Exhibit 99.1
Contact: Gilbert L. Danielson
Executive Vice President
Chief Financial Officer
AARON RENTS, INC. REPORTS
FOURTH QUARTER AND FISCAL YEAR RESULTS;
REVENUES UP 22% FOR QUARTER; 19% FOR YEAR;
SAME STORE REVENUES UP 11.5%;
DILUTED EPS $.29 FOR QUARTER; $1.14 FOR YEAR
ATLANTA, February 22, 2006 - Aaron Rents, Inc. (NYSE: RNT), the
nation's leader in 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 fourth quarter and
fiscal year ended December 31, 2005.
For the fourth quarter of 2005, revenues increased 22% to $296.2
million compared to $242.1 million for the fourth quarter of 2004. Net earnings
for the fourth quarter increased to $14.6 million versus $13.8 million last
year. Diluted earnings per share for the fourth quarter were $.29 compared to
$.27 per share a year ago.
For the year, revenues increased 19% to $1.1 billion compared to $946.5
million for 2004. Net earnings for the year increased to $58.0 million versus
$52.6 million last year. Diluted earnings per share were $1.14 for 2005 compared
to $1.04 in 2004.
"We are pleased with our fourth quarter results and believe we are on
track to continue our rapid expansion in the 2006 year," said R. Charles
Loudermilk, Sr., Chairman and Chief Executive Officer of Aaron Rents. "Our
intermediate term goal is to have 2,000 stores open, a combination of
Company-operated and franchised stores, and feel we can achieve that in a few
years. For the fourth quarter, the Aaron's Sales & Lease Ownership division
increased its revenues to $265.5 million, a 24% increase over the $214.0 million
in the fourth quarter of 2004. For the year, revenues were $1.0 billion, a 21%
increase over the $831.1 million recorded last year.
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 11.5% during the fourth quarter of 2005 compared to the
fourth quarter of 2004. Same store revenues for the twelve month period ended
December 31, 2005 increased 8.3% compared to the same period a year ago.
The fourth quarter was the 16th consecutive quarter that the Company has
experienced an over 5% quarterly same store revenue growth compared to the same
quarter a year ago.
The Aaron's Corporate Furnishings division, the Company's rent-to-rent
operations, increased revenues 8% during the fourth quarter to $30.0 million
compared to $27.8 million for the fourth quarter a year ago. Revenues for the
year were $117.5 million, up 8% from $108.5 million a year earlier.
Consolidated rentals and fees increased 23% for the fourth quarter and
22% for the year. In addition, franchise royalties and fees increased 9% in the
fourth quarter and 17% for the year. Non-retail sales, which are primarily sales
of rental merchandise to Aaron's Sales & Lease Ownership franchisees, increased
28% for the quarter compared to the fourth quarter last year and 15% for the
year. The increases in the Company's franchise revenues and the shipments of
non-retail sales are the result of an increase in revenues of the Company's
franchisees, who collectively had revenues of $419.7 million for the year of
2005, a 17% increase from the comparable prior year period. Revenues of
franchisees, however, are not revenues of Aaron Rents, Inc.
Included in the Company's other revenue in 2005 is a $565,000 gain and
a corresponding $355,000 after-tax gain, previously reported, realized from the
sale of shares of a competitor's common stock which had been purchased by the
Company in various open market transactions. In addition, results for 2004
included $5.5 million in other revenue and a corresponding $3.4 million
after-tax gain, or $.07 per diluted share, from the sale of another competitor's
stock also acquired on the open market. While these stock sales had a positive
impact on earnings in those periods, the size of the 2004 stock sale masks the
strong period over period improvement in earnings -- excluding the profit from
these two stock transactions in both periods, earnings would have been up 17%
for the 2005 year compared to 2004.
During the fourth quarter, the Aaron's Sales & Lease Ownership division
opened 24 new Company-operated stores, 19 new franchised stores, and one RIMCO
store. In addition, during the quarter the Company acquired nine stores from
three different franchisees. The Company also acquired 19 stores in the fourth
quarter from an independent rental operator, seven of which were merged into
existing Aaron's Company-operated stores, seven were opened as new
Company-operated stores, and another five were sold to franchisees. During the
quarter the Company also purchased the accounts of three other third party
stores.
For the 2005 year, the Company and its franchisees added a net of 167
sales and lease ownership stores, a 16% increase for the year in store count,
including, in addition to acquisitions, the opening of 75 new Company-operated
stores and 71 new franchised stores.
During the fourth quarter and fiscal year the Company awarded area
development agreements to open 14 and 64 additional franchised stores,
respectively. At the end of December 2005 there were 272 franchise stores
awarded that are planned to be opened over the next several years.
At December 31, 2005 the Company had 1,198 stores open, of which the
Aaron's Sales and Lease Ownership division accounted for 739 Company-operated
stores, 392 franchise stores, and nine RIMCO stores. The Company also had 58
rent-to-rent stores.
"We expect revenues in the first quarter of 2006 to be in excess of
$315 million and diluted earnings per share in the range of $.38 to $.41," Mr.
Loudermilk continued. "For the 2006 year we expect Company revenues in excess of
$1.3 billion (excluding revenues of franchisees) and diluted earnings per share
in the range of $1.45 to $1.55. We also anticipate that for the foreseeable
future we will continue to record very positive quarterly same store revenue
growth. We plan to increase our combined Company-operated and franchised store
count approximately 15% per annum during the next several years."
Aaron Rents will hold a conference call to discuss its quarterly and
annual financial results on Thursday, February 23, 2006, 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 1,200
Company-operated and franchised stores in 46 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 future periods.
AARON RENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------------- ---------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
Revenues:
Rentals and Fees $ 218,440 $ 177,974 $ 845,162 $ 694,293
Retail Sales 14,567 13,559 58,366 56,259
Non-Retail Sales 54,130 42,172 185,622 160,774
Franchise Royalties and Fees 7,598 6,999 29,474 25,093
Other 1,417 1,349 6,881 10,061
Total 296,152 242,053 1,125,505 946,480
Costs and Expenses:
Retail Cost of Sales 9,977 9,222 39,054 39,380
Non-Retail Cost of Sales 50,446 38,940 172,807 149,207
Operating Expenses 129,922 106,902 507,158 414,518
Depreciation of Rental
Merchandise 79,399 64,079 305,630 253,456
Interest 2,839 1,589 8,519 5,413
Total 272,583 220,732 1,033,168 861,974
Earnings Before Taxes 23,569 21,321 92,337 84,506
Income Taxes 8,961 7,554 34,344 31,890
Net Earnings $ 14,608 $ 13,767 $ 57,993 $ 52,616
Earnings Per Share $ .29 $ .28 $ 1.16 $ 1.06
Earnings Per Share
Assuming Dilution $ .29 $ .27 $ 1.14 $ 1.04
Weighted Average
Shares Outstanding 49,961 49,738 49,846 49,602
Weighted Average
Shares Outstanding
Assuming Dilution 50,836 50,798 50,805 50,575
SELECTED BALANCE SHEET DATA
(In Thousands)
December 31, December 31,
2005 2004
------------- -------------
(Unaudited)
Cash $ 6,973 $ 5,865
Accounts Receivable 42,812 32,736
Rental Merchandise, Net 550,932 425,567
Property, Plant and
Equipment, Net 133,759 111,118
Other Assets, Net 122,569 125,002
Total Assets 857,045 700,288
Bank Debt 91,336 45,528
Senior Notes 100,000 50,000
Total Liabilities 422,574 325,110
Shareholders' Equity $ 434,471 $ 375,178