ATLANTA, July 27, 2021 /PRNewswire/ --
Second Quarter Financial Highlights
- Total Revenues of $467.5
Million, an 8.5% Increase
- Same Store Revenues Increased 11.2%; E-commerce Revenues
Increased 15.8%
- Net Income of $33.0 Million, a
47.4% Increase; Adjusted EBITDA of $65.3
Million, a 16.3% Increase
- Diluted EPS of $0.95, a 43.9%
Increase; Non-GAAP Diluted EPS of $1.05, a 26.5% Increase
- Returned $42.0 Million to
Shareholders Through Share Repurchases And Dividends
Refer to the "Basis
of Presentation" section below for information regarding the
consolidated and combined financial results for the periods
discussed in this release.
|
The Aaron's Company, Inc. (NYSE: AAN), a leading,
technology-enabled, omnichannel provider of lease-to-own and
purchase solutions, today announced financial results for the
second quarter ended June 30, 2021.
"We are pleased to announce another quarter of strong operating
results, a significant return of capital to shareholders, and an
increase in our revenue and earnings outlook for the full year
2021," said Douglas Lindsay, Chief
Executive Officer of The Aaron's Company.
"Robust demand for our products, continued strength in customer
payments, and ongoing execution of our strategic initiatives have
led to a larger lease portfolio generating higher revenues,
double-digit earnings growth and strong free cash flow. Our
continued investments in customer-focused decisioning technology,
digital payment and servicing platforms, and both in-store and
online shopping experiences are yielding positive results and are
collectively driving greater productivity and margin
expansion."
Results of Operations - Second Quarter 2021
For
the second quarter of 2021, total revenues were $467.5 million compared with $431.0 million for the second quarter of 2020, an
increase of 8.5%. The increase in revenues was primarily due to the
improving size and quality of our lease portfolio and strong
customer payment activity during the quarter, partially offset by
the planned net reduction of 42 company-operated stores during the
15-month period ended June 30, 2021.
E-commerce revenues were up 15.8% compared to the prior year
quarter and represented 14.0% of lease revenues compared to 12.8%
in the prior year quarter.
On a same store basis, lease and retail revenues increased 11.2%
in the second quarter compared to the prior year quarter. Same
store revenue growth was primarily driven by a larger same store
lease portfolio size to begin the quarter, growth in the portfolio
during the second quarter, and strong customer payment
activity.
Net earnings for the second quarter of 2021 were $33.0 million compared to $22.4 million in the prior year period. Net
earnings in the second quarter of 2021 included $1.8 million in pre-tax restructuring charges and
$1.2 million in pre-tax spin-related
separation charges. Net earnings in the second quarter of 2020
included $7.0 million in pre-tax
restructuring charges.
Adjusted EBITDA for the Company was $65.3
million for the second quarter of 2021, compared with
$56.2 million for the same period in
2020, an increase of $9.1 million, or
16.3%. As a percentage of revenues, Adjusted EBITDA was 14.0% in
the second quarter of 2021 compared with 13.0% for the same period
in 2020, an improvement of 100 basis points. The improvement in
Adjusted EBITDA margin was primarily due to the items described
above related to the revenue increase and an 80 basis point
reduction in lease merchandise write-offs, partially offset by
incremental public company costs and a return to more normalized
levels of operating expenses compared to the second quarter of
2020, a period that included store shutdowns, employment furloughs,
curtailment of marketing activities, franchisee royalty abatement,
and other short-term actions related to the COVID-19 pandemic.
Diluted earnings per share for the second quarter of 2021 were
$0.95 compared with diluted earnings
per share of $0.66 in the year ago
same period. On a non-GAAP basis, diluted earnings per share
were $1.05 in the second quarter of 2021 compared with
non-GAAP diluted earnings per share of $0.83 for the same quarter in 2020, an increase
of $0.22 or 26.5%.
During the second quarter, the Company repurchased 1,166,010
shares of Aaron's common stock for a total purchase price,
including brokerage commissions, of approximately $38.6 million. For the year-to-date period
through July 23, 2021, the company
repurchased 1,839,313 shares of Aaron's common stock for a total
purchase price, including brokerage commissions, of approximately
$57.4 million. As of July 23, 2021, the Company had approximately
$92.6 million remaining under its
$150 million share repurchase
program.
During the quarter, the Company's board of directors declared a
quarterly cash dividend of $0.10 per
share which was paid on July 6,
2021.
As of June 30, 2021, the company had a cash balance of
$48.0 million, no debt, and total
available liquidity of $281.5 million including availability
under the Company's existing revolving credit facility.
Franchise Performance
Franchisee revenues
totaled $82.5 million for the three months ended June 30, 2021, a decrease of 20.9% from the three
months ended June 30, 2020 primarily
due to a reduction in franchise locations. Same store revenues for
franchised stores increased 1.9% for the three months ended
June 30, 2021 compared with the same
quarter in 2020. Revenues and customers of franchisees are not
revenues and customers of the Company.
2021 Outlook
The Company has revised its full
year 2021 outlook. For the full year 2021, we increased our
expected total revenues to between $1.775
billion and $1.800
billion. We also increased our expected Adjusted
EBITDA to between $215 million and
$225 million.
For the full year 2021 updated outlook, we have assumed an
effective tax rate for 2021 of approximately 26%, depreciation and
amortization of between $70 million
and $75 million, and a diluted
weighted average share count of approximately 34 million shares.
This outlook assumes no significant deterioration in the current
retail environment, state of the U.S. economy, or global supply
chain, as compared to its current condition.
|
Current
Outlook1
|
Previous
Outlook1
|
|
July 27,
2021
|
April 27,
2021
|
(In
thousands)
|
Low
|
High
|
Low
|
High
|
Total
Revenues
|
$
|
1,775,000
|
|
$
|
1,800,000
|
|
$
|
1,725,000
|
|
$
|
1,775,000
|
|
Adjusted
EBITDA2
|
215,000
|
|
225,000
|
|
190,000
|
|
205,000
|
|
Capital
Expenditures
|
90,000
|
|
100,000
|
|
80,000
|
|
90,000
|
|
Free Cash
Flow2
|
90,000
|
|
100,000
|
|
90,000
|
|
100,000
|
|
Annual Same Store
Revenues
|
6.0%
|
|
8.0%
|
|
4.0%
|
|
6.0%
|
|
|
1 See
the "Use of Non-GAAP Financial Information" section accompanying
this press release.
|
2 See
the "Reconciliation of 2021 Current Outlook" and "Reconciliation of
2021 Previous Outlook" sections accompanying this press
release.
|
Basis of Presentation
The financial statements
and related results discussed herein for periods prior to and
through the date of the separation and distribution, November 30, 2020, were prepared on a combined
standalone basis and were derived from the consolidated financial
statements and accounting records of PROG Holdings, Inc. The
financial statements for the periods subsequent to December 1, 2020 and through June 30, 2021
are consolidated financial statements of the Company and its
subsidiaries, each of which is wholly-owned, and is based on the
financial position and results of operations of the Company as a
standalone company.
The combined financial statements prepared through November 30, 2020 include all revenues and costs
directly attributable to the Company and an allocation of expenses
from PROG Holdings, Inc. related to certain corporate functions and
actions. These costs include executive management, finance,
treasury, tax, audit, legal, information technology, human
resources and risk management functions and the related benefit
cost associated with such functions, including stock-based
compensation. These expenses have been allocated to the Company
based on direct usage or benefit where specifically identifiable,
with the remaining expenses allocated primarily on a pro rata basis
using an applicable measure of revenues, headcount or other
relevant measures.
Conference Call and Webcast
The Company will
hold a conference call to discuss its quarterly results on
July 27, 2021, at 8:30 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. The webcast will be archived for
playback at that same site.
About The Aaron's Company
Inc.
Headquartered in Atlanta, The Aaron's Company, Inc. (NYSE:
AAN), is a leading, technology-enabled, omnichannel provider of
lease-to-own and purchase solutions. The Aaron's Company
engages in the sales and lease ownership and specialty retailing of
furniture, appliances, consumer electronics and accessories through
its approximately 1,300 Company-operated and franchised stores in
47 states and Canada, as well as
its e-commerce platform, Aarons.com. For more information, visit
investor.aarons.com and Aarons.com.
Forward-Looking Statements
Statements in
this news release regarding our 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 "remain," "believe,"
"outlook," "expect," "assume," "assumed," and similar
terminology. These risks and uncertainties include factors
such as (i) any ongoing impact of the COVID-19 pandemic due
to new variants or the efficacy and rate of vaccinations and
related measures taken by governmental or regulatory authorities to
combat the pandemic, including whether additional government
stimulus payments or supplemental unemployment benefits will be
approved, and the nature, amount and timing of any such payments or
benefits, (ii) the possibility that the operational,
strategic and shareholder value creation opportunities expected
from the separation and spin-off of the Aaron's Business into what
is now The Aaron's Company, Inc. may not be achieved in a timely
manner, or at all; (iii) the failure of that separation to qualify
for the expected tax treatment; (iv) changes in the enforcement and
interpretation of existing laws and regulations and the adoption of
new laws and regulations that may unfavorably impact our business;
(v) legal and regulatory proceedings and investigations, including
those related to consumer protection laws and regulations, customer
privacy, third party and employee fraud and information security;
(vi) the risks associated with our strategy and strategic
priorities not being successful, including our e-commerce and real
estate repositioning and optimization initiatives or being more
costly than anticipated; (vii) risks associated with the challenges
faced by our business, including the commoditization of consumer
electronics and our high fixed-cost operating model; (viii)
increased competition from traditional and virtual lease-to-own
competitors, as well as from traditional and online retailers and
other competitors; (ix) financial challenges faced by our
franchisees, (x) increases in lease merchandise write-offs, and the
potential limited duration and impact of stimulus and other
government payments made by Federal and State governments to
counteract the economic impact of the pandemic; 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, 2020. Statements in this press
release that are "forward-looking" include without limitation
statements about: (i) the execution of our key strategic
priorities; (ii) the growth and other benefits we expect from
executing those priorities; (iii) our 2021 financial performance
outlook; and (iv) the impact on our 2021 financial performance of
additional rounds of government stimulus payments. 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.
THE AARON'S
COMPANY, INC.
|
Condensed
Consolidated and Combined Statements of Earnings
|
(In thousands,
except per share amounts)
|
|
|
|
(Unaudited)
Three Months
Ended
|
(Unaudited)
Six Months
Ended
|
|
June 30,
|
June 30,
|
|
|
2021
|
2020
|
2021
|
2020
|
REVENUES:
|
|
|
|
|
|
Lease and Retail
Revenues
|
|
$
|
428,498
|
|
$
|
394,257
|
|
$
|
872,585
|
|
$
|
793,167
|
Non-Retail
Sales
|
|
32,455
|
|
33,044
|
|
62,404
|
|
59,890
|
Franchise Royalties
and Fees
|
|
6,542
|
|
3,654
|
|
13,560
|
|
10,729
|
|
|
467,495
|
|
430,955
|
|
948,549
|
|
863,786
|
COST OF
REVENUES:
|
|
|
|
|
|
Cost of Lease and
Retail Revenues
|
|
143,206
|
|
137,718
|
|
294,701
|
|
279,721
|
Non-Retail Cost of
Sales
|
|
29,609
|
|
29,316
|
|
56,100
|
|
52,897
|
|
|
172,815
|
|
167,034
|
|
350,801
|
|
332,618
|
GROSS
PROFIT
|
|
294,680
|
|
263,921
|
|
597,748
|
|
531,168
|
OPERATING
EXPENSES:
|
|
|
|
|
|
Personnel
Expenses
|
|
121,426
|
|
118,395
|
|
246,289
|
|
234,141
|
Other Operating
Expenses, Net
|
|
114,046
|
|
93,993
|
|
222,412
|
|
217,058
|
Provision for Lease
Merchandise Write-Offs
|
|
12,117
|
|
14,213
|
|
25,534
|
|
38,173
|
Restructuring
Expenses, Net
|
|
1,794
|
|
6,991
|
|
5,235
|
|
29,277
|
Impairment of
Goodwill
|
|
—
|
|
—
|
|
—
|
|
446,893
|
Separation
Costs
|
|
1,246
|
|
—
|
|
5,636
|
|
—
|
|
|
250,629
|
|
233,592
|
|
505,106
|
|
965,542
|
OPERATING PROFIT
(LOSS)
|
|
44,051
|
|
30,329
|
|
92,642
|
|
(434,374)
|
Interest
Expense
|
|
(451)
|
|
(2,853)
|
|
(795)
|
|
(6,652)
|
Other Non-Operating
Income, Net
|
|
744
|
|
1,948
|
|
1,146
|
|
189
|
EARNINGS (LOSS)
BEFORE INCOME TAX EXPENSE
(BENEFIT)
|
|
44,344
|
|
29,424
|
|
92,993
|
|
(440,837)
|
INCOME TAX EXPENSE
(BENEFIT)
|
|
11,369
|
|
7,050
|
|
23,695
|
|
(139,437)
|
NET EARNINGS
(LOSS)
|
|
$
|
32,975
|
|
$
|
22,374
|
|
$
|
69,298
|
|
$
|
(301,400)
|
|
|
|
|
|
|
EARNINGS (LOSS)
PER SHARE
|
|
$
|
0.98
|
|
$
|
0.66
|
|
$
|
2.04
|
|
$
|
(8.91)
|
EARNINGS (LOSS)
PER SHARE ASSUMING DILUTION
|
|
$
|
0.95
|
|
$
|
0.66
|
|
$
|
1.99
|
|
$
|
(8.91)
|
WEIGHTED AVERAGE
SHARES OUTSTANDING
|
|
33,812
|
|
33,842
|
|
34,036
|
|
33,842
|
WEIGHTED AVERAGE
SHARES OUTSTANDING
ASSUMING DILUTION
|
|
34,561
|
|
33,842
|
|
34,739
|
|
33,842
|
THE AARON'S
COMPANY, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
|
|
(Unaudited)
|
|
|
|
June 30,
2021
|
|
December 31,
2020
|
ASSETS:
|
|
|
|
Cash and Cash
Equivalents
|
$
|
47,979
|
|
|
$
|
76,123
|
|
Accounts Receivable
(net of allowances of $5,667 at June 30, 2021 and $7,613 at
December 31, 2020)
|
26,569
|
|
|
33,990
|
|
Lease Merchandise (net
of accumulated depreciation and allowances of $445,867
at June 30, 2021 and $458,405 at December 31, 2020)
|
737,305
|
|
|
697,235
|
|
Property, Plant and
Equipment, Net
|
209,876
|
|
|
200,370
|
|
Operating Lease
Right-of-Use Assets
|
236,507
|
|
|
238,085
|
|
Goodwill
|
8,482
|
|
|
7,569
|
|
Other Intangibles,
Net
|
5,844
|
|
|
9,097
|
|
Income Tax
Receivable
|
1,800
|
|
|
1,093
|
|
Prepaid Expenses and
Other Assets
|
89,179
|
|
|
89,895
|
|
Total
Assets
|
$
|
1,363,541
|
|
|
$
|
1,353,457
|
|
LIABILITIES & SHAREHOLDERS'
EQUITY:
|
|
|
|
Accounts Payable and
Accrued Expenses
|
$
|
230,279
|
|
|
$
|
230,848
|
|
Deferred Income Taxes
Payable
|
79,275
|
|
|
62,601
|
|
Customer Deposits and
Advance Payments
|
58,180
|
|
|
68,894
|
|
Operating Lease
Liabilities
|
262,292
|
|
|
278,958
|
|
Debt
|
—
|
|
|
831
|
|
Total
Liabilities
|
630,026
|
|
|
642,132
|
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
Common Stock, Par
Value $0.50 Per Share: Authorized: 112,500,000 Shares at
June 30, 2021 and December 31, 2020; Shares Issued: 35,520,456 at
June 30, 2021
and 35,099,571 at December 31, 2020
|
17,760
|
|
|
17,550
|
|
Additional Paid-in
Capital
|
715,513
|
|
|
708,668
|
|
Retained
Earnings
|
64,320
|
|
|
1,881
|
|
Accumulated Other
Comprehensive Loss
|
(450)
|
|
|
(797)
|
|
|
797,143
|
|
|
727,302
|
|
Less: Treasury Shares
at Cost
|
|
|
|
2,426,788 Shares
at June 30, 2021 and 894,660 at December 31, 2020
|
(63,628)
|
|
|
(15,977)
|
|
Total
Liabilities & Shareholders' Equity
|
$
|
1,363,541
|
|
|
$
|
1,353,457
|
|
THE AARON'S
COMPANY, INC.
|
CONDENSED
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
Six Months
Ended
June
30,
|
(In
Thousands)
|
2021
|
|
2020
|
OPERATING
ACTIVITIES:
|
|
|
|
Net Earnings
(Loss)
|
$
|
69,298
|
|
|
$
|
(301,400)
|
|
Adjustments to
Reconcile Net Earnings to Net Cash Provided by Operating
Activities:
|
|
|
|
Depreciation of Lease
Merchandise
|
269,600
|
|
|
260,308
|
|
Other Depreciation and
Amortization
|
34,547
|
|
|
34,235
|
|
Accounts Receivable
Provision
|
10,879
|
|
|
14,957
|
|
Stock-Based
Compensation
|
6,882
|
|
|
5,370
|
|
Deferred Income
Taxes
|
16,674
|
|
|
(80,206)
|
|
Impairment of
Assets
|
2,810
|
|
|
468,634
|
|
Non-Cash Lease
Expense
|
45,802
|
|
|
48,394
|
|
Other Changes,
Net
|
(2,437)
|
|
|
1,790
|
|
Changes in Operating
Assets and Liabilities, Net of Effects of Acquisitions and
Dispositions:
|
|
|
|
Additions to Lease
Merchandise
|
(408,440)
|
|
|
(193,677)
|
|
Book Value of Lease
Merchandise Sold or Disposed
|
98,712
|
|
|
104,370
|
|
Accounts
Receivable
|
(3,554)
|
|
|
(6,754)
|
|
Prepaid Expenses and
Other Assets
|
(3,228)
|
|
|
3,012
|
|
Income Tax
Receivable
|
(707)
|
|
|
(76,175)
|
|
Operating Lease
Right-of-Use Assets and Liabilities
|
(63,169)
|
|
|
(51,051)
|
|
Accounts Payable and
Accrued Expenses
|
(2,748)
|
|
|
(19,950)
|
|
Customer Deposits and
Advance Payments
|
(10,766)
|
|
|
2,583
|
|
Cash Provided by
Operating Activities
|
60,155
|
|
|
214,440
|
|
INVESTING
ACTIVITIES:
|
|
|
|
Insurance Proceeds
relating to Property, Plant and Equipment
|
363
|
|
|
—
|
|
Proceeds from
Investments
|
1,974
|
|
|
—
|
|
Purchases of Property,
Plant & Equipment
|
(45,826)
|
|
|
(30,059)
|
|
Proceeds from
Dispositions of Property, Plant, and Equipment
|
7,977
|
|
|
2,208
|
|
Acquisitions of
Businesses and Customer Agreements, Net of Cash Acquired
|
(1,734)
|
|
|
(1,210)
|
|
Proceeds from
Dispositions of Businesses and Customer Agreements, Net of Cash
Disposed
|
—
|
|
|
358
|
|
Cash Used in
Investing Activities
|
(37,246)
|
|
|
(28,703)
|
|
FINANCING
ACTIVITIES:
|
|
|
|
Proceeds from
Debt
|
—
|
|
|
5,625
|
|
Repayments on
Debt
|
(753)
|
|
|
(60,748)
|
|
Dividends
Paid
|
(6,770)
|
|
|
—
|
|
Acquisition of
Treasury Stock
|
(42,626)
|
|
|
—
|
|
Issuance of Stock
Under Stock Option Plans
|
1,790
|
|
|
—
|
|
Shares Withheld for
Tax Payments
|
(2,729)
|
|
|
—
|
|
Net Transfers From
Former Parent
|
—
|
|
|
126,265
|
|
Debt Issuance
Costs
|
—
|
|
|
(1,020)
|
|
Cash (Used in)
Provided by Financing Activities
|
(51,088)
|
|
|
70,122
|
|
Effect of Exchange
Rate Changes on Cash and Cash Equivalents
|
35
|
|
|
(79)
|
|
(Decrease) Increase in
Cash and Cash Equivalents
|
(28,144)
|
|
|
255,780
|
|
Cash and Cash
Equivalents at Beginning of Year
|
76,123
|
|
|
48,773
|
|
Cash and Cash
Equivalents at End of Year
|
$
|
47,979
|
|
|
$
|
304,553
|
|
Use of Non-GAAP Financial Information:
Non-GAAP net
earnings, non-GAAP diluted earnings per share, EBITDA and adjusted
EBITDA are supplemental measures of our performance that are not
calculated in accordance with generally accepted accounting
principles in the United States
("GAAP"). Non-GAAP net earnings and non-GAAP diluted earnings
per share for 2021 exclude certain charges including amortization
expense resulting from franchisee acquisitions, restructuring
charges, and separation costs associated with the separation and
distribution transaction that resulted in our spin-off into a
separate publicly-traded company. Non-GAAP net earnings and
non-GAAP diluted earnings per share for 2020 exclude certain
charges including amortization expense resulting from franchisee
acquisitions, early termination charges incurred to terminate a
sales and marketing agreement, goodwill impairment charges,
restructuring charges, and an income tax benefit resulting from the
revaluation of a net operating loss carryback. The amounts for
these pre-tax non-GAAP adjustments, which are tax-effected using
estimated tax rates which are commensurate with non-GAAP pre-tax
earnings, can be found in the Reconciliation of Earnings (Loss)
Before Income Taxes and Earnings (Loss) Per Share Assuming Dilution
to Non-GAAP Net Earnings and Non-GAAP Earnings Per Share Assuming
Dilution table in this press release.
The EBITDA and adjusted EBITDA figures presented in this press
release are calculated as the Company's earnings before interest
expense, depreciation on property, plant and equipment,
amortization of intangible assets and income taxes. Adjusted
EBITDA also excludes the other adjustments described in the
calculation of non-GAAP net earnings above. The amounts for these
pre-tax non-GAAP adjustments can be found in the Quarterly EBITDA
tables in this press release.
Management believes that non-GAAP net earnings, non-GAAP diluted
earnings per share, EBITDA and Adjusted EBITDA provide relevant and
useful information, and are widely used by analysts, investors and
competitors in our industry as well as by our management in
assessing both consolidated and business unit performance.
Non-GAAP net earnings and non-GAAP diluted earnings per share
provide management and investors with an understanding of the
results from the primary operations of our business by excluding
the effects of certain items that generally arose from larger,
one-time transactions that are not reflective of the ordinary
earnings activity of our operations or transactions that have
variability and volatility of the amount. This measure may be
useful to an investor in evaluating the underlying operating
performance of our business.
EBITDA and adjusted EBITDA also provide management and investors
with an understanding of one aspect of earnings before the impact
of investing and financing charges and income taxes. These
measures may be useful to an investor in evaluating our operating
performance and liquidity because the measures:
- Are widely used by investors to measure a company's operating
performance without regard to items excluded from the calculation
of such measure, which can vary substantially from company to
company depending upon accounting methods, book value of assets,
capital structure and the method by which assets were acquired,
among other factors.
- Are a financial measurement that is used by rating agencies,
lenders and other parties to evaluate our creditworthiness.
- Are used by our management for various purposes, including as a
measure of performance of our operating entities and as a basis for
strategic planning and forecasting.
The Free Cash Flow figures presented in this press release are
calculated as the Company's cash flows provided by operating
activities less capital expenditures. Management believes that Free
Cash Flow is an important measure of liquidity provides relevant
and useful information, and are widely used by analysts, investors
and competitors in our industry as well as by our management in
assessing liquidity.
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, the
Company's GAAP revenues and earnings before income taxes and GAAP
cash from operating activities, which are also presented in the
press release. Further, we caution investors that amounts
presented in accordance with our definitions of non-GAAP net
earnings, non-GAAP diluted earnings per share, EBITDA, adjusted
EBITDA and Free Cash Flow may not be comparable to similar measures
disclosed by other companies, because not all companies and
analysts calculate these measures in the same manner.
Reconciliation of
Earnings (Loss) Before Income Taxes and Earnings (Loss) Per Share
Assuming Dilution
to Non-GAAP Net Earnings and Non-GAAP Earnings Per Share Assuming
Dilution
|
(In thousands,
except per share)
|
|
|
(Unaudited)
Three Months
Ended
|
|
(Unaudited)
Six Months
Ended
|
|
June 30,
|
|
June 30,
|
|
2021
|
2020
|
|
2021
|
2020
|
Earnings (Loss)
Before Income Taxes
|
$
|
44,344
|
|
$
|
29,424
|
|
|
$
|
92,993
|
|
$
|
(440,837)
|
|
Add:
Franchisee-Related Intangible Amortization
Expense
|
1,428
|
|
1,438
|
|
|
2,935
|
|
3,018
|
|
Add: Restructuring
Expenses, net
|
1,794
|
|
6,991
|
|
|
5,235
|
|
29,277
|
|
Add: Sales and
Marketing Early Contract Termination
Fees
|
—
|
|
—
|
|
|
—
|
|
14,663
|
|
Add: Separation
Costs
|
1,246
|
|
—
|
|
|
5,636
|
|
—
|
|
Add: Impairment of
Goodwill
|
—
|
|
—
|
|
|
—
|
|
446,893
|
|
Non-GAAP Earnings
Before Income Taxes
|
48,812
|
|
37,853
|
|
|
106,799
|
|
53,014
|
|
|
|
|
|
|
|
Income taxes,
calculated using a non-GAAP Effective Tax
Rate
|
12,515
|
|
9,910
|
|
|
$
|
27,213
|
|
$
|
14,860
|
|
Non-GAAP Net
Earnings
|
$
|
36,297
|
|
$
|
27,943
|
|
|
$
|
79,586
|
|
$
|
38,154
|
|
|
|
|
|
|
|
NOL Carryback
Revaluation(1)
|
—
|
|
—
|
|
|
—
|
|
(34,191)
|
|
|
|
|
|
|
|
Earnings (Loss) Per
Share Assuming Dilution
|
$
|
0.95
|
|
$
|
0.66
|
|
|
$
|
1.99
|
|
$
|
(8.91)
|
|
Add:
Franchisee-Related Intangible Amortization
Expense
|
0.04
|
|
0.04
|
|
|
0.08
|
|
0.09
|
|
Add: Restructuring
Expenses, net
|
0.05
|
|
0.21
|
|
|
0.15
|
|
0.87
|
|
Add: Sales and
Marketing Early Contract Termination
Fees
|
—
|
|
—
|
|
|
—
|
|
0.43
|
|
Add: Separation
Costs
|
0.04
|
|
—
|
|
|
0.16
|
|
—
|
|
Add: Impairment of
Goodwill
|
—
|
|
—
|
|
|
—
|
|
13.21
|
|
Less: NOL Carryback
Revaluation(1)
|
—
|
|
—
|
|
|
—
|
|
(1.01)
|
|
Tax Effect of Non-GAAP
adjustments
|
$
|
(0.03)
|
|
$
|
(0.08)
|
|
|
$
|
(0.10)
|
|
$
|
(3.55)
|
|
Non-GAAP Earnings Per
Share Assuming Dilution(2)
|
$
|
1.05
|
|
$
|
0.83
|
|
|
$
|
2.29
|
|
$
|
1.13
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding Assuming Dilution
|
34,561
|
|
33,842
|
|
|
34,739
|
|
33,842
|
|
|
|
(1)
|
This Non-GAAP
adjustment directly impacted income tax benefit during the six
months ended June 30, 2020. While the inclusion of this
adjustment is not necessary to reconcile from Non-GAAP earnings
before income taxes to Non-GAAP net earnings in the above table, it
is necessary to reconcile from losses per share assuming dilution
(based on GAAP net earnings) to Non-GAAP earnings per share
assuming dilution for the six months ended June 30,
2020.
|
(2)
|
In some cases, the
sum of individual EPS amounts may not equal total non-GAAP EPS
calculations due to rounding.
|
The Aaron's
Company, Inc.
|
Non-GAAP Financial
Information
|
Quarterly and
Year-To Date EBITDA
|
(In
thousands)
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
2021
|
|
June 30,
2020
|
|
June 30,
2021
|
|
June 30,
2020
|
Net Earnings
(Loss)
|
$
|
32,975
|
|
|
$
|
22,374
|
|
|
$
|
69,298
|
|
|
$
|
(301,400)
|
|
Income
Taxes
|
11,369
|
|
|
7,050
|
|
|
23,695
|
|
|
(139,437)
|
|
Earnings (Loss)
Before Income Taxes
|
$
|
44,344
|
|
|
$
|
29,424
|
|
|
$
|
92,993
|
|
|
$
|
(440,837)
|
|
Interest
Expense
|
451
|
|
|
2,853
|
|
|
795
|
|
|
6,652
|
|
Depreciation
|
15,881
|
|
|
15,272
|
|
|
31,264
|
|
|
30,761
|
|
Amortization
|
1,599
|
|
|
1,632
|
|
|
3,283
|
|
|
3,474
|
|
EBITDA
|
$
|
62,275
|
|
|
$
|
49,181
|
|
|
$
|
128,335
|
|
|
$
|
(399,950)
|
|
Sales and Marketing
Early Contract
Termination Fees
|
—
|
|
|
—
|
|
|
—
|
|
|
14,663
|
|
Separation
Costs
|
1,246
|
|
|
—
|
|
|
5,636
|
|
|
—
|
|
Restructuring
Expenses, net
|
1,794
|
|
|
6,991
|
|
|
5,235
|
|
|
29,277
|
|
Impairment of
Goodwill
|
—
|
|
|
—
|
|
|
—
|
|
|
446,893
|
|
Adjusted
EBITDA
|
$
|
65,315
|
|
|
$
|
56,172
|
|
|
$
|
139,206
|
|
|
$
|
90,883
|
|
Reconciliation of
2021 Current Outlook for Adjusted EBITDA
|
(In
thousands)
|
|
|
Fiscal Year 2021
Ranges
|
|
Consolidated
Total
|
Estimated Net
Earnings
|
$100,000 -
$104,000
|
Income
Taxes
|
35,000 -
36,000
|
Projected Earnings
Before Income Taxes
|
135,000 -
140,000
|
Interest
Expense
|
1,000
|
Depreciation and
Amortization
|
70,000 -
75,000
|
Projected
EBITDA
|
$206,000 -
$216,000
|
Projected Other
Adjustments, Net1
|
9,000
|
Projected Adjusted
EBITDA
|
$215,000 -
$225,000
|
|
1 Projected Other Adjustments include
non-GAAP charges related to restructuring charges and separation
costs associated with the separation and distribution transaction
that resulted in our spin-off into a separate publicly-traded
company.
|
Reconciliation of
2021 Current Outlook for Free Cash Flow
|
(In
thousands)
|
|
|
Fiscal Year 2021
Ranges
|
|
Consolidated
Total
|
Cash Provided by
Operating Activities
|
$180,000 -
$200,000
|
Capital
Expenditures
|
90,000 -
100,000
|
Free Cash
Flow
|
$90,000 -
$100,000
|
Reconciliation of
2021 Previous Outlook for Adjusted EBITDA
|
(In
thousands)
|
|
|
Fiscal Year 2021
Ranges
|
|
Consolidated
Total
|
Estimated Net
Earnings
|
$82,500 -
$90,000
|
Income
Taxes
|
27,500
- 30,000
|
Projected Earnings
Before Income Taxes
|
110,000 - 120,000
|
Interest
Expense
|
1,000
|
Depreciation and
Amortization
|
70,000 - 75,000
|
Projected
EBITDA
|
$181,000 -
$196,000
|
Projected Other
Adjustments, Net1
|
9,000
|
Projected Adjusted
EBITDA
|
$190,000 -
$205,000
|
|
1 Projected Other Adjustments include
non-GAAP charges related to restructuring charges and separation
costs associated with the separation and distribution transaction
that resulted in our spin-off into a separate publicly-traded
company.
|
Reconciliation of
2021 Previous Outlook for Free Cash Flow
|
(In
thousands)
|
|
|
Fiscal Year 2021
Ranges
|
|
Consolidated
Total
|
Cash Provided by
Operating Activities
|
$170,000 -
$190,000
|
Capital
Expenditures
|
80,000
- 90,000
|
Free Cash
Flow
|
$90,000 -
$100,000
|
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SOURCE The Aaron's Company, Inc.