ATLANTA, Oct. 28 /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 and nine months ended
September 30, 2008. As previously announced, the Company has
entered into an agreement to sell substantially all of the assets
of its Aaron's Corporate Furnishings division. Beginning with the
results reported in this release, the Company no longer includes
the revenues and expenses of the Aaron's Corporate Furnishings
division on the Company's statement of earnings, and reports net
earnings of the division as discontinued operations. Prior periods
are restated to reflect this change in accounting treatment and the
assets of the division will be reflected as assets held for sale on
the Company's balance sheet until the transaction closes. For the
third quarter of 2008, revenues increased 16% to $388.0 million
compared to $333.7 million for the same period a year ago. Net
earnings rose 32% to $21.1 million versus the $15.9 million
recorded in the third quarter last year. Diluted earnings per share
were $.39 compared to $.29 per share in 2007, a 34% increase. For
the first nine months of this year, revenues advanced 15% to $1.188
billion compared to $1.030 billion for the same period of 2007. Net
earnings for the nine months were up 7% to $69.1 million versus
$64.8 million for the corresponding period a year ago. Diluted
earnings per share for the first nine months increased 8% to $1.28
for 2008 versus $1.18 for 2007. For the third quarter diluted
earnings per share from continuing operations increased 42% over
the same period in 2007 and 12% for the comparable nine month
period. "We are very pleased with the third quarter results from
both our Company- operated and franchised stores," said Robert C.
Loudermilk, Jr., President and Chief Executive Officer of Aaron
Rents. "Even though economic times are tough and our stores in the
southern and central United States were affected in September by
business disruption and property damage as a result of Hurricanes
Gustav and Ike, we still managed to have an outstanding quarter as
customers continue to come into our stores seeking basic home
furnishings." "Our same store revenue growth accelerated in the
quarter and margins improved, even though over 100 of our stores
were adversely impacted by the hurricanes," continued Mr.
Loudermilk. "Although difficult to estimate, we feel that the
hurricanes negatively affected earnings in the quarter by at least
$.01 to $.02 per diluted share, including the value of our
merchandise that was destroyed in the homes of our customers. In
addition, start up expenses associated with new stores also reduced
third quarter earnings by approximately $.05 per share. We feel we
are in an outstanding position to continue the growth of our
business during the remainder of 2008 and on into 2009." The
Company's other revenues in the third quarter of 2008 included a
$2.6 million gain from the sale of 11 Company-operated stores to
three different franchisees. Excluding this gain, net earnings on a
non-GAAP basis for the third quarter of 2008 would have been $19.5
million, or $.36 per diluted share. The Company has realized a
total of $8.4 million in gains in other revenues during the first
nine months of 2008 relating to similar store sales. The Company's
other revenues in the first nine months of 2007 included a $4.9
million gain from the sale of a parking deck at the Company's
corporate headquarters in last year's first quarter. See the
attached table for a reconciliation of revenues, net earnings, and
diluted earnings per share to non-GAAP revenues, earnings, and
diluted earnings per share excluding the aforementioned asset
sales. Revenues in the Aaron's Sales & Lease Ownership division
in the third quarter increased 17% to $382.6 million compared to
$328.1 million last year. The first nine months sales and lease
ownership revenues went up 16% to $1.170 billion compared to $1.007
billion 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 5.7%
during the third quarter of 2008 compared to the third quarter of
last year. On September 15, 2008, the Company announced that it had
entered into an agreement to sell substantially all of the assets
of its Aaron's Corporate Furnishings division to CORT Business
Services Corporation and to transfer certain liabilities of the
division to CORT. As consideration for the sale, the Company
anticipates receiving approximately $72 million in cash plus
payments for certain accounts receivable, subject to certain
adjustments. Subject to customary closing conditions, it is
anticipated that the transaction will close in November. It is not
expected that the Company will record a material gain or loss on
the sale. The Aaron's Corporate Furnishings division revenues,
which are not included in the Company's revenues, declined 4%
during the third quarter to $24.6 million compared to $25.7 million
a year ago. Corporate furnishings revenues were $73.5 million for
the nine months compared to $76.0 million in 2007, a 3% decrease.
After the sale of the Aaron's Corporate Furnishings division, the
Company will continue with the operations of the Aaron's Office
Furniture division. Consolidated rentals and fees increased 13% for
both the third quarter and first nine months compared to the
previous year periods. In addition, franchise royalties and fees
increased 25% for the third quarter and 16% year- to-date compared
to the same periods a year ago. Non-retail sales, which are
primarily sales of rental merchandise to Aaron's Sales & Lease
Ownership franchisees, increased 22% to $70.7 million for the third
quarter from $58.1 million in the comparable period in 2007, and
20% to $222.2 million for the first nine months compared to $185.0
million for the same period last year. The increases in the
Company's franchise revenues and non-retail sales are the result of
the increase in revenues of the Company's franchisees, who
collectively had revenues of $166.0 million for the third quarter
and $493.7 million for the first nine months of 2008, a 26% and 19%
increase, respectively, over the comparable prior year periods.
Same store revenues for franchised stores were up 18.4% for the
third quarter of 2008 compared to the third quarter of 2007.
Revenues of franchisees, however, are not revenues of Aaron Rents,
Inc. During the third quarter the Aaron's Sales & Lease
Ownership division opened four new Company-operated stores, 12 new
franchised stores, and one franchised RIMCO store. The Company sold
11 Company-operated sales and lease ownership stores to
franchisees, and closed four Company-operated sales and lease
ownership stores. In addition, during the quarter the Company
acquired one franchised store and purchased the accounts of three
third party stores. For the three months and nine months ended
September 30, the Company awarded area development agreements to
open 46 and 125 additional franchised stores, respectively. At the
end of September there were a total of 303 franchised stores
awarded that we expect will open over the next several years. At
September 30 the Aaron's Sales & Lease Ownership division had
open 983 Company-operated stores and 502 franchised stores, 30
Company-operated RIMCO stores, and eight franchised RIMCO stores.
In addition, the Company operated 47 Aaron's Corporate Furnishings
stores and 13 Aaron's Office Furniture stores. The total number of
stores open at the end of September was 1,583. "We anticipate in
the fourth quarter of 2008 to have revenues in excess of $410
million and diluted earnings per share between $0.32 to $0.37," Mr.
Loudermilk added. "For the 2008 fiscal year we anticipate Company
revenues to be approximately $1.6 billion (excluding revenues of
franchisees) and diluted earnings per share in the range of $1.60
to $1.65, excluding any gain or loss recorded on the sale of the
Aaron's Corporate Furnishings division. By the end of 2008 we
expect to have approximately 1,600 Company-operated and franchised
stores open. We continue to expect to increase the store base 10%
to 13% over the next several years, for the most part an equal mix
between Company-operated and franchised stores. Our initial
earnings guidance for 2009 is to achieve diluted earnings per share
in the range of $1.65 to $1.80." Aaron Rents will hold a conference
call to discuss its quarterly financial results on Wednesday,
October 29, 2008, at 10:30 am Eastern Time. The public is invited
to listen 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 1,585 Company- operated and franchised stores in 48
states and Canada. The Company's MacTavish Furniture Industries
division manufactured approximately $73 million at cost of
furniture, bedding and accessories at 12 facilities in five states
in 2007. The entire production of MacTavish is for shipment to
Aaron Rents stores. "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, 2007. 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 Nine Months Ended September 30,
September 30, 2008 2007 2008 2007 Revenues: Rentals and Fees
$291,102 $257,294 $885,554 $780,254 Retail Sales 10,230 7,713
32,363 25,783 Non-Retail Sales 70,691 58,140 222,180 185,047
Franchise Royalties and Fees 11,127 8,881 33,060 28,397 Other 4,869
1,688 14,557 10,796 Total 388,019 333,716 1,187,714 1,030,277 Costs
and Expenses: Retail Cost of Sales 6,266 4,546 19,839 15,838
Non-Retail Cost of Sales 64,752 53,095 203,222 169,355 Operating
Expenses 175,409 154,531 529,213 451,734 Depreciation of Rental
Merchandise 106,962 97,218 323,600 293,610 Interest 2,243 1,945
6,593 5,328 Total 355,632 311,335 1,082,467 935,865 Earnings from
Continuing Operations Before Taxes 32,387 22,381 105,247 94,412
Income Taxes 12,597 8,273 40,617 35,477 Net Earnings from
Continuing Operations 19,790 14,108 64,630 58,935 Earnings from
Discontinued Operations, Net of Tax 1,288 1,811 4,480 5,848 Net
Earnings $21,078 $15,919 $69,110 $64,783 Earnings Per Share: From
Continuing Operations $.37 $.26 $1.21 $1.09 From Discontinued
Operations .03 .03 .08 .11 Total $.40 $.29 $1.29 $1.20 Earnings Per
Share Assuming Dilution: From Continuing Operations $.37 $.26 $1.20
$1.07 From Discontinued Operations .02 .03 .08 .11 Total $.39 $.29
$1.28 $1.18 Weighted Average Shares Outstanding 53,356 54,217
53,370 54,190 Weighted Average Shares Outstanding Assuming Dilution
54,219 55,049 54,178 55,046 Selected Balance Sheet Data (In
thousands) (Unaudited) September 30, December 31, 2008 2007 Cash
$6,579 $5,249 Accounts Receivable, Net 48,470 47,712 Rental
Merchandise, Net 630,444 571,833 Property, Plant and Equipment, Net
212,318 245,876 Other Assets, Net 213,334 184,981 Assets of
Discontinued Operations 58,438 57,525 Total Assets 1,169,583
1,113,176 Bank Debt 72,321 82,884 Senior Notes 58,000 80,000 Total
Liabilities 429,752 439,796 Shareholders' Equity $739,831 $673,380
Reconciliation of Revenues, Net Earnings and Earnings per Share
Excluding Asset Sales of Stores and Parking Deck (In thousands,
except per share amounts) (Unaudited) (Unaudited) Three Months
Ended Nine Months Ended September 30, September 30, 2008 2007 2008
2007 Total Revenues $388,019 $333,716 $1,187,714 $1,030,277 Less
Revenues from Store Asset Sales 2,646 - 8,397 780 Less Revenues
from Parking Deck Sale - - - 4,878 Revenues Excluding Sales 385,373
333,716 1,179,317 1,024,619 Net Earnings 21,078 15,919 69,110
64,783 Less Gain from Store Asset Sales 1,619 - 5,158 479 Less Gain
from Parking Deck Sale - - - 3,034 Net Earnings Excluding Gain from
Sales $19,459 $15,919 $63,952 $61,270 Earnings Per Share Excluding
Gain from Sales $.36 $.29 $1.20 $1.13 Earnings Per Share Assuming
Dilution Excluding Gain from Sales $.36 $.29 $1.18 $1.11 Weighted
Average Shares Outstanding 53,356 54,217 53,370 54,190 Weighted
Average Shares Outstanding Assuming Dilution 54,219 55,049 54,178
55,046 DATASOURCE: Aaron Rents, Inc. CONTACT: Gilbert L. Danielson,
Executive Vice President, Chief Financial Officer, +1-404-231-0011
Web site: http://www.aaronrents.com/
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