Plano, Texas — Revenues rose for three rental and rent-to-own companies in the third quarter, driven by openings, acquisitions and positive same-store performance.
Rent-A-Center and Aaron Rents also reported sharply higher earnings, while profits at Rainbow Rentals were down.
Rent-A-Center
Plano-based Rent-A-Center's third-quarter revenues were up 10.6% to $494.6 million. Profits of $40.1 million were more than four times the earnings of a year earlier, and were up 67% excluding a one-time charge for a legal settlement in the 2001 quarter.
"Our achievements in the past 12 months have been extraordinary, particularly in light of the continued weakness of the economy as a whole and the retail sector in particular," said Mark Speese, chairman and chief executive officer.
Same-store revenues rose 6.9% in the third quarter as the number of customers and the transaction ticket size both grew.
Speese said the company continues to open and acquire stores and expects to add between 80 and 120 more in 2003. Already the largest U.S. RTO player, Rent-A-Center owns 2,377 stores and has another 315 in its ColorTyme franchise unit.
In last year's third quarter, the company took a $16 million one-time charge relating to the settlement of class-action lawsuits over gender discrimination.
Rent-A-Center projects revenues of just under $2.1 billion next year. Earnings per share are forecast at $1.23 to $1.28 for this year's fourth quarter, and $5.30 to $5.45 in 2003.
Aaron Rents
At Aaron's, revenues jumped 19.1% to $157.8 million. The Atlanta-based company's big RTO division, Aaron's Sales and Lease Ownership, posted a 34% gain to $128.3 million as same-store revenues grew 13.6%.
Net earnings amounted to $6.7 million, up from $1.5 million before one-time charges in the 2001 quarter. Including the charges, the company had a net loss a year ago.
Chairman and CEO Charlie Loudermilk said Aaron's Sales and Lease Ownership should continue to grow in revenues and profitability. Including franchised units, total revenue in the division rose 32% in the quarter to $186.9 million.
Net earnings were reduced by 4 cents in the quarter and 18 cents in the first nine months because of start-up expenses from the rapid opening of the Sales and Lease Ownership stores. The division added 38 units in the third quarter, bringing the total to 624. Aaron's also operates 70 rent-to-rent stores.
Next year, the company projects its revenues will exceed $635 million and systemwide revenues will top $860 million. Loudermilk said earnings per share should be in the range of 35 to 37 cents per share in the fourth quarter and $1.55 to $1.65 next year.
Rainbow Rentals
Rainbow Rentals, based in Canfield, Ohio, said its third-quarter revenue of $24.4 million was up 7.6% as comparable-store volume rose 3.8%. Net income was down 15% to $335,000 as the company absorbed the cost of opening a dozen stores in the quarter.
"We are pleased that comparable-store revenue has continued to rise over the last four quarters," said Wayland Russell, chairman and CEO. "However, we are not yet where we need to be in terms of revenue per store and customer growth. Our revenue growth is attributable primarily to improved pricing of both new merchandise and higher-quality, pre-rented inventory, as well as improved collection performance."
| Aaron Rents | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 9/30 | 2002 | 2001 | Change |
| (a) Includes non-rental revenues of $42.5 million in the 2002 quarter, $33.2 million in the 2001 quarter, $124.1 million in the 2002 nine months and $104.7 million in the 2001 nine months. (b) Revenues minus cost of sales, operating expenses and depreciation of rental merchandise. (c) Includes a $1.2 million income tax benefit and a $5.6 million pretax special charge. (d) Based on average shares outstanding of 22 million in the 2002 quarter, 20 million in the 2001 quarter, 21 million in the 2002 nine months and 20.1 million in the 2001 nine months. | |||
| Revenues (a) | $157,838,000 | $132,516,000 | 19.1% |
| Operating income (b) | 11,805,000 | (1,443,000) | — |
| Net income | 6,721,000 | (c)(1,961,000) | — |
| Earnings per share (d) | 0.31 | (0.10) | — |
| 9 months ended 9/30 | 2002 | 2001 | Change |
| Revenues (a) | $465,663,000 | $406,696,000 | 14.5% |
| Operating income (b) | 34,163,000 | 21,689,000 | 57.5% |
| Net income | 19,338,000 | 10,355,000 | 86.8% |
| Earnings per share (d) | 0.92 | 0.51 | 80.4% |
| Rent-A-Center | |||
|---|---|---|---|
| Earnings per share are fully diluted. | |||
| Quarter ended 9/30 | 2002 | 2001 | Change |
| (a) Includes non-rental revenues of $38.4 million in the 2002 quarter, $35.8 million in the 2001 quarter, $131.8 million in the 2002 nine months and $116.1 million in the 2001 nine months. (b) Revenues minus direct store expenses, franchise operation expenses and general and administrative expenses. (c) After preferred dividends of $1.3 million in the 2002 quarter, $2.7 million in the 2001 quarter, $10.2 million in the 2002 nine months and $12.1 million in the 2001 nine months. The 2001 periods also include a $16 million pretax charge for non-recurring legal settlements. (d) Based on average shares outstanding of 36.4 million in the 2002 quarter, 37.8 million in the 2001 quarter, 36.5 million in the 2002 nine months and 37.1 million in the 2001 nine months. | |||
| Revenues (a) | $494,561,000 | $447,074,000 | 10.6% |
| Operating income (b) | 85,644,000 | 56,110,000 | 52.6% |
| Net income (c) | 40,128,000 | 7,265,000 | 452.3% |
| Earnings per share (d) | 1.14 | 0.263 | 38.5% |
| 9 months ended 9/30 | 2002 | 2001 | Change |
| Revenues (a) | $1,487,831,000 | $1,329,535,000 | 11.9% |
| Operating income (b) | 263,822,000 | 199,899,000 | 32.0% |
| Net income (c) | 116,744,000 | 50,430,000 | 131.5% |
| Earnings per share (d) | 3.48 | 1.68 | 107.1% |
| Rainbow Rentals | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 9/30 | 2002 | 2001 | Change |
| (a) Includes non-rental revenues of $1.4 million in the 2002 quarter, $1.3 million in the 2001 quarter, $4.6 million in the 2002 nine months and $4.5 million in the 2001 nine months. (b) Revenues minus merchandise costs, store expenses and general and administrative expenses. | |||
| Revenues (a) | $24,370,000 | $22,654,000 | 7.6% |
| Operating income (b) | 763,000 | 1,029,000 | (25.9%) |
| Net income | 335,000 | 394,000 | (15.0%) |
| Earnings per share | 0.06 | 0.07 | (14.3%) |
| 9 months ended 9/30 | 2002 | 2001 | Change |
| Revenues (a) | $74,178,000 | $70,532,000 | 5.2% |
| Operating income (b) | 3,057,000 | 3,497,000 | (12.6%) |
| Net income | 1,339,000 | 1,343,000 | (0.3%) |
| Earnings per share | 0.23 | 0.23 | 0.0% |
