RWY Rent Way

Second Quarter Rental Business Revenues Up 5.2%; Same Store Revenues Up 1.2% ERIE, Pa., May 3 /PRNewswire-FirstCall/ -- Rent-Way, Inc. (NYSE:RWY) today reported financial results for the three and six months ended March 31, 2006. For the second quarter, the Company reported revenues of $142.4 million versus $136.2 million in the same quarter last year. Revenues from the Company's core rental business (which excludes the Company's dPi Teleconnect unit) were $138.4 million versus $131.6 million in the same quarter last year, an increase of 5.2%. Same store rental business revenue increased 1.2% versus last year's quarter. Operating income in the quarter was $11.2 million, compared to $14.3 million in the same period last year. Net income was $2.1 million, compared to $6.3 million in the second quarter last year. Net income allocable to common shareholders was $1.6 million or $0.06 per diluted share versus net income of $5.8 million last year or $0.19 per diluted share. Net income for the quarter gives effect to a non-cash $0.1 million FAS 133 gain related to the conversion feature of the Company's preferred stock. The FAS 133 gain was $0.6 million in last year's quarter. William Short, Rent-Way's President, commented, "We experienced strong growth in potential weekly rental revenue during the quarter, and as predicted our same-store revenue comparisons were positive in the quarter. Looking forward for the balance of the fiscal and calendar year, we expect to see same store revenues in the 3% - 5% range." Mr. Short continued, "During the quarter we opened 2 new stores, sold 2 stores, and acquired the rental agreements of another 2 which were merged into existing RentWay locations. This brings our total new store count to 8 this fiscal year, and 53 over the past 18 months. These stores continue to meet our expectations and our plan for the balance of the fiscal year is to continue to open new stores and seek out strategic acquisitions. We believe very strongly that continuing to invest in the growth of our business is the best way to maximize earnings and shareholder value." The Company ended the quarter with $37.0 million outstanding on its bank revolver, up from $18.0 million at March 31, 2005. The Company reported EBITDA for the quarter of $15.0 million versus $18.2 million in the same quarter last year. EBITDA as defined by the Company is operating income plus depreciation of property and equipment and amortization of intangibles. The Company believes EBITDA provides investors useful information regarding its ability to service its debt and generate cash for other purposes, including for capital expenditures and working capital. The Company reported net cash provided by operations for the quarter of $6.8 million versus $13.3 million in the same quarter last year. Reconciliations of the non-GAAP measures mentioned above to the nearest comparable GAAP measures are presented in the chart of supplemental information accompanying this release. About Rent-Way Rent-Way is one of the nation's largest operators of rental-purchase stores. Rent-Way rents quality name brand merchandise such as home entertainment equipment, computers, furniture and appliances from 784 stores in 34 states. Safe-Harbor Statements This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements contain the words "projects," "anticipates," "believes," "expects," "intends," "will," "may" and similar words and expressions. Each such statement is subject to uncertainties, risks and other factors that could cause actual results or performance to differ materially from the results or performance expressed in or implied by such statements. The forward-looking statements in this news release that contain projections of the company's expected financial performance and other projections regarding future performance are inherently subject to change given the nature of projections and the company's actual performance may be better or worse than projected. Uncertainties, risks and other factors that may cause actual results or performance to differ materially from any results or performance expressed or implied by forward- looking statements in this news release include: (1) the company's ability to control its operating expenses and to realize operating efficiencies, (2) the company's ability to develop, implement and maintain adequate and reliable internal accounting systems and controls, (3) the company's ability to retain existing senior management and to attract additional management employees, (4) general economic and business conditions, including demand for the company's products and services, (5) general conditions relating to the rental-purchase industry, including the impact of state and federal laws regulating or otherwise affecting the rental-purchase transaction, (6) competition in the rental-purchase industry, including competition with traditional retailers, (7) the company's ability to make principal and interest payments on its high level of outstanding debt, and (8) the company's ability to open new stores and cause those new stores to operate profitably. A discussion of other risk factors that may cause actual results to differ from the results expressed in or implied by these forward-looking statements can be found in the company's filing with the SEC. The company disclaims any duty to provide updates to the forward-looking statements made in this news release. RENT-WAY, INC. SELECTED BALANCE SHEET DATA (all dollars in thousands) March 31, 2006 September 30, 2005 (unaudited) Cash and cash equivalents $7,378 $6,439 Prepaid expenses 6,637 7,962 Rental merchandise, net 234,551 194,178 Total Assets 505,156 460,485 Accounts payable 40,768 23,744 Debt 239,522 221,313 Total Liabilities 368,659 324,322 Shareholders' Equity 120,014 118,234 RENT-WAY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (all dollars in thousands except per share data) For the three months ended March 31, 020885/00004 BFLODOCS 1532792v1 2006 2005 Revenues: Rental revenue $119,564 84.0% $114,199 83.8% Prepaid phone service revenue 4,125 2.9% 4,742 3.5% Other revenues 18,695 13.1% 17,257 12.7% Total Revenues 142,384 100.0% 136,198 100.0% Costs and operating expenses: Depreciation and amortization: Rental merchandise 38,950 27.4% 36,005 26.4% Property and equipment 3,655 2.6% 3,902 2.9% Amortization of intangibles 196 0.1% 28 0.0% Cost of prepaid phone service 2,733 1.9% 2,871 2.1% Salaries and wages 36,950 26.0% 34,764 25.5% Advertising, net 5,156 3.6% 4,733 3.5% Occupancy 10,195 7.2% 9,289 6.8% Other operating expenses 33,351 23.4% 30,305 22.3% Total costs and operating expenses 131,186 92.1% 121,897 89.5% Operating income 11,198 7.9% 14,301 10.5% Other income (expense): Interest expense (7,334) -5.2% (7,291) -5.4% Interest income 21 0.0% 7 0.0% Amortization of deferred financing costs (331) -0.2% (285) -0.2% Other income (expense), net 355 0.2% 1,025 0.8% Income before income taxes and discontinued operations 3,909 2.7% 7,757 5.7% Income tax expense 1,697 1.2% 1,395 1.0% Income before discontinued operations 2,212 1.6% 6,362 4.7% Loss from discontinued operations (69) 0.0% (53) 0.0% Net income $2,143 1.5% $6,309 4.6% Preferred stock dividend and accretion of preferred stock (585) -0.4% (534) -0.4% Net income allocable to common shareholders $1,558 1.1% $5,775 4.2% Earnings per common share: Basic earnings per common share Income before discontinued operations $0.08 $0.24 Net income allocable to common shareholders $0.06 $0.22 Diluted earnings per common share Income before discontinued operations $0.08 $0.19 Net income allocable to common shareholders $0.06 $0.19 Weighted average common shares outstanding: Basic 26,387 26,244 Diluted 26,612 29,992 RENT-WAY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (all dollars in thousands except per share data) For the six months ended March 31, 2006 2005 Revenues: Rental revenue $226,798 83.9% $220,141 83.9% Prepaid phone service revenue 8,164 3.0% 9,304 3.5% Other revenues 35,278 13.1% 33,050 12.6% Total Revenues 270,240 100.0% 262,495 100.0% Costs and operating expenses: Depreciation and amortization: Rental merchandise 72,593 26.9% 68,521 26.1% Property and equipment 7,226 2.7% 8,413 3.2% Amortization of intangibles 381 0.1% 56 0.0% Cost of prepaid phone service 5,269 1.9% 5,777 2.2% Salaries and wages 73,585 27.2% 69,584 26.5% Advertising, net 11,109 4.1% 10,085 3.8% Occupancy 20,130 7.4% 18,349 7.0% Other operating expenses 61,374 22.7% 56,247 21.4% Total costs and operating expenses 251,667 93.1% 237,032 90.3% Operating income 18,573 6.9% 25,463 9.7% Other income (expense): Interest expense (14,308) -5.3% (14,358) -5.5% Interest income 42 0.0% 13 0.0% Amortization of deferred financing costs (649) -0.2% (565) -0.2% Other income (expense), net 2,269 0.8% (239) -0.1% Income before income taxes and discontinued operations 5,927 2.2% 10,314 3.9% Income tax expense 3,085 1.1% 2,790 1.1% Income before discontinued operations 2,842 1.1% 7,524 2.9% Loss from discontinued operations (92) 0.0% (181) -0.1% Net income $2,750 1.0% $7,343 2.8% Preferred stock dividend and accretion of preferred stock (1,164) -0.4% (1,069) -0.4% Net income allocable to common shareholders $1,586 0.6% $6,274 2.4% Earnings per common share: Basic earnings per common share Income before discontinued operations $0.11 $0.29 Net income allocable to common shareholders $0.06 $0.24 Diluted earnings per common share Income before discontinued operations $0.03 $0.28 Net income allocable to common shareholders $0.03 $0.23 Weighted average common shares outstanding: Basic 26,384 26,244 Diluted 29,827 26,728 Calculation of EBITDA and Reconciliation of Net Cash Provided by (Used in) Operations to EBITDA For the Three and Six Months Ended March 31, 2006 and 2005 (all dollars in thousands) Three Months Ended Six Months Ended 03/31/06 03/31/05 03/31/06 03/31/05 (unaudited)(unaudited)(unaudited)(unaudited) Calculation of EBITDA Operating income $11,198 $14,301 $18,573 $25,463 Depreciation - property and equipment 3,655 3,902 7,226 8,413 Amortization of intangibles 196 28 381 56 EBITDA $15,049 $18,231 $26,180 $33,932 Reconciliation of Net Cash Provided by (Used in) Operations to EBITDA Three Months Ended Six Months Ended 03/31/06 03/31/05 03/31/06 03/31/05 (unaudited)(unaudited)(unaudited)(unaudited) Net cash provided by (used in) operating activities $6,761 $13,338 $(3,800) $(4,711) Net cash used in discontinued operations 69 53 92 181 Adjustments to reconcile net income to net cash provided by (used in) operating activities (45,125) (40,749) (82,760) (80,438) Changes in assets and liabilities 40,438 33,667 89,218 92,311 Depreciation - property and equipment 3,655 3,902 7,226 8,413 Amortization of intangibles 196 28 381 56 Interest expense 7,334 7,291 14,308 14,358 Interest income (21) (7) (42) (13) Amortization of deferred financing costs 331 285 649 565 Other income (355) (1,025) (2,269) 239 Income taxes 1,697 1,395 3,085 2,790 Loss from discontinued operations 69 53 92 181 EBITDA $15,049 $18,231 $26,180 $33,932 DATASOURCE: Rent-Way, Inc. CONTACT: John Lombardi of Rent-Way, +1-814-455-5378 Web site: http://www.rentway.com/

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