Aaron Rents, Inc. Reports Second Quarter Revenues and Earnings
ATLANTA, July 24 /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 and home
appliances and accessories, today announced revenues and earnings for the three
months ended June 30, 2007.
For the second quarter of 2007, revenues rose 12% to $359.0 million compared
to $321.7 million for the second quarter of 2006. Net earnings were $19.7
million versus $20.7 million for the same period a year ago. Diluted earnings
per share were $.36 compared to $.39 per share last year. Last year's second
quarter results included a pre-tax gain of $4.4 million, or approximately $.06
per diluted share, from the sale of the Company's former Puerto Rico operations.
For the first six months of this year, revenues were up 12% to $746.9
million compared to $669.0 million for the first six months of 2006. Net
earnings for the first half of 2007 increased 16% to $48.9 million versus $42.2
million for the corresponding period last year. Diluted earnings per share for
the first six months were $.89 for 2007 and $.81 for 2006.
Included in the Company's other revenues in the first six months of 2007 was
a pre-tax $4.9 million gain from the sale in the first quarter of a parking deck
at the Company's corporate headquarters. The Company's other revenues in the
second quarter and first six months of 2006 included the aforementioned gain
from the sale of the Company's Puerto Rican stores. Excluding these two
transactions the Company's net earnings on a non-GAAP basis would have been up
17% for the six months of 2007 compared to the six months of 2006.
"We feel we are still on track to add 250 stores during fiscal year 2007,"
said R. Charles Loudermilk, Sr., Chairman and Chief Executive Officer of Aaron
Rents. "Our Aaron's Sales & Lease Ownership division continues to do well and
our prospects for the division's future have not changed."
Aaron's Sales & Lease Ownership division second quarter revenues increased
13% to $327.6 million compared to $290.2 million last year. First six months
sales and lease ownership revenues increased 12% to $678.8 million compared to
$604.5 million recorded a year ago.
Same store revenues (revenues earned in Company-operated stores open for the
entirety of both periods) in the Aaron's Sales & Lease Ownership division
increased 5.0% during the second quarter of 2007 compared to the same quarter a
year ago. Same store revenues increased 3.0% for Aaron's Sales & Lease Ownership
stores open over two years at the end of June 2007.
Aaron's Corporate Furnishings division revenues during the second quarter
were $30.6 million compared to $31.1 million a year ago and revenues for the
first half were $61.8 million versus $63.4 million.
Consolidated rentals and fees for both the second quarter and first half
advanced 13% over the comparable previous year periods. In addition, franchise
royalties and fees were up 18% and 19% for the second quarter and year-to-date,
respectively. Non-retail sales, which are primarily sales of rental merchandise
to Aaron's Sales & Lease Ownership franchisees, increased to $56.7 million for
the second quarter from $46.4 million in the comparable period in 2006 and to
$126.9 million for the first six months compared to $110.4 million for the first
six months last year. The increases in the Company's franchise revenues and the
shipments of non-retail sales are the result of the increase in revenues of the
Company's franchisees, who collectively had revenues of $136.2 million during
the second quarter and $283.8 million for the first six months of 2007, a 15%
and 16% increase, respectively, over the prior year periods. Revenues of
franchisees, however, are not revenues of Aaron Rents, Inc.
During the second quarter the Aaron's Sales & Lease Ownership division
opened 15 new Company-operated stores, 19 new franchised stores, acquired 14
franchised stores and sold a Company-operated store to a franchisee. The Aaron's
Corporate Furnishings division also opened one new store during the quarter and
purchased the accounts of a third party operator, merging these accounts into
the new store.
Through the three months and six months ended June 30, the Company awarded
area development agreements to open 55 and 106 additional franchised stores,
respectively. At the end of June there were a total of 276 franchised stores
awarded that are expected to open over the next several years.
At June 30, 2007 the Aaron's Sales and Lease Ownership division had 868
Company-operated stores, 454 franchised stores, 22 Company-operated RIMCO
stores, and two franchised RIMCO stores. In addition, the Company operated 60
corporate furnishings stores.
"Our 2007 store opening plans have not changed, and we anticipate adding
approximately 190 stores during the second half of 2007, of which we expect
roughly 35 stores will be franchised stores," Mr. Loudermilk continued. "Our
guidance for the third quarter of 2007 is to expect revenues in excess of $355
million and diluted earnings per share in the range of $.31 to $.35. For the
entire 2007 year we expect Company revenues of approximately $1.5 billion
(excluding revenues of franchisees) and are lowering our previous diluted
earnings per share range of guidance of $1.55 to $1.65 for the year to $1.50 to
$1.60 (excluding the gain on the first quarter parking deck sale), primarily due
to the anticipated start-up costs of the substantial number of new stores
planned to be added during the last half of the year."
Aaron Rents will hold a conference call to discuss its quarterly financial
results on Wednesday, July 25, 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 1,400
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) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Revenues:
Rentals and Fees $277,927 $245,794 $563,724 $500,040
Retail Sales 12,514 15,932 28,140 35,102
Non-Retail Sales 56,654 46,357 126,907 110,384
Franchise Royalties and Fees 9,602 8,120 19,516 16,448
Other 2,288 5,524 8,632 7,040
Total 358,985 321,727 746,919 669,014
Costs and Expenses:
Retail Cost of Sales 8,484 10,867 18,791 23,273
Non-Retail Cost of Sales 52,130 43,307 116,260 103,098
Operating Expenses 163,737 142,818 325,414 286,774
Depreciation of Rental
Merchandise 101,063 90,321 204,114 183,602
Interest 1,896 2,724 3,785 5,946
Total 327,310 290,037 668,364 602,693
Earnings Before Taxes 31,675 31,690 78,555 66,321
Income Taxes 12,018 11,040 29,691 24,110
Net Earnings $19,657 $20,650 $48,864 $42,211
Earnings Per Share $.36 $.40 $.90 $.83
Earnings Per Share
Assuming Dilution $.36 $.39 $.89 $.81
Weighted Average
Shares Outstanding 54,191 51,887 54,176 51,040
Weighted Average
Shares Outstanding
Assuming Dilution 55,065 52,705 55,046 51,896
Selected Balance Sheet Data
(In Thousands)
(Unaudited)
June 30, December 31,
2007 2006
Cash $10,600 $8,807
Accounts Receivable, Net 41,607 43,495
Rental Merchandise, Net 619,532 612,149
Property, Plant and
Equipment, Net 189,749 170,294
Other Assets, Net 162,443 144,861
Total Assets 1,023,931 979,606
Bank Debt 7,000 15,612
Senior Notes 90,000 90,000
Total Liabilities 369,457 372,591
Shareholders' Equity $654,474 $607,015
Reconciliation of Revenues and Earnings
Excluding Asset Sales of Parking Deck and Puerto Rican Stores
(In thousands)
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Total Revenues $358,985 $321,727 $746,919 $669,014
Less Revenues from Asset
Sales - 4,425 4,878 4,425
Revenues Excluding Asset
Sales 358,985 317,302 742,041 664,589
Net Earnings 19,657 20,650 48,864 42,211
Less Gain from Asset Sales - 2,884 3,034 2,884
Net Earnings Excluding Gain
From Asset Sales $19,657 $17,766 $45,830 $39,327
SOURCE Aaron Rents, Inc.