Exhibit 99.1
AARON RENTS, INC. REPORTS SECOND QUARTER REVENUES AND EARNINGS; SAME STORE
REVENUES UP 9.1%; TO ACCELERATE NEW STORE OPENINGS
ATLANTA, July 26 /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, 2006.
For the second quarter of 2006, revenues increased 19% to $321.7 million
compared to $271.3 million for the second quarter in 2005. Net earnings
increased 28% to $20.7 million versus $16.1 million for the same period a year
ago. Diluted earnings per share were $.39 compared to $.32 per share last year.
For the first six months of this year, revenues advanced 21% to $669.0
million compared to $550.7 million for the first half of 2005. Net earnings for
the first six months were up 22% to $42.2 million versus $34.5 million for the
corresponding period last year. Diluted earnings per share for the first six
months were $.81 for 2006 and $.68 for 2005.
"We are pleased with the results for the quarter," said R. Charles
Loudermilk, Sr., Chairman and Chief Executive Officer of Aaron Rents. "Our
business plan remains to rapidly increase our revenues and store base through
the opening of new Company-operated and franchised stores, plus selective
acquisitions. We are very confident of the prospects for our business and are
accelerating our store opening plans. We anticipate adding approximately 350 new
Aaron's Sales & Lease Ownership stores over the next 18 months, a 30% increase
over the current store base."
The Aaron's Sales & Lease Ownership division increased its second quarter
revenues 20% to $290.2 million compared to $241.5 million last year. First six
months sales and lease ownership revenues increased 23% to $604.5 million
compared to $490.2 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 9.1% during the second quarter of 2006 compared to the second quarter
of 2005. Same store revenues also increased 6.0% for Aaron's Sales & Lease
Ownership stores open over two years at the end of June 2006.
The Aaron's Corporate Furnishings division increased revenues 9% during the
second quarter to $31.1 million compared to $28.5 million a year ago. First six
months corporate furnishings revenues were $63.4 million compared to $58.7
million last year, an 8% increase.
Included in the Company's other revenues in the 2006 second quarter and six
month results is a pre-tax gain of $4.4 million, or approximately $.06 per
diluted share, from the sale at the end of June of the assets of the Company's
12 stores located in Puerto Rico. Also, included in the Company's other revenues
in the 2005 second quarter and six month results is a $565,000 pre- tax gain, or
approximately $.01 per diluted share, realized from the sale of Rent-Way, Inc.
common stock which the Company purchased in various open market transactions.
Included in operating expenses in both the first and second quarter of 2006
was a $950,000 pre-tax expense, or approximately $.01 per diluted share each
quarter, resulting from the Company's adoption on January 1, 2006 of accounting
for stock options as compensation expense under the guidelines of Statement of
Financial Accounting Standards No. 123R.
Consolidated rentals and fees for the second quarter increased 19% and the
first six months increased 20% over the previous year. In addition, franchise
royalties and fees were up 12% and 13% 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 $46.4 million for
the second quarter from $42.2 million in the comparable period in 2005 and to
$110.4 million for the first six months compared to $87.8 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 $118.0 million during
the second quarter and $245.4 million for the first six months of 2006, a 17%
increase over both the comparable 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 12 new Company-operated stores and 15 new franchised stores. In addition,
during the quarter the Company acquired eight franchised stores and three stores
from independent rental operators, and purchased the accounts of four other
third party stores. As previously noted above, the Company also sold all 12 of
its stores in Puerto Rico.
Through the three months and six months ended June 30, the Company awarded
area development agreements to open three and eight additional franchised
stores, respectively. At the end of June there were a total of 237 franchised
stores awarded that will open over the next several years.
At June 30, 2006 the Aaron's Sales and Lease Ownership division had 766
Company-operated stores, 406 franchised stores, and ten RIMCO stores. In
addition, the Company operated 59 corporate furnishings stores.
During the second quarter the Company sold 3,450,000 shares of Common Stock
in a secondary stock offering, using the proceeds of approximately $84 million
to pay down bank debt. At the end of June 2006 the Company had no borrowings
under its $140 million revolving credit agreement and had $24 million of cash on
hand.
"Our revenue growth over a number of years has been excellent and we expect
these trends to continue as we aggressively expand our operations," Mr.
Loudermilk added. "As always our future earnings will be impacted by losses
incurred as a result of the opening of new stores, and these losses will be
somewhat higher in future periods with our accelerated new store growth plans.
We plan to work on initiatives that we expect will improve margins to partially
offset increases in normal operating costs and some of the effect of the new
store start-up expenses."
"Our guidance for the third quarter of 2006 is to expect revenues in excess
of $320 million and diluted earnings per share, after the effect of the
secondary stock offering, in the range of $.30 to $.33, compared to $.17 per
share in the third quarter of 2005," Mr. Loudermilk continued. "We plan to open
approximately 65 new Company-operated and 35 new franchised stores the last half
of 2006, and approximately 150 new Company-operated and 100 new franchised
stores in fiscal year 2007. Our revised guidance for the 2006 fiscal year is to
expect Company revenues in excess of $1.3 billion (excluding revenues of
franchisees) and diluted earnings per share, including the gain on the Puerto
Rico sale, in the range of $1.46 to $1.50."
Aaron Rents will hold a conference call to discuss its quarterly financial
results on Thursday, July 27, 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 1,245 Company-
operated and franchised stores in 47 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 Registration
Statement on Form S-3, file number 333-133913, filed with the Securities and
Exchange Commission on May 9, 2006, 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)
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Revenues:
Rentals and Fees $ 245,794 $ 206,626 $ 500,040 $ 415,771
Retail Sales 15,932 13,314 35,102 29,357
Non-Retail Sales 46,357 42,212 110,384 87,783
Franchise Royalties and Fees 8,120 7,222 16,448 14,492
Other 5,524 1,964 7,040 3,283
Total 321,727 271,338 669,014 550,686
Costs and Expenses:
Retail Cost of Sales 10,867 8,892 23,273 19,628
Non-Retail Cost of Sales 43,307 39,089 103,098 81,722
Operating Expenses 142,818 121,602 286,774 241,233
Depreciation of Rental
Merchandise 90,321 74,374 183,602 149,504
Interest 2,724 1,737 5,946 3,337
Total 290,037 245,694 602,693 495,424
Earnings Before Taxes 31,690 25,644 66,321 55,262
Income Taxes 11,040 9,524 24,110 20,720
Net Earnings $ 20,650 $ 16,120 $ 42,211 $ 34,542
Earnings Per Share $ .40 $ .32 $ .83 $ .69
Earnings Per Share
Assuming Dilution $ .39 $ .32 $ .81 $ .68
Weighted Average
Shares Outstanding 51,887 49,792 51,040 49,780
Weighted Average
Shares Outstanding
Assuming Dilution 52,705 50,774 51,896 50,761
Selected Balance Sheet Data
(In Thousands)
(Unaudited)
June 30, December 31,
2006 2005
------------ ------------
Cash $ 24,293 $ 6,973
Accounts Receivable, Net 34,964 42,812
Rental Merchandise, Net 568,191 550,932
Property, Plant and
Equipment, Net 138,231 133,759
Other Assets, Net 141,571 124,039
Total Assets 907,250 858,515
Bank Debt - 91,336
Senior Notes 100,000 100,000
Total Liabilities 339,716 424,044
Shareholders' Equity $ 567,534 $ 434,471
SOURCE Aaron Rents, Inc.
-0- 07/26/2006
/CONTACT: Gilbert L. Danielson, Executive Vice President, Chief Financial
Officer of Aaron Rents, Inc., +1-678-402-3314/
/Web site: http://www.aaronrents.com/