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Aaron profit up 6.1% in 4Q

By Clint Engel -- Furniture Today, February 26, 2006

Aaron Rents posted a 6.1% gain in fourth quarter profit and a 22.4% increase in revenue as aggressive expansion and solid execution continued to pay off for the nation's second-largest rent-to-own chain.

Fourth-quarter net income came to $14.6 million on revenues of $296.2 million.

Revenues for the Aaron's Sales & Lease Ownership division grew 24% in the quarter to $265.5 million for company-owned stores. Same-store revenue was up 11.5% for the period — the 16th consecutive quarter of same-store growth of more than 5%.

For the year, net earnings grew 10.2% to $58 million as revenues rose 18.9%, to $1.1 billion. Same-store revenue was up 8.3%.

Aaron said its earnings improvement for the year was masked by its sale of shares of a competitor's stock in 2004, which led to a $3.4 million after-tax gain that year (compared with a $355,000 after-tax gain for a similar sale this past year). Excluding the profit from the two stock transactions, earnings would have been up 17% in 2005.

For the year, Aaron added a net 167 Sales & Lease Ownership stores for a 16% gain in store count, including 75 new company-owned stores, 71 new franchise locations and some stores gained through acquisitions. It ended the year with 1,198 total stores — 739 company-owned and 392 franchised units in the Sales & Lease Ownership division, 58 rent-to-rent stores and nine RIMCO stores (specializing in rentals of tire rims).

The franchise stores collectively had revenues of $419.7 million for the year (not included in Aaron's corporate revenues), up 17% from 2004.

Aaron Chairman and CEO Charlie Loudermilk said the company will continue its expansion this year and beyond, with a plan to increase its combined company-owned and franchised store count by about 15% annually over the next several years.

"Our intermediate term goal is to have 2,000 stores open ... and we feel we can achieve that in a few years," Loudermilk said.

Aaron Rents
Earnings per share are fully diluted, and all figures in parentheses are losses or declines.
Quarter ended 12/31 2005 2004 Change
(a) Includes after-tax gains from the sale of common stock of competitors of $355,000 in the 2005 year and $3.4 million in the 2004 year.
Revenues $296,152,000 $242,053,000 22.4%
Operating income 286,175,000 232,831,000 22.9%
Net income 14,608,000 13,767,000 6.1%
Earnings per share 0.29 0.28 3.6%
Year ended 12/31 2005 2004 Change
Revenues $1,125,505,000 $946,480,000 18.9%
Operating income 952,698,000 797,273,000 19.5%
Net income (a) 57,993,000 52,616,000 10.2%
Earnings per share 1.16 1.06 9.4%
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