RAC, Aaron, Rent-Way all post quarterly revenue gains
By Janice Chamberlain -- Furniture Today, August 29, 2005
Plano, Texas — Rent-to-own giant Rent-A-Center posted a 1.3% increase in revenues for the quarter ended June 30, a figure topped by fellow rental companies Aaron Rents and Rent-Way, which recorded quarterly revenue gains of 17.8% and 2.7%, respectively.
Rent-A-Center, based here, reported revenues in the latest quarter of $580.6 million, up from $573 million in the comparable 2004 period. Net income in the 2005 quarter was $41.7 million, falling 18.5% from year-earlier profits of $51.2 million. The company said the revenue increase was driven by incremental gains generated in new and acquired stores, offset by a 2.6% decrease in same-store sales.
In the first half, RAC recorded revenues of $1.18 billion, up 2.1% from the same period in 2004. Net earnings slipped 13.5% to $89.4 million from $103.4 million in the year-earlier period. Same-store sales dropped 4%.
Rent-A-Center Chairman and CEO Mark Speese said, "Our business environment remains challenged. We currently have fewer agreements on rent relative to our prior expectations, due to weaker-than-expected demand in June and July. As such, including a softer outlook for the balance of this year, we are lowering our guidance for the remainder of 2005."
RAC now expects third-quarter revenues in a range of $572 million to $580 million, with same-store sales dipping 1% to 2%. The company projects earnings per share in the quarter will be 38 cents to 42 cents.
For all of 2005, RAC believes revenues will be $2.34 billion to $2.36 billion. Same-store sales are projected to fall 2% to 4%, and earnings per share will be $1.90 to $2.
RAC operates 2,892 company-owned stores in the United States, Canada and Puerto Rico. ColorTyme, a wholly owned subsidiary, is a national franchiser of 281 rent-to-own stores.
Second-quarter total revenues at Atlanta-based Aaron Rents were $271.3 million, a double-digit increase over year-earlier revenues of $230.3 million. The company's rent-to-own division reported revenues shot up 22% to $241.5 million, with same-store sales increasing 7.3%.
Net income in the latest quarter rose 4.8% to $16.1 million.
Aaron's total revenues for the first six months increased 16.5% to $550.7 million. RTO division revenues jumped 19% to $490.2 million, as same-store sales grew 4%. Earnings in the latest six months skyrocketed 22.5% to $34.5 million.
Aaron's Chairman and CEO Charlie Loudermilk said, "In recent years our business has thrived even in periods of uncertain strength in overall consumer spending habits. Our growth prospects are, as they have been, excellent, and we are well on our way to meeting our operating and financial objectives for the year."
Loudermilk added that third-quarter 2005 revenues are expected to be in excess of $270 million, with earnings per share 26 cents to 28 cents.
In the second quarter, the company's RTO division opened 17 company-operated stores and 18 franchised stores, and acquired 11 franchised stores and 10 stores from independent rental operators.
The division also purchased the accounts of 17 other third-party stores.
Erie, Pa.-based Rent-Way said revenues of $128.3 million in its third quarter ended June 30 represented a $3.4 million gain over the same period in 2004. In the nine months, revenues increased 1.9% to $390.8 million from $383.4 million in the year-earlier period.
Rent-Way posted a net loss of $1.8 million in the latest quarter, compared with net income of $4.4 million in the prior-year quarter.
Earnings in the nine months improved 12.8% to $4.5 million from $4 million a year ago.
Rent-Way's earnings figures for all four periods included net losses from discontinued operations. The 2005 quarter also included a $2.6 million operating loss related to the company's new store opening program.
Rent-Way President Bill Short said, "The fundamentals of our business are sound and our plan to invest in growing the Rent-Way brand by 40 to 50 stores per year for the next several year is working. We opened nine new stores in the quarter and we expect to open 10 more by the end of September, which would mean 42 new stores opened in fiscal 2005."
| Aaron Rents | |||
|---|---|---|---|
| Earnings per share are fully diluted. | |||
| Quarter ended 6/30 | 2005 | 2004 | Change |
| (a) Includes non-rental revenues of $64.7 million in the 2005 quarter, $60.1 million in the 2004 quarter, $134.9 million in the 2005 six months and $130.2 million in the 2004 six months. (b) Revenues minus cost of sales, operating expenses and depreciation of rental merchandise. | |||
| Revenues(a) | $271,338,000 | $230,286,000 | 17.8% |
| Operating income (b) | 27,381,000 | 26,194,000 | 4.5% |
| Net income | 16,120,000 | 15,385,000 | 4.8% |
| Earnings per share | 0.32 | 0.30 | 6.7% |
| 6 months ended 6/30 | 2005 | 2004 | Change |
| Revenues (a) | $550,686,000 | $472,779,000 | 16.5% |
| Operating income (b) | 58,599,000 | 48,108,000 | 21.8% |
| Net income | 34,542,000 | 28,202,000 | 22.5% |
| Earnings per share | 0.68 | 0.56 | 21.4% |
| Rent-A-Center | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 6/30 | 2005 | 2004 | Change |
| (a) Includes non-rental revenues of $53.9 million in the 2005 quarter, $52.4 million in the 2004 quarter, $137.1 million in the 2005 six months and $133.5 million in the 2004 six months. (b) Based on average shares outstanding of 76 million in the 2005 periods, 82 million in the 2004 quarter and 82.4 million in the 2004 six months. (c) Includes an $8 million pretax gain on a litigation settlement. | |||
| Revenues (a) | $580,578,000 | $572,985,000 | 1.3% |
| Operating income | 75,143,000 | 93,381,000 | (19.5%) |
| Net income | 41,742,000 | 51,194,000 | (18.5%) |
| Earnings per share (b) | 0.55 | 0.62 | (11.3%) |
| 6 months ended 6/30 | 2005 | 2004 | Change |
| Revenues (a) | $1,182,387,000 | $1,158,365,000 | 2.1% |
| Operating income | 155,432,000 | 188,528,000 | (17.6%) |
| Net income | (c)89,411,000 | 103,403,000 | (13.5%) |
| Earnings per share (b) | 1.18 | 1.25 | (5.6%) |
| Rent-Way | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 6/30 | 2005 | (a)2004 | Change |
| (a) Restated. (b) Includes non-rental revenues of $19.8 million in the 2005 quarter, $21.7 million in the 2004 quarter, $62.2 million in the 2005 nine months and $66.9 million in the 2004 nine months. (c) Revenues minus depreciation and amortization of rental merchandise and property and equipment, cost of prepaid phone service, salaries and wages, advertising, occupancy and other operating expenses. (d) After preferred stock dividends of $549,000 in the 2005 quarter, $487,000 in the 2004 quarter, $1.6 million in the 2005 nine months and $1.3 million in the 2004 nine months; includes net losses from discontinued operations of $181,000 in the 2005 quarter, $12,000 in the 2004 quarter, $361,000 in the 2005 nine months and $1.7 million in the 2004 nine months. The 2004 nine months also includes a $48,000 pretax restructuring charge. | |||
| Revenues (b) | $128,297,000 | $124,882,000 | 2.7% |
| Operating income (c) | 12,502,000 | 12,412,000 | 0.7% |
| Net income (d) | (1,764,000) | 4,416,000 | — |
| Earnings per share | (0.07) | 0.16 | — |
| 9 months ended 6/30 | (a)2005 | (a)2004 | Change |
| Revenues (b) | $390,792,000 | $383,388,000 | 1.9% |
| Operating income (c) | 38,021,000 | 35,916,000 | 5.9% |
| Net income (d) | 4,510,000 | 3,997,000 | 12.8% |
| Earnings per share | 0.17 | 0.15 | 13.3% |
