PLANO, Texas - (BUSINESS WIRE) - Oct. 20, 2014 - Rent-A-Center, Inc. (the "Company") (NASDAQ/NGS: RCII), the nation's largest rent-to-own operator, today announced results for the quarter ended September 30, 2014.
Total revenues were $769.5 million, an increase of $14.7 million from total revenues of $754.8 million for the same period in the prior year. This 2.0% increase in total revenues was primarily due to increases of approximately $36.6 million in the Acceptance Now segment and approximately $6.9 million in the Mexico segment, partially offset by a decrease of approximately $29.5 million in the Core U.S. segment.
Same store sales increased 1.9% as compared to the same period in the prior year, primarily attributable to increases of 25.7% and 25.9% in the Acceptance Now and Mexico segments, respectively, partially offset by a 3.6% decrease in the Core U.S. segment.
Net earnings and net earnings per diluted share were $25.3 million and $0.48, respectively, as compared to $27.2 million and $0.50, respectively, for the same period in the prior year. After adjusting for significant items (see Non-GAAP Reconciliation below), net earnings and net earnings per diluted share were $26.0 million and $0.49, respectively.
"As we expected, same store sales improved again versus the previous quarter in our Core U.S. business, aided by the roll-out of smartphones in July. In addition, Acceptance Now continued to deliver consistently strong same store sales growth. As a result of the performance of these two businesses, our earnings for the third quarter 2014 met our expectations," said Robert D. Davis, the Chief Executive Officer of Rent-A-Center, Inc.
"At the same time, these results confirm our urgency to execute on the transformation we outlined in February, with a focus on operational and infrastructure initiatives such as introducing a new labor model for our Core U.S. stores, developing a new supply chain, formulating a customer-focused value-based pricing strategy and implementing new technology into our Acceptance Now locations," Mr. Davis concluded.
Total revenues were $2,376.5 million, an increase of $41.9 million from total revenues of $2,334.6 million in the same period in the prior year. This 1.8% increase in total revenues was primarily due to increases of approximately $121.9 million in the Acceptance Now segment and approximately $19.7 million in the Mexico segment, partially offset by a decrease of approximately $97.6 million in the Core U.S. segment.
Same store sales increased 0.5% as compared to the same period in the prior year, primarily attributable to increases of 25.6% and 21.2% in the Acceptance Now and Mexico segments, respectively, partially offset by a 4.9% decrease in the Core U.S. segment.
Net earnings and net earnings per diluted share were $71.7 million and $1.35, respectively, as compared to $115.2 million and $2.06, respectively, for the same period in the prior year.
For the nine months ended September 30, 2014, the Company generated cash flow from operations of approximately $63.3 million, while ending the quarter with approximately $62.0 million of cash on hand. The Company will pay its 18th consecutive quarterly cash dividend on October 23, 2014.
Management believes that excluding special items from the financial results provides investors a clearer perspective of the Company's ongoing operating performance and a more relevant comparison to prior period results. During the third quarter of 2014, the Company recorded a pre-tax credit of approximately $7.1 million due to the settlement of a lawsuit against the manufacturers of LCD screen displays, pre-tax restructuring charges of approximately $2.8 million related to a corporate reorganization, pre-tax restructuring charges of approximately $0.4 million related to the previously announced consolidation of 150 stores, and a pre-tax impairment charge of $4.6 million related to internally-developed computer software. During the nine months ended September 30, 2014, the Company also recorded $1.9 million of financing charges due to refinancing in the first quarter and pre-tax restructuring charges of approximately $4.4 million related to the previously announced consolidation of 150 stores in the second quarter.
While management believes this non-GAAP financial measure is useful in evaluating the Company, this information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Further, the non-GAAP financial measure may differ from similar measures presented by other companies.
Reconciliation of net income to net income excluding special items (in thousands, except per share data):
View Original for Full Data Table
The Company's expectations for the balance of the year are consistent with the guidance provided in the second quarter 2014 press release.
Rent-A-Center, Inc. will host a conference call to discuss the third quarter results, guidance and other operational matters on Tuesday morning, October 21, 2014, at 10:45 a.m. ET. For a live webcast of the call, visit http://investor.rentacenter.com. Certain financial and other statistical information that will be discussed during the conference call will also be provided on the same website.
Rent-A-Center, Inc., headquartered in Plano, Texas, is the largest rent-to-own operator in North America, focused on improving the quality of life for its customers by providing them the opportunity to obtain ownership of high-quality, durable products such as consumer electronics, appliances, computers, furniture and accessories, under flexible rental purchase agreements with no long-term obligation. The Company owns and operates approximately 3,020 stores in the United States, Mexico, Canada and Puerto Rico, and approximately 1,360 Acceptance Now kiosk locations in the United States and Puerto Rico. Rent-A-Center Franchising International, Inc., a wholly owned subsidiary of the Company, is a national franchiser of approximately 190 rent-to-own stores operating under the trade names of "Rent-A-Center," "ColorTyme," and "RimTyme." For additional information about the Company, please visit our website at www.rentacenter.com.
This press release and the guidance above contain forward-looking statements that involve risks and uncertainties. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "could," "estimate," "should," "anticipate," or "believe," or the negative thereof or variations thereon or similar terminology. The Company believes that the expectations reflected in such forward-looking statements are accurate. However, there can be no assurance that such expectations will occur. The Company's actual future performance could differ materially from such statements. Factors that could cause or contribute to such differences include, but are not limited to: the general strength of the economy and other economic conditions affecting consumer preferences and spending; economic pressures, such as high fuel costs, affecting the disposable income available to the Company's current and potential customers; changes in the unemployment rate; difficulties encountered in improving the financial performance of the Core U.S. segment; the Company’s ability to develop and successfully execute the competencies and capabilities which are the focus of the Company’s multi-year program designed to transform and modernize the Company’s operations; costs associated with the Company's multi-year program designed to transform and modernize the Company’s operations; the Company’s ability to successfully market smartphones and related services to its customers; the Company's ability to develop and successfully implement digital electronic commerce capabilities; the Company's ability to retain the revenue from customer accounts merged into another store location as a result of the store consolidation plan; the Company's ability to execute and the effectiveness of the store consolidation; rapid inflation or deflation in prices of the Company's products; the Company's available cash flow; the Company's ability to identify and successfully market products and services that appeal to its customer demographic; consumer preferences and perceptions of the Company's brand; uncertainties regarding the ability to open new locations; the Company's ability to acquire additional stores or customer accounts on favorable terms; the Company's ability to control costs and increase profitability; the Company's ability to enhance the performance of acquired stores; the Company's ability to retain the revenue associated with acquired customer accounts; the Company's ability to enter into new and collect on its rental or lease purchase agreements; the passage of legislation adversely affecting the rent-to-own industry; the Company's compliance with applicable statutes or regulations governing its transactions; changes in interest rates; adverse changes in the economic conditions of the industries, countries or markets that the Company serves; information technology and data security costs; the Company's ability to protect the integrity and security of individually identifiable data of its customers and employees; the impact of any breaches in data security or other disturbances to the Company's information technology and other networks; changes in the Company's stock price, the number of shares of common stock that it may or may not repurchase, and future dividends, if any; changes in estimates relating to self-insurance liabilities and income tax and litigation reserves; changes in the Company's effective tax rate; fluctuations in foreign currency exchange rates; the Company's ability to maintain an effective system of internal controls; the resolution of the Company's litigation; and the other risks detailed from time to time in the Company's SEC reports, including but not limited to, its annual report on Form 10-K for the year ended December 31, 2013, and its quarterly reports on Form 10-Q for the quarters ended March 31, 2014, and June 30, 2014. 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 is not obligated to publicly release any revisions to these forward-looking statements to reflect the events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
View Original for Full Data Table
(1) Excludes the effects of a $7.1 million pre-tax vendor settlement credit, a $4.6 million pre-tax impairment charge and a $3.2 million pre-tax restructuring charge. These charges reduced net earnings and net earnings per diluted share for the quarter ended September 30, 2014, by approximately $0.7 million and $0.01, respectively.
(2) As discussed in our Annual Report on Form 10-K for the year ended December 31, 2013, we identified errors in accounting for our estimates for rental merchandise reserves and for the allowance for doubtful accounts, resulting in an immaterial overstatement of on rent merchandise and understatements of held for rent merchandise and receivables which affected periods through December 31, 2013. We increased (decreased) previously reported salaries and other expenses, operating profit, income tax expense and net earnings by $0.8 million, $(0.8) million, $(0.3) million and $(0.5) million in our historical financial statement highlights and financial statements for the three-month period endedSeptember 30, 2013, reported herein.
View Original for Full Data Table
(3) Excludes the effects of a $7.1 million pre-tax vendor settlement credit, a $7.6 million pre-tax restructuring charge, a $4.6 million pre-tax impairment charge and a $1.9 million pre-tax refinancing charge. These charges reduced net earnings and net earnings per diluted share for the nine months ended September 30, 2014, by approximately $4.6 million and$0.09, respectively.
(4) As discussed in our Annual Report on Form 10-K for the year ended December 31, 2013, we identified errors in accounting for our estimates for rental merchandise reserves and for the allowance for doubtful accounts, resulting in an immaterial overstatement of on rent merchandise and understatements of held for rent merchandise and receivables which affected periods through December 31, 2013. We increased (decreased) previously reported salaries and other expenses, operating profit, income tax expense and net earnings by $1.5 million, $(1.5) million, $(0.6) million and $(0.9) million in our historical financial statement highlights and financial statements for the nine-month period endedSeptember 30, 2013, reported herein. We also increased (decreased) previously reported accounts receivable, on rent rental merchandise inventory, held for rent rental merchandise, total assets, total liabilities and stockholders' equity by $4.5 million, $(16.4) million, $1.2 million, $(10.7) million, $(4.0) million and $(6.7) million, respectively, atSeptember 30, 2013.
View Original for Full Data Table
View Original for Full Data Table
Rent-A-Center, Inc. and Subsidiaries
SEGMENT INFORMATION HIGHLIGHTS
(Unaudited)
On January 1, 2014, the Company realigned its reporting structure to include its Canadian stores in the Core U.S. segment, which were previously reported in the International segment. The accompanying prior-year amounts and store counts have been revised to reflect this change, and we now refer to the segment formerly reported as "International" as "Mexico" since only that country's results are reported therein.
View Original for Full Data Table
View Original for Full Data Table
View Original for Full Data Table
SOURCE Rent-A-Center, Inc.
David E. Carpenter
Rent-A-Center, Inc.
972-801-1214
Vice President - Investor Relations
david.carpenter@rentacenter.com
Maureen B. Short
Rent-A-Center, Inc.
972-801-1899
Senior Vice President
Finance, Investor Relations and Treasury
maureen.short@rentacenter.com
Rent-A-Center, Inc., headquartered in Plano, Texas, is the largest rent-to-own operator in North America.