RCII ($48-$55-?)PE=21 Cap= 1.3Bil Reports Second Quarter 2002 Results
Total Revenues Increase 11.7%;
Same Store Sales Increase 6.6%;
Diluted Earnings Per Share Rise 34.1%
PLANO, Texas, July 29 /PRNewswire-FirstCall/ --
Rent-A-Center, Inc. (Nasdaq: RCII) (the "Company"), the leading rent-to-own
operator in the U.S., today announced revenues and net earnings for the
quarter ended June 30, 2002.
The Company, the nation's largest rent-to-own operator, had total revenues
for the quarter ended June 30, 2002 of $494.7 million, a $51.9 million
increase from $442.8 million for the same period in the prior year. This
increase of 11.7% in revenues was primarily driven by growth in same store
revenues, as well as incremental revenues generated in new and acquired
stores. Same store revenues (revenues earned in stores operated for the
entirety of both periods) during the second quarter of 2002 increased 6.6%
above the comparable quarter of 2001.
Net earnings for the quarter ended June 30, 2002, when excluding the
charges discussed below, were $44.9 million, or $1.22 per diluted share. This
represented an increase of 62.9% over net earnings of $27.5 million, or
$0.74 per diluted share, reported for the same period in the prior year.
After adjusting reported results for the second quarter of 2001 to exclude the
effects of goodwill amortization, net earnings and diluted earnings per common
share increased $11.1 million and $0.31, respectively, for an increase in
diluted earnings per common share of 34.1%, on a comparable basis. The
increase in net earnings and earnings per diluted share are primarily
attributable to the Company's increase in revenues, operational improvements
in existing stores and a continued focus on cost control.
Net earnings for the six months ended June 30, 2002, were $88.4 million,
or $2.42 per diluted share, when excluding the charges discussed below,
representing an increase of 68.3% over net earnings of $52.5 million, or
$1.43 per diluted share for the same period in the prior year. After
adjusting reported results for the six-month period ending June 30, 2001 to
exclude the effects of goodwill amortization, net earnings and diluted
earnings per common share increased $23.5 million and $0.66, respectively, for
an increase in diluted earnings per common share of 37.5%, on a comparable
basis. Total revenues for the six months ended June 30, 2002 increased to
$993.3 million from $882.5 million in 2001, representing an increase of 12.6%.
Same store revenues for the six-month period ending June 30, 2002 increased
6.7%.
"We are pleased to report another quarter of outstanding results,"
commented Mark E. Speese, the Company's Chairman and Chief Executive Officer.
"Our continued ability to meet, and in many cases, exceed our stated
objectives in terms of revenue and earnings growth," Speese continued,
"further validates our business model and speaks to the opportunities inherent
in the industry for continued growth. Needless to say, we expect to be at the
forefront of that growth."
During the second quarter of 2002, the Company strengthened its balance
sheet with the prepayment of $128 million of term debt. Associated with the
prepayment was a write-off of financing fees of approximately $2.9 million.
The Company also recorded a charge of $2.0 million during the second quarter
relating to the settlement of its class action gender discrimination lawsuits,
which is included in general and administrative expenses on the quarterly
income statement. These charges reduced diluted earnings per share in the
quarter by $0.08 to the reported diluted earnings per share of $1.14.
In addition, during the second quarter of 2002, the Company opened 16 new
locations and acquired 38 additional stores while consolidating three
locations into existing stores. The Company also purchased accounts from
40 additional locations during the second quarter of 2002. Since
June 30, 2002, the Company has opened four additional new stores, consolidated
one store with an existing location and has purchased accounts from four
additional locations. For the entire year ending December 31, 2002, the
Company intends to add approximately 5% to 10% to its store base by opening
between 60 and 80 new store locations as well as continuing to pursue
opportunistic acquisitions. The Company expects to accelerate the number of
new store openings each year beginning in 2003 to between 100 and 120 new
store locations.
The strong recurring cash flows have enabled the Company to fund its
growth internally. Through the six-month period ending June 30, 2002, the
Company had cash flow from operations of approximately $172.9 million and,
after funding its growth and reducing debt by $128 million, ended the quarter
with $93.8 million of cash on hand. "This performance clearly demonstrates
our ability to grow our store base and reduce our outstanding debt
simultaneously," commented Speese.
Rent-A-Center will host a conference call to discuss the second quarter
financial results on Tuesday morning July 30, 2002 at 10:45 a.m. EDT. For a
live webcast of the call, visit
rentacenter.com . The webcast will be archived
for a period of two weeks.
Rent-A-Center, Inc., headquartered in Plano, Texas, currently operates
2,338 rent-to-own stores in 50 states, Washington, D.C. and Puerto Rico,
offering high-quality, durable goods such as consumer electronics, appliances,
computers, furniture and accessories to consumers under flexible rental
purchase arrangements that allow the customer to obtain ownership of the
merchandise at the conclusion of an agreed-upon rental period. ColorTyme,
Inc., a wholly owned subsidiary of the Company, is a national franchiser of
327 rent-to-own stores, 315 of which operate under the trade name of
"ColorTyme," and the remaining 12 of which operate under the "Rent-A-Center"
name.
The following statements are based on current expectations. These
statements are forward-looking, and actual results may differ materially.
These statements do not include the potential impact of store acquisitions,
the prepayment of debt and other changes in our capital structure that may be
completed after June 30, 2002.
THIRD QUARTER 2002 GUIDANCE:
Revenues
-- The Company expects total revenues to be in the range of $488 million
to $494 million.
-- Store rental and fee revenues are expected to be between $452 million
and $456 million.
-- Total store revenues are expected to be in the range of $475 million
to $480 million.
-- Same store sales increases are expected to be in the 4% to 6% range.
-- The Company expects to open 15-20 new store locations.
Expenses
-- The Company expects depreciation of rental merchandise to be between
20.7% and 20.9% of store rental and fee revenue and cost of goods
merchandise sales to be between 75% and 85% of store merchandise
sales.
-- Store salaries and other expenses are expected to be in the range of
55.8% and 56.8% of total store revenue.
-- General and administrative expenses are expected to be between 3.0%
and 3.3% of total revenue.
-- Interest expense is expected to be approximately $13.5 million and
amortization is expected to be approximately $0.9 million.
-- The effective tax rate is expected to be approximately 40.5% of pre-
tax income.
-- Diluted earnings per share are estimated to be in the range of $1.06
to $1.10.
-- Diluted shares outstanding are estimated to be between 36.9 million
and 37.3 million.
FISCAL 2002 GUIDANCE:
Revenues
-- The Company expects total revenues to be in the range of $1.98 billion
and $2.00 billion.
-- Store rental and fee revenues are expected to be between
$1.808 billion and $1.823 billion.
-- Total store revenues are expected to be in the range of $1.921 billion
and $1.936 billion.
-- Same store sales increases are expected to be in the 4% to 6% range.
-- The Company expects to open a total of 60-80 new store locations.
Expenses
-- The Company expects depreciation of rental merchandise to be between
20.7% and 20.8% of store rental and fee revenue and cost of goods
merchandise sales to be between 72% and 77% of store merchandise
sales.
-- Store salaries and other expenses are expected to be in the range of
54.6% and 55.8% of total store revenue.
-- General and administrative expenses are expected to be between 3.0%
and 3.2% of total revenue.
-- Interest expense is expected to be between $56.0 million and
$60.0 million and amortization of intangibles is expected to be
approximately $3.5 million.
-- The effective tax rate is expected to be approximately 40.5% of pre-
tax income.
-- Diluted earnings per share are estimated to be in the range of
$4.57 to $4.65, or $4.65 to $4.73 when excluding the $0.08 in charges
recorded in the second quarter of 2002.
-- Diluted shares outstanding are estimated to be between 36.7 million
and 37.1 million. |
