ATLANTA, Feb. 19 /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, 2007.
For the fourth quarter of 2007, revenues increased 14% to $388.6 million
compared to $339.9 million for the fourth quarter in 2006. Net earnings were
$15.5 million versus $19.0 million last year. Diluted earnings per share were
$.28 compared to $.35 per share a year ago.
For the year, revenues increased 13% to $1.495 billion compared to $1.327
billion for the 2006 year. Net earnings were $80.3 million versus $78.6
million a year ago. Diluted earnings per share were $1.46 for 2007 and $1.47
in 2006.
"We are pleased that 2007 revenues and earnings reached new records," said
R. Charles Loudermilk, Sr., Chairman and Chief Executive Officer of Aaron
Rents. "As we said in our January 22 release previewing 2007 results, the
year was marked by rapid expansion in our store base as we added a net 215 new
stores, a 16% increase over the previous year. The expenses of such
substantial store growth reduced earnings, and we had to deal with collection
issues at our Company-operated stores which resulted in many of the stores not
performing at the same high level as our franchised stores."
"Although new store start-up expenses will continue into 2008, we expect
to see improved profit trends later in the year as we grow at a more measured
rate, focusing on increasing revenues in existing stores and improving overall
profitability," Mr. Loudermilk, Sr. added.
The Aaron's Sales & Lease Ownership division increased its revenues in the
fourth quarter to $358.6 million, a 16% increase over the $309.8 million in
the fourth quarter of 2006. For the year, revenues were $1.366 billion, a 14%
increase over the $1.201 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 3.9% during the fourth quarter of 2007 compared to the fourth
quarter of 2006. Same store revenues also increased 2.1% for Aaron's Sales &
Lease Ownership stores open over two years at the end of December 2007.
Consolidated rentals and fees increased 14% for the fourth quarter and 13%
for the year. In addition, franchise royalties and fees increased 18% in the
fourth quarter and 15% for the year. Non-retail sales, which are primarily
sales of rental merchandise to Aaron's Sales & Lease Ownership franchisees,
increased 18% for the quarter compared to the fourth quarter last year and 17%
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 $143.8 million during
the fourth quarter, an 18% increase over the same quarter a year ago, and
$558.9 million for the 2007 year, a 15% increase over last year. Same store
revenues for franchised stores were up 15% for the quarter compared to the
fourth quarter last year. Revenues of franchisees, however, are not revenues
of Aaron Rents, Inc.
During the fourth quarter the Aaron's Sales & Lease Ownership division
opened 56 new Company-operated stores and 29 new franchised stores. It also
acquired 23 stores and the accounts of nine other stores from two different
third party rental operators and one Aaron's franchisee, which resulted in an
additional 14 Company-operated stores and two franchised stores, with the
remainder of the accounts of acquired stores being merged into existing
Company-operated and franchised stores. During the quarter the Company also
sold nine Company-operated stores to two different franchisees, and closed one
franchised store. In addition, during the quarter two new Aaron's Office
Furniture stores were opened.
During the fourth quarter and fiscal year the Company awarded, in total,
area development agreements to open 30 and 182 additional franchised stores,
respectively. At the end of December 2007 there were 284 franchised stores
awarded that are planned to be opened over the next several years.
At December 31, 2007 the Aaron's Sales and Lease Ownership division
accounted for 987 Company-operated stores, 480 franchised stores, 27 Company-
operated RIMCO stores, and four franchised RIMCO stores. The Company also had
62 corporate furnishings stores. The total number of stores open at the end
of 2007 was 1,560.
The Company generated $111 million in cash flow from operations in 2007
and expects to continue to generate positive cash flow from operations in
2008. The Company may use some of this cash flow to continue repurchasing its
shares as deemed warranted. There are currently 4,307,958 shares remaining
under the Company's recent Board repurchase authorization.
In 2008 the Company expects to achieve the following:
-- First quarter revenues (excluding revenues of franchisees) in excess of
$425 million.
-- First quarter diluted earnings per share in the range of $.38 to $.43
per share.
-- Fiscal year revenues (excluding revenues of franchisees) of
approximately $1.7 billion.
-- Fiscal year diluted earnings per share in the range of $1.40 to $1.55.
-- Opening between 55 and 75 new Company-operated stores and 70 and 90 new
franchised stores.
-- The Company-operated store openings will be offset somewhat by the
merging or selling of stores not meeting profit goals.
-- The Company also plans to continue to acquire franchised stores or sell
Company-operated stores to franchisees as opportunities present
themselves.
The Company expects to increase store count, a combination of Company-
operated and franchised stores, between 10% and 13% on average over the next
several years. The net store growth in 2008 is expected to be somewhat less
than 10%, as the Company plans to consolidate or sell some stores during the
year that do not meet revenue or profit criteria.
Aaron Rents will hold a conference call to discuss its quarterly financial
results on Wednesday, February 20, 2008, at 10:30 am Eastern Time. The public
is invited to listen to the conference call via 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 over 1,565 Company-
operated and franchised stores in 48 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 Annual
Report on Form 10-K for the fiscal year ended December 31, 2006. 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,
2007 2006 2007 2006
(Unaudited) (Unaudited)
Revenues:
Rentals and Fees $284,984 $249,102 $1,126,812 $992,791
Retail Sales 13,570 12,887 54,518 62,319
Non-Retail Sales 76,537 64,676 261,584 224,489
Franchise Royalties
and Fees 10,406 8,856 38,803 33,626
Other 3,114 4,348 13,194 13,367
Total 388,611 339,869 1,494,911 1,326,592
Costs and Expenses:
Retail Cost of Sales 8,919 8,436 36,099 41,262
Non-Retail Cost of Sales 70,400 58,909 239,755 207,217
Operating Expenses 179,893 149,190 674,412 579,565
Depreciation of Rental
Merchandise 101,908 90,701 407,321 364,109
Interest 2,514 1,869 8,479 9,729
Total 363,634 309,105 1,366,066 1,201,882
Earnings Before Taxes 24,977 30,764 128,845 124,710
Income Taxes 9,485 11,723 48,570 46,075
Net Earnings $15,492 $19,041 $80,275 $78,635
Earnings Per Share $.29 $.35 $1.48 $1.50
Earnings Per Share
Assuming Dilution $.28 $.35 $1.46 $1.47
Weighted Average
Shares Outstanding 54,084 54,062 54,163 52,545
Weighted Average
Shares Outstanding
Assuming Dilution 54,791 54,866 55,082 53,377
Selected Balance Sheet Data
(In Thousands)
December 31, December 31,
2007 2006
(Unaudited)
Cash $5,249 $8,807
Accounts Receivable 52,025 43,495
Rental Merchandise, Net 623,452 612,149
Property, Plant and Equipment, Net 247,038 170,294
Other Assets, Net 185,412 144,861
Total Assets 1,113,176 979,606
Bank Debt 82,884 15,612
Senior Notes 80,000 90,000
Total Liabilities 439,796 372,591
Shareholders' Equity $673,380 $607,015
SOURCE Aaron Rents, Inc.
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