EXHIBIT 99.1
For Immediate Release:
RENT-A-CENTER, INC. REPORTS
THIRD QUARTER 2003 RESULTS
DILUTED EARNINGS PER SHARE RISE 23.9%
SAME STORE SALES INCREASE 3.4%
BOARD APPROVES NEW $100 MILLION SHARE REPURCHASE PROGRAM
-------------------------
PLANO, TEXAS, OCTOBER 27, 2003 -- Rent-A-Center, Inc. (the "Company")
(NASDAQ/NNM:RCII), the leading rent-to-own operator in the U.S., today announced
revenues and net earnings for the quarter ended September 30, 2003.
The Company, the nation's largest rent-to-own operator, reported net earnings
for the quarter ended September 30, 2003 of $48.5 million, or $0.57 per diluted
share, when excluding the non-recurring finance charge of approximately $7.5
million associated with finalizing the Company's recapitalization program, an
increase of 23.9% from the same quarter of the prior year. Total revenues for
the quarter ended September 30, 2003 increased to $549.8 million as compared to
$494.6 million for the same quarter of the prior year. Incremental revenues
generated in new and acquired stores, as well as growth in same store revenues
primarily drove this 11.2% increase. Same store revenues during the third
quarter of 2003 increased 3.4% above the comparable quarter of 2002. The
Company's quarterly growth in net earnings resulted primarily from the increase
of revenues as outlined above, as well as the benefits associated with the
Company's recapitalization program.
Net earnings for the nine months ended September 30, 2003 were $151.7 million,
or $1.72 per diluted share, when excluding the non-recurring finance charge of
approximately $35.3 million associated with the recapitalization program, an
increase of 19.5% over the net earnings of $127.0 million, or $1.39 per diluted
share for the same period in the prior year. Total revenues for the nine months
ended September 30, 2003 increased to $1.669 billion from $1.488 billion in
2002, representing an increase of 12.2%. Same store revenues for the nine-month
period ending September 30, 2003 increased 3.9%.
"We are pleased to be reporting earnings within our expectations," commented
Mark E. Speese, the Company's Chairman and Chief Executive Officer, "and are
excited about our opportunities in 2004. While the child tax credit refunds led
to increased payouts and lower units on rent in August and September," continued
Mr. Speese, "the fourth quarter has begun with positive momentum, which we
believe positions us for our continued growth."
During the third quarter of 2003, the Company opened 27 new store locations and
acquired 13 stores as well as accounts from nine additional locations. Through
the nine month period ending September 30, 2003, the Company opened 65 new
stores, acquired a total of 143 others as well as accounts from 199 additional
locations while consolidating 15 stores into existing locations. To date through
the fourth quarter, the Company has opened three new store locations, acquired
two stores and accounts from two additional locations.
The Company's cash flow from operations was $117.2 million for the third quarter
of 2003 and $300.6 million for the nine months ended September 30, 2003. The
Company also announced that its board of directors has authorized a new $100
million share repurchase program. "We continue to believe that the growth
potential of this company and the industry as a whole is significant," Speese
commented, "and that our strong recurring cash flow continues to allow us to
pursue our growth initiatives, as well as to think and act strategically in
managing our capital structure for the benefit of all of our stakeholders."
Rent-A-Center will host a conference call to discuss the third quarter financial
results on Tuesday morning, October 28, 2003, at 10:45 a.m. EST. For a live
webcast of the call, visit http://investor.rentacenter.com. Certain financial
and other statistical information that will be discussed during the conference
call will also be provided on the same website.
Rent-A-Center, Inc., headquartered in Plano, Texas, currently operates 2,605
company-owned stores nationwide and in Puerto Rico. The stores generally offer
high-quality, durable goods such as home
electronics, appliances, computers and furniture and accessories to consumers
under flexible rental purchase agreements that generally allow the customer to
obtain ownership of the merchandise at the conclusion of an agreed-upon rental
period. ColorTyme, Inc., a wholly owned subsidiary of the Company, is a national
franchiser of 327 rent-to-own stores, 315 of which operate under the trade name
of "ColorTyme," and the remaining 12 of which operate under the "Rent-A-Center"
name.
The following statements are based on current expectations. These statements are
forward-looking, and actual results may differ materially. These statements do
not include the potential impact of share repurchases that may be completed
after October 27, 2003.
FOURTH QUARTER 2003 GUIDANCE:
REVENUES
o The Company expects total revenues to be in the range of $555 million
to $560 million.
o Store rental and fee revenues are expected to be between $500 million
and $504 million.
o Total store revenues are expected to be in the range of $540 million to
$545 million.
o Same store sales increases are expected to be in the 1% to 3% range.
o The Company expects to open 20-30 new store locations.
EXPENSES
o The Company expects depreciation of rental merchandise to be between
21.6% and 22.0% of store rental and fee revenue and cost of goods
merchandise sales to be between 75% and 80% of store merchandise sales.
o Store salaries and other expenses are expected to be in the range of
55.0% to 56.0% of total store revenue.
o General and administrative expenses are expected to be between 3.0% and
3.2% of total revenue.
o Net interest expense is expected to be approximately $9.0 million and
amortization of intangibles is expected to be approximately $3.0
million.
o The effective tax rate is expected to be approximately 37.25% of
pre-tax income.
o Diluted earnings per share are estimated to be in the range of $0.60 to
$0.61.
o Diluted shares outstanding are estimated to be between 83.6 million and
84.4 million.
FISCAL 2004 GUIDANCE:
REVENUES
o The Company expects total revenues to be in the range of $2.300 billion
and $2.330 billion.
o Store rental and fee revenues are expected to be between $2.065 billion
and $2.090 billion.
o Total store revenues are expected to be in the range of $2.250 billion
and $2.278 billion.
o Same store sales increases are expected to be in the 1% to 3% range.
o The Company expects to open approximately 80 to 120 new store
locations.
EXPENSES
o The Company expects depreciation of rental merchandise to be between
21.6% and 22.0% of store rental and fee revenue and cost of goods
merchandise sales to be between 75% and 80% of store merchandise sales.
o Store salaries and other expenses are expected to be in the range of
54.0% to 55.5% of total store revenue.
o General and administrative expenses are expected to be between 3.0% and
3.2% of total revenue.
o Net interest expense is expected to be between $34.0 million and $38.0
million and amortization of intangibles is expected to be approximately
$6.5 million.
o The effective tax rate is expected to be between 37.5% and 38.0% of
pre-tax income.
o Diluted earnings per share are estimated to be in the range of $2.62 to
$2.70.
o Diluted shares outstanding are estimated to be between 84.0 million and
86.0 million.
This press release and the guidance above contain forward-looking statements
that involve risks and uncertainties. Such forward-looking statements generally
can be identified by the use of forward-looking terminology such as "may,"
"will," "expect," "intend," "could," "estimate," "should," "anticipate," or
"believe," or the negative thereof or variations thereon or similar terminology.
Although the Company believes that the expectations reflected in such
forward-looking statements will prove to be correct, the Company can give no
assurance that such expectations will prove to have been correct. The actual
future performance of the Company could differ materially from such statements.
Factors that could cause or contribute to such differences include, but are not
limited to: uncertainties regarding the ability to open new stores; the
Company's ability to acquire additional rent-to-own stores on favorable terms;
the Company's ability to enhance the performance of these acquired stores,
including the stores acquired in the Rent-Way acquisition; the Company's ability
to control store level costs; the results of the Company's litigation; the
passage of legislation adversely affecting the rent-to-own industry; interest
rates; the Company's ability to collect on its rental purchase agreements;
changes in the Company's effective tax rate; changes in the Company's stock
price and the number of shares of common stock that the Company may or may not
repurchase; and the other risks detailed from
time to time in the Company's SEC filings, including but not limited to, its
annual report on Form 10-K for the year ended December 31, 2002, its quarterly
report on Form 10-Q for the quarter ended March 31, 2003 and its quarterly
report on Form 10-Q for the quarter ended June 30, 2003. You are cautioned not
to place undue reliance on these forward-looking statements, which speak only as
of the date of this press release. Except as required by law, the Company is not
obligated to publicly release any revisions to these forward-looking statements
to reflect the events or circumstances after the date of this press release or
to reflect the occurrence of unanticipated events.
CONTACTS FOR RENT-A-CENTER, INC.:
<Table>
David E. Carpenter Robert D. Davis Mitchell E. Fadel Mark E. Speese
Director of Investor Chief Financial Officer President Chairman and CEO
Relations (972) 801-1204 (972) 801-1114 (972) 801-1199
(972) 801-1214 rdavis@racenter.com mfadel@racenter.com mspeese@racenter.com
dcarpenter@racenter.com
</Table>
RENT-A-CENTER, INC. AND SUBSIDIARIES
STATEMENT OF EARNINGS HIGHLIGHTS
(In Thousands of Dollars, except per share data)
<Table>
<Caption>
THREE MONTHS ENDED SEPTEMBER 30,
------------------------------------------------------------
2003 2003 (1) 2002
-------------------- -------------------- --------
Before Non-Recurring After Non-Recurring
Finance Charge Finance Charge
-------------------- -------------------- --------
UNAUDITED
Total Revenue $549,825 $549,825 $494,561
Operating Profit 87,502 87,502 84,087
Net Earnings 48,469 43,738 41,449
Diluted Earnings per Common Share $ 0.57 $ 0.52 $ 0.46
EBITDA $101,801 $101,801 $ 95,292
Reconciliation to EBITDA:
Reported earnings before income taxes 77,242 69,730 69,374
Add back:
Non-recurring financing charge -- 7,512 --
Interest expense, net 10,260 10,260 14,713
Depreciation of property assets 11,116 11,116 9,647
Amortization of intangibles 3,183 3,183 1,557
-------- -------- --------
EBITDA $101,801 $101,801 $ 95,291
</Table>
<Table>
<Caption>
NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------------------------------
2003 2003 (2) 2002
-------------------- ------------------- ----------
Before Non-Recurring After Non-Recurring
Finance Charge Finance Charge
-------------------- ------------------- ----------
UNAUDITED
Total Revenue $1,669,491 $1,669,491 $1,487,831
Operating Profit 281,031 281,031 260,623
Net Earnings 151,721 129,997 126,955
Diluted Earnings per Common Share $ 1.72 $ 1.47 $ 1.39
EBITDA $ 322,451 $ 322,451 $ 292,347
Reconciliation to EBITDA:
Reported earnings before income taxes 246,157 210,897 213,074
Add back:
Non-recurring financing charge -- 35,260 --
Interest expense, net 34,874 34,874 47,549
Depreciation of property assets 32,068 32,068 28,525
Amortization of intangibles 9,352 9,352 3,199
---------- ---------- ----------
EBITDA $ 322,451 $ 322,451 $ 292,347
</Table>
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(1) Including the effects of a pre-tax finance charge of $7.5 million
associated with the recapitalization of the Company. These charges
reduced diluted earnings per share in the third quarter of 2003 by
$0.05 from $0.57 per diluted share to $0.52.
(2) Including the effects of a pre-tax finance charge of $35.3 million
associated with the recapitalization of the Company. These charges
reduced diluted earnings per share for the nine month period ending
September 30, 2003 by $0.25 from $1.72 per diluted share to $1.47.
<Table>
<Caption>
SELECTED BALANCE SHEET DATA: (IN THOUSANDS OF DOLLARS) SEPTEMBER 30, 2003 SEPTEMBER 30, 2002
------------------ ------------------
Cash and cash equivalents $ 155,974 $ 110,261
Prepaid expenses and other assets 29,879 28,043
Rental merchandise, net
On rent 508,183 505,397
Held for rent 133,732 119,197
Total Assets 1,748,721 1,611,058
Senior debt 399,000 260,000
Subordinated notes payable 300,000 273,312
Total Liabilities 986,248 801,674
Stockholders' Equity 762,473 809,384
</Table>
RENT-A-CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<Table>
<Caption>
(In Thousands of Dollars, except per share data) THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
2003 2002
----------- ------------
Unaudited
STORE REVENUE
Rentals and Fees $ 497,881 $ 456,208
Merchandise Sales 34,453 24,710
Installment Sales 4,633 --
Other 697 561
--------- ---------
537,664 481,479
FRANCHISE REVENUE
Franchise Merchandise Sales 10,754 11,566
Royalty Income and Fees 1,407 1,516
--------- ---------
TOTAL REVENUE 549,825 494,561
OPERATING EXPENSES
Direct Store Expenses
Depreciation of Rental Merchandise 107,777 95,508
Cost of Merchandise Sold 25,901 18,471
Cost of Installment Sales 2,120 --
Salaries and Other Expenses 296,427 268,552
Franchise Operation Expenses
Cost of Franchise Merchandise Sales 10,298 11,061
--------- ---------
442,523 393,592
General and Administrative Expenses 16,617 15,325
Amortization of Intangibles 3,183 1,557
--------- ---------
Total Operating Expenses 462,323 410,474
--------- ---------
OPERATING PROFIT 87,502 84,087
Non-Recurring Finance Charge 7,512 --
Interest Expense 11,565 15,301
Interest Income (1,305) (588)
--------- ---------
Earnings Before Income Taxes 69,730 69,374
Income Tax Expense 25,992 27,925
--------- ---------
NET EARNINGS 43,738 41,449
Preferred Dividends -- 1,321
--------- ---------
Net earnings allocable to common stockholders $ 43,738 $ 40,128
========= =========
BASIC WEIGHTED AVERAGE SHARES 81,253 80,888
========= =========
BASIC EARNINGS PER COMMON SHARE $ 0.54 $ 0.50
========= =========
DILUTED WEIGHTED AVERAGE SHARES 84,406 91,078
========= =========
DILUTED EARNINGS PER COMMON SHARE $ 0.52 $ 0.46
========= =========
</Table>
RENT-A-CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<Table>
<Caption>
(In Thousands of Dollars, except per share data) NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
2003 2002
----------- -----------
Unaudited
STORE REVENUE
Rentals and Fees $ 1,495,652 $ 1,356,062
Merchandise Sales 119,645 88,309
Installment Sales 15,423 --
Other 2,224 1,742
----------- -----------
1,632,944 1,446,113
FRANCHISE REVENUE
Franchise Merchandise Sales 32,087 37,305
Royalty Income and Fees 4,460 4,413
----------- -----------
TOTAL REVENUE 1,669,491 1,487,831
OPERATING EXPENSES
Direct Store Expenses
Depreciation of Rental Merchandise 323,778 282,085
Cost of Merchandise Sold 86,684 62,950
Cost of Installment Sales 7,441 --
Salaries and Other Expenses 880,649 795,649
Franchise Operation Expenses
Cost of Franchise Merchandise Sales 30,795 35,598
----------- -----------
1,329,347 1,176,282
General and Administrative Expenses 49,761 47,727
Amortization of Intangibles 9,352 3,199
----------- -----------
Total Operating Expenses 1,388,460 1,227,208
----------- -----------
OPERATING PROFIT 281,031 260,623
Non-Recurring Finance Charge 35,260 --
Interest Expense 38,158 49,565
Interest Income (3,284) (2,016)
----------- -----------
Earnings Before Income Taxes 210,897 213,074
Income Tax Expense 80,900 86,119
----------- -----------
NET EARNINGS 129,997 126,955
Preferred Dividends -- 10,211
----------- -----------
Net earnings allocable to common stockholders $ 129,997 $ 116,744
=========== ===========
BASIC WEIGHTED AVERAGE SHARES 85,331 68,815
=========== ===========
BASIC EARNINGS PER COMMON SHARE $ 1.52 $ 1.70
=========== ===========
DILUTED WEIGHTED AVERAGE SHARES 88,337 91,223
=========== ===========
DILUTED EARNINGS PER COMMON SHARE $ 1.47 $ 1.39
=========== ===========
</Table>