RAC 1Q revenues up 24.4%
By Larry Thomas -- Furniture Today, May 6, 2007
Plano, Texas — Powered by its recent acquisition of Rent-Way, rent-to-own powerhouse Rent-A-Center said its first quarter revenues were 24.4% ahead of last year's first quarter.
The company, the nation's largest rent-to-own operator, also said same-store sales rose 2.9%, the fifth consecutive quarter of positive same-store revenues.
Net income, however, was reduced more than 60% because of a one-time charge stemming from a New Jersey class-action lawsuit that tentatively has been settled out of court.
Total revenue for the quarter ended March 31 amounted to $755.3 million, up from $607 million in last year's first quarter. Rental revenue jumped 26.9% to $660.1 million.
Net income, including the litigation expenses, came to $15.1 million or 21 cents per fully diluted share. In last year's first quarter, earnings were $40.3 million or 57 cents per share.
Excluding the one-time charge of $51.3 million, net income for the first quarter would have been $47.3 million, a 17.2% increase from last year's first quarter.
Mark Speese, chairman and CEO, said the company expects to pay more than $109 million, including some $23.5 million in attorney's fees, to settle the lawsuit.
He noted that the company also took a one-time charge of $58 million in the fourth quarter in connection with the suit.
Under terms of the settlement, Rent-A-Center is not admitting liability for any past business practices in New Jersey, where it was accused of violating the state's Installment Sales Act and Consumer Fraud Act.
"We continued to execute in our core rent-to-own business as demonstrated by our increase in same-store sales," Speese said. "As a result of our strong operating results, we generated cash flow from operations of approximately $86 million and reduced our outstanding senior debt by approximately $77.1 million."
The company had a net reduction of 28 stores during the quarter, ending with 3,378 Rent-A-Center and 274 ColorTyme locations. Most of the closed stores were Rent-Way locations that were consolidated into Rent-A-Center stores.
| Rent-A-Center | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 3/31 | 2007 | 2006 | Change |
| (a) Includes pretax litigation expense of $51.3 million in the 2007 quarter. (b) Based on average shares outstanding of 71.3 million in the 2007 quarter and 70.3 million in the 2006 quarter. |
|||
| Revenues | $755,299,000 | $606,975,000 | 24.4% |
| Operating income | 101,443,000 | 76,370,000 | 32.8% |
| Net income (a) | 15,103,000 | 40,328,000 | (62.5%) |
| Earnings per share (b) | 0.21 | 0.57 | (63.2%) |
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