Aaron Rents, Inc. Reports Record First Quarter Results; Earnings Up 35%
ATLANTA, April 25 /PRNewswire-FirstCall/ -- Aaron Rents, Inc. (NYSE: RNT),
the nation's leader in the sales and lease ownership, specialty retailing and
rental of residential and office furniture, consumer electronics, home
appliances and accessories, today announced record revenues and earnings for the
three months ended March 31, 2007.
For the first quarter of 2007, revenues increased 12% to $387.9 million
compared to $347.3 million for the same quarter a year ago. Net earnings were up
35% to $29.2 million versus $21.6 million last year. Diluted earnings per share
were $.53 compared to $.42 per diluted share in the first quarter of 2006.
Included in the Company's other revenues in the first quarter of 2007 was a $4.9
million gain from the sale of a parking deck at the Company's corporate
headquarters. Excluding this gain, net earnings on a non-GAAP basis for the
first quarter would have been $26.2 million or $.48 per diluted share. "We feel
that our first quarter was a good start for 2007," said R. Charles Loudermilk,
Sr., Chairman and Chief Executive Officer of Aaron Rents. "We plan to continue
to aggressively expand operations and look forward to adding more stores in
future periods."
For the first quarter, the Aaron's Sales & Lease Ownership division
increased its revenues 12% to $351.2 million compared to $314.3 million for the
first quarter last year. Same store rental revenues (rental revenues earned in
Company-operated stores open for the entirety of both periods) in the Aaron's
Sales & Lease Ownership division increased 9.3% during the first quarter of 2007
compared to the first quarter of 2006. Total same store revenues for these
stores, which includes the rental revenue gain offset by a decline in retail
sales and early payouts of lease ownership agreements, increased 5.4% for the
first quarter of this year compared to the quarter last year.
The Aaron's Corporate Furnishings division revenues declined 3% during the
quarter to $31.2 million compared to the $32.3 million recorded in the first
quarter a year ago. The division's revenues were aided last year from increased
business related to the hurricanes in the Gulf Coast region in 2005.
Consolidated rentals and fees advanced increased 12% and franchise
royalties and fees increased 19% during the first quarter of 2007 compared to
the same period in 2006. Non-retail sales, which are primarily sales of
merchandise to Aaron's Sales & Lease Ownership franchisees, increased 10% for
the quarter compared to the first quarter of last year. The increases in the
Company's franchise revenues and non-retail sales are the result of an increase
in revenues of the Company's franchisees, who collectively had revenues of
$147.6 million during the first quarter of 2007, a 16% increase over the 2006
quarter. Revenues of franchisees, however, are not revenues of Aaron Rents, Inc.
During the quarter the Aaron's Sales & Lease Ownership division opened 13
new Company-operated stores, 13 new franchised stores, and three RIMCO stores.
In addition, the Company acquired three franchised stores, sold one Company-
operated store to a franchisee, and purchased the accounts from two other third
party stores that were merged into existing Company-operated stores. In
addition, area development agreements were awarded to open 51 additional
franchised stores. At the end of March there were 258 franchised stores awarded
that are expected to open over the next several years.
At March 31, 2007, the Aaron's Sales & Lease Ownership division had 842
Company-operated stores, 451 franchised stores, and 20 RIMCO stores. The Company
also had 59 corporate furnishings stores.
"Although revenue growth in the first quarter was slower than in the past
quarters, due to the decline in retail sales and early payouts, margins improved
as several of the initiatives we have put in place over the past year to raise
profitability are showing results," Mr. Loudermilk continued. "We still expect
to add 250 stores in 2007, a combination of Company-operated and franchised
stores. Our guidance for the second quarter of 2007 is to expect revenues in
excess of $350 million and diluted earnings per share in the range of $.35 to
$.39," Mr. Loudermilk continued. "For the entire 2007 year we expect Company
revenues of approximately $1.5 billion (excluding revenues of franchisees) and
diluted earnings per share in the range of $1.55 to $1.65 (excluding the gain on
the parking deck sale)."
Aaron Rents will hold a conference call to discuss its quarterly financial
results on Thursday, April 26, 2007, at 10:30 am Eastern Time. The public is
invited to listen in to the conference call by webcast accessible through the
Company's website, www.aaronrents.com, in the "Investor Relations" section. The
webcast will be archived for playback at that same site.
Aaron Rents, Inc., based in Atlanta, currently has more than 1,380
Company-operated and franchised stores in 48 states and Canada for the rental
and sale of residential and office furniture, accessories, consumer electronics
and household appliances. The Company also manufactures furniture, bedding and
accessories at 13 facilities in five states.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: Statements in this news release regarding Aaron Rents, Inc.'s business
which are not historical facts are "forward-looking statements" that involve
risks and uncertainties which could cause actual results to differ materially
from those contained in the forward-looking statements. These risks and
uncertainties include factors such as changes in general economic conditions,
competition, pricing, customer demand and other issues, and the risks and
uncertainties discussed under "Risk Factors" in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2006. Statements in this
release that are "forward-looking" include without limitation Aaron Rents'
projected revenues, earnings, and store openings for future periods.
Aaron Rents, Inc. and Subsidiaries
Consolidated Statements of Earnings
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
2007 2006
Revenues:
Rentals and Fees $ 285,797 $ 254,246
Retail Sales 15,626 19,170
Non-Retail Sales 70,253 64,027
Franchise Royalties and Fees 9,914 8,328
Other 6,344 1,516
Total 387,934 347,287
Costs and Expenses:
Retail Cost of Sales 10,307 12,406
Non-Retail Cost of Sales 64,130 59,791
Operating Expenses 161,677 143,956
Depreciation of Rental Merchandise 103,051 93,281
Interest 1,889 3,222
Total 341,054 312,656
Earnings Before Taxes 46,880 34,631
Income Taxes 17,673 13,070
Net Earnings $ 29,207 $ 21,561
Earnings Per Share $ .54 $ .43
Earnings Per Share Assuming Dilution $ .53 $ .42
Weighted Average Shares Outstanding 54,161 50,185
Weighted Average Shares Outstanding
Assuming Dilution 54,992 51,085
Selected Balance Sheet Data
(In Thousands)
(Unaudited) March 31, December 31,
2007 2006
Cash $ 9,420 $ 8,807
Accounts Receivable 46,721 43,495
Rental Merchandise, Net 637,816 612,149
Property, Plant and Equipment, Net 175,977 170,294
Other Assets, Net 147,323 144,861
Total Assets 1,017,257 979,606
Bank Debt 5,000 15,612
Senior Notes 90,000 90,000
Total Liabilities 383,075 372,591
Shareholders' Equity $ 634,182 $ 607,015
SOURCE Aaron Rents, Inc.
-0- 04/25/2007
/CONTACT: Gilbert L. Danielson, Executive Vice President, Chief Financial
Officer, of Aaron Rents, Inc., +1-678-402-3314/
/Web site: http://www.aaronrents.com /