EX-99.1 3 e15348ex99-1.txt PRESS RELEASE Exhibit 99.1 Same Store Revenues Up 11.3%; Earnings Up 31%; Announces More Acquisitions ATLANTA, July 29 /PRNewswire-FirstCall/ -- Aaron Rents, Inc. (NYSE: RNT), the nation's leader in the rental, sales and lease ownership, and specialty retailing of residential and office furniture, consumer electronics and home appliances and accessories, today announced record revenues and earnings for the second quarter and first half of 2003. The Company's major division, Aaron's Sales & Lease Ownership, increased revenues 25% for the second quarter and 28% for the first half of the year. The division's same store revenue growth for the second quarter was 11.3%. "We continue to meet our performance expectations," said R. Charles Loudermilk, Sr., Chairman and Chief Executive Officer of Aaron Rents, Inc. "The growth within the Aaron's Sales & Lease Ownership division has been exceptional and we see further strong results in upcoming quarters." For the three months ended June 30, revenues increased 18% to a record $177.7 million compared to $151.2 million for the second quarter of 2002. Net earnings for the second quarter this year increased 31% to $8.8 million versus $6.7 million last year. Diluted earnings per share for the quarter were $.40 compared to $.32 per share for the second quarter a year ago. For the first six months of this year, revenues advanced 20% to a record $369.0 million compared to $307.8 million for the first half of 2002. Net earnings for the six months were $17.5 million versus $12.6 million for the corresponding period. Diluted earnings per share for the first half were $.80 for 2003 and $.62 for 2002. Systemwide revenues for the Company, which includes gross revenues of franchised stores, advanced 17% to $243.0 million for the quarter versus $208.0 million a year ago. For the six-month period systemwide revenues were $502.4 million, up 19% from the $423.3 million last year. Systemwide revenues is a non-GAAP financial measurement calculated by adding Company revenues determined in accordance with GAAP to the revenues of the Company's franchisees and subtracting the Company's royalty revenues. Franchisee revenues, however, are not revenues of Aaron Rents, Inc. A schedule reconciling Company revenues to systemwide revenues appears below. Same store revenues (revenues earned in Company-operated stores opened for the entirety of both periods) in the Aaron's Sales & Lease Ownership division increased 11.3% during the second quarter of 2003. Same store revenues increased 6.0% for stores open over two years in both the second quarter of 2003 and 2002. The Aaron's Sales & Lease Ownership division increased its second quarter revenues 25% to $150.3 million versus $120.1 million for the second quarter last year. Systemwide revenues for this division rose 22% to $215.5 million versus $177.0 million compared to the second quarter a year ago. First half sales and lease ownership revenues increased 28% to $312.2 million compared to $243.4 million last year, and systemwide revenues for the division advanced 24% to $445.6 million compared to $358.9 million for the first half of last year. A schedule reconciling Aaron's Sales & Lease Ownership revenues to the division's systemwide revenues also appears below. The Aaron's Sales & Lease Ownership division increased its store count during the second quarter by 21 stores, 12 Company-operated stores and nine franchised stores, bringing the total of stores open at June 30 to 686. At the end of June the Company also had 66 rent-to-rent stores open The Company's Sight & Sound stores, acquired in 2002, negatively affected earnings in the second quarter by approximately $.04 per diluted share and $.11 per diluted share for the first six months of the year. Currently the Company is operating 12 Sight & Sound stores. On July 2 the Company announced the purchase of 37 rental stores in three different transactions. Of the 37 stores acquired, 19 have become new Aaron's Sales & Lease Ownership stores with the remaining 18 stores merged into existing Aaron's locations. In addition, ten more rental stores in Ohio were purchased as of today from Showplace, Inc. The Company will merge five of these stores into existing Aaron's locations. All of the acquisitions were asset purchases for cash. "We continue to actively look for opportunistic acquisitions to compliment the opening of our Company-operated and franchised stores," Mr. Loudermilk continued. "In addition to seeking the acquisition of independent rental stores, we also anticipate purchasing up to 50 of our better performing franchise stores within the next several months, assuming there are willing sellers. All franchise store acquisitions are expected to be accretive to earnings." A 3-for-2 stock split effected in the form of a 50% stock dividend on both Common Stock (RNT) and Class A Common Stock (RNT.A) was announced by the Company on July 21. New shares will be distributed on August 15, 2003 to shareholders of record as of the close of business on August 1, 2003. The accompanying table presents the second quarter results as if the split occurred prior to this date. "We are revising our guidance for 2003, expecting revenues during the year in excess of $750 million with systemwide revenues exceeding $1 billion," Mr. Loudermilk added. "We plan to aggressively open stores, opening at least 30 Company-operated and 50 franchised Aaron's Sales & Lease Ownership stores during the current year. On a pre-split basis for the third quarter of 2003 we expect diluted earnings per share to be in the range of $.38 to $.40 per share with earnings per share for the full 2003 year in a range of $1.60 to $1.65 per diluted share. Our initial outlook for 2004 is achieving diluted earnings per share, on a pre-split basis, between $1.85 to $1.95. We are obviously very positive on the future for the Company." Estimated 2003 systemwide revenues includes the Company's estimated revenues, other than approximately $14 million to $15 million in royalties, plus anticipated revenues of franchisees of approximately $265 million to over $285 million. Aaron Rents will hold a conference call to discuss its quarterly financial results on Wednesday, July 30, 2003, at 10:00 am Eastern Time. The public is invited to listen in to the conference call by webcast accessible through our 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 775 Company-operated and franchised stores across the United States and Puerto Rico 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 10 facilities in four 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 "Certain Factors Affecting Forward Looking Statements" in the Company's Annual Report on Form 10-K for fiscal 2002, which discussion is incorporated herein by this reference. Aaron Rents, 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, 2003 2002 2003 2002 Revenues: Rentals and Fees $131,419 $113,643 $262,456 $226,145 Retail Sales 15,608 14,150 38,646 31,165 Non-Retail Sales 24,870 18,801 56,427 41,264 Other 5,844 4,568 11,472 9,251 Total 177,741 151,162 369,001 307,825 Costs and Expenses: Retail Cost of Sales 11,391 10,388 28,246 22,766 Non-Retail Cost of Sales 23,077 17,348 52,479 38,176 Operating Expenses 81,377 71,654 164,496 144,788 Depreciation of Rental Merchandise 46,517 40,036 92,906 79,736 Interest 1,473 1,070 3,061 2,236 Total 163,835 140,496 341,188 287,702 Earnings Before Taxes 13,906 10,666 27,813 20,123 Income Taxes 5,145 3,970 10,304 7,506 Net Earnings $ 8,761 $ 6,696 $ 17,509 $ 12,617 Earnings Per Share $ .40 $ .33 $ .81 $ .63 Earnings Per Share Assuming Dilution $ .40 $ .32 $ .80 $ .62 Weighted Average Shares Outstanding 21,708 20,353 21,697 20,134 Weighted Average Shares Outstanding Assuming Dilution 22,057 20,761 22,000 20,489 Aaron Rents, Inc. and Subsidiaries Selected Balance Sheet Data (In Thousands) (Unaudited) June 30, December 31, 2003 2002 Cash $ 10,458 $ 96 Accounts Receivable 24,814 26,973 Rental Merchandise, Net 313,775 317,287 Property, Plant and Equipment, Net 90,496 87,094 Total Assets 494,626 483,648 Bank Debt 7,325 Senior Notes 50,000 50,000 Total Liabilities 195,079 203,103 Shareholders' Equity $299,547 $280,545 Aaron Rents, Inc. and Subsidiaries Earnings Per Share Pro Forma Presentation (1) (In thousands, except per share amounts) (Unaudited) (Unaudited) Three Months Six Months Ended Ended June 30, June 30, 2003 2002 2003 2003 Net Earnings $8,761 $6,696 $17,509 $12,617 Earnings Per Share $.27 $.22 $.54 $.42 Earnings Per Share Assuming Dilution $.26 $.22 $.53 $.41 Weighted Average Shares Outstanding 32,562 30,530 32,545 30,201 Weighted Average Shares Outstanding Assuming Dilution 33,085 31,142 33,000 30,734 (1) Pro forma presentation gives prior-period effect to the 3-for-2 partial stock split effective August 15, 2003. Aaron Rents, Inc. and Subsidiaries Reconciliation of Company Revenues to Non-GAAP Systemwide Revenues (In thousands, except per share amounts) (Unaudited) (Unaudited) Three Months Six Months Ended Ended June 30, June 30, 2003 2002 2003 2003 Total Company Revenues $177,741 $151,162 $369,001 $307,825 Royalty Revenues (3,433) (2,993) (7,023) (6,079) Franchisees' Revenues 68,660 59,864 140,460 121,585 Systemwide Revenues $242,968 $208,033 $502,438 $423,331 Sales & Lease Ownership Revenues $150,297 $120,100 $312,195 $243,395 Sales & Lease Ownership Royalty Revenues (3,433) (2,993) (7,023) (6,079) Sales & Lease Ownership Franchisees' Revenues 68,660 59,864 140,460 121,585 Sales & Lease Ownership Systemwide Revenues $215,524 $176,971 $445,632 $358,901 SOURCE Aaron Rents, Inc. -0- 07/29/2003 /CONTACT: Gilbert L. Danielson, Executive Vice President, Chief Financial Officer of Aaron Rents, Inc., +1-678-402-3334/ /Web site: http://www.aaronrents.com / (RNT) CO: Aaron Rents, Inc. ST: Georgia IN: REA HOU SU: ERN CCA