2008, an 18% and 15% increase, respectively, over the prior year
periods. Same store revenues for franchised stores were up 16.1% for the
second quarter compared to the same quarter last year. Revenues of
franchisees, however, are not revenues of Aaron Rents, Inc.
During the second quarter the Aaron's Sales & Lease Ownership division
opened six new Company-operated stores, 14 new franchised stores, one Company-
operated RIMCO store and one franchised RIMCO store. The division also closed
nine Company-operated and four franchised stores during the quarter, merging
their operations with other existing stores. In addition, the Company
acquired 17 franchised stores, acquired one store and the rental accounts of
six other stores from unrelated rental companies, sold four Company-operated
stores to a franchisee, and sold the rental accounts of three other stores to
another rental operator. The Company also closed two corporate furnishings
stores during the quarter.
Through the three months and six months ended June 30, the Company awarded
area development agreements to open 29 and 79 additional franchised stores,
respectively. At the end of June there were a total of 285 franchised stores
awarded that are expected to open over the next several years.
At June 30, 2008 the Aaron's Sales & Lease Ownership division had 993
Company-operated stores, 480 franchised stores, 30 Company-operated RIMCO
stores, and seven franchised RIMCO stores. In addition, the Company operated
60 corporate furnishings stores.
"During the first six months of 2008 we have continued to open new stores
but also have bought and sold numerous stores in transactions with franchisees
as well as closing a total of 29 Company-operated and seven franchised stores,
merging their operations with other stores. These actions were done to
improve profitability and we will continue to evaluate the need for additional
mergers and realignments throughout the year," Mr. Loudermilk, Jr. continued.
"As a result of these realignment efforts, we anticipate that we will now
open approximately 55 to 65 new Company-operated stores and 55 to 65 new
franchised stores this year, a somewhat smaller number than previously
forecasted. Our guidance for the third quarter of 2008 is to expect revenues
in excess of $405 million and diluted earnings per share in the range of $.32
to $.37. For the entire 2008 year we continue to expect Company revenues of
approximately $1.7 billion (excluding revenues of franchisees) and are raising
our previous diluted earnings per share range of guidance of $1.40 to $1.55
for the year to $1.54 to $1.64, primarily due to the improving trends in our
performance and market opportunity. We anticipate a 10% to 13% overall store
square footage growth in 2009."
Aaron Rents will hold a conference call to discuss its quarterly financial
results on Wednesday, July 23, 2008, at 10:30 am Eastern Time. The public is
invited to listen 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 1,570
Company-operated and franchised stores in 48 states and Canada. The Company's
MacTavish Furniture Industries division manufactured in 2007 approximately $73
million at cost of furniture, bedding and accessories at 12 facilities in five
states. The entire production of MacTavish is for shipment to Aaron Rents
stores.
"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) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenues:
Rentals and Fees $315,679 $277,927 $635,517 $563,724
Retail Sales 13,246 12,514 30,395 28,140
Non-Retail Sales 66,072 56,654 151,489 126,907
Franchise Royalties
and Fees 10,894 9,602 21,933 19,516
Other 5,300 2,288 9,188 8,632
Total 411,191 358,985 848,522 746,919
Costs and Expenses:
Retail Cost of Sales 8,774 8,484 19,796 18,791
Non-Retail Cost of
Sales 60,574 52,130 138,470 116,260
Operating Expenses 190,897 163,737 382,899 325,414
Depreciation of
Rental Merchandise 110,902 101,063 224,499 204,114
Interest 2,375 1,896 4,810 3,785
Total 373,522 327,310 770,474 668,364
Earnings Before Taxes 37,669 31,675 78,048 78,555
Income Taxes 14,390 12,018 30,016 29,691
Net Earnings $23,279 $19,657 $48,032 $48,864
Earnings Per Share $.44 $.36 $.90 $.90
Earnings Per Share
Assuming Dilution $.43 $.36 $.89 $.89
Weighted Average
Shares Outstanding 53,262 54,191 53,377 54,176
Weighted Average
Shares Outstanding
Assuming Dilution 54,076 55,065 54,062 55,046
Selected Balance Sheet Data
(In Thousands)
(Unaudited)
June 30, December 31,
2008 2007
Cash $5,990 $5,249
Accounts Receivable, Net 49,543 52,025
Rental Merchandise, Net 687,745 623,452
Property, Plant and
Equipment, Net 241,046 247,038
Other Assets, Net 206,659 185,412
Total Assets 1,190,983 1,113,176
Bank Debt 109,786 82,884
Senior Notes 80,000 80,000
Total Liabilities 476,013 439,796
Shareholders' Equity $714,970 $673,380
Reconciliation of Revenues, Net Earnings and Earnings per Share
Excluding Asset Sales of Stores and Parking Deck
(In thousands, except per share amounts)
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Total Revenues $411,191 $358,985 $848,522 $746,919
Less Revenues from
Store Asset Sales 3,427 - 5,750 -
Less Revenues from
Parking Deck Sale - - - 4,878
Revenues Excluding
Sales 407,764 358,985 842,772 742,041
Net Earnings 23,279 19,657 48,032 48,864
Less Gain from Store
Asset Sales 2,118 - 3,539 -
Less Gain from
Parking Deck Sale - - - 3,034
Net Earnings
Excluding Gain
From Sales $21,161 $19,657 $44,493 $45,830
Earnings Per Share
Excluding Gain
from Sales $.40 $.36 $.83 $.85
Earnings Per Share
Assuming Dilution
Excluding Gain
from Sales $.39 $.36 $.82 $.83
Weighted Average
Shares Outstanding 53,262 54,191 53,377 54,176
Weighted Average
Shares Outstanding
Assuming Dilution 54,076 55,065 54,062 55,046
SOURCE Aaron Rents, Inc: 07/22/2008
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)