ATLANTA, Oct. 24, 2014
/PRNewswire/ -- Aaron's, Inc. (NYSE: AAN), a leader in the sales
and lease ownership and specialty retailing of furniture, consumer
electronics, home appliances and accessories, today announced
revenues and earnings for the three and nine months ended
September 30, 2014.
For the third quarter of 2014, revenues increased 32% to
$707.6 million compared to
$537.2 million for the same period in
2013. Net earnings were $9.3
million versus $21.1 million a
year ago. Diluted earnings per share were $.13 compared to $.28 per share last year. The $170.3 million increase in revenue was due to
$189.8 million in revenue from
Progressive, partially offset by a decrease in revenue from Aaron's
core business.
"We are making significant progress on the strategic initiatives
outlined earlier this year to strengthen our core business," said
Gilbert L. Danielson, interim Chief
Executive Officer and Chief Financial Officer of Aaron's,
Inc. "Improving the customer's experience is a priority and
through meeting their needs in all areas of our operations,
including e-commerce and the personal relationship at Aaron's
stores, we believe our overall customer reach will expand."
"Progressive once again exceeded expectations and is rapidly
growing its business," Mr. Danielson continued. "The number of
customers entering into Progressive lease ownership transactions
continues to grow through both existing and new retailer
relationships. We are also well on our way to capturing significant
synergy opportunities for the overall Company resulting from the
April acquisition."
"While our core business continues to experience challenges in
the current economic environment, we believe consumers still need
and want the household furnishings we offer. With our strengthened
omni-channel platform, we are removing obstacles to doing business
by meeting our customers where they want to do business with us,
which we expect will increase demand and customer
satisfaction."
"We continue to expect that approximately $50 million in annual cost savings will be
achieved by the end of 2015. Among other actions, during the
third quarter we closed 44 under-performing stores and restructured
our home office and field support to more closely align with
current business conditions. Overall, we believe we are on the
right path in transforming Aaron's," Mr. Danielson concluded.
Financial Summary
For the first nine months of 2014, revenues increased 17% to
$1.965 billion compared to
$1.681 billion for the same period of
2013. Net earnings were $56.1
million versus $98.0 million
last year. Diluted earnings per share for the first nine
months were $.77 for 2014 compared to
$1.28 in 2013.
During the third quarter of 2014, pre-tax earnings were
negatively impacted by $9.1 million
of expenses pertaining to the retirement of both the Company's
Chief Executive Officer and Chief Operating Officer, $6.9 million in restructuring charges resulting
from store closings and the realignment of operations in the
Aaron's core business and $11.3
million in amortization expense related to the Progressive
acquisition, partially offset by a $1.2
million reduction in previously recognized regulatory
expense upon the resolution of the regulatory investigation by the
California Attorney General into
Aaron's leasing, marketing and privacy practices. In addition,
during the second quarter of 2014, pre-tax earnings were negatively
impacted by $9.7 million in
amortization expense and $5.5 million
in transaction costs related to the Progressive acquisition. The
Company also incurred $12.4 million
in financial advisory and legal costs related to addressing
strategic matters, including proxy contests, and $2.3 million in restructuring charges during the
second quarter of 2014.
Included in 2013 pre-tax earnings was a third quarter
$13.4 million accrual related to the
then-pending regulatory investigation by the California Attorney General, and, in the
second quarter, a $15.0 million
accrual related to the same investigation and $4.9 million of retirement expenses and a change
in the Company's vacation policies.
On a non-GAAP basis, excluding the special charges, costs and
expenses described above from all periods, net earnings for the
third quarter of 2014 would have been $28.2
million compared to $30.8
million for the same period in 2013, and earnings per share
assuming dilution would have been $.39 compared to $.40 a year ago. Net earnings for the first nine
months of 2014 would have been $93.6
million compared to $119.6
million in 2013, and earnings per share assuming dilution
would have been $1.29 versus
$1.56 last year.
Adjusted EBITDA for the Company, adjusted to exclude the
aforementioned special fees and expenses, was $60.0 million and $201.1
million for the three and nine months ended
September 30, 2014, respectively. Adjusted EBITDA is
calculated as the Company's earnings before interest, depreciation
on property, plant and equipment, amortization of intangible
assets, income taxes and special fees and expenses.
Same store revenues (revenues earned in Company-operated stores
open for the entirety of the quarter) decreased 2.8% during the
third quarter of 2014 compared to the third quarter of 2013, and
customer count on a same store basis was down 3.9%. For
Company-operated stores open over two years at the end of
September 2014, same store revenues
decreased 3.7% during the third quarter of 2014 compared to the
third quarter of 2013. The Company had 1,072,000 customers and its
franchisees had 574,000 customers at the end of the most recent
quarter, a 3.8% decrease in total customers over the number at the
end of the third quarter a year ago (customers of franchisees,
however, are not customers of Aaron's, Inc.).
The effective tax rate increased in the third quarter of 2014 to
29.6% compared to 28.2% in the third quarter of 2013. The effective
tax rate also increased for the first nine months of 2014 to 35.8%
compared to 35.0% in the same period a year ago. The increase in
the tax rate for both the quarter and nine months ended
September 30, 2014 is primarily the result of decreased tax
benefits related to the Company's furniture manufacturing
operations and the loss of federal credits that have not been
renewed by Congress. It is anticipated that the effective tax rate
for the entire year 2014 will be approximately 36.0%.
The Company reacquired 1,000,952 shares during the first quarter
of 2014 at the completion of the previously announced accelerated
share repurchase program. The Company has authorization to purchase
an additional 10,496,421 shares.
Division Results
Aaron's Sales & Lease Ownership division revenues decreased
$14.4 million, or 3%, in the third
quarter of 2014 to $501.7 million
compared to $516.1 million in
revenues in the third quarter of 2013. Sales and lease ownership
revenues for the first nine months of 2014 decreased 2% to
$1.584 billion compared to
$1.614 billion for the same period a
year ago.
Revenues of the HomeSmart division were $15.6 million in the third quarter of 2014, a 5%
increase over the $14.8 million in
revenues in the third quarter of 2013. HomeSmart revenues for the
first nine months of 2014 were $48.9
million versus $47.6 million
for the same period a year ago, a 3% increase.
As noted above, the Company recorded a $6.9 million restructuring charge in the third
quarter related to the closing of 44 Company-operated stores and
the realignment of home office and field support operations.
The Progressive division generated revenues of $189.8 million and a pre-tax profit of
$1.7 million in the third quarter,
and for the period from the April 14,
2014 acquisition date recorded $328.7
million in revenues and a pre-tax profit of $1.4 million. Progressive's EBITDA included in
the Company's results during the third quarter and nine months
ended September 30, 2014 was $18.6
million and $32.5 million,
respectively.
Components of Revenue
Consolidated lease revenues and fees for the third quarter and
first nine months of 2014 increased 42% and 22%, respectively, over
the comparable prior year periods. In addition, franchise royalties
and fees decreased 4% and 3% in the third quarter and first nine
months of 2014 compared to the same periods in 2013,
respectively. The decreases in the Company's franchise
royalties and fees are the result of a decrease in revenues of the
Company's franchisees, which collectively had revenues of
$240.1 million during the third
quarter and $754.1 million for the
first nine months of 2014, decreases of 2% and 1% from the
comparable 2013 periods, respectively. Same store revenues and
customer counts for franchised stores were down 2.5% and 4.1%,
respectively, for the third quarter of 2014 compared to the same
quarter last year (revenues and customers of franchisees, however,
are not revenues and customers of Aaron's, Inc.). Non-retail sales,
which are primarily sales of merchandise to Aaron's Sales and Lease
Ownership franchisees, decreased 7% for the third quarter and 3%
for the first nine months compared to the same periods last
year.
Store Count
During the third quarter of 2014, the Company closed 43 Aaron's
Sales & Lease Ownership stores and one HomeSmart store, and
opened nine Company-operated Aaron's Sales & Lease Ownership
stores and six franchised stores. The Company also acquired two
Aaron's Sales & Lease Ownership franchised stores. Five Aaron's
Sales & Lease Ownership franchised stores and one HomeSmart
franchised store were closed during the quarter. Through the three
and nine months ended September 30, 2014, the Company awarded
area development agreements to open six and 23 additional
franchised stores, respectively. At September 30, 2014, there
were area development agreements outstanding for the opening of 142
franchised stores over the next several years.
At September 30, 2014, the Company had 1,234
Company-operated Aaron's Sales & Lease Ownership stores, 783
franchised Aaron's Sales & Lease Ownership stores, 82
Company-operated HomeSmart stores, and two franchised HomeSmart
stores. The total number of stores open at September 30,
2014 was 2,101.
Fourth Quarter and Full Year 2014 Outlook
The Company is updating its guidance for the fourth quarter and
full year 2014. Diluted earnings per share is presented both
on a GAAP basis and on a non-GAAP adjusted basis that excludes
transaction-related amortization and special fees and expenses. The
Company currently expects to achieve the following:
- Consolidated fourth quarter revenues (excluding revenues of
franchisees) of approximately $740
million, including Progressive revenues of approximately
$205 million.
- Fiscal year 2014 revenues (excluding revenues of franchisees)
of approximately $2.71 billion,
including Progressive revenues of approximately $534 million since the April 14 acquisition.
- Fourth quarter and fiscal year adjusted EBITDA in the range of
approximately $57 million to $62
million and $257 million to $262
million, respectively, including Progressive EBITDA in the
range of $15 million to $18 million
and $47 million to $50 million,
respectively.
- Fourth quarter and fiscal year GAAP diluted earnings per share
in the range of $.24 to $.29 and
$1.01 to $1.06, respectively.
- Fourth quarter and fiscal year 2014 non-GAAP adjusted diluted
earnings per share in the range of $.34 to
$.39 and $1.62 to $1.67,
respectively.
- EPS guidance does not assume any significant repurchases of the
Company's common stock.
- The Company expects for the full year 2014 no new store growth
in Company-operated Aaron's stores, on a net basis after store
closings.
Conference Call
Aaron's will hold a conference call to discuss its quarterly
financial results on Friday, October 24, 2014, at 10:00 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 Aaron's, Inc.
Aaron's, Inc. (NYSE: AAN), a leader in the sales and lease
ownership and specialty retailing of furniture, consumer
electronics, home appliances and accessories, currently has more
than 2,100 Company-operated and franchised stores in 48 states
and Canada. Aaron's was founded in 1955, is
headquartered in Atlanta and has been publicly traded
since 1982. Progressive Leasing, a wholly-owned subsidiary and
leading virtual lease-to-own company, provides lease-purchase
solutions through over 15,000 retail locations in 46 states.
Aaron's, Inc. includes the Aarons.com, ShopHomeSmart.com and
ProgLeasing.com brands. For more information,
visit www.aarons.com.
"Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995: Statements in this news release
regarding Aaron's, Inc.'s 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 "may," "expect,"
"forecast," "guidance", "intend," "believe," "could," "project,"
"estimate," "anticipate," "should" and similar terminology. These
risks and uncertainties include factors such as changes in general
economic conditions, competition, pricing, legal and regulatory
proceedings, customer privacy, information security, customer
demand, the integration of the Progressive acquisition, the
execution and results of our new strategy, risks related to
Progressive's "virtual" lease-to-own business with which the
Company may be unfamiliar, 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, 2013 as updated in its Quarterly Reports on Form 10-Q
for the fiscal quarters ended March 31,
2014 and June 30, 2014.
Statements in this release that are "forward-looking" include
without limitation: Aaron's projected results (including
Progressive's results) for future periods, including statements
under the heading "Fourth Quarter and Full Year 2014 Outlook";
statements on cost reductions and strategic initiatives; and
statements regarding the future effects of the Progressive
acquisition on the Company's business; statements regarding the
Company's omni-channel distribution plans; and statements regarding
the effects of planned promotions. 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.
Aaron's, Inc. and
Subsidiaries
Consolidated
Statements of Earnings
(In thousands,
except per share amounts)
|
|
|
|
(Unaudited)
Three Months Ended
|
(Unaudited)
Nine Months Ended
|
|
|
September
30,
|
September
30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Lease Revenues and
Fees
|
|
$
|
603,601
|
|
$
|
425,734
|
|
$
|
1,625,931
|
|
$
|
1,330,526
|
|
Retail
Sales
|
|
8,094
|
|
9,315
|
|
31,023
|
|
32,618
|
|
Non-Retail
Sales
|
|
78,503
|
|
84,412
|
|
254,021
|
|
262,152
|
|
Franchise Royalties
and Fees
|
|
15,838
|
|
16,530
|
|
50,147
|
|
51,564
|
|
Other
|
|
1,528
|
|
1,233
|
|
4,375
|
|
3,919
|
|
Total
|
|
707,564
|
|
537,224
|
|
1,965,497
|
|
1,680,779
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
Expenses:
|
|
|
|
|
|
|
|
|
|
Depreciation of Lease
Merchandise
|
|
260,819
|
|
154,495
|
|
661,446
|
|
475,900
|
|
Retail Cost of
Sales
|
|
5,409
|
|
5,681
|
|
19,900
|
|
19,295
|
|
Non-Retail Cost of
Sales
|
|
71,403
|
|
76,792
|
|
230,537
|
|
238,335
|
|
Operating
Expenses
|
|
334,294
|
|
259,708
|
|
918,129
|
|
759,541
|
|
Financial Advisory
and Legal Costs
|
|
385
|
|
—
|
|
13,661
|
|
—
|
|
Restructuring
Expenses
|
|
6,876
|
|
—
|
|
9,140
|
|
—
|
|
Retirement and
Vacation Charges
|
|
9,094
|
|
—
|
|
9,094
|
|
4,917
|
|
Progressive-Related
Transaction Costs
|
|
371
|
|
—
|
|
6,638
|
|
—
|
|
Regulatory (Income)
Expenses
|
|
(1,200)
|
|
13,400
|
|
(1,200)
|
|
28,400
|
|
Other Operating
(Income) Expense, Net
|
|
(197)
|
|
(1,038)
|
|
(869)
|
|
1,218
|
|
Total
|
|
687,254
|
|
509,038
|
|
1,866,476
|
|
1,527,606
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit
|
|
20,310
|
|
28,186
|
|
99,021
|
|
153,173
|
|
Interest
Income
|
|
634
|
|
719
|
|
2,461
|
|
2,241
|
|
Interest
Expense
|
|
(6,162)
|
|
(1,497)
|
|
(13,174)
|
|
(4,516)
|
|
Other Non-Operating
(Expense) Income, Net
|
|
(1,583)
|
|
2,012
|
|
(837)
|
|
(49)
|
|
Earnings Before
Income Taxes
|
|
13,199
|
|
29,420
|
|
87,471
|
|
150,849
|
|
|
|
|
|
|
|
|
|
|
|
Income
Taxes
|
|
3,904
|
|
8,282
|
|
31,332
|
|
52,857
|
|
|
|
|
|
|
|
|
|
|
|
Net
Earnings
|
|
$
|
9,295
|
|
$
|
21,138
|
|
$
|
56,139
|
|
$
|
97,992
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share
|
|
$
|
.13
|
|
$
|
.28
|
|
$
|
.78
|
|
$
|
1.29
|
|
Earnings Per Share
Assuming Dilution
|
|
$
|
.13
|
|
$
|
.28
|
|
$
|
.77
|
|
$
|
1.28
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding
|
|
72,340
|
|
76,101
|
|
72,350
|
|
75,922
|
|
Weighted Average
Shares Outstanding Assuming Dilution
|
|
72,660
|
|
76,676
|
|
72,713
|
|
76,611
|
|
Selected Balance
Sheet Data
(In
thousands)
(Unaudited)
|
|
|
|
September 30,
2014
|
|
December 31,
2013
|
Cash and Cash
Equivalents
|
|
$
|
10,401
|
|
|
$
|
231,091
|
|
Investments
|
|
21,704
|
|
|
112,391
|
|
Accounts Receivable,
Net
|
|
89,821
|
|
|
68,684
|
|
Lease Merchandise,
Net
|
|
1,036,407
|
|
|
869,725
|
|
Property, Plant and
Equipment, Net
|
|
224,301
|
|
|
231,293
|
|
Other Assets,
Net
|
|
905,294
|
|
|
313,992
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
2,287,928
|
|
|
1,827,176
|
|
|
|
|
|
|
|
|
Debt
|
|
557,237
|
|
|
142,704
|
|
Total
Liabilities
|
|
1,086,682
|
|
|
687,213
|
|
Shareholders'
Equity
|
|
$
|
1,201,246
|
|
|
$
|
1,139,963
|
|
Use of Non-GAAP Financial Information:
This press release presents the Company's net earnings and
diluted earnings per share in accordance with generally accepted
accounting principles in the United
States ("GAAP") and in a format that is not in accordance
with GAAP that excludes third quarter 2014 charges of (i)
$11.3 million in Progressive-related
amortization expense, (ii) $9.1
million in expenses pertaining to the retirement of both the
Company's Chief Executive Officer and Chief Operating Officer,
(iii) $6.9 million of restructuring
expenses, (iv) a $1.2 million
reduction of previously recognized regulatory expense upon the
resolution of a regulatory investigation and second quarter 2014
charges of (v) $9.7 million in
amortization expense and $5.5 million
in transaction costs related to the Progressive acquisition, (vi)
$12.4 million of financial advisory
and legal costs related to addressing strategic matters, including
proxy contests, and (vii) $2.3
million of restructuring expenses. Excluded from prior year
net earnings and diluted earnings per share are (viii) third
quarter 2013 charges of $13.4 million
related to a then-pending regulatory investigation, (ix) second
quarter 2013 charges of $15.0 million
related to the same regulatory investigation and (x) second quarter
2013 retirement and vacation-related charges of $4.9 million. In addition, this press release
presents the adjusted EBITDA of the Company and its operating
segments. Adjusted EBITDA is also not a measure in accordance with
GAAP.
Management regards the circumstances of the special charges
mentioned above as not arising out of the ordinary course of
business. The adjustments include matters that are not entirely
susceptible to prediction or effective management, and consequently
management believes that presentation of net earnings and diluted
earnings per share excluding these adjustments is useful because it
gives investors supplemental information to evaluate and compare
the performance of the Company's underlying core business from
period to period. Management believes presenting the Company's
adjusted EBITDA is useful to investors because it provides some
indication of what the results of Progressive would have been
absent the effects of the Company's acquisition of Progressive,
which arise principally from the debt financing of the transaction
and acquisition-related accounting for intangible assets. It also
provides additional information on what the results of the Company
would have been absent the Progressive acquisition and the
aforementioned special charges.
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 and the GAAP
operating income of the Company's segments, which are also
presented in the press release. Please refer to our Current Report
on Form 8-K furnishing this earnings release to the SEC on the date
hereof for further information on our use of non-GAAP financial
measures.
Reconciliation of
Net Earnings and Earnings Per Share Assuming Dilution to
Non-GAAP
Net Earnings and
Earnings Per Share Assuming Dilution
(In thousands,
except earnings per share)
|
|
|
(Unaudited)
Three Months Ended
September 30,
|
(Unaudited)
Nine Months Ended
September 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Net
Earnings
|
$
|
9,295
|
|
$
|
21,138
|
|
$
|
56,139
|
|
$
|
97,992
|
|
Add Preliminary
Progressive-Related Amortization Expense (1)
|
7,984
|
|
—
|
|
13,502
|
|
—
|
|
Add Financial
Advisory and Legal Costs (2)
|
271
|
|
—
|
|
8,768
|
|
—
|
|
Add
Progressive-Related Transaction Costs (3)
|
261
|
|
—
|
|
4,260
|
|
—
|
|
Add Restructuring
Expenses (4)
|
4,842
|
|
—
|
|
5,866
|
|
—
|
|
Add Regulatory
(Income) Expenses (5)(6)
|
(845)
|
|
9,628
|
|
(770)
|
|
18,449
|
|
Add Retirement and
Vacation Charges (7)(8)
|
6,404
|
|
—
|
|
5,837
|
|
3,194
|
|
Non-GAAP Net
Earnings
|
$
|
28,212
|
|
$
|
30,766
|
|
$
|
93,602
|
|
$
|
119,635
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share
Assuming Dilution
|
$
|
.13
|
|
$
|
.28
|
|
$
|
.77
|
|
$
|
1.28
|
|
Add Preliminary
Progressive-Related Amortization Expense
|
.11
|
|
—
|
|
.19
|
|
—
|
|
Add Financial
Advisory and Legal Costs
|
—
|
|
—
|
|
.12
|
|
—
|
|
Add
Progressive-Related Transaction Costs
|
—
|
|
—
|
|
.06
|
|
—
|
|
Add Restructuring
Expenses
|
.07
|
|
—
|
|
.08
|
|
—
|
|
Add Regulatory
(Income) Expenses
|
(.01)
|
|
.13
|
|
(.01)
|
|
.24
|
|
Add Retirement and
Vacation Related Charges
|
.09
|
|
—
|
|
.08
|
|
.04
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Earnings Per
Share Assuming Dilution (9)
|
$
|
.39
|
|
$
|
.40
|
|
$
|
1.29
|
|
$
|
1.56
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding Assuming Dilution
|
72,660
|
|
76,676
|
|
72,713
|
|
76,611
|
|
|
(1) Net of
taxes of $3,354 for the three months and $7,535 for the nine months
ended September 30, 2014 calculated using the effective tax rates
for the three and nine months ended September 30, 2014.
|
(2) Net of
taxes of $114 for the three months and $4,893 for the nine months
ended September 30, 2014 calculated using the effective tax rates
for the three and nine months ended September 30, 2014.
|
(3) Net of
taxes of $110 for the three months and $2,378 for the nine months
ended September 30, 2014 calculated using the effective tax rates
for the three and nine months ended September 30, 2014.
|
(4) Net of
taxes of $2,034 for the three months and $3,274 for the nine months
ended September 30, 2014 calculated using the effective tax rates
for the three and nine months ended September 30, 2014.
|
(5) Net of
taxes of $355 for the three months and $430 for the nine months
ended September 30, 2014 calculated using the effective tax rates
for the three and nine months ended September 30, 2014.
|
(6) Net of
taxes of $3,772 for the three months and $9,951 for the nine months
ended September 30, 2013 calculated using the effective tax rates
for the three and nine months ended September 30, 2013.
|
(7) Net of
taxes of $2,690 for the three months and $3,257 for the nine months
ended September 30, 2014 calculated using the effective tax rates
for the three and nine months ended September 30, 2014.
|
(8) Net of
taxes of $1,723 for the nine months ended September 30, 2013
calculated using the effective tax rate for the nine months ended
September 30, 2013.
|
(9) In some
cases the sum of individual EPS amounts may not equal total EPS
calculations.
|
Aaron's, Inc. and
Subsidiaries
Non-GAAP Financial
Information
Quarterly Segment
EBITDA
(In
thousands)
(Unaudited)
|
|
|
Three Months Ended
September 30, 2014
|
|
Sales &
Lease
Ownership
|
Progressive
|
HomeSmart
|
Franchise
|
Manufacturing
|
Other
|
Consolidated
Total
|
Net Income
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
9,295
|
|
Provision for Income
Taxes
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3,904
|
|
Operating
Income
|
23,814
|
|
1,689
|
|
(906)
|
|
12,542
|
|
(17)
|
|
(23,923)
|
|
13,199
|
|
Interest
Expense
|
1,966
|
|
5,247
|
|
217
|
|
—
|
|
12
|
|
(1,280)
|
|
6,162
|
|
Depreciation
|
8,260
|
|
327
|
|
646
|
|
388
|
|
385
|
|
3,328
|
|
13,334
|
|
Amortization
|
353
|
|
11,338
|
|
42
|
|
—
|
|
—
|
|
—
|
|
11,733
|
|
EBITDA
|
34,393
|
|
18,601
|
|
(1)
|
|
12,930
|
|
380
|
|
(21,875)
|
|
44,428
|
|
Financial Advisory
and Legal Costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
385
|
|
385
|
|
Progressive-Related
Transaction Costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
371
|
|
371
|
|
Restructuring
Expenses
|
2,572
|
|
—
|
|
6
|
|
—
|
|
—
|
|
4,298
|
|
6,876
|
|
Regulatory
Income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,200)
|
|
(1,200)
|
|
Retirement
Charges
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
9,094
|
|
9,094
|
|
Adjusted
EBITDA
|
$
|
36,965
|
|
$
|
18,601
|
|
$
|
5
|
|
$
|
12,930
|
|
$
|
380
|
|
$
|
(8,927)
|
|
$
|
59,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, 2013
|
|
Sales &
Lease
Ownership
|
Progressive
|
HomeSmart
|
Franchise
|
Manufacturing
|
Other
|
Consolidated
Total
|
Net Income
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
21,138
|
|
Provision for Income
Taxes
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
8,282
|
|
Operating
Income
|
37,193
|
|
—
|
|
(1,582)
|
|
13,084
|
|
22
|
|
(19,297)
|
|
29,420
|
|
Interest
Expense
|
1,876
|
|
—
|
|
217
|
|
—
|
|
20
|
|
(616)
|
|
1,497
|
|
Depreciation
|
9,080
|
|
—
|
|
614
|
|
441
|
|
381
|
|
2,762
|
|
13,278
|
|
Amortization
|
708
|
|
—
|
|
232
|
|
—
|
|
—
|
|
—
|
|
940
|
|
EBITDA
|
48,857
|
|
—
|
|
(519)
|
|
13,525
|
|
423
|
|
(17,151)
|
|
45,135
|
|
Regulatory
Expenses
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
13,400
|
|
13,400
|
|
Adjusted
EBITDA
|
$
|
48,857
|
|
$
|
—
|
|
$
|
(519)
|
|
$
|
13,525
|
|
$
|
423
|
|
$
|
(3,751)
|
|
$
|
58,535
|
|
Aaron's, Inc. and
Subsidiaries
Non-GAAP Financial
Information
Year to Date
Segment EBITDA
(In
thousands)
(Unaudited)
|
|
|
Nine Months Ended
September 30, 2014
|
|
Sales &
Lease
Ownership
|
Progressive
|
HomeSmart
|
Franchise
|
Manufacturing
|
Other
|
Consolidated
Total
|
Net Income
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
56,139
|
|
Provision for Income
Taxes
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
31,332
|
|
Operating
Income
|
111,806
|
|
1,366
|
|
(1,492)
|
|
38,173
|
|
441
|
|
(62,823)
|
|
87,471
|
|
Interest
Expense
|
5,891
|
|
9,501
|
|
688
|
|
—
|
|
40
|
|
(2,946)
|
|
13,174
|
|
Depreciation
|
25,766
|
|
587
|
|
1,944
|
|
1,217
|
|
1,152
|
|
9,677
|
|
40,343
|
|
Amortization
|
1,458
|
|
21,037
|
|
249
|
|
—
|
|
—
|
|
—
|
|
22,744
|
|
EBITDA
|
144,921
|
|
32,491
|
|
1,389
|
|
39,390
|
|
1,633
|
|
(56,092)
|
|
163,732
|
|
Financial Advisory
and Legal Costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
13,661
|
|
13,661
|
|
Progressive-Related
Transaction Costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6,638
|
|
6,638
|
|
Restructuring
Expenses
|
4,836
|
|
—
|
|
6
|
|
—
|
|
—
|
|
4,298
|
|
9,140
|
|
Regulatory
Income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,200)
|
|
(1,200)
|
|
Retirement
Charges
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
9,094
|
|
9,094
|
|
Adjusted
EBITDA
|
$
|
149,757
|
|
$
|
32,491
|
|
$
|
1,395
|
|
$
|
39,390
|
|
$
|
1,633
|
|
$
|
(23,601)
|
|
$
|
201,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2013
|
|
Sales &
Lease Ownership
|
Progressive
|
HomeSmart
|
Franchise
|
Manufacturing
|
Other
|
Consolidated
Total
|
Net Income
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
97,992
|
|
Provision for Income
Taxes
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
52,857
|
|
Operating
Income
|
162,409
|
|
—
|
|
(2,376)
|
|
40,841
|
|
67
|
|
(50,092)
|
|
150,849
|
|
Interest
Expense
|
5,613
|
|
—
|
|
683
|
|
—
|
|
64
|
|
(1,844)
|
|
4,516
|
|
Depreciation
|
27,005
|
|
—
|
|
1,836
|
|
1,350
|
|
1,640
|
|
7,792
|
|
39,623
|
|
Amortization
|
2,153
|
|
—
|
|
793
|
|
—
|
|
—
|
|
—
|
|
2,946
|
|
EBITDA
|
197,180
|
|
—
|
|
936
|
|
42,191
|
|
1,771
|
|
(44,144)
|
|
197,934
|
|
Regulatory
Expenses
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
28,400
|
|
28,400
|
|
Retirement and
Vacation Charges
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4,917
|
|
4,917
|
|
Adjusted
EBITDA
|
$
|
197,180
|
|
$
|
—
|
|
$
|
936
|
|
$
|
42,191
|
|
$
|
1,771
|
|
$
|
(10,827)
|
|
$
|
231,251
|
|
Reconciliation of
2014 Projected Guidance for Earnings Per Share
Assuming Dilution
to Non-GAAP Earnings Per Share Assuming Dilution
|
|
|
Fourth Quarter
2014
|
Fiscal Year
2014
|
|
Low Range
|
High Range
|
Low Range
|
High Range
|
Projected Earnings
Per Share Assuming Dilution
|
$
|
.24
|
|
$
|
.29
|
|
$
|
1.01
|
|
$
|
1.06
|
|
Add
Progressive-Related Amortization Expense
|
.10
|
|
.10
|
|
.28
|
|
.28
|
|
Add Financial
Advisory and Legal Costs
|
—
|
|
—
|
|
.12
|
|
.12
|
|
Add
Progressive-Related Transaction Costs
|
—
|
|
—
|
|
.06
|
|
.06
|
|
Add Restructuring
Expenses
|
—
|
|
—
|
|
.08
|
|
.08
|
|
Add Regulatory
(Income)
|
—
|
|
—
|
|
(.01)
|
|
(.01)
|
|
Add Retirement
Charges
|
—
|
|
—
|
|
.08
|
|
.08
|
|
Projected Non-GAAP
Earnings Per Share Assuming Dilution
|
$
|
.34
|
|
$
|
.39
|
|
$
|
1.62
|
|
$
|
1.67
|
|
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SOURCE Aaron's, Inc.