Exhibit 99.1
AARON RENTS, INC. REPORTS FOURTH QUARTER AND FISCAL YEAR RESULTS;
NET EARNINGS UP 30% FOR QUARTER; 36% FOR YEAR
ATLANTA, Feb. 20 /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 fourth
quarter and fiscal year ended December 31, 2006.
For the fourth quarter of 2006, revenues increased 15% to $339.9 million
compared to $296.2 million for the fourth quarter in 2005. Net earnings
increased 30% to $19.0 million versus $14.6 million last year. Diluted earnings
per share were $.35 compared to $.29 per share a year ago.
For the year, revenues increased 18% to $1.327 billion compared to $1.126
billion for the 2005 year. Net earnings increased 36% to $78.6 million versus
$58.0 million a year ago. Diluted earnings per share were $1.47 for 2006
compared to $1.14 in 2005.
"Our results met our expectations for the quarter and we are very pleased
with our record year in revenues and earnings," said R. Charles Loudermilk, Sr.,
Chairman and Chief Executive Officer of Aaron Rents. "We stated we would add 100
stores during the last half of 2006 and slightly exceeded that number. Our goal
for 2007 is unchanged and we plan to add another 250 stores during the year, a
combination of Company-operated and franchised stores."
The Aaron's Sales & Lease Ownership division continues to have record
results. For the fourth quarter the division increased its revenues to $309.8
million, a 17% increase over the $265.5 million in the fourth quarter of 2005.
For the year, revenues were $1.201 billion, a 19% increase over the $1.005
billion 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 7.2% during the fourth quarter of 2006 compared to the fourth quarter
of 2005. Same store revenues also increased 4.5% for Aaron's Sales & Lease
Ownership stores open over two years at the end of December 2006.
The Aaron's Corporate Furnishings division revenues for the fourth quarter
were $29.2 million compared to $30.0 million for the fourth quarter a year ago.
Revenues for the year were $123.0 million, up 5% from $117.5 million a year
earlier.
Consolidated rentals and fees increased 14% for the fourth quarter and 17%
for the year. In addition, franchise royalties and fees increased 16% in the
fourth quarter and 13% for the year. Non-retail sales, which are primarily sales
of rental merchandise to Aaron's Sales & Lease Ownership franchisees, increased
19% for the quarter compared to the fourth quarter last year and 21% 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 $121.8 million during the fourth
quarter, a 13% increase over the same quarter a year ago, and $485.5 million for
the 2006 year, a 16% increase over last year. Revenues of franchisees, however,
are not revenues of Aaron Rents, Inc.
Included in operating expenses was $658,000 for the fourth quarter and $3.5
million for the year of expense 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.
During the fourth quarter the Aaron's Sales & Lease Ownership division
opened 31 new Company-operated stores, 33 new franchised stores, and five RIMCO
stores. In addition, during the quarter the Company acquired 12 stores from five
different franchisees, one store from a third party rental operator, and sold
three stores to two franchisees.
For the 2006 year, the Company and its franchisees added a net of 146 sales
and lease ownership stores, a 13% increase for the year in total store count for
the division, including, in addition to acquisitions, the opening of 78 new
Company-operated stores and 75 new franchised stores.
In the fourth quarter two rental chains converted their stores to Aaron's
Sales & Lease Ownership franchised stores. This transaction resulted in 17 new
franchised stores for the Company and the execution of area development
agreements to open an additional eight franchised stores in future periods. As
part of this transaction, the Company acquired six stores from the two chains
and converted four of them to Company-operated stores, the remaining two
acquired stores were merged into existing Company-operated stores. Additionally,
the new franchisees purchased three Company-operated stores, which now are open
as franchised stores. The Company realized a $2.2 million gain in the fourth
quarter on the sale of the three stores to the franchisees. It is expected that
more conversions of independent operators will occur in future periods.
During the fourth quarter and fiscal year the Company awarded, in total,
area development agreements to open 48 and 73 additional franchised stores,
respectively. At the end of December 2006 there were 233 franchise stores
awarded that are planned to be opened over the next several years.
At December 31, 2006 the Aaron's Sales and Lease Ownership division
accounted for 828 Company-operated stores, 441 franchised stores, and 17 RIMCO
stores. The Company also had 59 corporate furnishings stores. The total number
of stores open at the end of 2006 was 1,345.
"We expect revenues in the first quarter of 2007 to be in excess of $390
million and diluted earnings per share in the range of $.45 to $.49," Mr.
Loudermilk continued. "For the 2007 year we expect Company revenues in excess of
$1.5 billion (excluding revenues of franchisees) and diluted earnings per share
in the range of $1.55 to $1.65."
Aaron Rents will hold a conference call to discuss its quarterly and annual
financial results on Wednesday, February 21, 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 1,350
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 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, 2005, as updated by subsequent
Quarterly Reports on Form 10-Q, which discussions are 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,
----------- ----------- ----------- -----------
2006 2005 2006 2005
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
Revenues:
Rentals and Fees $ 249,102 $ 218,440 $ 992,791 $ 845,162
Retail Sales 12,887 14,567 62,319 58,366
Non-Retail Sales 64,676 54,130 224,489 185,622
Franchise Royalties
and Fees 8,856 7,662 33,626 29,781
Other 4,348 1,353 13,367 6,574
Total 339,869 296,152 1,326,592 1,125,505
Costs and Expenses:
Retail Cost of Sales 8,436 9,977 41,262 39,054
Non-Retail Cost
of Sales 58,909 50,446 207,217 172,807
Operating Expenses 149,190 129,922 579,565 507,158
Depreciation of
Rental Merchandise 90,701 79,399 364,109 305,630
Interest 1,869 2,839 9,729 8,519
Total 309,105 272,583 1,201,882 1,033,168
Earnings Before Taxes 30,764 23,569 124,710 92,337
Income Taxes 11,723 8,961 46,075 34,344
Net Earnings $ 19,041 $ 14,608 $ 78,635 $ 57,993
Earnings Per Share $ .35 $ .29 $ 1.50 $ 1.16
Earnings Per Share
Assuming Dilution $ .35 $ .29 $ 1.47 $ 1.14
Weighted Average
Shares Outstanding 54,062 49,961 52,545 49,846
Weighted Average
Shares Outstanding
Assuming Dilution 54,866 50,836 53,377 50,805
Selected Balance Sheet Data
(In Thousands)
(Unaudited)
December 31, December 31,
2006 2005
------------ ------------
(Unaudited)
Cash $ 8,807 $ 6,973
Accounts Receivable 43,495 42,812
Rental Merchandise, Net 612,149 550,932
Property, Plant and
Equipment, Net 170,294 133,759
Other Assets, Net 144,861 124,039
Total Assets 979,606 858,515
Bank Debt 15,612 91,336
Senior Notes 90,000 100,000
Total Liabilities 372,591 424,044
Shareholders' Equity $ 607,015 $ 434,471
SOURCE Aaron Rents, Inc.
-0- 02/20/2007
/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 /
(RNT)