RAC reports revenue gain of 11.7% in 2Q
By Furniture Today Staff -- Furniture Today, August 5, 2002
PLANO, Texas — PLANO, Texas — Gains in same-store performance and the contributions of newly opened or acquired stores lifted Rent-A-Center to an 11.7% revenue increase and a sharp rise in earnings in the second quarter.
Net earnings of $38 million were up 69.1% from the same quarter last year on revenues of $494.7 million. Just under a third of the rent-to-own major's business is from furniture and accessories.
Excluding one-time charges of $2 million to settle class-action gender discrimination lawsuits and $2.9 million for the early retirement of debt, net earnings were $44.9 million or $1.22 per share, a 62.9% gain, the company said.
Mark Speese, chairman and chief executive officer, said the improved performance shows the success of steps the company has taken to build revenues and control costs, and "speaks to the opportunities inherent in the industry for continued growth."
Same-store revenues were up 6.6% for the quarter, representing about a 1.5% increase in customers and a 5% hike in pricing, largely because of a change in product mix, the company said.
Rent-A-Center also added a net 51 stores in the quarter, opening 16, acquiring 38 and consolidating three locations into existing stores. It also purchased the accounts of 40 other stores. Since the quarter ended, it has added a net of three stores and now operates 2,338. It also is a franchiser of another 327 RTO stores through its ColorTyme subsidiary.
The one-time charge for the lawsuit settlement involves some previously reported claims of gender discrimination in employment, which the company said it is taking steps to prevent.
Rent-A-Center also strengthened its balance sheet in the quarter by prepaying $128 million in debt. Since the end of the quarter it has reduced debt by another $11 million and has repurchased about $12 million worth of its common stock, said Robert Davis, chief financial officer.
| Quarter ended 6/30 | 2002 | 2001 | Change |
|---|---|---|---|
| Revenues (a) | $494,660,000 | $442,759,000 | 11.7% |
| Operating income (b) | 89,162,000 | 74,036,000 | 20.4% |
| Net income (c) | 38,045,000 | 22,492,000 | 69.1% |
| Earnings per share (d) | 1.14 | 0.74 | 54.1% |
| 6 months ended 6/30 | 2002 | 2001 | Change |
| Revenues (a) | $993,270,000 | $882,461,000 | 12.6% |
| Operating income (b) | 178,178,000 | 143,789,000 | 23.9% |
| Net income (c) | 76,616,000 | 43,165,000 | 77.5% |
| Earnings per share (d) | 2.34 | 1.43 | 63.6% |
| (a) Includes non-rental revenues of $38.5 million in the 2002 quarter, $33.7 million in the 2001 quarter, $93.4 million in the 2002 six months and $80.3 million in the 2001 six months. (b) Revenues minus direct store expenses, franchise operation expenses and general and administrative expenses. (c) After preferred dividends of $3.9 million in the 2002 quarter, $5.1 million in the 2001 quarter, $8.9 million in the 2002 six months and $9.4 million in the 2001 six months. The 2002 periods also include a $2.9 million pretax non-recurring finance charge. (d) Based on average shares outstanding of 36.7 million in the 2002 quarter, 37.2 million in the 2001 quarter, 36.5 million in the 2002 six months and 36.8 million in the 2001 six months. | |||
