ATLANTA, Feb. 23, 2021
/PRNewswire/ --
Full Year 2020 Highlights
- Full Year 2020 Revenues of $1.735
Billion
- Diluted EPS of ($7.85);
Non-GAAP Diluted EPS of $3.02, Up
43.8%
- Adjusted EBITDA of $208.9
Million, Up 26.4%
- Same Store Revenues Up 1.8%; E-commerce Lease Revenues Up
41%
Fourth Quarter 2020 Highlights
- Fourth Quarter Revenues of $430
Million
- Diluted EPS of $0.08; Non-GAAP
Diluted EPS $0.79, Up 11.3%
- Adjusted EBITDA of $53.7
Million, Up 4.8%
- Same Store Revenues Up 3.4%; E-commerce Lease Revenues Up
39%
Refer to the "Basis of Presentation" section below for
information regarding the consolidated and combined financial
results for the periods discussed in this release.
The Aaron's Company, Inc. (NYSE: AAN), a leading
technology-enabled omnichannel provider of lease-purchase
solutions, today announced financial results for the full year and
fourth quarter ended December 31, 2020.
"We are pleased to announce another quarter of solid financial
results to conclude a strong year for Aaron's," said Douglas Lindsay, Chief Executive Officer of The
Aaron's Company. "I am proud of the dedication of our team members
who continue to provide exceptional customer service during the
ongoing COVID-19 pandemic. We believe our investments in customer
servicing platforms, decisioning technologies, new store formats
and fast-growing e-commerce channel are delivering positive
momentum in financial performance and lease portfolio growth. We
remain focused on executing our key strategic priorities:
simplifying and digitizing the customer experience; aligning our
store footprint to the customer opportunity; and promoting the
Aaron's value proposition of low payments, high approval rates, and
best-in-class service."
Results of Operations - Full Year 2020
For the full year 2020, consolidated revenues were $1.735 billion, a decline of 2.8% compared to the
full year 2019. This decline is the result of a reduction of 253
company-operated stores in 2019 and 2020, partially offset by a
1.8% increase in same store revenues for the full year 2020.
Adjusted EBITDA for the full year 2020 was $208.9 million, an increase of $43.6 million or 26.4% compared to the full year
of 2019. As a percentage of revenues, adjusted EBITDA margin was
12.0% compared to 9.3% in 2019, an increase of 270 basis points.
The increase in adjusted EBITDA is primarily due to an improvement
in customer payment activity, fewer lease merchandise returns and
efficiencies in store operations. Write-offs were 4.2% of lease
revenues in 2020, a 200 basis point improvement over 2019.
Non-GAAP EPS for the full year 2020 was $3.02, an increase of 43.8% compared to the
$2.10 reported for the full year
2019.
The Company generated $355.8
million in cash from operations during the twelve months
ended December 31, 2020 and ended the year with $76.1 million in cash. Total available liquidity
was $311.4 million and total debt was
less than $1 million as of
December 31, 2020.
Results of Operations - Fourth Quarter 2020
For the fourth quarter of 2020, consolidated revenues were
$430.2 million compared with
$435.0 million for the fourth quarter
of 2019, a decrease of 1.1%. The decrease in consolidated revenues
was primarily due to the net reduction of 75 company-operated
stores during 2020, partially offset by strength in customer
payment activity. On a same store revenue basis, revenues increased
3.4% in the fourth quarter compared to the prior year quarter, the
sixth quarter of positive same store revenue growth in the last
eight quarters, and the third consecutive quarter in a
row.
Adjusted EBITDA for the Company was $53.7
million for the fourth quarter of 2020, compared with
$51.2 million for the same period in
2019, an increase of $2.5 million, or
4.8%. As a percentage of revenues, adjusted EBITDA was 12.5% in the
fourth quarter of 2020 compared with 11.8% for the same period in
2019, an improvement of 70 basis points. The improvement in
adjusted EBITDA margin was primarily due to a 300 basis point
reduction in write-offs to 4.3% of lease revenues, partially offset
by the impact of one-time benefits related primarily to real estate
sale and leaseback transactions and other miscellaneous items in
the fourth quarter of 2019. Before the impact of these one-time
items in the fourth quarter of 2019, adjusted EBITDA margin in the
fourth quarter of 2020 would have improved 250 basis points.
Net earnings for the fourth quarter of 2020 were $2.9 million compared to net earnings of
$20.5 million in the prior year
period. Net earnings in the fourth quarter of 2020 included
$12.1 million in pre-tax spin-related
retirement charges, $9.2 million in
pre-tax restructuring charges and $7.0
million in pre-tax spin-related separation charges. Net
earnings in the fourth quarter of 2019 included $2.5 million in pre-tax restructuring
charges.
Diluted earnings per share for the fourth quarter of 2020 were
$0.08 compared with diluted earnings
per share of $0.61 in the year ago
period. On a non-GAAP basis, diluted earnings per share were
$0.79 in the fourth quarter of 2020
compared with non-GAAP diluted earnings per share of $0.71 for the same quarter in 2019, an increase
of $0.08 or 11.3%.
Franchise Performance
Franchisee revenues totaled $405.1
million for the full year of 2020, a decrease of 6.4% from
the full year of 2019 primarily due to a reduction in franchise
locations. Franchisee revenues totaled $97.1
million for the fourth quarter of 2020, a decrease of 4.1%
from the fourth quarter of 2019 primarily due to a reduction in
franchise locations. Same-store revenues for franchised stores
increased 6.1% for the fourth quarter of 2020 compared with the
same quarter in 2019. Revenues and customers of franchisees
are not revenues and customers of the Company.
2021 Outlook
For the full-year 2021, we expect consolidated revenues between
$1.65 billion and $1.70 billion, and adjusted EBITDA of between
$155 million and $170 million. In addition, we have assumed an
effective tax rate for 2021 of approximately 25%, depreciation and
amortization of between $70 million
and $75 million, and a diluted
weighted average share count of approximately 35 million shares.
This outlook assumes no significant deterioration in the current
retail environment or in the state of the U.S. economy as compared
to its current condition, a gradual improvement in global supply
chain conditions, and no incremental government stimulus or
supplemental unemployment benefits in response to the COVID-19
pandemic.
|
2021
Outlook
|
(In thousands,
except per share amounts)
|
Low
|
High
|
Total
Revenues
|
$
|
1,650,000
|
|
$
|
1,700,000
|
|
Adjusted
EBITDA
|
155,000
|
|
170,000
|
|
Capital
Expenditures
|
80,000
|
|
90,000
|
|
Free Cash
Flow
|
80,000
|
|
90,000
|
|
Annual Same-Store
Revenues
|
0%
|
|
2%
|
|
Basis of Presentation
The financial statements and related results discussed herein
for periods prior to and through the date of the separation and
distribution, November 30, 2020, were
prepared on a combined standalone basis and were derived from the
consolidated financial statements and accounting records of PROG
Holdings, Inc. The financial statements for the period from
December 1, 2020 through December 31, 2020 are consolidated financial
statements of the Company and its subsidiaries, each of which is
wholly-owned, and is based on the financial position and results of
operations of the Company as a standalone company.
The combined financial statements prepared through November 30, 2020 include all revenues and costs
directly attributable to the Company and an allocation of expenses
from PROG Holdings, Inc. related to certain corporate functions and
actions. These costs include executive management, finance,
treasury, tax, audit, legal, information technology, human
resources and risk management functions and the related benefit
cost associated with such functions, including stock-based
compensation. These expenses have been allocated to the Company
based on direct usage or benefit where specifically identifiable,
with the remaining expenses allocated primarily on a pro rata basis
using an applicable measure of revenues, headcount or other
relevant measures.
Conference Call and Webcast
The Company will hold a conference call to discuss its quarterly
results on Tuesday, February 23, 2021, at 8:30 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 The Aaron's Company Inc.
Headquartered in Atlanta, The
Aaron's Company, Inc. (NYSE: AAN), is a leading, technology-enabled
omnichannel provider of lease-purchase solutions. The Aaron's
Company engages in the sales and lease ownership and specialty
retailing of furniture, appliances, consumer electronics and
accessories through its approximately 1,300 Company-operated and
franchised stores in 47 states and Canada, as well as its e-commerce platform,
Aarons.com. For more information, visit investor.aarons.com and
Aarons.com.
"Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995: Statements in this news release
regarding our 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 "remain," "believe,"
"outlook," "expect," "assume," "assumed," and similar
terminology. These risks and uncertainties include factors
such as (i) the impact of the COVID-19 pandemic and related
measures taken by governmental or regulatory authorities to combat
the pandemic, and whether additional government stimulus payments
or supplemental unemployment benefits will be approved, and the
nature, amount and timing of any such payments or benefits,
including the impact of the pandemic and such measures on: (a)
demand for the lease-to-own products offered by us, (b) our
customers, including their ability and willingness to satisfy their
obligations under their lease agreements, (c) our suppliers'
ability to provide us with the merchandise we need to obtain from
them, (d) our employees and labor needs, including our ability to
adequately staff our operations, (e) our financial and operational
performance, and (f) our liquidity; (ii) the possibility that
the operational, strategic and shareholder value creation
opportunities expected from the separation and spin-off of the
Aaron's Business into what is now The Aaron's Company, Inc. may not
be achieved in a timely manner, or at all; (iii) the failure of
that separation to qualify for the expected tax treatment; (iv)
changes in the enforcement and interpretation of existing laws and
regulations and the adoption of new laws and regulations that may
unfavorably impact our businesses; (v) legal and regulatory
proceedings and investigations, including those related to consumer
protection laws and regulations, customer privacy, third party and
employee fraud and information security; (vi) the risks associated
with our strategy and strategic priorities not being
successful, including our e-commerce and real estate repositioning
and optimization initiatives or being more costly than anticipated;
(vii) risks associated with the challenges faced by our business,
including the commoditization of consumer electronics and our
high fixed-cost operating model; (viii) increased competition from
traditional and virtual lease-to-own competitors, as well as from
traditional and online retailers and other competitors; (ix)
financial challenges faced by our franchisees, which we believe may
be exacerbated by the COVID-19 pandemic and related governmental or
regulatory measures to combat the pandemic; (x) increases in lease
merchandise write-offs, especially in light of the COVID-19
pandemic and its adverse economic impacts; 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,
2020. Statements in this press release that are "forward-looking"
include without limitation statements about: (i) the
execution of our key strategic priorities; (ii) the growth and
other benefits we expect from executing those priorities; (iii) our
2021 financial performance outlook; and (iv) the impact on our 2021
financial performance of additional rounds of government stimulus
payments. 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.
THE AARON'S
COMPANY, INC.
|
Consolidated and
Combined Statements of Earnings
|
(In thousands,
except per share amounts)
|
|
|
|
(Unaudited)
Three Months
Ended
|
(Unaudited)
Twelve Months
Ended
|
|
December
31,
|
December
31,
|
|
|
2020
|
2019
|
2020
|
2019
|
REVENUES:
|
|
|
|
|
|
Lease and Retail
Revenues
|
|
$
|
386,906
|
|
$
|
388,357
|
|
$
|
1,577,809
|
|
$
|
1,608,832
|
|
Non-Retail
Sales
|
|
32,942
|
|
38,760
|
|
127,652
|
|
140,950
|
|
Franchise Royalties
and Fees
|
|
10,324
|
|
7,835
|
|
29,458
|
|
34,695
|
|
|
|
430,172
|
|
434,952
|
|
1,734,919
|
|
1,784,477
|
|
COST OF
REVENUES:
|
|
|
|
|
|
Cost of Lease and
Retail Revenues
|
|
128,574
|
|
133,592
|
|
540,583
|
|
559,232
|
|
Non-Retail Cost of
Sales
|
|
28,788
|
|
30,172
|
|
110,794
|
|
113,229
|
|
|
|
157,362
|
|
163,764
|
|
651,377
|
|
672,461
|
|
GROSS
PROFIT
|
|
272,810
|
|
271,188
|
|
1,083,542
|
|
1,112,016
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
Personnel
Expenses
|
|
124,670
|
|
121,003
|
|
476,575
|
|
499,993
|
|
Other Operating
Expenses, Net
|
|
96,686
|
|
89,839
|
|
419,108
|
|
426,774
|
|
Provision for Lease
Merchandise Write-Offs
|
|
16,164
|
|
27,834
|
|
63,642
|
|
97,903
|
|
Restructuring
Expenses, Net
|
|
9,226
|
|
2,455
|
|
42,544
|
|
39,990
|
|
Impairment of
Goodwill
|
|
—
|
|
—
|
|
446,893
|
|
—
|
|
Retirement
Charges
|
|
12,060
|
|
—
|
|
12,634
|
|
—
|
|
Separation
Costs
|
|
7,024
|
|
—
|
|
8,184
|
|
—
|
|
|
|
265,830
|
|
241,131
|
|
1,469,580
|
|
1,064,660
|
|
OPERATING PROFIT
(LOSS)
|
|
6,980
|
|
30,057
|
|
(386,038)
|
|
47,356
|
|
Interest
Expense
|
|
(1,381)
|
|
(3,720)
|
|
(10,006)
|
|
(16,967)
|
|
Loss on Debt
Extinguishment
|
|
(4,079)
|
|
—
|
|
(4,079)
|
|
—
|
|
Other Non-Operating
Income, Net
|
|
1,422
|
|
1,046
|
|
2,309
|
|
3,881
|
|
EARNINGS (LOSS)
BEFORE INCOME TAX
EXPENSE (BENEFIT)
|
|
2,942
|
|
27,383
|
|
(397,814)
|
|
34,270
|
|
INCOME TAX EXPENSE
(BENEFIT)
|
|
67
|
|
6,861
|
|
(131,902)
|
|
6,171
|
|
NET EARNINGS
(LOSS)
|
|
$
|
2,875
|
|
$
|
20,522
|
|
$
|
(265,912)
|
|
$
|
28,099
|
|
|
|
|
|
|
|
EARNINGS (LOSS)
PER SHARE
|
|
$
|
0.08
|
|
$
|
0.61
|
|
$
|
(7.85)
|
|
$
|
0.83
|
|
EARNINGS (LOSS)
PER SHARE ASSUMING
DILUTION
|
|
$
|
0.08
|
|
$
|
0.61
|
|
$
|
(7.85)
|
|
$
|
0.83
|
|
WEIGHTED AVERAGE
SHARES OUTSTANDING
|
|
33,981
|
|
33,842
|
|
33,877
|
|
33,842
|
|
WEIGHTED AVERAGE
SHARES OUTSTANDING
ASSUMING DILUTION
|
|
34,901
|
|
33,842
|
|
33,877
|
|
33,842
|
|
THE AARON'S
COMPANY, INC.
|
CONSOLIDATED AND
COMBINED BALANCE SHEETS
|
(In
thousands)
|
|
|
(Unaudited)
|
|
|
|
December
31,
|
|
2020
|
|
2019
|
|
(In Thousands)
|
ASSETS:
|
|
|
|
Cash and Cash
Equivalents
|
$
|
76,123
|
|
|
$
|
48,773
|
|
Accounts Receivable
(net of allowances of $7,613 in 2020 and $10,720 in
2019)
|
33,990
|
|
|
37,079
|
|
Lease Merchandise (net
of accumulated depreciation and allowances of $458,405
in 2020 and $467,769 in 2019)
|
697,235
|
|
|
781,598
|
|
Property, Plant and
Equipment, Net
|
200,370
|
|
|
207,301
|
|
Operating Lease
Right-of-Use Assets
|
238,085
|
|
|
305,257
|
|
Goodwill
|
7,569
|
|
|
447,781
|
|
Other Intangibles,
Net
|
9,097
|
|
|
14,234
|
|
Income Tax
Receivable
|
1,093
|
|
|
5,927
|
|
Prepaid Expenses and
Other Assets
|
89,895
|
|
|
92,381
|
|
Total
Assets
|
$
|
1,353,457
|
|
|
$
|
1,940,331
|
|
LIABILITIES & SHAREHOLDERS'
EQUITY:
|
|
|
|
Accounts Payable and
Accrued Expenses
|
$
|
230,848
|
|
|
$
|
220,596
|
|
Deferred Income Taxes
Payable
|
62,601
|
|
|
157,425
|
|
Customer Deposits and
Advance Payments
|
68,894
|
|
|
47,692
|
|
Operating Lease
Liabilities
|
278,958
|
|
|
335,807
|
|
Debt
|
831
|
|
|
341,030
|
|
Total
Liabilities
|
642,132
|
|
|
1,102,550
|
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
Common Stock, Par
Value $0.50 Per Share: Authorized: 112,500,000 Shares at
December 31, 2020; Shares Issued: 35,099,571 at December 31,
2020
|
17,550
|
|
|
—
|
|
Additional Paid-in
Capital
|
708,668
|
|
|
—
|
|
Retained
Earnings
|
1,881
|
|
|
—
|
|
Former Parent Invested
Capital
|
—
|
|
|
837,800
|
|
Accumulated Other
Comprehensive Loss
|
(797)
|
|
|
(19)
|
|
|
727,302
|
|
|
837,781
|
|
Less: Treasury Shares
at Cost
|
|
|
|
894,660 Shares at
December 31, 2020
|
(15,977)
|
|
|
—
|
|
Total
Liabilities & Shareholders' Equity
|
$
|
1,353,457
|
|
|
$
|
1,940,331
|
|
THE AARON'S
COMPANY, INC.
|
CONSOLIDATED AND
COMBINED STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
Year Ended December
31,
|
(In
Thousands)
|
2020
|
|
2019
|
OPERATING
ACTIVITIES:
|
|
|
|
Net (Loss)
Earnings
|
$
|
(265,912)
|
|
|
$
|
28,099
|
|
Adjustments to
Reconcile Net Earnings to Net Cash Provided by Operating
Activities:
|
|
|
|
Depreciation of Lease
Merchandise
|
503,593
|
|
|
528,382
|
|
Other Depreciation and
Amortization
|
67,667
|
|
|
73,582
|
|
Accounts Receivable
Provision
|
30,753
|
|
|
46,721
|
|
Stock-Based
Compensation
|
24,442
|
|
|
13,486
|
|
Deferred Income
Taxes
|
(119,193)
|
|
|
18,226
|
|
Impairment of
Assets
|
477,854
|
|
|
30,344
|
|
Non-Cash Lease
Expense
|
95,864
|
|
|
110,615
|
|
Other Changes,
Net
|
10,056
|
|
|
(3,917)
|
|
Changes in Operating
Assets and Liabilities, Net of Effects of Acquisitions and
Dispositions:
|
|
|
|
Additions to Lease
Merchandise
|
(619,397)
|
|
|
(734,641)
|
|
Book Value of Lease
Merchandise Sold or Disposed
|
203,761
|
|
|
236,627
|
|
Accounts
Receivable
|
(27,914)
|
|
|
(39,881)
|
|
Prepaid Expenses and
Other Assets
|
(4,303)
|
|
|
(18,151)
|
|
Income Tax
Receivable
|
4,834
|
|
|
6,610
|
|
Operating Lease
Right-of-Use Assets and Liabilities
|
(110,295)
|
|
|
(120,287)
|
|
Accounts Payable and
Accrued Expenses
|
63,261
|
|
|
9,435
|
|
Customer Deposits and
Advance Payments
|
20,698
|
|
|
727
|
|
Cash Provided by
Operating Activities
|
355,769
|
|
|
185,977
|
|
INVESTING
ACTIVITIES:
|
|
|
|
Proceeds from
Investments
|
—
|
|
|
1,212
|
|
Purchases of Property,
Plant & Equipment
|
(69,037)
|
|
|
(79,932)
|
|
Proceeds from
Property, Plant, and Equipment
|
8,430
|
|
|
14,005
|
|
Acquisitions of
Businesses and Customer Agreements, Net of Cash Acquired
|
(14,793)
|
|
|
(14,285)
|
|
Proceeds from
Dispositions of Businesses and Customer Agreements, Net of Cash
Disposed
|
359
|
|
|
2,813
|
|
Cash Used in
Investing Activities
|
(75,041)
|
|
|
(76,187)
|
|
FINANCING
ACTIVITIES:
|
|
|
|
(Repayments)
Borrowings on Revolving Facility, Net
|
—
|
|
|
(16,000)
|
|
Proceeds from
Debt
|
5,625
|
|
|
—
|
|
Repayments on Debt and
Related Fees
|
(347,960)
|
|
|
(68,531)
|
|
Shares Withheld for
Tax Payments
|
(5,227)
|
|
|
—
|
|
Debt Issuance
Costs
|
(3,193)
|
|
|
(40)
|
|
Other Transfers From
Former Parent
|
97,344
|
|
|
11,428
|
|
Cash (Used in)
Provided by Financing Activities
|
(253,411)
|
|
|
(73,143)
|
|
Effect of Exchange
Rate Changes on Cash and Cash Equivalents
|
33
|
|
|
120
|
|
Increase (Decrease) in
Cash and Cash Equivalents
|
27,350
|
|
|
36,767
|
|
Cash and Cash
Equivalents at Beginning of Year
|
48,773
|
|
|
12,006
|
|
Cash and Cash
Equivalents at End of Year
|
$
|
76,123
|
|
|
$
|
48,773
|
|
Net Cash Paid
(Received) During the Year:
|
|
|
|
Interest
|
$
|
10,418
|
|
|
$
|
16,460
|
|
Income
Taxes
|
$
|
(64,013)
|
|
|
$
|
(4,554)
|
|
Use of Non-GAAP Financial Information:
Non-GAAP net earnings, non-GAAP diluted earnings per share,
EBITDA and adjusted EBITDA are supplemental measures of our
performance that are not calculated in accordance with generally
accepted accounting principles in the
United States ("GAAP"). Non-GAAP net earnings and
non-GAAP diluted earnings per share for 2020 exclude certain
charges including amortization expense resulting from franchisee
acquisitions, restructuring charges, early termination charges
incurred to terminate a sales and marketing agreement, goodwill
impairment charges, retirement charges associated with the
retirement of the former Chief Executive Officer of Aaron's
Holdings Company, Inc. and other Company executive-level employees,
separation costs associated with the separation and distribution
transaction that resulted in our spin-off into a separate
publicly-traded company, loss on extinguishment of debt, and an
income tax benefit resulting from the revaluation of a net
operating loss carryback. Non-GAAP net earnings and non-GAAP
diluted earnings per share for 2019 exclude certain Aaron's charges
including amortization expense resulting from franchisee
acquisitions, acquisition transaction and transition costs related
to franchisee acquisitions and restructuring charges. The amounts
for these pre-tax non-GAAP adjustments, which are tax-effected
using estimated tax rates which are commensurate with non-GAAP
pre-tax earnings, can be found in the Reconciliation of Net
Earnings and Earnings Per Share Assuming Dilution to non-GAAP Net
Earnings and Earnings Per Share Assuming Dilution table in this
press release.
The EBITDA and adjusted EBITDA figures presented in this press
release are calculated as the Company's earnings before interest
expense, depreciation on property, plant and equipment,
amortization of intangible assets and income taxes. Adjusted
EBITDA also excludes the other adjustments described in the
calculation of non-GAAP net earnings above. The amounts for these
pre-tax non-GAAP adjustments can be found in the Quarterly EBITDA
tables in this press release.
Management believes that non-GAAP net earnings, non-GAAP diluted
earnings per share, EBITDA and Adjusted EBITDA provide relevant and
useful information, and are widely used by analysts, investors and
competitors in our industry as well as by our management in
assessing both consolidated and business unit performance.
Non-GAAP net earnings and non-GAAP diluted earnings per share
provide management and investors with an understanding of the
results from the primary operations of our business by excluding
the effects of certain items that generally arose from larger,
one-time transactions that are not reflective of the ordinary
earnings activity of our operations or transactions that have
variability and volatility of the amount. This measure may be
useful to an investor in evaluating the underlying operating
performance of our business.
EBITDA and adjusted EBITDA also provide management and investors
with an understanding of one aspect of earnings before the impact
of investing and financing charges and income taxes. These
measures may be useful to an investor in evaluating our operating
performance and liquidity because the measures:
- Are widely used by investors to measure a company's operating
performance without regard to items excluded from the calculation
of such measure, which can vary substantially from company to
company depending upon accounting methods, book value of assets,
capital structure and the method by which assets were acquired,
among other factors.
- Are a financial measurement that is used by rating agencies,
lenders and other parties to evaluate our creditworthiness.
- Are used by our management for various purposes, including as a
measure of performance of our operating entities and as a basis for
strategic planning and forecasting.
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
Company's GAAP revenues and earnings before income taxes, which are
also presented in the press release. Further, we caution
investors that amounts presented in accordance with our definitions
of non-GAAP net earnings, non-GAAP diluted earnings per share,
EBITDA and adjusted EBITDA may not be comparable to similar
measures disclosed by other companies, because not all companies
and analysts calculate these measures in the same manner.
Reconciliation of
Net Earnings (Loss) and Earnings (Loss) Per Share Assuming Dilution
to
|
Non-GAAP Net
Earnings and Earnings Per Share Assuming Dilution
|
(In thousands,
except per share)
|
|
|
(Unaudited)
Three Months
Ended
|
|
(Unaudited)
Twelve Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2020
|
2019
|
|
2020
|
2019
|
Earnings (Loss)
Before Income Taxes
|
$
|
2,942
|
|
$
|
27,383
|
|
|
$
|
(397,814)
|
|
$
|
34,270
|
|
|
Add:
Franchisee-Related Intangible Amortization Expense
|
1,488
|
|
1,911
|
|
|
5,971
|
|
11,983
|
|
Add: Restructuring
Expenses, net
|
9,226
|
|
2,455
|
|
|
42,544
|
|
39,990
|
|
Add: Acquisition
Transaction and Transition Costs
|
—
|
|
100
|
|
|
—
|
|
475
|
|
Add: Sales and
Marketing Early Contract Termination Fees
|
—
|
|
—
|
|
|
14,663
|
|
—
|
|
Add: Separation
Costs
|
7,024
|
|
—
|
|
|
8,184
|
|
—
|
|
Add: Impairment of
Goodwill
|
—
|
|
—
|
|
|
446,893
|
|
—
|
|
Add: Retirement
Charges
|
12,060
|
|
—
|
|
|
12,634
|
|
—
|
|
Add: Loss on Debt
Extinguishment
|
4,079
|
|
—
|
|
|
4,079
|
|
—
|
|
Non-GAAP Earnings
Before Income Taxes
|
36,819
|
|
31,849
|
|
|
137,154
|
|
86,718
|
|
|
|
|
|
|
|
Less: NOL Carryback
Revaluation
|
—
|
|
—
|
|
|
(35,540)
|
|
—
|
|
Income taxes,
calculated using a non-GAAP Effective Tax
Rate
|
9,229
|
|
7,980
|
|
$
|
69,813
|
|
$
|
15,615
|
|
|
Non-GAAP Net
Earnings
|
$
|
27,590
|
|
$
|
23,869
|
|
|
$
|
102,881
|
|
$
|
71,103
|
|
|
|
|
|
|
|
|
Earnings (Loss) Per
Share Assuming Dilution(1)
|
$
|
0.08
|
|
$
|
0.61
|
|
|
$
|
(7.85)
|
|
$
|
0.83
|
|
|
Add:
Franchisee-Related Intangible Amortization Expense
|
0.04
|
|
0.06
|
|
|
0.18
|
|
0.35
|
|
Add: Restructuring
Expenses, net
|
0.26
|
|
0.07
|
|
|
1.25
|
|
1.18
|
|
Add: Acquisition
Transaction and Transition Costs
|
—
|
|
—
|
|
|
—
|
|
0.01
|
|
Add: Sales and
Marketing Early Contract Termination Fees
|
—
|
|
—
|
|
|
0.43
|
|
—
|
|
Add: Separation
Costs
|
0.20
|
|
—
|
|
|
0.24
|
|
—
|
|
Add: Impairment of
Goodwill
|
—
|
|
—
|
|
|
13.10
|
|
—
|
|
Add: Retirement
Charges
|
0.35
|
|
—
|
|
|
0.37
|
|
—
|
|
Add: Loss on Debt
Extinguishment
|
0.12
|
|
—
|
|
|
0.12
|
|
—
|
|
Non-GAAP Earnings
(Loss) Per Share Before Income Taxes
Assuming Dilution(1)
|
$
|
1.05
|
|
$
|
0.74
|
|
|
$
|
7.84
|
|
$
|
2.37
|
|
|
|
|
|
|
|
|
Less: NOL Carryback
Revaluation
|
—
|
|
—
|
|
|
(1.04)
|
|
—
|
|
Tax Effect of non-GAAP
adjustments
|
$
|
(0.24)
|
|
$
|
(0.03)
|
|
|
$
|
(3.83)
|
|
$
|
(0.27)
|
|
|
Non-GAAP Earnings Per
Share Assuming Dilution(1)(2)
|
$
|
0.79
|
|
$
|
0.71
|
|
|
$
|
3.02
|
|
$
|
2.10
|
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding Assuming Dilution
|
34,901
|
|
33,842
|
|
|
34,107
|
|
33,842
|
|
|
|
(1)
|
For the twelve months
ended December 31, 2020, the GAAP Weighted Average Shares
Outstanding Assuming Dilution was 33,877
and the Non-GAAP Weighted Average Shares Outstanding Assuming
Dilution was 34,107.
|
(2)
|
In some cases, the
sum of individual EPS amounts may not equal total non-GAAP EPS
calculations due to rounding.
|
The Aaron's
Company, Inc.
|
Non-GAAP Financial
Information
|
Quarterly and
Year-to-date EBITDA
|
(In
thousands)
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
December 31,
2020
|
|
December 31,
2019
|
|
December 31,
2020
|
|
December 31,
2019
|
Net Earnings
(Loss)
|
$
|
2,875
|
|
|
$
|
20,522
|
|
|
$
|
(265,912)
|
|
|
$
|
28,099
|
|
Income
Taxes
|
67
|
|
|
6,861
|
|
|
(131,902)
|
|
|
6,171
|
|
Earnings (Loss)
Before Income Taxes
|
$
|
2,942
|
|
|
$
|
27,383
|
|
|
$
|
(397,814)
|
|
|
$
|
34,270
|
|
Interest
Expense
|
1,381
|
|
|
3,720
|
|
|
10,006
|
|
|
16,967
|
|
Depreciation
|
15,293
|
|
|
15,354
|
|
|
60,878
|
|
|
60,288
|
|
Amortization
|
1,674
|
|
|
2,194
|
|
|
6,788
|
|
|
13,294
|
|
EBITDA
|
$
|
21,290
|
|
|
$
|
48,651
|
|
|
$
|
(320,142)
|
|
|
$
|
124,819
|
|
Sales and Marketing
Early Contract Termination
|
—
|
|
|
—
|
|
|
14,663
|
|
|
—
|
|
Separation
Costs
|
7,024
|
|
|
—
|
|
|
8,184
|
|
|
—
|
|
Restructuring
Expenses, net
|
9,226
|
|
|
2,455
|
|
|
42,544
|
|
|
39,990
|
|
Acquisition
Transaction and Transition Costs
|
—
|
|
|
100
|
|
|
—
|
|
|
475
|
|
Goodwill
Impairment
|
—
|
|
|
—
|
|
|
446,893
|
|
|
—
|
|
Retirement
Charges
|
12,060
|
|
|
—
|
|
|
12,634
|
|
|
—
|
|
Loss on Debt
Extinguishment
|
4,079
|
|
|
—
|
|
|
4,079
|
|
|
—
|
|
Adjusted
EBITDA
|
$
|
53,679
|
|
|
$
|
51,206
|
|
|
$
|
208,855
|
|
|
$
|
165,284
|
|
Reconciliation of
2021 Outlook for EBITDA
|
(In
thousands)
|
|
|
Fiscal Year 2021
Ranges
|
|
Consolidated
Total
|
Estimated Net
Earnings
|
$61,000 -
$68,000
|
Taxes
|
20,000
- 23,000
|
Projected Earnings
Before Taxes
|
81,000 - 91,000
|
Interest
Expense
|
1,000
|
Separation
Costs
|
3,000
|
Depreciation and
Amortization
|
70,000 - 75,000
|
Projected Adjusted
EBITDA
|
$155,000 -
$170,000
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/the-aarons-company-reports-full-year-and-fourth-quarter-revenues-and-earnings-initiates-outlook-for-2021-301232922.html
SOURCE The Aaron's Company, Inc.