Contact: Gilbert L. Danielson
Executive Vice President
Chief Financial Officer
404-231-0011
Aaron Rents, Inc.
Previews Fourth Quarter and
Fiscal Year Results;
Revenues up 14% for Quarter;
Same Store Revenues up 3.9%
ATLANTA, January 22, 2008 - 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, announced today expected fourth quarter and annual financial
results for the fiscal year ended December 31, 2007. All data in this earnings
release is preliminary and subject to audit. The Company will announce final
fourth quarter and fiscal year 2007 financial results on February 19, 2008.
"Fiscal year 2007 was a record for us in revenues and earnings, and a year
of rapid expansion in store base," said R. Charles Loudermilk, Sr., Chairman and
Chief Executive Officer of Aaron Rents. "Although conditions in some of our
markets are currently challenging, we are confident that the products and
services we offer to credit constrained consumers will continue to be in high
demand in the future."
For the fourth quarter of 2007 the Company preliminarily expects to record
the following:
- Aaron's Sales & Lease Ownership division revenues increased 16% and
overall Company revenues increased 14% compared to the fourth
quarter a year ago. Same store revenues in the Aaron's Sales & Lease
Ownership division were up 3.9% over last year.
- Diluted earnings per share should be in the range of $.27 to $.28
per share.
- The Company added a net 61 Company-operated stores and 38 franchised
stores during the quarter.
- New store start-up expenses were approximately $.11 per diluted
share versus $.04 per share in the fourth quarter a year ago.
- Overall revenues and same store revenues of Aaron's Sales & Lease
Ownership franchised stores increased by double-digit percentages,
respectively, over the fourth quarter of 2006. Revenues of
franchisees, however, are not revenues of Aaron Rents, Inc.
The Company preliminarily expects the following results for the twelve
months of 2007: - Company revenues are up 13% to slightly below $1.5 billion
(excluding revenues of franchisees).
- Revenues of the Aaron's Sales & Lease Ownership division were up 14%
over last year.
- The Company with its franchisees had a total store count at the end
of 2007 of 1,560 stores open, an increase of 16% over the previous
year.
- During 2007 the Company awarded area development agreements to open
a record 182 additional franchised stores and at the end of December
there were a total of 284 franchised stores awarded that are
expected to open over the next several years.
"Same store revenue growth for our Company-operated stores, although still
good, was less than expected during the quarter. We have, however, made progress
in reducing write-offs over the last several months," Mr. Loudermilk, Sr.
continued. "The expenses incurred in expanding our store base substantially
reduced profitability compared to the fourth quarter a year ago. As previously
announced, we have slowed down our new store plans for 2008 and will concentrate
on improving overall profitability as well as revenue growth in existing
stores."
"Our collective franchised stores during 2007 outperformed
Company-operated stores and our priority in 2008 is to raise Company stores to a
similar level of performance," Mr. Loudermilk, Sr. added. "We are also
especially pleased with the demand for new franchised stores as evidenced by the
record number of new area development agreements during the fiscal year."
The Company bought 646,000 shares of its Common Stock during the fourth
quarter of 2007 and at its current market valuation anticipates continuing the
repurchase of shares. There are currently 4,354,000 shares remaining under the
Company's recent Board repurchase authorization.
The Company will update first quarter and fiscal year 2008 revenue,
earnings, and store growth expectations when 2007 financial results are reported
on February 19. It is expected that first quarter earnings will be below that of
the first quarter of 2007 due to the issues discussed above and the continuing
start-up expenses of the large amount of new stores added in recent periods. The
Company does expect that revenues and earnings for the entire 2008 year will
again reach record levels, but in the current environment results are
anticipated to be lower than the previous EPS guidance of $1.60 to $1.75 per
diluted share. At this time, the Company anticipates opening less than 75 new
Company-operated stores in 2008 and these openings are expected to be offset
somewhat by the merging or selling of stores not meeting profit goals. It is
expected that 70 to 90 new franchised stores will also be opened in 2008. The
Company also plans to continue to acquire franchised stores and sell
Company-operated stores to franchisees as opportunities to improve profitability
present themselves.
Aaron Rents will hold a conference call to discuss its quarterly financial
results on Wednesday, February 20, 2008, 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, at December 31, 2007 had 1,560
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 12 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'
preliminary expectations regarding its results for the year and fourth quarter
ended December 31, 2007 and its projected revenues, earnings, and store openings
for future periods.