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Bestway moves push 2Q revenues up 7.5%

By Furniture Today Staff -- Furniture Today, March 21, 2004

DALLAS — DALLAS— Rent-to-own specialist Bestway posted a 7.5% increase in revenues in its second quarter while nearly quadrupling profits.

Revenues for the quarter were $9.6 million, compared with $8.9 million in the same period last year. Net income grew to $159,208 from $42,619.

The operating margin in the latest quarter increased by a full percentage point to 7.7%. Return on sales more than tripled to 1.7% from 0.5% a year ago.

The company said the revenue increase was attributable to a larger customer base and to increasing the average price per unit on rent by upgrading merchandise.

For the first six months, Rentway recorded revenues of $18.6 million, up 8.5% from $17.2 million in the previous year. Net earnings were $223,713, compared with a net loss of $194,072 last year.

Return on sales for the six months increased to 1.2% from a negative 1.1% a year ago. The six-month operating margin rose from 4.8% in 2003 to 7.5% in 2004.

Rentway said the six-month earnings improvement was primarily due to eliminating lower-margin merchandise, focusing on higher revenue-generating merchandise, driving revenues through training and developing employees, and implementing a more aggressive and targeted marketing campaign.

The 2004 periods included pretax gains on the sale of property and equipment, and the 2003 periods included both pretax losses on the sale of property and equipment, and income tax benefits.

David Kraemer, president and CEO, said, "We continue to be pleased with our initiatives.... The payoffs are tighter inventory controls, a reduction in delinquent accounts, increased customer counts, and reduced employee turnover."

Rentway owns and operates 69 RTO stores in the Southeast.

Bestway
Earnings per share are fully diluted, and all figures in parentheses are loses or declines.
Quarter ended 1/31
	2004	2003	Change
Revenues (a)	$9,564,193	$8,894,260	7.5%
Operating income (b)	685,852	555,068	23.6%
Net income	(c)159,208	(d)42,619	273.6%
Earnings per share (e)	0.09	0.02	350.0%
6 months ended 1/31	2004	2003	Change
Revenues (a)	$18,623,221	$17,167,222	8.5%
Operating income (b)	1,296,359	782,641	65.6%
Net income	(c)223,713	(d)(194,072)	—
Earnings per share (e)	0.12	(0.12)	—
(a) Includes non-rental revenues of $193,317 in the 2004 quarter, $391,591 in the 2003 quarter, $357,406 in the 2004 six months and $670,362 in the 2003 six months. (b) Revenues minus depreciation and amortization of rental merchandise, cost of merchandise sold, salaries and wages, advertising, occupancy and other operating expenses. (c) Includes pretax losses on the sale of property and equipment of $14,225 in the 2004 quarter and $11,653 in the 2004 six months. (d) Includes pretax gains on the sale of property and equipment of $9,347 in the 2003 quarter and $8,561 in the 2003 six months and income tax benefits of $32,714 in the 2003 quarter and $116,938 in the 2003 six months. (e) Based on average shares outstanding of 1.83 million in the 2004 periods, 1.75 million in the 2003 quarter and 1.66 million in the 2003 six months.

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