Rent-A-Center profit climbs
By Larry Thomas -- Furniture Today, November 5, 2006
Plano, Texas — Powered by a healthy increase in same-store sales, Rent-A-Center said third-quarter sales rose 2.4% and net income more than doubled.
The company, the nation's biggest operator of rent-to-own stores, said reduced promotional activity and increased rental revenues from electronics were key drivers of the improved numbers.
"The overall tone of the business remains positive," said Mark Speese, chairman and CEO. "All in all, it was a solid quarter, and I believe we are well positioned for the balance of the year."
Revenue of $587.2 million was up 2.4% from last year's third quarter. Same-store sales rose 3.6% in the quarter and were up 2.1% for the first nine months of 2006.
Net income, after one-time charges for debt refinancing and litigation in California, totaled $25.2 million or 36 cents per share.
In last year's third quarter, net income was $11.4 million or 15 cents per share. Those figures included one-time costs related to Hurricane Katrina and a company-wide restructuring.
During a conference call with securities analysts, Speese said Rent-A-Center's pending acquisition of Rent-Way, the No. 3 rent-to-own operator, will close "as soon as possible" after a Nov. 14 meeting of Rent-Way shareholders.
He said about 150 of Rent-Way's 782 stores will be closed by the end of January, and "back office" operations will be merged within 90 days after the acquisition is completed.
"Obviously, this is a large undertaking, but we believe we are up to the task," he told analysts.
Rent-A-Center now has 2,753 stores. Speese said the company plans to open five to 10 new stores by the end of the year and another 25 to 35 new stores in 2007.
Revenues for the first nine months of 2006 rose 1.2% to $1.8 billion. Net income rose 4.7% to $105.4 million or $1.49 per share.
| Rent-A-Center | |||
|---|---|---|---|
| Earnings per share are fully diluted. | |||
| Quarter ended 9/30 | 2006 | 2005 | Change |
| (a) Includes pretax charge for litigation settlement of $15.3 million in the 2006 quarter and nine months; an $8 million pretax credit for reversion of litigation settlement in the 2005 nine months; a $13 million pretax charge for restructuring in the 2005 nine months; and pretax finance charges from refinancing of $2.2 million in the 2006 quarter and nine months. (b) Based on average shares outstanding of 70.9 million in the 2006 quarter, 73.7 million in the 2005 quarter, 70.6 million in 2006 nine months and 75.3 million in the 2005 nine months. |
|||
| Revenues | $587,184,000 | $573,507,000 | 2.4% |
| Operating income | 68,180,000 | 49,934,000 | 36.5% |
| Net income (a) | 25,241,000 | 11,277,000 | 123.8% |
| Earnings per share (b) | 0.36 | 0.15 | 140.0% |
| 9 months ended 9/30 | 2006 | 2005 | Change |
| Revenues | $1,777,782,000 | $1,755,894,000 | 1.2% |
| Operating income | 220,693,000 | 205,366,000 | 7.5% |
| Net income (a) | 105,412,000 | 100,688,000 | 4.7% |
| Earnings per share (b) | 1.49 | 1.34 | 11.2% |
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