Exhibit 99.1
For Immediate Release:
RENT-A-CENTER, INC. REPORTS
FIRST QUARTER 2004 RESULTS
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RECORD DILUTED EARNINGS PER SHARE OF $0.63
CASH FLOW FROM OPERATIONS WAS $157.4 MILLION
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PLANO, TEXAS, APRIL 26, 2004 - Rent-A-Center, Inc. (the "Company") (NASDAQ/NNM:
RCII), announced today revenues and net earnings for the quarter ended March 31,
2004.
The Company, the nation's largest rent-to-own operator, had total revenues for
the quarter ended March 31, 2004 of $585.4 million, a $19.0 million increase
from $566.4 million for the same period in the prior year. This increase of 3.3%
was a result of an increase in merchandise sales and incremental revenues
generated in new and acquired stores, offset by a decrease in same store sales
of 1.3%.
Net earnings for the quarter ended March 31, 2004 were $52.2 million, or $0.63
per diluted share, representing an increase of 10.5% over the diluted earnings
per share of $0.57, or net earnings of $51.0 million, reported for the same
period in the prior year. The increase in net earnings and earnings per diluted
share was primarily attributable to the Company's increase in revenues as
described above, as well as a lower tax rate and the benefits associated with
the recapitalization completed in the spring of 2003.
"We are pleased to be reporting record diluted earnings per share for the first
quarter of 2004," commented Mark E. Speese, the Company's Chairman and Chief
Executive Officer. "Furthermore, we are beginning to see positive trends in our
payouts, which had been running abnormally high over the last year or so, and as
a result, we believe we will see positive growth in our same store sales by the
fourth quarter of this year." Speese continued, "Finally, with the fundamentals
of the business still intact and the continued strength in our cash flow, we
intend to continue to expand our business model through new stores and
acquisitions."
During the first quarter of 2004, the Company opened 22 new store locations and
acquired 23 new stores, including five in Canada. In addition, the Company
consolidated 16 locations into existing stores and purchased accounts from 19
locations, as well as sold six stores. Since March 31, 2004, the Company has
opened four additional new stores and has consolidated three locations into
existing stores, one of which was a Get-It-Now store. For the entire year ending
December 31, 2004, the Company intends to open between 80 and 120 new store
locations as well as pursue opportunistic acquisitions. Furthermore, the Company
currently anticipates closing the previously announced acquisition of Rainbow
Rentals in the mid to late May 2004 timeframe and continues to believe that,
after a transition period in 2004, the acquisition will add incremental
operating profit, beginning in 2005, of approximately $17 million annually,
including cost savings attributable to economies of scale in advertising,
purchasing and overhead.
Rent-A-Center will host a conference call to discuss the first quarter financial
results and other business updates on Tuesday morning, April 27, 2004, 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 2,673
company-owned stores nationwide, and in Canada and 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 franchisor of 322 rent-to-own stores, 310 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 store acquisitions that may be completed
after April 26, 2004, other than the previously announced Rainbow acquisition.
SECOND QUARTER 2004 GUIDANCE:
REVENUES
o The Company expects total revenues to be in the range of $564.0 million to
$569.0 million.
o Store rental and fee revenues are expected to be between $510.0 million and
$515.0 million.
o Total store revenues are expected to be in the range of $552.5 million to
$557.5 million.
o Same store sales are expected to be in the (1.0%) and (1.5%) range.
o The Company expects to open 20-25 new store locations.
EXPENSES
o The Company expects depreciation of rental merchandise to be between 21.5%
and 21.9% of store rental and fee revenue and cost of goods on merchandise
sales to be between 74% and 79% of store merchandise sales.
o Store salaries and other expenses are expected to be in the range of 53.5%
to 55.0% 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 between 37.5% and 38.0% of pre-tax
income.
o Diluted earnings per share are estimated to be in the range of $0.60 to
$0.62.
o Diluted shares outstanding are estimated to be between 82.5 million and 83.5
million.
FISCAL 2004 GUIDANCE:
REVENUES
o The Company expects total revenues to be in the range of $2.345 billion and
$2.375 billion.
o Store rental and fee revenues are expected to be between $2.095 billion and
$2.115 billion.
o Total store revenues are expected to be in the range of $2.285 billion and
$2.315 billion.
o Same store sales are expected to be in the (1.0%) to 1.0% range.
o The Company expects to open between approximately 80 and 120 new store
locations.
EXPENSES
o The Company expects depreciation of rental merchandise to be between 21.5%
and 21.9% of store rental and fee revenue and cost of goods on merchandise
sales to be between 73% and 78% of store merchandise sales.
o Store salaries and other expenses are expected to be in the range of 53.5%
to 55.0% 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 between $35.0 million and $40.0
million and amortization of intangibles is expected to be approximately
$10.0 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 82.5 million and 84.5
million.
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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; 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; the approval of the acquisition of Rainbow by Rainbow
shareholders; the ability of the Company to successfully integrate the acquired
Rainbow stores into the Company's operating system; the Company's ability to
enhance the performance of the acquired Rainbow stores; the ability to close the
transaction in the period currently anticipated; the satisfaction of the closing
conditions to the Rainbow acquisition; the ability to realize the cost savings
anticipated; 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/A for the
year ended December 31, 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.:
David E. Carpenter
Director of Investor
Relations
(972) 801-1214
dcarpenter@racenter.com
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RENT-A-CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS HIGHLIGHTS
<Table>
<Caption>
(In Thousands of Dollars, except per share data) THREE MONTHS ENDED MARCH 31,
-------------------------------
2004 2003
------------ ------------
UNAUDITED
Total Revenues $ 585,380 $ 566,406
Operating Profit 92,659 96,291
Net Earnings 52,209 50,959
Diluted Earnings Per Common Share 0.63 0.57
EBITDA $ 106,396 $ 109,284
RECONCILIATION TO EBITDA:
Reported earnings before income taxes $ 83,803 $ 83,539
Add back:
Interest expense, net 8,856 12,752
Depreciation of property assets 11,249 10,120
Amortization of intangibles 2,488 2,873
------------ ------------
EBITDA $ 106,396 $ 109,284
</Table>
<Table>
<Caption>
SELECTED BALANCE SHEET DATA: (IN THOUSANDS OF DOLLARS) MARCH 31, 2004 MARCH 31, 2003
--------------- ---------------
Cash and cash equivalents $ 273,391 $ 103,151
Prepaid expenses and other assets 42,444 25,717
Rental merchandise, net
On rent 557,484 556,415
Held for rent 140,418 136,909
Total Assets 1,954,674 1,729,618
Senior debt 397,000 249,500
Subordinated notes payable 300,000 271,849
Total Liabilities 1,110,307 841,687
Stockholders' Equity 844,367 887,931
</Table>
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RENT-A-CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
<Table>
<Caption>
(In Thousands of Dollars, except per share data) THREE MONTHS ENDED MARCH 31,
--------------------------------
2004 2003
------------ ------------
UNAUDITED
Revenues
Store
Rentals and fees $ 504,290 $ 493,419
Merchandise sales 59,423 52,664
Installment sales 6,698 6,045
Other 1,080 715
------------ ------------
571,491 552,843
Franchise
Merchandise sales 12,464 12,072
Royalty income and fees 1,425 1,491
------------ ------------
Total revenues 585,380 566,406
Operating expenses
Direct store expenses
Depreciation of rental merchandise 108,315 106,660
Cost of merchandise sold 39,611 36,548
Cost of installment sales 3,145 3,231
Salaries and other expenses 309,084 292,496
Franchise cost of merchandise sold 11,892 11,551
------------ ------------
472,047 450,486
General and administrative expenses 18,186 16,756
Amortization of intangibles 2,488 2,873
------------ ------------
Total operating expenses 492,721 470,115
------------ ------------
Operating profit 92,659 96,291
Interest expense 10,359 13,523
Interest income (1,503) (771)
------------ ------------
Earnings before income taxes 83,803 83,539
Income tax expense 31,594 32,580
------------ ------------
NET EARNINGS 52,209 50,959
Preferred dividends -- --
------------ ------------
Net earnings allocable to common stockholders $ 52,209 $ 50,959
============ ============
Basic weighted average shares outstanding 80,285 87,240
============ ============
Basic earnings per common share $ 0.65 $ 0.58
============ ============
Diluted weighted average shares outstanding 82,887 89,840
============ ============
Diluted earnings per common share $ 0.63 $ 0.57
============ ============
</Table>
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