Rent-to-own News - Aaron's same-store revenue increases 3.7%

Aaron's Thursday, announced results for the three months and year ended December 31, 2011.

For the fourth quarter of 2011, revenues increased 8% to $523.5 million compared to $484.4 million for the fourth quarter in 2010. Net earnings decreased 1% to $30.5 million versus $30.8 million last year.  Diluted earnings per share were $.40 compared to $.38 a year ago, a 5% increase.

For the year ended December 31, 2011, revenues increased 8% to $2.024 billion compared to $1.877 billion for 2010.  Net earnings decreased 4% to $113.8 million versus $118.4 million a year ago.  Diluted earnings per share were down 1% to $1.43 for 2011 compared to $1.44 in 2010. 

During the fourth quarter of 2011 the Company recorded a $3.5 million, or $.03 per diluted share, charge to earnings for separation costs primarily related to the accelerated vesting of restricted stock units and stock options previously granted to its former Chief Executive Officer.

Diluted earnings per share for the fourth quarter and 2011 year excluding this charge would have been $.43 and $1.46, respectively.  Additionally, as previously reported, the Company recorded a lawsuit-related charge in the second quarter of 2011 of $36.5 million.  On January 13, 2012, the court ruled not to sustain the verdict previously reported, although it did not indicate what action it would take, including whether it would order a new trial or reduce the jury's damages award.  We are awaiting additional developments in the lawsuit, which could affect the litigation expense accrual.

Excluding the fourth quarter separation-related charge and the second quarter lawsuit-related charge, net earnings for 2011 would have been $138.6 million, up 17% over the same period in 2010, and diluted earnings per share excluding the two charges would have been $1.75, a 22% increase over the same period in 2010.

"Excluding the aforementioned $.03 diluted per share charge, our results for the fourth quarter and year were within our guidance," said Ronald W. Allen, interim President and Chief Executive Officer of Aaron's.  "We had good revenue and customer growth during the quarter, and believe the results were outstanding in these challenging economic times.  Our market remains large, and the high-quality, affordable basic home furnishings we provide fulfills the desires and needs of our customers."

"We continued to expand our HomeSmart weekly rental business during the quarter and had 71 HomeSmart stores open at the end of the year.  Revenues of the HomeSmart stores grew to $8.6 million for the fourth quarter and $15.4 million for the year; however, the start-up expenses associated with opening these stores negatively affected earnings during the quarter by $.03 per diluted share and $.06 per diluted share for the year.  We continue to be very optimistic about the future prospects for HomeSmart, but as previously stated, do not plan to open a significant number of additional HomeSmart stores until the earnings and return on investment potential of this concept are thoroughly evaluated," Mr. Allen added.

Same store revenues (revenues earned in Company-operated stores open for the entirety of both periods) increased 3.7% during the fourth quarter of 2011 compared to the fourth quarter of 2010.  Same store revenues also increased 2.1% for Company-operated stores open for over two years at the end of 2011.  The Company had 1,015,000 customers at the end of the year, an 11% increase over the number at the end of 2010.  The customer count on a same store basis for Company-operated stores was up 6.4% in the fourth quarter compared to the same quarter last year.

During the year the Company generated $307 million of cash flow from operations and had $176.3 million of cash on hand at the end of December 2011. 

The Company repurchased 5,075,675 shares of its Common Stock in 2011 representing a total cash outlay of $127.2 million.  The Company has authorization to acquire an additional 5,281,344 shares of Common Stock.