ATLANTA, July 21 /PRNewswire-FirstCall/ -- Aaron's, Inc.
(NYSE:AAN), the nation's leader in the sales and lease ownership
and specialty retailing of residential and office furniture,
consumer electronics, home appliances and accessories, today
announced revenues and earnings for the three and six months ended
June 30, 2009. For the second quarter of 2009, revenues increased
8% to $417.3 million compared to $387.0 million for the same
quarter a year ago. Net earnings from continuing operations were up
24% to $27.8 million versus $22.4 million in 2008. Diluted earnings
per share were $.51 compared to $.43 per share a year ago, a 19%
increase. For the first six months of this year, revenues advanced
11% to $891.3 million compared to $799.7 million for the first six
months of 2008. Net earnings from continuing operations were $63.2
million versus $44.9 million last year, a 41% increase. Diluted
earnings per share for the first six months were $1.15 for 2009
versus $.89 in 2008, a 29% increase. "We are highly pleased with
these results," said Robert C. Loudermilk, Jr., President and Chief
Executive Officer of Aaron's. "Our same store revenue and customer
growth remain strong and we are on track with our 2009 new store
opening plans. In this difficult economic environment consumers
still need home furnishing necessities, and especially need the
ability to obtain the merchandise with no credit checks or
long-term obligations. We believe that the Aaron's offering is
extremely valuable to this credit-constrained consumer." Same store
revenues (revenues earned in Company-operated stores open for the
entirety of both periods) increased 8.4% during the second quarter
of 2009 compared to the second quarter of 2008. Same store revenues
also increased 5.2% for Company-operated stores open over two years
at the end of June 2009. The Company had 787,000 customers and its
franchisees had 406,000 customers at the end of the second quarter
of 2009, an 18% increase in total customers over the number at the
end of the second quarter a year ago (customers of our franchisees,
however, are not customers of Aaron's, Inc.). The customer count on
a same store basis for Company-operated stores was up 15.7% in the
second quarter compared to the same quarter last year. "Although
overall revenue in the quarter was less than projected, it was
primarily due to lower than anticipated non-retail sales to our
franchisees, a decline in the amount of the early payouts of lease
agreements compared to the same period a year ago, and lower
revenues in our office furniture stores," continued Mr. Loudermilk,
Jr. "The total dollar amount of the lower margin non-retail sales
were up only 3% for the quarter even though the actual number of
units shipped from our fulfillment centers increased over 20%. This
difference is mainly due to declining costs of electronic
products," Mr. Loudermilk, Jr. added. "We also believe that last
year the government stimulus checks had a positive effect on early
payouts and overall business." At the end of June the Company had
cash on hand of $83.3 million versus $5.9 million at the end of the
first quarter 2009. This increase in cash is due to cash flow
generated from operations and the sale leaseback of approximately
$30 million of store real estate during the quarter. In the fourth
quarter of 2008 the Company consummated the sale of substantially
all of the assets of its Aaron's Corporate Furnishings division.
The Company no longer includes the revenues and expenses of the
Aaron's Corporate Furnishings division in its continuing
operations, and now reports the net earnings or loss of the
division as discontinued operations. Prior periods are restated to
reflect this change in accounting treatment. Division Results The
Aaron's Sales & Lease Ownership division increased its revenues
in the second quarter of 2009 to $416.6 million, an 8% increase
over the $386.6 million in revenues in the second quarter of 2008.
First six months sales and lease ownership revenues increased 11%
to $890.2 million compared to $799.0 million for the same period a
year ago. Included in the division's results are the revenues of
the Aaron's Office Furniture stores which had revenues of $3.5
million in the second quarter and $8.8 million for the first six
months of 2009 compared to $5.2 million and $11.3 million,
respectively, for the comparable periods of 2008. A net loss of
$76,000 from discontinued operations was recorded for the second
quarter of 2009 compared to net earnings of $918,000 in the second
quarter of 2008. For the six months the net loss was $285,000
compared to net earnings of $3.1 million for the same period in
2008. Components of Revenue Consolidated lease revenues and fees
for the second quarter and first half of 2009 increased 10% and 12%
over the comparable previous year periods, respectively. In
addition, franchise royalties and fees were up 19% for both the
second quarter and year to date compared to the same period in
2008. Non-retail sales, which are primarily sales of merchandise to
Aaron's Sales & Lease Ownership franchisees, increased to $67.8
million for the second quarter from $66.1 million in the comparable
period in 2008 and to $160.8 million for the first six months
compared to $151.5 million for the first six months of last year.
The increases in the Company's franchise revenues and non-retail
sales are the result of an increase in revenues of the Company's
franchisees, who collectively had revenues of $183.8 million during
the second quarter and $377.4 million for the first six months of
2009, both 15% increases over the prior year periods. Same store
revenues for franchised stores were up 9.9% for the second quarter
compared to the same quarter last year. Revenues of franchisees,
however, are not revenues of Aaron's, Inc. The Company's other
revenues in the second quarter of 2009 and 2008 included $417,000
and $3.4 million of gains, respectively, from the sale of the
assets of Company-operated stores. Other revenues for the first six
months included gains from the sale of stores of $6.1 million in
2009 and $5.8 million in 2008. Store Count During the second
quarter of 2009 the Aaron's Sales & Lease Ownership division
opened 19 new Company-operated stores, 19 new franchised stores,
and one RIMCO store. It also acquired seven franchised stores and
one third party store during the quarter. In addition, in the
second quarter the Company sold one Company-operated store to a
franchisee and closed two Company-operated stores, and two
franchised stores were also closed. Through the three months and
six months ended June 30 of this year, the Company awarded area
development agreements to open 13 and 84 additional franchised
stores, respectively. At the end of June 2009 there were 280
franchised stores awarded that are expected to be opened over the
next several years. At the end of the second quarter of 2009 the
Aaron's Sales & Lease Ownership division consisted of 1,035
Company-operated stores, 543 franchised stores, 12 Company-operated
RIMCO stores, and seven franchised RIMCO stores. The Company also
had 16 Aaron's Office Furniture stores. The total number of stores
open at the end of June 30, 2009 was 1,613. Third Quarter and Full
Year 2009 Outlook The Company is updating its guidance for 2009 and
expects to achieve the following: -- Third quarter revenues
(excluding revenues of franchisees) of approximately $420 million.
-- Third quarter diluted earnings per share in the range of $.39 to
$.44 per share, assuming no significant store or other asset sales.
-- Fiscal year revenues (excluding revenues of franchisees) of
approximately $1.75 billion. This is a revision from the previous
guidance of approximately $1.80 billion and is due in a large part
to the currently anticipated lower dollar volume of non-retail
sales in 2009. -- Fiscal year diluted earnings per share in the
range of $1.95 to $2.05 compared to the previous guidance of $1.90
to $2.05. -- As previously announced, new store growth of
approximately 5% to 9% over the store base at the end of 2008, for
the most part an equal mix between Company-operated and franchised
stores. This is expected to be a net store growth after any
opportunistic merging or disposition of stores. -- The Company will
continue as warranted to consolidate or sell stores not meeting
performance goals. -- The Company also plans to continue to acquire
franchised stores, convert independent operators' stores to Aaron's
franchised stores, or sell Company-operated stores to franchisees
as opportunities present themselves. Conference Call Aaron's will
hold a conference call to discuss its quarterly financial results
on Wednesday, July 22, 2009, 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, http://www.aarons.com/,
in the "Investor Relations" section. The webcast will be archived
for playback at that same site. Aaron's, Inc., based in Atlanta,
currently has more than 1,615 Company- operated and franchised
stores in 48 states and Canada. The Company's MacTavish Furniture
Industries division manufactured approximately $69 million at cost
of furniture and bedding at 12 facilities in five states in 2008.
The entire production of MacTavish is for shipment to Aaron's
stores. "Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995: Statements in this news release
regarding Aaron's, Inc.'s business that 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, 2008. Statements in this release that are
"forward-looking" include without limitation Aaron's projected
revenues, earnings, and store openings for future periods. Aaron's,
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, 2009 2008 2009 2008
---- ---- ---- ---- Revenues: Lease Revenues and Fees $324,111
$294,776 $668,613 $594,451 Retail Sales 9,490 9,744 25,365 22,133
Non-Retail Sales 67,835 66,072 160,801 151,489 Franchise Royalties
and Fees 12,920 10,894 26,027 21,933 Other 2,954 5,527 10,454 9,688
Total 417,310 387,013 891,260 799,694 Costs and Expenses: Retail
Cost of Sales 5,814 6,145 15,219 13,573 Non-Retail Cost of Sales
62,496 60,574 146,808 138,470 Operating Expenses 185,571 175,832
382,088 353,662 Depreciation of Lease Merchandise 117,915 106,928
243,119 216,638 Interest 1,164 2,151 2,440 4,350 Total 372,960
351,630 789,674 726,693 Earnings from Continuing Operations Before
Taxes 44,350 35,383 101,586 73,001 Income Taxes 16,524 13,022
38,400 28,077 Net Earnings from Continuing Operations 27,826 22,361
63,186 44,924 (Loss) Earnings from Discontinued Operations, Net of
Tax (76) 918 (285) 3,108 Net Earnings $27,750 $23,279 $62,901
$48,032 Earnings Per Share: From Continuing Operations $.51 $.42
$1.17 $.84 From Discontinued Operations .00 .02 (.01) .06 Total
$.51 $.44 $1.16 $.90 Earnings Per Share Assuming Dilution: From
Continuing Operations $.51 $.41 $1.16 $.83 From Discontinued
Operations .00 .02 (.01) .06 Total $.51 $.43 $1.15 $.89 Weighted
Average Shares Outstanding 54,117 53,262 53,942 53,377 Weighted
Average Shares Outstanding Assuming Dilution 54,716 54,076 54,531
54,062 Selected Balance Sheet Data (In thousands) (Unaudited and
Preliminary) June 30, December 31, 2009 2008 Cash $83,279 $7,376
Accounts Receivable, Net 47,795 59,513 Lease Merchandise, Net
670,494 681,086 Property, Plant and Equipment, Net 207,393 224,431
Other Assets, Net 248,494 260,864 Assets of Discontinued Operations
- - Total Assets 1,257,455 1,233,270 Bank Debt 2,557 35,000 Senior
Notes 58,000 58,000 Total Liabilities 421,095 471,726 Shareholders'
Equity $836,360 $761,544 DATASOURCE: Aaron's, Inc. CONTACT: Gilbert
L. Danielson, Executive Vice President, Chief Financial Officer of
Aaron's, Inc., +1-404-231-0011 Web Site: http://www.aarons.com/
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