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Aaron Rents earnings increase 46.5% in 1Q

By Furniture Today Staff -- Furniture Today, May 2, 2004

ATLANTA — ATLANTA— Aaron Rents posted stellar results in the first quarter, with revenues rising 26.8% and earnings surging 46.5% from the same period a year earlier.

Growth in the Aaron's Sales and Lease Ownership rent-to-own division continued to drive the gains, with a 33% revenue increase and a 13.7% same-store gain.

"Our first-quarter results were better than expected and we are raising our revenue and earnings forecasts for the remainder of the year," said Charlie Loudermilk, chairman and CEO. For the year, the company now expects revenues to rise more than 24%, topping $950 million, with earnings coming in at $1.48 to $1.53 per share, compared with $1.10 in 2003.

In the quarter, revenues came to $242.5 million and earnings were $12.8 million, or 38 cents per share.

At the end of the quarter, Aaron's had 518 company-owned RTO stores and 50 rent-to-rent stores, and 312 RTO stores operated by Sales and Lease Ownership franchisees. Systemwide, first-quarter revenues for the Sales and Lease Ownership division were $293.6 million, up 28%.

Aaron's added 18 company-owned stores and 25 franchise units in the first quarter. It also sold franchises for 55 more stores in the quarter, bringing to 266 the number set to open in the future.

The company also opened its 12th distribution center, in Magnolia, Miss., and signed a lease for a 13th, in Indianapolis. It is looking for sites for distribution centers in New England, California and the Pacific Northwest to accommodate growth.

Gil Danielson, Aaron's chief financial officer, said the rent-to-rent business, long a laggard compared with Aaron's growing RTO division, appeared to have turned a corner financially. It posted $6.5 million in pretax profit last year and should exceed that this year, he said.

Aaron Rents
Earnings per share are fully diluted.
Quarter ended 3/31	2004	2003	Change
Revenues (a)	$242,493,000	$191,260,000	26.8%
Operating income (b)	21,914,000	15,495,000	41.4%
Net income	12,817,000	8,748,000	46.5%
Earnings per share (c)	0.38	0.27	40.7%
(a) Includes non-rental revenues of $70.1 million in the 2004 quarter and $60.2 million in the 2003 year. (b) Revenues minus cost of sales, operating expenses and depreciation of rental merchandise. (c) Based on average shares outstanding of 33.5 million in the 2004 quarter and 32.9 million in the 2003 quarter.

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