ATLANTA, April 24, 2015
/PRNewswire/ -- Aaron's, Inc. (NYSE: AAN), a leader in the
sales and lease ownership and specialty retailing of furniture,
consumer electronics, home appliances and accessories, today
announced revenues and earnings for the three months ended
March 31, 2015.
For the first quarter of 2015, revenues increased 40.4% to
$821.8 million compared with
$585.4 million for the first quarter
of 2014. Net earnings increased 28.4% to $49.2 million compared with $38.3 million in the prior year period.
Diluted earnings per share were $.68
compared with $.53 a year ago.
Non-GAAP earnings per share were $.73
compared with $.53 last year.
"We're encouraged by the contributions of the core business and
Progressive," said John Robinson,
Chief Executive Officer of Aaron's, Inc. "The core business
performed as expected. Inventory and pricing initiatives are
gaining traction, and significant benefits are being realized from
the cost reductions previously outlined. Progressive
continues to deliver solid profitability on growing revenues."
"Profitability in the core business stabilized in the quarter,
and we believe our strategies can ultimately restore growth in this
segment," continued Mr. Robinson. "At Progressive, we plan to
add new doors to the system while maintaining our focus on product
and process innovation to drive higher invoice volume in existing
retail locations. We are making progress on realizing synergies
between Progressive and the core business and will continue
to look for new integration opportunities. Looking
forward, we believe our strategic plans will result in a much
stronger and more profitable organization," Mr. Robinson
said.
Financial Summary
On a non-GAAP basis, excluding the $6.6
million of amortization expense related to the acquisition
of Progressive, net earnings for the first quarter of 2015 were
$53.4 million compared with
$38.3 million in the first quarter a
year ago, and diluted earnings per share were $.73 compared with $.53.
EBITDA for the Company was $103.7
million for the first quarter of 2015 compared with
$76.3 million in the prior year
period. EBITDA is calculated as the Company's earnings before
interest, depreciation on property, plant and equipment,
amortization of intangible assets and income taxes.
The Company ended the first quarter of 2015 with $129.8 million in cash compared with $3.5 million at the end of 2014. Debt was reduced
to $520.7 million at March 31,
2015 from $606.1 million at
December 31, 2014.
Core Results
Aaron's Sales & Lease Ownership revenues decreased
$12.8 million, or 2.3%, in the first
quarter of 2015 to $552.5 million
compared with $565.3 million in
revenues in the first quarter of 2014.
HomeSmart revenues were $16.8
million in the first quarter of 2015, a 2.9% decrease from
$17.3 million in the first quarter of
2014.
EBITDA for the core business in the first quarter of 2015 was
$75.4 million compared with
$76.3 million a year ago. As a
percentage of total revenues, EBITDA was 13.2% compared with 13.0%
for the same period in 2014.
Write offs for damaged, lost or unsaleable merchandise were 3.0%
of revenues in both periods.
Same store revenues (revenues earned in Company-operated stores
open for the entirety of both quarters) decreased 3.8% during the
first quarter of 2015 compared with the first quarter of 2014, and
customer counts on a same store basis were down
4.2%. Company-operated Aaron's stores had 1,047,000 customers
and franchised stores had 576,000 customers at the end of the
quarter, a 3.5% decline in total customers from the end of the
first quarter a year ago (customers of franchisees are not
customers of Aaron's, Inc.).
During the first quarter of 2015, the Company revised the
methodology for calculating same store revenues and same store
customer counts to reflect a full lifecycle for customer retention
after stores are closed. As a result, revenues for stores that have
been consolidated/merged are now included in the comparable same
store calculation after 24 months. Previously, merged stores were
included in the same store calculation after 15 months. The change
in the same store calculation had an immaterial impact on
comparable store revenues and customer counts for the first
quarters of 2015 and 2014.
Progressive Results
Progressive's revenues in the first quarter of 2015 were
$251.6 million and EBITDA was
$28.3 million. As a percentage of
revenues EBITDA was 11.3%. Write offs for damaged, lost or
unsaleable merchandise were 6.4% of revenues. Progressive's results
of operations were not included in the Company's financial
statements in the first quarter of 2014. Progressive had 453,000
customers at March 31, 2015. Progressive's results of
operations were not included in the Company's financial statements
in the first quarter of 2014.
Progressive's revenue growth was driven by a diverse and
broadening base. Business with merchant partners across small,
medium and large retailers all grew at double-digit rates in the
quarter compared to the previous year. Results were supported
by a mix of gross margin expansion and leverage on operating
expenses.
Components of Revenue
Consolidated lease revenues and fees for the first quarter of
2015 increased 51.2% over the prior year period, due to the
inclusion of Progressive revenues in the first quarter of 2015.
Franchise royalties and fees decreased 6.0% in the first quarter of
2015 compared with the same period a year ago. The decrease in the
Company's franchise royalties and fees is primarily the result of a
decrease in revenues of the Company's franchisees, which
collectively had revenues of $260.8
million during the first quarter of 2015, a decrease of 3.9%
from the same quarter last year. Same store revenues and customer
counts for franchised stores were down 3.0% and 3.8%, respectively,
for the first quarter of 2015 compared with the same quarter last
year (revenues and customers of franchisees are not revenues and
customers of Aaron's, Inc.). Non-retail sales, which are primarily
sales of merchandise to Aaron's Sales and Lease Ownership
franchisees, increased 4.8% for the first quarter compared with the
prior year period.
Store Count
During the first quarter of 2015, the Company opened one
Company-operated Aaron's Sales & Lease Ownership store and four
franchised stores. The Company also sold nine Aaron's Sales &
Lease Ownership stores to a franchisee and five Aaron's Sales &
Lease Ownership franchised stores were closed during the
quarter.
At March 31, 2015, the Company had 1,235 Company-operated
Aaron's Sales & Lease Ownership stores, 788 franchised Aaron's
Sales & Lease Ownership stores, 83 Company-operated HomeSmart
stores, and two franchised HomeSmart stores. The total number
of stores open at March 31, 2015 was 2,108.
2015 Outlook
The Company is updating its guidance for the full year 2015 to
increase its outlook for Progressive's lease revenues and EBITDA.
The Company's expectations for the core business remain unchanged
from the previously published guidance on February 6, 2015. Diluted earnings per share is
presented both on a GAAP basis and on a non-GAAP basis that
excludes Progressive-related intangible amortization. The Company
currently expects to achieve the following:
Progressive
- Lease revenues for 2015 are now expected to be in the range of
$1.05 billion to $1.15 billion
compared with the previous guidance of $1.00
billion to $1.10 billion.
- EBITDA is expected to be in the range of $105 million to $115 million compared with the
previous guidance of $95 million to $105
million.
Consolidated Results
- Revenues for 2015 are now estimated to be in the range of
$3.10 billion to $3.30 billion
compared with the previous guidance of $3.05
billion to $3.25 billion.
- EBITDA expectations are being increased to a range of
$305 million to $335 million compared
with the previous guidance of $295 million
to $325 million.
- GAAP diluted earnings per share are expected to be in the range
of $1.78 to $1.98 compared with the
previous guidance of $1.68 to
$1.88.
- Non-GAAP adjusted diluted earnings per share have been
increased to a range of $2.01 to
$2.21 compared with the previous guidance of $1.90 to $2.10.
Conference Call and Webcast
Aaron's will hold a conference call to discuss its quarterly
financial results on Friday, April 24, 2015, at 10:00 a.m. Eastern Time. The public is invited to
listen to the conference call by webcast accessible through the
Company's Investor Relations website, investor.aarons.com, in the
"Investor Relations" section. The webcast will be archived for
playback at that same site.
About Aaron's, Inc.
Aaron's, Inc. (NYSE: AAN), a leader in the sales and lease
ownership and specialty retailing of furniture, consumer
electronics, home appliances and accessories, currently has more
than 2,100 Company-operated and franchised stores in 48 states, the
District of Columbia,
and Canada. Aaron's was founded in 1955, is
headquartered in Atlanta and has been publicly traded
since 1982. Progressive Leasing, a wholly-owned subsidiary and
leading virtual lease-to-own company, provides lease-purchase
solutions through more than 15,000 retail locations in 46
states. Aaron's, Inc. includes the Aarons.com,
ShopHomeSmart.com and ProgLeasing.com brands. For more
information, visit www.aarons.com.
"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. Such
forward-looking statements generally can be identified by the use
of forward-looking terminology, such as "may," "expect,"
"forecast," "guidance," "intend," "believe," "could," "project,"
"estimate," "anticipate," "should" and similar terminology. These
risks and uncertainties include factors such as changes in general
economic conditions, competition, pricing, legal and regulatory
proceedings, customer privacy, information security, customer
demand, the integration of the Progressive acquisition, the
execution and results of our new strategy, risks related to
Progressive's "virtual" lease-to-own business with which the
Company may be unfamiliar, and the other risks and uncertainties
discussed under "Risk Factors" in the Company's Annual Report on
Form 10-K for the fiscal year ended December
31, 2014. Statements in this release that are
"forward-looking" include without limitation: statements regarding
the impact of the Company's strategies for its core business, new
product introduction and Aaron's projected results (including
Progressive's results) for the remainder of 2015, including
statements under the heading "2015 Outlook." You are cautioned not
to place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. Except as required
by law, the Company undertakes no obligation to update these
forward-looking statements to reflect subsequent events or
circumstances after the date of this press release.
Aaron's, Inc. and
Subsidiaries
Consolidated Statements of
Earnings
(In thousands, except per share amounts)
|
|
(Unaudited)
Three Months Ended
|
|
|
March 31,
|
|
|
2015
|
2014
|
Revenues:
|
|
|
|
Lease Revenues and
Fees
|
|
$
|
695,282
|
|
$
|
459,816
|
|
Retail
Sales
|
|
11,994
|
|
14,510
|
|
Non-Retail
Sales
|
|
96,037
|
|
91,625
|
|
Franchise Royalties
and Fees
|
|
17,004
|
|
18,084
|
|
Other
|
|
1,497
|
|
1,388
|
|
Total
|
|
821,814
|
|
585,423
|
|
|
|
|
|
Costs and
Expenses:
|
|
|
|
Depreciation of Lease
Merchandise
|
|
315,986
|
|
167,912
|
|
Retail Cost of
Sales
|
|
7,704
|
|
9,013
|
|
Non-Retail Cost of
Sales
|
|
86,852
|
|
82,907
|
|
Operating
Expenses
|
|
327,920
|
|
264,374
|
|
Other Operating
Income, Net
|
|
(1,460)
|
|
(677)
|
|
Total
|
|
737,002
|
|
523,529
|
|
|
|
|
|
Operating
Profit
|
|
84,812
|
|
61,894
|
|
Interest
Income
|
|
439
|
|
753
|
|
Interest
Expense
|
|
(5,969)
|
|
(1,533)
|
|
Other Non-Operating
Expense, Net
|
|
(1,452)
|
|
(404)
|
|
Earnings Before
Income Taxes
|
|
77,830
|
|
60,710
|
|
|
|
|
|
Income
Taxes
|
|
28,587
|
|
22,371
|
|
|
|
|
|
Net
Earnings
|
|
$
|
49,243
|
|
$
|
38,339
|
|
|
|
|
|
Earnings Per
Share
|
|
$
|
.68
|
|
$
|
.53
|
|
Earnings Per Share
Assuming Dilution
|
|
$
|
.68
|
|
$
|
.53
|
|
|
|
|
|
Weighted Average
Shares Outstanding
|
|
72,517
|
|
72,467
|
|
Weighted Average
Shares Outstanding Assuming Dilution
|
|
72,855
|
|
72,884
|
|
Selected Balance Sheet Data
(In
thousands)
(Unaudited)
|
|
March 31,
2015
|
|
December 31,
2014
|
Cash and Cash
Equivalents
|
|
$
|
129,837
|
|
|
$
|
3,549
|
|
Investments
|
|
20,724
|
|
|
21,311
|
|
Accounts Receivable,
Net
|
|
105,602
|
|
|
107,383
|
|
Lease Merchandise,
Net
|
|
1,048,279
|
|
|
1,087,032
|
|
Property, Plant and
Equipment, Net
|
|
214,518
|
|
|
219,417
|
|
Other Assets,
Net
|
|
883,783
|
|
|
1,018,152
|
|
|
|
|
|
|
Total
Assets
|
|
2,402,743
|
|
|
2,456,844
|
|
|
|
|
|
|
Debt
|
|
520,668
|
|
|
606,082
|
|
Total
Liabilities
|
|
1,127,946
|
|
|
1,233,323
|
|
Shareholders'
Equity
|
|
$
|
1,274,797
|
|
|
$
|
1,223,521
|
|
|
|
|
|
|
Use of Non-GAAP Financial Information:
This press release presents the Company's net earnings and
diluted earnings per share in accordance with generally accepted
accounting principles in the United
States ("GAAP") and in a format that is not in accordance
with GAAP due to the exclusion of $6.6
million in Progressive-related intangible amortization
expense in the first quarter of 2015.
Management regards the amortization expense relating to the
Company's acquisition of Progressive as a special charge not
arising out of the ordinary course of business. Management believes
that presentation of net earnings and diluted earnings per share
excluding this adjustment is useful because it gives investors
supplemental information to evaluate and compare the Company's
underlying operating performance from period to period.
Non-GAAP financial measures, however, should not be used as a
substitute for, or considered superior to, measures of financial
performance prepared in accordance with GAAP, such as the Company's
GAAP basis net earnings and diluted earnings per share and the GAAP
operating income of the Company's segments, which are also
presented in the press release. Please refer to our Current Report
on Form 8-K furnishing this earnings release to the SEC on the date
hereof for further information on our use of non-GAAP financial
measures.
Reconciliation of Net Earnings and Earnings
Per Share Assuming Dilution to Non-GAAP
Net Earnings and
Earnings Per Share Assuming Dilution
(In thousands,
except earnings per share)
|
(Unaudited)
Three Months Ended
March 31,
|
|
2015
|
2014
|
Net
Earnings
|
$
|
49,243
|
|
$
|
38,339
|
|
Add
Progressive-Related Intangible Amortization Expense (1)
|
4,168
|
|
—
|
|
Non-GAAP Net
Earnings
|
$
|
53,411
|
|
$
|
38,339
|
|
|
|
|
Earnings Per Share
Assuming Dilution
|
$
|
.68
|
|
$
|
.53
|
|
Add
Progressive-Related Intangible Amortization Expense
|
.05
|
|
—
|
|
|
|
|
Non-GAAP Earnings Per
Share Assuming Dilution
|
$
|
.73
|
|
$
|
.53
|
|
|
|
|
Weighted Average
Shares Outstanding Assuming Dilution
|
72,855
|
|
72,884
|
|
(1)
|
Net of taxes of
$2,420 for the three months ended March 31, 2015 calculated using
the effective tax rate for the three months ended March 31,
2015.
|
Aaron's, Inc. and
Subsidiaries
Non-GAAP Financial
Information
Quarterly Segment EBITDA
(In
thousands)
(Unaudited)
|
Three Months Ended
March 31, 2015
|
|
Sales &
Lease
Ownership
|
Progressive
|
HomeSmart
|
Franchise
|
Manufacturing
|
Other
|
Consolidated
Total
|
Net
Earnings
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
49,243
|
|
Income
Taxes
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
28,587
|
|
Earnings Before
Income
Taxes
|
59,041
|
|
15,830
|
|
526
|
|
13,898
|
|
1,282
|
|
(12,747)
|
|
77,830
|
|
Interest
Expense
|
1,932
|
|
5,469
|
|
240
|
|
—
|
|
10
|
|
(1,682)
|
|
5,969
|
|
Depreciation
|
7,709
|
|
454
|
|
628
|
|
366
|
|
382
|
|
3,443
|
|
12,982
|
|
Amortization
|
368
|
|
6,588
|
|
6
|
|
—
|
|
—
|
|
—
|
|
6,962
|
|
EBITDA
|
$
|
69,050
|
|
$
|
28,341
|
|
$
|
1,400
|
|
$
|
14,264
|
|
$
|
1,674
|
|
$
|
(10,986)
|
|
$
|
103,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2014
|
|
Sales &
Lease
Ownership
|
Progressive
|
HomeSmart
|
Franchise
|
Manufacturing
|
Other
|
Consolidated
Total
|
Net
Earnings
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
38,339
|
|
Income
Taxes
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
22,371
|
|
Earnings Before
Income
Taxes
|
56,167
|
|
—
|
|
(126)
|
|
14,558
|
|
547
|
|
(10,436)
|
|
60,710
|
|
Interest
Expense
|
1,944
|
|
—
|
|
249
|
|
—
|
|
15
|
|
(675)
|
|
1,533
|
|
Depreciation
|
8,830
|
|
—
|
|
651
|
|
427
|
|
383
|
|
3,075
|
|
13,366
|
|
Amortization
|
590
|
|
—
|
|
105
|
|
—
|
|
—
|
|
—
|
|
695
|
|
EBITDA
|
$
|
67,531
|
|
$
|
—
|
|
$
|
879
|
|
$
|
14,985
|
|
$
|
945
|
|
$
|
(8,036)
|
|
$
|
76,304
|
|
Reconciliation of 2015 Projected Guidance for
Earnings Per Share
Assuming Dilution to Non-GAAP Earnings
Per Share Assuming Dilution
|
Fiscal Year
2015
|
|
Low Range
|
High Range
|
Projected Earnings
Per Share Assuming Dilution
|
$
|
1.78
|
$
|
1.98
|
Add Projected
Progressive-Related Intangible Amortization Expense
|
.23
|
.23
|
Projected Non-GAAP
Earnings Per Share Assuming Dilution
|
$
|
2.01
|
$
|
2.21
|
Logo -
http://photos.prnewswire.com/prnh/20130826/CL69318LOGO
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/aarons-inc-reports-first-quarter-2015-results-300071586.html
SOURCE Aaron's, Inc.