Furniture Sales And Lease Giant Aaron Rents, Inc. Reports Earnings Up 34% for Quarter; 44% for Year

Furniture World Magazine

Aaron Rents, Inc., a leader in the sales and lease ownership, specialty retailing and rental of residential and office furniture, consumer electronics and home appliances and accessories, announced results for the fourth quarter and full year of 2004. For the three months ended December 31, revenues increased 16% to $242.1 million compared to $209.4 million for the fourth quarter of 2003. Net earnings increased 34% to $13.8 million versus $10.3 million for the same period a year ago. Diluted earnings per share were $.27 for the quarter compared to $.20 per share for the comparable period last year. For the year, revenues increased 23% to $946.5 million compared to $766.8 million for 2003. Net earnings for 2004 were $52.6 million versus $36.4 million for 2003, a 44% increase. Diluted earnings per share were $1.04 for 2004 compared to $.73 in 2003. "We are obviously pleased with these results," said R. Charles Loudermilk, Sr., Chairman and Chief Executive Officer of Aaron Rents. "This is the best year in the Company's history, now in its 50th year. We plan to continue to aggressively expand our Aaron's Sales & Lease Ownership business in 2005." For the fourth quarter the Aaron's Sales & Lease Ownership division increased its revenues 17% to $214.0 million compared to $183.0 million last year. For the twelve months, the division's revenues were $831.1 million, a 27% increase over the $656.5 million recorded for 2003. Same store revenues (revenues earned in Company-operated stores open for the entirety of both periods) in the Aaron's Sales & Lease Ownership division increased 8.0% during the fourth quarter of 2004 compared to the fourth quarter of 2003. Same store revenues for Aaron's Sales & Lease Ownership stores open over two years at the end of December 2004 also increased 4.9% between those quarters. Non-retail sales, which are primarily sales of rental merchandise to franchisees, increased to $42.2 million for the fourth quarter from $38.4 million for the quarter a year ago and to $160.8 million for the year compared to $120.4 million for 2003. Royalty income from franchisees, which is included in the Company's other revenues, increased to $4.9 million for the fourth quarter of 2004 from $3.5 million for the quarter a year ago, and to $17.8 million for the year compared to $14.0 million for last year. The increases in non-retail sales and royalty income are attributable to an increase in revenues of the Company's franchisees, who collectively had revenues of $97.2 million during the fourth quarter and $358.7 million for fiscal 2004, 36% and 28% increases from the comparable prior year periods, respectively. Revenues of franchisees, however, are not revenues of Aaron Rents, Inc. Included in the operating results for the fourth quarter 2004 was an approximate $750,000 net credit, or $.01 per diluted share, due to a reduction in the Company's accrual for future personal property tax liabilities offset by additional expense relating to advertising. Also included in other revenues for 2004 is a pre-tax gain of $5.5 million, or $.07 per diluted share, realized in the second quarter from the previously announced disposition of the Company's Rainbow Rentals, Inc. stock when Rainbow Rentals merged with Rent-A-Center, Inc. in May, 2004. During the fourth quarter the Aaron's Sales & Lease Ownership division opened 25 new Company-operated stores and 24 new franchised stores. In addition, during the quarter the Company acquired nine stores from one of its franchisees, acquired two stores from an independent rental operator, and acquired the accounts from three other third party stores. For 2004, a net of 186 sales and lease ownership stores were added, an over 23% increase for the year in store count, including the opening of 68 new Company-operated stores and 79 new franchised stores. During the year the Company awarded area development agreements to open 160 additional franchised stores. At the end of December there were 301 franchise stores awarded that are expected to open over the next several years. At December 31 the Aaron's Sales and Lease Ownership division operated 616 Company-operated stores and its franchisees operated 357 stores. In addition, the Company had 58 rent-to-rent stores. "Our guidance for the first quarter of 2005 is to expect revenues in excess of $270 million and diluted earnings per share in the range of $.29 to $.32," Mr. Loudermilk continued. "For the entire 2005 year we continue to expect Company revenues in excess of $1.1 billion and diluted earnings per share in the range of $1.13 to $1.20. We plan to increase our store count between 15% and 20% per year for the next several years." Aaron Rents will hold a conference call to discuss its quarterly financial results on Thursday, February 24, 2005, 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, 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 1,040 Company- operated and franchised stores in 45 states, Canada, 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.