Rent-to-own News - Rent-A-Center reports Q3 results

Rent-A-Center, the nation's largest rent-to-own operator, today released its results for the third quarter 2010.

Total revenues for the quarter ended September 30, 2010, were $664.6 million, a decrease of $6.7 million from total revenues of $671.3 million for the same period in the prior year. This decrease in revenues was attributable to the November 2009 divestiture of dPi Teleconnect, LLC, the Company's subsidiary engaged in the prepaid telecommunications and energy business, which had contributed approximately $14.6 million in merchandise sales for the quarter ended September 30, 2009.

Same store sales for the quarter ended September 30, 2010 increased 0.3%.

For the quarter ended September 30, 2010, net earnings increased approximately 10% to $40.5 million from $36.8 million for the same period in the prior year, and net earnings per diluted share also increased approximately 13% to $0.62 from $0.55 in the prior year period.

"We had a very strong quarter as both our revenues and earnings exceeded our expectations," said Mark E. Speese, the Company's Chairman and Chief Executive Officer. "Customer demand remained strong in the quarter with total deliveries outperforming the comparable period in 2009," Speese stated. "We also continued to return value to our stockholders with the repurchase of 1.9 million shares of our common stock, and the declaration of our second consecutive quarterly dividend. We will continue to invest in future profitable growth as evidenced by the rapid expansion of our RAC Acceptance kiosks - partnering with retailers and offering the rent-to-own transaction to consumers who do not qualify for in-store financing. In addition, we are excited to announce our international entry into Mexico with the recent opening of our first rent-to-own store in Reynosa," Speese concluded.

Nine Months Ended September 30, 2010 Results

Total revenues for the nine months ended September 30, 2010, were $2.055 billion, a decrease of $24.0 million from total revenues of $2.079 billion for the same period in the prior year. As described above, this decrease in revenues was attributable to the November 2009 divestiture of dPi Teleconnect, LLC, which had contributed approximately $42.6 million in merchandise sales for the nine months ended September 30, 2009. Same store sales for the nine months ended September 30, 2010 declined 0.1%.

Net earnings and net earnings per diluted share for the nine months ended September 30, 2010 were $139.8 million and $2.11, respectively, as compared to $124.2 million and $1.86, respectively, for the same period in the prior year. Net earnings and net earnings per diluted share for the nine months ended September 30, 2009 included $4.9 million in pre-tax litigation credits, or approximately $0.04 per share, related to the Hilda Perez matter as discussed below.

Net earnings per diluted share for the nine months ended September 30, 2010 increased approximately 16% to $2.11, as compared to adjusted net earnings per diluted share of $1.82, when excluding the pre-tax litigation credit above, for the nine months ended September 30, 2009.

Through the nine month period ended September 30, 2010, the Company generated cash flow from operations of approximately $192.7 million, while ending the quarter with approximately $80.8 million of cash on hand. The Company utilized its cash from operations to reduce its outstanding indebtedness by approximately $115.1 million in 2010, or approximately 16% from year end 2009, and repurchased 2,181,502 shares of its common stock for approximately $45.9 million in cash under its common stock repurchase program. To date, the Company has repurchased a total of 22,066,352 shares and has utilized approximately $512.5 million of the $600.0 million authorized by its Board of Directors since the inception of the plan.

Other Announcements

The Company today announced that its Board of Directors has declared a $0.06 per share cash dividend for the fourth quarter of 2010 to be paid to the Company's common stockholders. The dividend will be paid on November 23, 2010, to common stockholders of record as of the close of business on November 5, 2010. Any future dividends will be subject to approval by the Board of Directors.

The Company also today announced that in connection with its analysis of available growth initiatives, it is exploring strategic alternatives with respect to its financial services business, which may or may not include a sale or divesture of such business. The Company does not intend to disclose developments with respect to the strategic alternatives for its financial services business unless and until a final decision is made and further disclosure is required. The Company does not anticipate these strategic alternatives to result in a material adverse change to its financial condition or results of operations.

Hilda Perez Matter

In connection with the court approved settlement of the Hilda Perez v. Rent-A-Center, Inc. matter in New Jersey, the Company previously recorded a pre-tax credit in the amount of $3.0 million in the first quarter of 2009 and a pre-tax credit in the amount of $1.9 million in the second quarter of 2009 to account for cash payments to the Company representing undistributed monies in the settlement fund to which the Company is entitled pursuant to the terms of the settlement, as well as a refund of costs to administer the settlement previously paid by the Company which were not expended during the administration of the settlement. Through the nine month period ended September 30, 2009, the total pre-tax credit of approximately $4.9 million increased net earnings per diluted share by approximately $0.04.

Rent-A-Center, Inc. will host a conference call to discuss the third quarter results, guidance and other operational matters on Tuesday morning, October 26, 2010, at 10:45 a.m. EDT. 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, currently operates approximately 3,000 company-owned stores nationwide and in Canada and Puerto Rico. The stores generally offer high-quality, durable goods such as major consumer electronics, appliances, computers and furniture and accessories under flexible rental purchase agreements that generally 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 approximately 200 rent-to-own stores operating under the trade name of "ColorTyme."

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 any repurchases of common stock the Company may make, future dividends, changes in outstanding indebtedness, or the potential impact of acquisitions or dispositions that may be completed after October 25, 2010.