As previously announced, on November 6, 2008 the Company consummated the
sale of substantially all of the assets of its Aaron's Corporate Furnishings
division. The Company no longer includes the revenues and expenses of the
Aaron's Corporate Furnishings division in its continuing operations, and now
reports the net earnings of the division as discontinued operations. Prior
periods are restated to reflect this change in accounting treatment.
For the fourth quarter of 2008, revenues increased 11% to $404.9 million
compared to $364.7 million for the fourth quarter in 2007. Net earnings were
$21.1 million versus $15.5 million last year. Diluted earnings per share were
$.39 compared to $.28 per share a year ago, a 39% increase. Diluted earnings
per share from continuing operations were $.39 versus $.26 for the fourth
quarter of 2007, up 50%.
For the year, revenues increased 14% to $1.593 billion compared to $1.395
billion for 2007. Net earnings were $90.2 million versus $80.3 million a year
ago. Diluted earnings per share were up 14% to $1.66 for 2008 compared to
$1.46 in 2007. Diluted earnings per share from continuing operations were
$1.58 versus $1.33 last year, a 19% increase.
"There is no question we are pleased and excited with these results," said
Robert C. Loudermilk, Jr., President and Chief Executive Officer of Aaron
Rents. "As we have experienced for quite some time, we continue to gain
revenues and customers even in this economic environment. As more people see
the availability of their credit diminish or disappear, we expect our business
will continue to be strong as we satisfy our customers' ongoing demand for
basic home furnishings."
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 6.2% during the fourth quarter of 2008 compared to the fourth
quarter of 2007. Same store revenues also increased 3.1% for Aaron's Sales &
Lease Ownership stores open over two years at the end of December 2008. The
Company had 740,000 corporate customers and 363,000 franchise customers at the
end of the year, a 19% increase in total customers over the number at the end
of 2007 (customers of our franchisees, however, are not customers of Aaron
Rents, Inc). The customer count on a same store basis for Company-operated
stores was up 12% in the fourth quarter compared to the same quarter last
year.
The Company recorded no significant gains from the sale of stores in the
fourth quarter of 2008. The Company's other revenues in the fourth quarter of
2007 included a $1.9 million gain from the sale of Company-operated stores.
The Company realized a total of $8.5 million and $2.7 million in gains
recorded in other revenues during fiscal 2008 and 2007, respectively, relating
to store sales as well as a $4.9 million gain from the sale of a parking deck
at the Company's corporate headquarters in the 2007 first quarter.
Division Results
The Aaron's Sales & Lease Ownership division increased its revenues in the
fourth quarter of 2008 to $398.8 million, an 11% increase over the $358.6
million in revenues in the fourth quarter of 2007. For the year, division
revenues were $1.569 billion, a 15% increase over the $1.366 billion recorded
last year.
The net earnings from discontinued operations for the fourth quarter of
2008 were $69,000, compared to net earnings of $1.1 million in the prior year.
Included in the earnings for the fourth quarter 2008 was a pre-tax gain of
$1.2 million from the sale of the Aaron's Corporate Furnishings division. For
the fiscal year, discontinued operations had net earnings of $4.4 million
compared to $6.9 million for the 2007 year.
Components of Revenue
Consolidated rentals and fees increased 10% for the fourth quarter and 13%
for the year. Franchise royalties and fees increased 15% in the fourth
quarter and 16% for the year. Non-retail sales, which are primarily sales of
rental merchandise to Aaron's Sales & Lease Ownership franchisees, increased
14% for the quarter compared to the fourth quarter last year and 18% for the
year. The increases in the Company's franchise revenues and the shipments of
non-retail sales are the result of an increase in revenues of the Company's
franchisees, who collectively had revenues of $171.8 million during the fourth
quarter and $665.5 million for the 2008 year, both 19% increases over the
comparable 2007 periods. Same store revenues for franchised stores were up
13.8% for the quarter compared to the same quarter last year. Revenues of
franchisees, however, are not revenues of Aaron Rents, Inc.
Store Count
During the fourth quarter of 2008 the Aaron's Sales & Lease Ownership
division opened 26 new Company-operated stores and 30 new franchised stores.
It also acquired the accounts of 18 stores, purchased one store, and sold 11
stores in transactions with several competitors. In addition, the Company
acquired 35 franchised stores during the quarter and opened three new Aaron's
Office Furniture stores.
The sale of the 47 Aaron's Corporate Furnishings stores, the merging of 20
RIMCO stores into Aaron's Sales & Lease Ownership stores, and the closure of
seven Company-operated stores and two franchised stores reduced total store
count by 76 stores in the fourth quarter.
For the 2008 year, the Company opened 49 new Company-operated stores and
68 new franchised stores. After the numerous acquisitions, sales, and other
realignments described above, the Company's total net systemwide store count
from its continuing operations increased 2.9% for the year.
During the fourth quarter and fiscal year the Company awarded area
development agreements to open 24 and 149 additional franchised stores,
respectively. At the end of December 2008 there were 282 franchised stores
awarded that are expected to be opened over the next several years.
At December 31, 2008 the Aaron's Sales & Lease Ownership division
accounted for 1,027 Company-operated stores, 495 franchised stores, 10
Company-operated RIMCO stores, and nine franchised RIMCO stores. The Company
also had 16 Aaron's Office Furniture stores. The total number of stores open
at the end of 2008 was 1,557.
First Quarter and Full Year 2009 Outlook
The Company has updated its guidance for 2009 and expects to achieve the
following:
-- First quarter revenues (excluding revenues of franchisees) in excess of
$445 million.
-- First quarter diluted earnings per share in the range of $.49 to $.54
per share, excluding any significant store or asset sales.
-- Fiscal year revenues (excluding revenues of franchisees) of
approximately $1.75 billion.
-- Fiscal year diluted earnings per share in the range of $1.72 to $1.87,
an increase over the previous guidance of $1.70 to $1.85 per diluted share.
-- As previously announced, anticipate new store growth of approximately
5% to 9% over the store base at the end of 2008, for the most part an equal
mix between Company-operated and franchised stores. This will be a net store
growth after any opportunistic merging or disposition of stores.
-- The Company will continue as warranted to consolidate or sell stores
not meeting performance goals.
-- The Company also plans to continue to acquire franchised stores,
convert independent operator's stores to Aaron's franchised stores, or sell
Company-operated stores to franchisees as opportunities present themselves.
Conference Call
Aaron Rents will hold a conference call to discuss its quarterly financial
results on Tuesday, February 17, 2009, 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 1,557
Company-operated and franchised stores in 48 states and Canada. The Company's
MacTavish Furniture Industries division manufactured approximately $69 million
at cost of furniture and bedding at 12 facilities in five states in 2008. 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 that 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 Twelve Months Ended
December 31, December 31,
2008 2007 2008 2007
Revenues:
Rentals and Fees $293,165 $265,550 $1,178,719 $1,045,804
Retail Sales 10,824 8,808 43,187 34,591
Non-Retail Sales 87,146 76,537 309,326 261,584
Franchise Royalties and
Fees 11,965 10,406 45,025 38,803
Other 1,794 3,361 16,351 14,157
Total 404,894 364,662 1,592,608 1,394,939
Costs and Expenses:
Retail Cost of Sales 6,540 5,363 26,379 21,201
Non-Retail Cost of
Sales 80,136 70,400 283,358 239,755
Operating Expenses 176,565 165,605 705,566 617,106
Depreciation of Rental
Merchandise 106,307 97,928 429,907 391,538
Interest 1,225 2,259 7,818 7,587
Total 370,773 341,555 1,453,028 1,277,187
Earnings from
Continuing
Operations
Before Taxes 34,121 23,107 139,580 117,752
Income Taxes 13,111 8,753 53,811 44,327
Net Earnings from
Continuing
Operations 21,010 14,354 85,769 73,425
Earnings from
Discontinued
Operations, Net of Tax 69 1,138 4,420 6,850
Net Earnings $21,079 $15,492 $90,189 $80,275
Earnings Per Share:
From Continuing
Operations $.39 $.27 $1.61 $1.35
From Discontinued
Operations .00 .02 .08 .13
Total $.39 $.29 $1.69 $1.48
Earnings Per Share
Assuming Dilution:
From Continuing
Operations $.39 $.26 $1.58 $1.33
From Discontinued
Operations .00 .02 .08 .13
Total $.39 $.28 $1.66 $1.46
Weighted Average Shares
Outstanding 53,526 54,084 53,409 54,163
Weighted Average Shares
Outstanding Assuming
Dilution 54,236 54,791 54,189 55,082
Selected Balance Sheet Data
(In thousands)
(Unaudited and Preliminary)
December 31, December 31,
2008 2007
Cash $7,376 $4,790
Accounts Receivable, Net 59,375 46,294
Rental Merchandise, Net 679,572 558,322
Property, Plant and Equipment, Net 224,431 243,447
Other Assets, Net 263,384 182,947
Assets of Discontinued Operations - 77,376
Total Assets 1,234,138 1,113,176
Bank Debt 35,000 82,884
Senior Notes 58,000 80,000
Total Liabilities 472,594 439,796
Shareholders' Equity $761,544 $673,380
SOURCE Aaron Rents, Inc.
http://www.aaronrents.com/