Exhibit 99.1
AARON RENTS, INC. REPORTS RECORD SECOND QUARTER REVENUES AND EARNINGS;
SAME STORE REVENUES UP 7.3%;
EARNINGS GUIDANCE RAISED
ATLANTA, July 27 /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 record second quarter revenues and
earnings for the three months ended June 30, 2005.
For the second quarter of 2005, revenues increased 18% to $271.3 million
compared to $230.3 million for the second quarter in 2004. Net earnings
increased to $16.1 million versus $15.4 million for the same period a year ago.
Diluted earnings per share were $.32 compared to $.30 per share last year (which
included a $.07 per share gain on the disposition of Rainbow Rentals stock).
For the first six months of this year, revenues advanced 16% to a record
$550.7 million compared to $472.8 million for the first half of 2004. Net
earnings for the first half were up 22% to a record $34.5 million versus $28.2
million for the corresponding period last year. Diluted earnings per share for
the first six months were $.68 for 2005 and $.56 for 2004.
"We continue to execute the plans we have articulated to our investors over
a number of years," said R. Charles Loudermilk, Sr., Chairman and Chief
Executive Officer of Aaron Rents. "In recent years, our business has thrived
even in periods of uncertain strength in overall consumer spending habits. Our
growth prospects are, as they have been, excellent and we are well on our way to
meeting our operating and financial objectives for the year."
Included in the Company's other revenue in the 2005 second quarter and six
month results is a $565,000 gain realized from the sale of Rent-Way, Inc. common
stock which the Company purchased in various open market transactions. In
addition, results for the second quarter and six months of 2004 included $5.5
million in other revenue and a corresponding $3.4 million after-tax gain, or
$.07 diluted per share, from the disposition of the Company's Rainbow Rentals,
Inc. stock when Rainbow merged with Rent-A-Center, Inc. in May 2004. Excluding
the revenue and profit from these two stock transactions in all periods,
revenues would have been up 20% for the second quarter and 18% for the six
months of 2005, and earnings would have been up 31% for the second quarter and
38% for the six months of this year. A schedule reconciling the Company's
revenues and earnings excluding the effect of these stock transactions to its
revenues and earnings determined in accordance with GAAP follows the statement
of earnings and balance sheet data accompanying this release.
Rentals and fees for both the second quarter and first six months increased
21% over the previous year. In addition, franchise royalties and fees increased
27% for the second quarter and 24% year-to-date. Non-retail sales, which are
primarily sales of rental merchandise to Aaron's Sales & Lease Ownership
franchisees, increased to $42.2 million for the second quarter from $35.3
million in the comparable period in 2004 and to $87.8 million for
the first six months compared to $81.8 million for the same period 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 $209.5 million for the first six
months of 2005, a 22% increase over the comparable prior year period. Revenues
of franchisees, however, are not revenues of Aaron Rents, Inc.
The Aaron's Sales & Lease Ownership division increased its second quarter
revenues 22% to $241.5 million compared to $198.3 million last year. First six
months sales and lease ownership revenues increased 19% to $490.2 million
compared to $412.9 million 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 7.3% during the second quarter of 2005 compared to the second quarter
of 2004. Same store revenues also increased 4.0% for Aaron's Sales & Lease
Ownership stores open over two years at the end of June 2005.
During the second quarter the Aaron's Sales & Lease Ownership division
opened 17 new Company-operated stores and 18 new franchised stores. In addition,
during the quarter the Company acquired 11 franchised stores, acquired 10 stores
from independent rental operators, and purchased the accounts of 17 other third
party stores.
Through the three months and six months ended June 30, the Company awarded
area development agreements to open 8 and 37 additional franchised stores,
respectively. At the end of June there were a total of 304 franchised stores
awarded that will open over the next several years.
At June 30 the Aaron's Sales and Lease Ownership division had 684 Company-
operated stores and 368 franchise stores. In addition, the Company operated 59
rent-to-rent stores.
"Our guidance for the third quarter of 2005 is to expect revenues in excess
of $270 million and diluted earnings per share in the range of $.26 to $.28,
compared to $.21 per share in the third quarter of 2004," Mr. Loudermilk
continued. "We plan to open approximately 90 new Company-operated and 70 new
franchised stores in 2005, as well as continuing to add stores through
acquisition. We are raising our earnings guidance for the 2005 fiscal year and
expect Company revenues in excess of $1.1 billion (excluding revenues of
franchisees) and diluted earnings per share in the range of $1.25 to $1.28. Our
initial guidance for 2006 is to continue to increase our store base between 15%
and 20% per year and to achieve diluted earnings per share in the range of $1.45
to $1.55."
Aaron Rents will hold a conference call to discuss its quarterly financial
results on Thursday, July 28, 2005, 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, http://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 1,110 Company-
operated and franchised stores in 45 states, Canada, and Puerto Rico 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 10 facilities in four 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 "Certain Factors Affecting Forward Looking
Statements" in the Company's Annual Report on Form 10-K for fiscal 2004, which
discussion is incorporated herein by this reference. Statements in this release
that are "forward-looking" include without limitation Aaron Rents' projected
revenues, earnings, and store openings for 2005 and 2006.
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,
----------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Revenues:
Rentals and Fees $ 206,626 $ 170,225 $ 415,771 $ 342,597
Retail Sales 13,314 12,578 29,357 29,049
Non-Retail Sales 42,212 35,272 87,783 81,771
Franchise Royalties
and Fees 7,137 5,610 14,328 11,526
Other 2,049 6,601 3,447 7,836
Total 271,338 230,286 550,686 472,779
Costs and Expenses:
Retail Cost of Sales 8,892 8,663 19,628 20,373
Non-Retail Cost of
Sales 39,089 32,709 81,722 76,015
Operating Expenses 121,602 100,658 241,233 202,751
Depreciation of Rental
Merchandise 74,374 62,062 149,504 125,532
Interest 1,737 1,266 3,337 2,474
Total 245,694 205,358 495,424 427,145
Earnings Before Taxes 25,644 24,928 55,262 45,634
Income Taxes 9,524 9,543 20,720 17,432
Net Earnings $ 16,120 $ 15,385 $ 34,542 $ 28,202
Earnings Per Share $ .32 $ .31 $ .69 $ .57
Earnings Per Share
Assuming Dilution $ .32 $ .30 $ .68 $ .56
Weighted Average
Shares Outstanding (1) 49,792 49,632 49,780 49,478
Weighted Average
Shares Outstanding
Assuming Dilution (1) 50,774 50,525 50,761 50,393
(1) Shares outstanding adjusted for a 3-for-2 partial stock split effective
August 16, 2004.
Selected Balance Sheet Data
(In Thousands)
June 30, December 31,
2005 2004
---------- ------------
(Unaudited)
Cash $ 4,808 $ 5,865
Accounts Receivable, Net 32,871 32,736
Rental Merchandise, Net 470,611 425,567
Property, Plant and
Equipment, Net 119,177 111,118
Other Assets, Net 119,744 125,002
Total Assets 747,211 700,288
Bank Debt 76,799 45,528
Senior Notes 50,000 50,000
Total Liabilities 337,555 325,110
Shareholders' Equity $ 409,656 $ 375,178
Reconciliation of Revenues and Earnings
Excluding Stock Sales
(In thousands, except per share amounts)
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Total Revenues $ 271,338 $ 230,286 $ 550,686 $ 472,779
Less Revenues from
Stock Sales 565 5,500 565 5,500
Revenues Excluding
Stock Sales 270,773 224,786 550,121 467,279
Net Earnings 16,120 15,385 34,542 28,202
Less Gain from Stock Sales 355 3,394 355 3,394
Net Earnings Excluding Gain
From Stock Sales $ 15,765 $ 11,991 $ 34,187 $ 24,808
SOURCE Aaron Rents, Inc.
-0- 07/27/2005
/CONTACT: Gilbert L. Danielson, Executive Vice President and Chief
Financial Officer of Aaron Rents, Inc., +1-678-402-3334/
/Web site: http://www.aaronrents.com/