ATLANTA, Oct. 29, 2020 /PRNewswire/ -- Aaron's
Holdings Company, Inc. (NYSE: AAN), a leading omnichannel provider
of lease-purchase solutions, today announced financial results for
the three months ended September 30, 2020.
"We are pleased to announce record third quarter revenues and
earnings. Progressive Leasing and the Aaron's Business
continued to perform well during this period of uncertainty caused
by the ongoing pandemic. I am proud of our teams for
executing at such a high level during the quarter despite supply
chain disruptions, changing consumer behavior and ongoing retail
restrictions in certain markets. Our team has done an
outstanding job effectively managing our business in a very
challenging environment," said John
Robinson, Chief Executive Officer at Aaron's Holdings
Company, Inc. "Regarding our previously announced separation, we
believe the Company is on track to complete the transaction during
the fourth quarter."
Consolidated Results
For the third quarter of 2020, consolidated revenues were
$1.05 billion compared with
$963.8 million for the third
quarter of 2019, an increase of 9.2%. The increase in consolidated
revenues was due to continued strength in customer payment activity
across our businesses, which the Company believes is partially a
result of various government stimulus programs enacted in response
to the COVID-19 pandemic.
Net earnings for the third quarter of 2020 were $109.3 million compared to net earnings of
$39.8 million in the prior year
period. Net earnings in the third quarter of 2020 included
$8.3 million in pre-tax spin-related
separation charges and $4.0 million
in pre-tax restructuring charges. Net earnings in the third quarter
of 2019 included $5.5 million in
pre-tax restructuring charges.
Adjusted EBITDA for the Company was $178.3 million for the third quarter of 2020,
compared with $87.1 million for the
same period in 2019, an increase of $91.3
million, or 104.8%. As a percentage of revenues, adjusted
EBITDA was 16.9% in the third quarter of 2020 compared with 9.0%
for the same period in 2019.
Diluted earnings per share for the third quarter of 2020 were
$1.60 compared with diluted earnings
per share of $0.58 in the year ago
period. On a non-GAAP basis, diluted earnings per share were
$1.80 in the third quarter of 2020.
This compares with non-GAAP diluted earnings per share of
$0.73 for the same quarter in 2019,
an increase of $1.07 or 147%.
The Company generated $551.8 million in cash from operations
during the nine months ended September 30, 2020 and ended the
third quarter with $470.2 million in cash, compared with a cash
balance of $57.8 million at the
end of 2019. Total available liquidity was $956.3 million as of September 30,
2020.
Progressive Leasing Segment Results
Progressive Leasing's revenues in the third quarter of 2020
increased 13.7% to $601.1 million
compared to $528.9 million in the
third quarter of 2019. Third quarter invoice volume increased 3.4%,
with improving customer demand partially offset by shortages of
available products in many of its retail partners, primarily in the
furniture, electronics and appliance categories. Invoice
volume per active door was up 3.0% and active doors were up 0.4% to
approximately 20,000. Progressive Leasing had 892,000 customers at
September 30, 2020, a 1.9% decrease from September 30,
2019 primarily as a result of higher than prior year early lease
buyout activity.
Earnings before income taxes for the third quarter of 2020 were
$103.8 million compared to
$53.5 million in the prior year
period. Earnings before income taxes for the third quarter of 2020
included $1.8 million in spin-related
separation charges. Adjusted EBITDA for the third quarter of 2020
was $115.2 million compared with
$62.9 million for the same period of
2019, an increase of 83.4%. As a percentage of revenues,
adjusted EBITDA was 19.2% for the third quarter of 2020, an
increase of 730 basis points compared to the third quarter of
2019. The margin improvement was due primarily to strong
portfolio performance and operating expense control.
The provision for lease merchandise write-offs was 2.1% of
revenues in the third quarter of 2020 compared with 7.7% in the
same period of 2019. The decrease in the provision for lease
merchandise write-offs as a percent of revenues was due primarily
to strong customer payment activity and the positive impact of more
conservative decisioning implemented at the onset of the COVID
pandemic.
The Aaron's Business Segment Results
For the third quarter of 2020, total revenues for the Aaron's
Business increased 3.4% to $441.0
million from $426.3 million in
the third quarter of 2019. The increase was due to strong customer
payment activity and higher merchandise sales to our franchisees,
partially offset by a reduction of 134 stores during the 15-month
period ended September 30, 2020. Same-store revenues
increased 7.3% due primarily to strong customer payment
activity. Customer count on a same-store basis was down 3.7% during
the third quarter of 2020 compared to the same period in 2019.
Company-operated Aaron's stores had 902,000 customers at
September 30, 2020, an 8.3% decrease
from September 30, 2019. At
September 30, 2020, the Aaron's Business had 1,086
Company-operated stores and 308 franchised stores compared to 1,163
and 341 company-operated and franchised stores, respectively, at
the end of the prior year period.
Lease revenue and fees for the three months ended
September 30, 2020 increased 1.7% compared with the same
period in 2019. Retail sales increased 53.1% compared with
the same period in 2019. Non-retail sales, which primarily consist
of merchandise sales to the Company's franchisees, increased 12.0%
for the third quarter of 2020 compared with the prior year
period.
Earnings before income taxes for the third quarter of 2020 were
$39.8 million, which includes the
impact of $6.5 million in
spin-related separation charges and $4.0
million in restructuring charges. Adjusted EBITDA for the
three months ended September 30, 2020 was $65.1 million compared to $25.7 million for the same period in 2019, an
increase of $39.4 million or 153.1%.
As a percentage of revenues, adjusted EBITDA was 14.8% in the third
quarter of 2020 compared to 6.0% in the prior year quarter. The
increase in adjusted EBITDA was due primarily to strong customer
payment activity and lower merchandise write-offs, partially offset
by the impact of a slightly lower portfolio balance entering the
third quarter as compared to the same period in the prior year.
The provision for lease merchandise write-offs was 2.4% of
revenues in the third quarter of 2020, compared with 7.4% for the
same period last year. Contributing to the year-over-year
improvement in write-offs was strong customer payment activity, in
both our store and e-commerce channels.
Significant Components of Revenue and Franchise
Performance
Consolidated lease revenues and fees for the three months ended
September 30, 2020 increased 8.7% over the prior year period.
Franchise royalties and fees were flat in the third quarter of 2020
compared with the same period a year ago. Franchisee revenues
totaled $101.2 million for the three
months ended September 30, 2020, a decrease of 2.2% from the
prior year period. Same-store revenues for franchised stores
increased 5.8% and same-store customer counts declined 5.8% for the
third quarter of 2020 compared with the same quarter in 2019.
Franchised stores had 210,000 customers at the end of the third
quarter of 2020. Revenues and customers of franchisees are
not revenues and customers of the Aaron's Business or the
Company.
2020 Outlook
For the fourth quarter, we expect consolidated revenues between
$1.025 billion and $1.045 billion and Non-GAAP Diluted Earnings Per
Share of between $1.20 and
$1.30. 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
and a gradual improvement in global supply chain conditions.
Estimated fourth quarter Non-GAAP Diluted Earnings Per Share
assumes no reduction in the COVID-specific reserves established at
the end of the first quarter of 2020.
Reconciliation of Non-GAAP Items
|
Q4 2020
Range
|
|
Low
|
High
|
Projected Earnings
Per Share Assuming Dilution
|
$
|
1.14
|
|
$
|
1.24
|
|
Add: Projected
Intangible Amortization Expense
|
0.06
|
|
0.06
|
|
Projected Non-GAAP
Earnings Per Share Assuming Dilution
|
$
|
1.20
|
|
$
|
1.30
|
|
Conference Call and Webcast
The Company will hold a conference call to discuss its quarterly
results on Thursday, October 29,
2020, at 10:30 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 Aaron's Holdings Company, Inc.
Headquartered in Atlanta,
Aaron's Holdings Company, Inc. (NYSE: AAN), is a leading
omnichannel provider of lease-purchase solutions. Progressive
Leasing provides lease-purchase solutions through more than 20,000
retail and e-commerce partner locations in 46 states and the
District of Columbia. The Aaron's
Business engages in the sales and lease ownership and specialty
retailing of furniture, home appliances, consumer electronics and
accessories through its approximately 1,400 Company-operated and
franchised stores in 47 states, Puerto Rico and Canada, as well as its e-commerce platform,
Aarons.com. Vive Financial provides a variety of second-look credit
products that are originated through federally-insured banks.
For more information, visit investor.aarons.com, Aarons.com,
ProgLeasing.com, and ViveCard.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 "expected", "believe",
"outlook" 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 our Progressive Leasing and Aaron's Business
segments, (b) Progressive Leasing's retail partners, (c) our
customers, including their ability and willingness to satisfy their
obligations under their lease agreements, (d) our suppliers'
ability to provide us with the merchandise we need to obtain from
them, (e) our employees and labor needs, including our ability to
adequately staff our operations, (f) our financial and operational
performance, and (g) our liquidity; (ii) uncertainties as to the
timing of the separation and whether it will be completed; (iii)
the possibility that various closing conditions for the separation
may not be satisfied; (iv) failure of the separation to qualify for
the expected tax treatment; (v) the risk that the Aaron's and
Progressive businesses will not be separated successfully or such
separation may be more difficult, time-consuming and/or costly than
expected; (vi) the possibility that the operational, strategic and
shareholder value creation opportunities from the separation may
not be achieved; (vii) changes in the enforcement of existing laws
and regulations and the adoption of new laws and regulations that
may unfavorably impact our businesses; (viii) the effects on our
business and reputation resulting from Progressive's announced
settlement and related consent order with the FTC, including the
risk of losing existing retail partners or being unable to
establish new partnerships with additional retailers, and of any
follow-on regulatory and/or civil litigation arising therefrom;
(ix) other types of legal and regulatory proceedings and
investigations, including those related to customer privacy, third
party and employee fraud and information security; (x) the risks
associated with our business transformation strategy for our
Aaron's Business not being successful, including our e-commerce and
real estate repositioning and optimization initiatives (including
the risk that the costs associated with these initiatives exceeds
our expectations); (xi) risks associated with the challenges faced
by our Aaron's Business, including the commoditization of consumer
electronics and the high fixed-cost operating model of the Aaron's
Business; (xii) increased competition from traditional and virtual
lease-to-own competitors, as well as from traditional and on-line
retailers and other competitors; (xiii) 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; (xiv) increases in lease merchandise
write-offs for our Aaron's Business and increases in lease
merchandise write-offs and the provision for returns and
uncollectible renewal payments for Progressive Leasing, especially
in light of the COVID-19 pandemic; 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,
2019 and in the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2020. Statements in this press release
that are "forward-looking" include without limitation statements
about (i) the strength of our businesses during the ongoing
economic uncertainty caused by the COVID pandemic, (ii) the
expected timing for the completion of our previously announced spin
transaction and our ability to complete it; and (iii) our outlook
for our consolidated financial performance for the fourth quarter
of 2020. 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 Holdings
Company, 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,
|
|
|
2020
|
2019
|
2020
|
2019
|
Revenues:
|
|
|
|
|
|
Lease Revenues and
Fees
|
|
$
|
985,287
|
|
$
|
906,776
|
|
$
|
3,003,187
|
|
$
|
2,758,498
|
|
Retail
Sales
|
|
13,553
|
|
8,854
|
|
37,104
|
|
30,561
|
|
Non-Retail
Sales
|
|
34,820
|
|
31,085
|
|
94,710
|
|
102,190
|
|
Franchise Royalties
and Fees
|
|
8,079
|
|
8,087
|
|
18,168
|
|
25,899
|
|
Interest and Fees on
Loans Receivable
|
|
10,233
|
|
8,687
|
|
29,555
|
|
25,943
|
|
Other
|
|
325
|
|
319
|
|
966
|
|
961
|
|
Total
|
|
1,052,297
|
|
963,808
|
|
3,183,690
|
|
2,944,052
|
|
|
|
|
|
|
|
Costs and
Expenses:
|
|
|
|
|
|
Depreciation of Lease
Merchandise
|
|
527,883
|
|
489,199
|
|
1,672,841
|
|
1,464,887
|
|
Retail Cost of
Sales
|
|
7,793
|
|
5,742
|
|
23,720
|
|
20,025
|
|
Non-Retail Cost of
Sales
|
|
29,109
|
|
24,913
|
|
82,006
|
|
83,057
|
|
Operating
Expenses
|
|
342,896
|
|
383,264
|
|
1,099,716
|
|
1,154,056
|
|
Restructuring
Expenses, Net
|
|
4,041
|
|
5,516
|
|
33,318
|
|
37,535
|
|
Legal and Regulatory
Expense, Net of Recoveries
|
|
(835)
|
|
—
|
|
(835)
|
|
—
|
|
Impairment of
Goodwill
|
|
—
|
|
—
|
|
446,893
|
|
—
|
|
Other Operating
Income, Net
|
|
(202)
|
|
(329)
|
|
(128)
|
|
(4,712)
|
|
Total
|
|
910,685
|
|
908,305
|
|
3,357,531
|
|
2,754,848
|
|
|
|
|
|
|
|
Operating Profit
(Loss)
|
|
141,612
|
|
55,503
|
|
(173,841)
|
|
189,204
|
|
Interest
Income
|
|
141
|
|
360
|
|
560
|
|
1,405
|
|
Interest
Expense
|
|
(1,973)
|
|
(3,991)
|
|
(8,625)
|
|
(13,247)
|
|
Other Non-Operating
Income (Expense), Net
|
|
557
|
|
(207)
|
|
327
|
|
1,430
|
|
Earnings (Loss)
Before Income Tax Expense
|
|
140,337
|
|
51,665
|
|
(181,579)
|
|
178,792
|
|
|
|
|
|
|
|
Income Tax Expense
(Benefit)
|
|
30,992
|
|
11,864
|
|
(79,296)
|
|
40,263
|
|
Net Earnings
(Loss)
|
|
$
|
109,345
|
|
$
|
39,801
|
|
$
|
(102,283)
|
|
$
|
138,529
|
|
|
|
|
|
|
|
Earnings (Loss) Per
Share
|
|
$
|
1.62
|
|
$
|
0.59
|
|
$
|
(1.52)
|
|
$
|
2.05
|
|
Earnings (Loss) Per
Share Assuming Dilution
|
|
$
|
1.60
|
|
$
|
0.58
|
|
$
|
(1.52)
|
|
$
|
2.02
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding
|
|
67,398
|
|
67,400
|
|
67,107
|
|
67,461
|
|
Weighted Average
Shares Outstanding Assuming Dilution
|
|
68,155
|
|
68,652
|
|
67,107
|
|
68,739
|
|
Aaron's Holdings
Company, Inc. and Subsidiaries
Consolidated
Balance Sheets
(In
thousands)
|
|
|
|
(Unaudited)
|
|
|
|
|
|
September 30,
2020
|
|
December 31,
2019
|
|
ASSETS:
|
|
|
|
|
|
Cash and Cash
Equivalents
|
|
$
|
470,170
|
|
|
$
|
57,755
|
|
|
Accounts Receivable
(net of allowances of $59,428 in 2020 and $76,293 in
2019)
|
|
86,721
|
|
|
104,159
|
|
|
Lease Merchandise
(net of accumulated depreciation and allowances of $874,238 in 2020
and $896,056 in 2019)
|
|
1,185,662
|
|
|
1,433,417
|
|
|
Loans Receivable (net
of allowances and unamortized fees of $43,770 in 2020 and $21,134
in 2019)
|
|
67,596
|
|
|
75,253
|
|
|
Property, Plant and
Equipment at Cost (net of accumulated depreciation of $336,029 in
2020 and $311,252 in 2019)
|
|
222,636
|
|
|
237,666
|
|
|
Operating Lease
Right-of-Use Assets
|
|
269,645
|
|
|
329,211
|
|
|
Goodwill
|
|
291,446
|
|
|
736,582
|
|
|
Other Intangibles
(net of accumulated amortization of $170,803 in 2020 and $151,932
in 2019)
|
|
169,368
|
|
|
190,796
|
|
|
Income Tax
Receivable
|
|
9,510
|
|
|
18,690
|
|
|
Prepaid Expenses and
Other Assets
|
|
112,178
|
|
|
114,271
|
|
|
Total
Assets
|
|
$
|
2,884,932
|
|
|
$
|
3,297,800
|
|
|
LIABILITIES & SHAREHOLDERS'
EQUITY:
|
|
|
|
|
|
Accounts Payable and
Accrued Expenses
|
|
$
|
320,016
|
|
|
$
|
272,816
|
|
|
Accrued Regulatory
Expense
|
|
—
|
|
|
175,000
|
|
|
Deferred Income Taxes
Payable
|
|
231,151
|
|
|
310,395
|
|
|
Customer Deposits and
Advance Payments
|
|
90,085
|
|
|
91,914
|
|
|
Operating Lease
Liabilities
|
|
319,875
|
|
|
369,386
|
|
|
Debt
|
|
285,123
|
|
|
341,030
|
|
|
Total
Liabilities
|
|
1,246,250
|
|
|
1,560,541
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
|
|
Common Stock, Par
Value $0.50 Per Share: Authorized: 225,000,000 Shares at September
30, 2020 and December 31, 2019; Shares Issued: 90,752,123 at
September 30, 2020 and December 31, 2019
|
|
45,376
|
|
|
45,376
|
|
|
Additional Paid-in
Capital
|
|
299,418
|
|
|
290,229
|
|
|
Retained
Earnings
|
|
1,912,494
|
|
|
2,029,613
|
|
|
Accumulated Other
Comprehensive Loss
|
|
(1,244)
|
|
|
(19)
|
|
|
|
|
|
|
|
|
Less: Treasury Shares
at Cost
|
|
|
|
|
|
Common Stock:
23,613,045 Shares at September 30, 2020 and 24,034,053 at December
31, 2019
|
|
(617,362)
|
|
|
(627,940)
|
|
|
Total Shareholders'
Equity
|
|
1,638,682
|
|
|
1,737,259
|
|
|
Total Liabilities and
Shareholders' Equity
|
|
$
|
2,884,932
|
|
|
$
|
3,297,800
|
|
|
Aaron's Holdings
Company, Inc. and Subsidiaries
Consolidated
Statements of Cash Flows
|
|
(Unaudited)
|
Nine Months Ended
September 30,
|
(In
Thousands)
|
2020
|
|
2019
|
OPERATING
ACTIVITIES:
|
|
|
|
Net
Earnings
|
$
|
(102,283)
|
|
|
$
|
138,529
|
|
Adjustments to
Reconcile Net Earnings to Net Cash Provided by Operating
Activities:
|
|
|
|
Depreciation of Lease
Merchandise
|
1,672,841
|
|
|
1,464,887
|
|
Other Depreciation and
Amortization
|
74,683
|
|
|
79,419
|
|
Accounts Receivable
Provision
|
201,198
|
|
|
228,608
|
|
Provision for Credit
Losses on Loans Receivable
|
23,761
|
|
|
15,291
|
|
Stock-Based
Compensation
|
21,378
|
|
|
20,261
|
|
Deferred Income Tax
(Benefit) Expense
|
(76,885)
|
|
|
28,747
|
|
Impairment of Goodwill
and Other Assets
|
469,782
|
|
|
29,031
|
|
Non Cash Lease
Expense
|
75,589
|
|
|
86,367
|
|
Other Changes,
Net
|
5,529
|
|
|
3,423
|
|
Changes in Operating
Assets and Liabilities, Net of Effects Of Acquisitions and
Dispositions:
|
|
|
|
Additions to Lease
Merchandise
|
(1,687,483)
|
|
|
(1,723,385)
|
|
Book Value of Lease
Merchandise Sold or Disposed
|
263,007
|
|
|
298,904
|
|
Accounts
Receivable
|
(183,807)
|
|
|
(225,372)
|
|
Prepaid Expenses and
Other Assets
|
(1,381)
|
|
|
(19,642)
|
|
Income Tax
Receivable
|
9,180
|
|
|
13,217
|
|
Operating Lease
Liabilities
|
(85,073)
|
|
|
(91,333)
|
|
Accounts Payable and
Accrued Expenses
|
48,851
|
|
|
5,762
|
|
Accrued Regulatory
Expense
|
(175,000)
|
|
|
—
|
|
Customer Deposits and
Advance Payments
|
(2,041)
|
|
|
(1,954)
|
|
Cash Provided by
Operating Activities
|
551,846
|
|
|
350,760
|
|
INVESTING
ACTIVITIES:
|
|
|
|
Investments in Loans
Receivable
|
(73,208)
|
|
|
(49,311)
|
|
Proceeds from Loans
Receivable
|
50,154
|
|
|
40,423
|
|
Outflows on Purchases
of Property, Plant and Equipment
|
(50,867)
|
|
|
(67,049)
|
|
Proceeds from
Disposition of Property, Plant and Equipment
|
3,829
|
|
|
2,805
|
|
Outflows on
Acquisitions of Businesses and Customer Agreements, Net of Cash
Acquired
|
(2,874)
|
|
|
(12,873)
|
|
Proceeds from
Dispositions of Businesses and Customer Agreements, Net of Cash
Disposed
|
359
|
|
|
2,813
|
|
Cash Used in
Investing Activities
|
(72,607)
|
|
|
(83,192)
|
|
FINANCING
ACTIVITIES:
|
|
|
|
Repayments on
Revolving Facility, Net
|
—
|
|
|
(16,000)
|
|
Proceeds from
Debt
|
5,625
|
|
|
—
|
|
Repayments on
Debt
|
(61,515)
|
|
|
(62,317)
|
|
Dividends
Paid
|
(8,035)
|
|
|
(7,086)
|
|
Acquisition of
Treasury Stock
|
—
|
|
|
(39,422)
|
|
Issuance of Stock
Under Stock Option Plans
|
9,876
|
|
|
5,115
|
|
Shares Withheld for
Tax Payments
|
(11,734)
|
|
|
(12,977)
|
|
Debt Issuance
Costs
|
(1,020)
|
|
|
—
|
|
Cash Used in
Financing Activities
|
(66,803)
|
|
|
(132,687)
|
|
Effect of
Exchange Rate Changes on Cash & Cash Equivalents
|
(21)
|
|
|
102
|
|
Increase in Cash and
Cash Equivalents
|
412,415
|
|
|
134,983
|
|
Cash and Cash
Equivalents at Beginning of Period
|
57,755
|
|
|
15,278
|
|
Cash and Cash
Equivalents at End of Period
|
$
|
470,170
|
|
|
$
|
150,261
|
|
Aaron's Holdings
Company, Inc. and Subsidiaries
Quarterly Revenues
by Segment
(In
thousands)
|
|
|
(Unaudited)
|
|
Three Months
Ended
|
|
September 30,
2020
|
|
Progressive
Leasing
|
Aaron's
Business
|
Vive
|
Consolidated
Total
|
Lease Revenues and
Fees
|
$
|
601,105
|
|
$
|
384,182
|
|
$
|
—
|
|
$
|
985,287
|
|
Retail
Sales
|
—
|
|
13,553
|
|
—
|
|
13,553
|
|
Non-Retail
Sales
|
—
|
|
34,820
|
|
—
|
|
34,820
|
|
Franchise Royalties
and Fees
|
—
|
|
8,079
|
|
—
|
|
8,079
|
|
Interest and Fees on
Loans Receivable
|
—
|
|
—
|
|
10,233
|
|
10,233
|
|
Other
|
—
|
|
325
|
|
—
|
|
325
|
|
Total
Revenues
|
$
|
601,105
|
|
$
|
440,959
|
|
$
|
10,233
|
|
$
|
1,052,297
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
Three Months
Ended
|
|
September 30,
2019
|
|
Progressive
Leasing
|
Aaron's
Business
|
Vive
|
Consolidated
Total
|
Lease Revenues and
Fees
|
$
|
528,850
|
|
$
|
377,926
|
|
$
|
—
|
|
$
|
906,776
|
|
Retail
Sales
|
—
|
|
8,854
|
|
—
|
|
8,854
|
|
Non-Retail
Sales
|
—
|
|
31,085
|
|
—
|
|
31,085
|
|
Franchise Royalties
and Fees
|
—
|
|
8,087
|
|
—
|
|
8,087
|
|
Interest and Fees on
Loans Receivable
|
—
|
|
—
|
|
8,687
|
|
8,687
|
|
Other
|
—
|
|
319
|
|
—
|
|
319
|
|
Total
Revenues
|
$
|
528,850
|
|
$
|
426,271
|
|
$
|
8,687
|
|
$
|
963,808
|
|
Aaron's Holdings
Company, Inc. and Subsidiaries
Nine Months
Revenues by Segment
(In
thousands)
|
|
|
(Unaudited)
|
|
Nine Months
Ended
|
|
September 30,
2020
|
|
Progressive
Leasing
|
Aaron's
Business
|
Vive
|
Consolidated
Total
|
Lease Revenues and
Fees
|
$
|
1,849,388
|
|
$
|
1,153,799
|
|
$
|
—
|
|
$
|
3,003,187
|
|
Retail
Sales
|
—
|
|
37,104
|
|
—
|
|
37,104
|
|
Non-Retail
Sales
|
—
|
|
94,710
|
|
—
|
|
94,710
|
|
Franchise Royalties
and Fees
|
—
|
|
18,168
|
|
—
|
|
18,168
|
|
Interest and Fees on
Loans Receivable
|
—
|
|
—
|
|
29,555
|
|
29,555
|
|
Other
|
—
|
|
966
|
|
—
|
|
966
|
|
Total
Revenues
|
$
|
1,849,388
|
|
$
|
1,304,747
|
|
$
|
29,555
|
|
$
|
3,183,690
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
Nine Months
Ended
|
|
September 30,
2019
|
|
Progressive
Leasing
|
Aaron's
Business
|
Vive
|
Consolidated
Total
|
Lease Revenues and
Fees
|
$
|
1,568,584
|
|
$
|
1,189,914
|
|
$
|
—
|
|
$
|
2,758,498
|
|
Retail
Sales
|
—
|
|
30,561
|
|
—
|
|
30,561
|
|
Non-Retail
Sales
|
—
|
|
102,190
|
|
—
|
|
102,190
|
|
Franchise Royalties
and Fees
|
—
|
|
25,899
|
|
—
|
|
25,899
|
|
Interest and Fees on
Loans Receivable
|
—
|
|
—
|
|
25,943
|
|
25,943
|
|
Other
|
—
|
|
961
|
|
—
|
|
961
|
|
Total
Revenues
|
$
|
1,568,584
|
|
$
|
1,349,525
|
|
$
|
25,943
|
|
$
|
2,944,052
|
|
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 Progressive
Leasing-related intangible amortization expense and insurance
reimbursements for certain legal costs, as well as certain Aaron's
Business charges including amortization expense resulting from
franchisee acquisitions, restructuring charges, early termination
charges incurred to terminate a sales and marketing agreement,
goodwill impairment charges, legal, accounting and personnel
expenses incurred in conjunction with the Company's implementation
of a holding company structure and the planned separation and
distribution of the Aaron's Business into a separate company, 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 Progressive
Leasing-related intangible amortization expense, certain Aaron's
Business charges including amortization expense resulting from
franchisee acquisitions, acquisition transaction and transition
costs related to franchisee acquisitions and restructuring charges.
The amounts for these after-tax non-GAAP adjustments, which are
calculated 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 Segment
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 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.
Finally, this press release presents pre-tax, pre-provision loss
for Vive, which is also a supplemental measure not calculated in
accordance with GAAP. Management believes this measure is
useful because it gives management and investors an additional,
supplemental metric to assess Vive's underlying operational
performance for the period. Management uses this measure as one of
its bases for strategic planning and forecasting for Vive.
Our use of pre-provision, pre-tax loss may not be comparable to
similar measures disclosed by other companies, because not all
companies and analysts calculate these measures in the same
manner.
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
revenues and earnings before income taxes of the Company's
segments, 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, adjusted EBITDA, and pre-tax,
pre-provision loss 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)
Nine Months Ended
|
|
September
30,
|
|
September
30,
|
|
2020
|
2019
|
|
2020
|
2019
|
Net Earnings
(Loss)
|
$
|
109,345
|
|
$
|
39,801
|
|
|
$
|
(102,283)
|
|
$
|
138,529
|
|
Add: Progressive
Leasing-Related Intangible Amortization Expense
(1)(2)
|
3,943
|
|
4,175
|
|
|
12,325
|
|
12,600
|
|
Add:
Franchisee-Related Intangible Amortization
Expense(3)(4)
|
1,066
|
|
1,593
|
|
|
3,398
|
|
7,803
|
|
Add: Restructuring
Expenses, net (5)(6)
|
2,940
|
|
4,250
|
|
|
25,252
|
|
29,082
|
|
Add: Acquisition
Transaction and Transition Costs(7)
|
—
|
|
248
|
|
|
—
|
|
492
|
|
Add: Sales and
Marketing Early Contract Termination Fees(8)
|
—
|
|
—
|
|
|
11,113
|
|
—
|
|
Add: Separation
Costs(9)
|
6,019
|
|
—
|
|
|
8,182
|
|
—
|
|
Add: Impairment of
Goodwill(10)
|
—
|
|
—
|
|
|
338,698
|
|
—
|
|
Less: Legal and
Regulatory, net of Recoveries(11)
|
(607)
|
|
—
|
|
|
(633)
|
|
—
|
|
Less: NOL Carryback
Revaluation
|
—
|
|
—
|
|
|
(35,540)
|
|
—
|
|
Non-GAAP Net
Earnings
|
$
|
122,706
|
|
$
|
50,067
|
|
|
$
|
260,512
|
|
$
|
188,506
|
|
|
|
|
|
|
|
Earnings (Loss) Per
Share Assuming Dilution(10)
|
$
|
1.60
|
|
$
|
0.58
|
|
|
$
|
(1.52)
|
|
$
|
2.02
|
|
Add: Progressive
Leasing-Related Intangible Amortization Expense
(1)(2)
|
0.06
|
|
0.06
|
|
|
0.18
|
|
0.18
|
|
Add:
Franchisee-Related Intangible Amortization
Expense(3)(4)
|
0.02
|
|
0.02
|
|
|
0.05
|
|
0.11
|
|
Add: Restructuring
Expenses, net(5)(6)
|
0.04
|
|
0.06
|
|
|
0.37
|
|
0.42
|
|
Add: Acquisition
Transaction and Transition Costs(7)
|
—
|
|
—
|
|
|
—
|
|
0.01
|
|
Add: Sales and
Marketing Early Contract Termination Fees(8)
|
—
|
|
—
|
|
|
0.16
|
|
—
|
|
Add: Separation
Costs(9)
|
0.09
|
|
—
|
|
|
0.12
|
|
—
|
|
Add: Impairment of
Goodwill(10)
|
—
|
|
—
|
|
|
4.99
|
|
—
|
|
Less: Legal and
Regulatory, net of Recoveries(11)
|
(0.01)
|
|
—
|
|
|
(0.01)
|
|
—
|
|
Less: NOL Carryback
Revaluation
|
—
|
|
—
|
|
|
(0.52)
|
|
—
|
|
|
|
|
|
|
|
Non-GAAP Earnings Per
Share Assuming Dilution(12)(13)
|
$
|
1.80
|
|
$
|
0.73
|
|
|
$
|
3.84
|
|
$
|
2.74
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding Assuming Dilution
|
68,155
|
|
68,652
|
|
|
67,849
|
|
68,739
|
|
(1)
|
Net of taxes of
$1,477 and $3,937 for the three and nine months ended
September 30, 2020 calculated using the estimated tax rates of
27.3% and 24.2% for the respective periods.
|
(2)
|
Net of taxes of
$1,245 and $3,662 for the three and nine months ended
September 30, 2019 calculated using the effective tax rate for
the respective periods.
|
(3)
|
Net of taxes of $400
and $1,086 for the three and nine months ended September 30,
2020 calculated using the estimated tax rates of 27.3% and 24.2%
for the respective periods.
|
(4)
|
Net of taxes of $475
and $2,268 for the three and nine months ended September 30,
2019 calculated using the effective tax rate for the respective
periods.
|
(5)
|
Net of taxes of
$1,101 and $8,066 for the three and nine months ended
September 30, 2020 calculated using the estimated tax rates of
27.3% and 24.2% for the respective periods.
|
(6)
|
Net of taxes of
$1,266 and $8,453 for the three and nine months ended
September 30, 2019 calculated using the effective tax rate for
the respective periods.
|
(7)
|
Net of taxes of $74
and $143 for the three and nine months ended September 30,
2019 calculated using the effective tax rate for the respective
periods.
|
(8)
|
Net of taxes of
$3,550 for the nine months ended September 30, 2020 calculated
using the estimated tax rate of 24.2% for the respective
periods.
|
(9)
|
Net of taxes of
$2,255 and $2,614 for the three and nine months ended
September 30, 2020 calculated using the estimated tax rates of
27.3% and 24.2% for the respective periods.
|
(10)
|
Net of taxes of
$108,195 for the nine months ended September 30, 2020
calculated using the estimated tax rate of 24.2% for the
period.
|
(11)
|
Net of taxes of $228
and $202 for the three and nine months ended September 30,
2020 calculated using the estimated tax rates of 27.3% and 24.2%
for the respective periods.
|
(12)
|
For the nine months
ended September 30, 2020, the GAAP Weighted Average Shares
Outstanding Assuming Dilution was 67,107 and the Non-GAAP Weighted
Average Shares Outstanding Assuming Dilution was 67,849.
|
(13)
|
In some cases, the
sum of individual EPS amounts may not equal total non-GAAP EPS
calculations due to rounding.
|
Vive Pre-tax,
Pre-provision Earnings (Loss)
(In
thousands)
|
|
|
(Unaudited)
Three Months Ended
|
(Unaudited)
Nine Months Ended
|
|
September
30,
|
September
30,
|
|
2020
|
2019
|
2020
|
2019
|
Loss Before Income
Taxes
|
$
|
(3,306)
|
|
$
|
(2,740)
|
|
$
|
(10,675)
|
|
$
|
(7,133)
|
|
Adjustment to Increase
Allowance for Loan Losses During Period
|
4,722
|
|
1,271
|
|
11,041
|
|
1,084
|
|
Pre-tax,
Pre-provision Earnings (Loss)
|
$
|
1,416
|
|
$
|
(1,469)
|
|
$
|
366
|
|
$
|
(6,049)
|
|
Aaron's Holdings
Company, Inc. and Subsidiaries
Non-GAAP Financial
Information
Quarterly Segment
EBITDA
(In
thousands)
|
|
|
(Unaudited)
|
|
Three Months
Ended
|
|
September 30,
2020
|
|
Progressive
Leasing
|
Aaron's
Business
|
Vive
|
Consolidated
Total
|
Net
Earnings
|
|
|
|
$
|
109,345
|
|
Income
Taxes1
|
|
|
|
30,992
|
|
Earnings (Loss)
Before Income Taxes
|
$
|
103,835
|
|
$
|
39,808
|
|
$
|
(3,306)
|
|
140,337
|
|
Interest
Expense
|
2,847
|
|
(1,833)
|
|
959
|
|
1,973
|
|
Depreciation
|
2,208
|
|
14,920
|
|
196
|
|
17,324
|
|
Amortization
|
5,420
|
|
1,640
|
|
145
|
|
7,205
|
|
EBITDA
|
$
|
114,310
|
|
$
|
54,535
|
|
$
|
(2,006)
|
|
$
|
166,839
|
|
Separation
Costs
|
1,765
|
|
6,509
|
|
—
|
|
8,274
|
|
Legal and Regulatory
Expense, Net of Recoveries
|
(835)
|
|
—
|
|
—
|
|
(835)
|
|
Restructuring
Expenses
|
—
|
|
4,041
|
|
—
|
|
4,041
|
|
Adjusted
EBITDA
|
$
|
115,240
|
|
$
|
65,085
|
|
$
|
(2,006)
|
|
$
|
178,319
|
|
|
|
(Unaudited)
|
|
Three Months
Ended
|
|
September 30,
2019
|
|
Progressive
Leasing
|
Aaron's
Business
|
Vive
|
Consolidated
Total
|
Net
Earnings
|
|
|
|
$
|
39,801
|
|
Income
Taxes1
|
|
|
|
11,864
|
|
Earnings (Loss)
Before Income Taxes
|
$
|
53,473
|
|
$
|
932
|
|
$
|
(2,740)
|
|
51,665
|
|
Interest
Expense
|
1,910
|
|
1,210
|
|
871
|
|
3,991
|
|
Depreciation
|
2,049
|
|
15,365
|
|
205
|
|
17,619
|
|
Amortization
|
5,420
|
|
2,373
|
|
145
|
|
7,938
|
|
EBITDA
|
$
|
62,852
|
|
$
|
19,880
|
|
$
|
(1,519)
|
|
$
|
81,213
|
|
Restructuring
Expenses
|
—
|
|
5,516
|
|
—
|
|
5,516
|
|
Acquisition
Transaction and Transition Costs
|
—
|
|
322
|
|
—
|
|
322
|
|
Adjusted
EBITDA
|
$
|
62,852
|
|
$
|
25,718
|
|
$
|
(1,519)
|
|
$
|
87,051
|
|
(1)
|
Taxes are calculated
on a consolidated basis and are not identifiable by Company
segments.
|
Aaron's Holdings
Company, Inc. and Subsidiaries
Non-GAAP Financial
Information
Nine Months
Segment EBITDA
(In
thousands)
|
|
|
(Unaudited)
|
|
Nine Months
Ended
|
|
September 30,
2020
|
|
Progressive
Leasing
|
Aaron's
Business
|
Vive
|
Consolidated
Total
|
Net
Earnings
|
|
|
|
$
|
(102,283)
|
|
Income Tax
Benefit1
|
|
|
|
(79,296)
|
|
Earnings (Loss)
Before Income Taxes
|
$
|
222,636
|
|
$
|
(393,540)
|
|
$
|
(10,675)
|
|
(181,579)
|
|
Interest
Expense
|
9,866
|
|
(4,043)
|
|
2,802
|
|
8,625
|
|
Depreciation
|
6,508
|
|
45,741
|
|
623
|
|
52,872
|
|
Amortization
|
16,262
|
|
5,114
|
|
435
|
|
21,811
|
|
EBITDA
|
$
|
255,272
|
|
$
|
(346,728)
|
|
$
|
(6,815)
|
|
$
|
(98,271)
|
|
Restructuring
Expenses
|
—
|
|
33,318
|
|
—
|
|
33,318
|
|
Sales and Marketing
Early Termination Fees
|
—
|
|
14,663
|
|
—
|
|
14,663
|
|
Separation
Costs
|
1,765
|
|
9,031
|
|
—
|
|
10,796
|
|
Legal and Regulatory
Expense, Net of Recoveries
|
(835)
|
|
—
|
|
—
|
|
(835)
|
|
Impairment of
Goodwill
|
—
|
|
446,893
|
|
—
|
|
446,893
|
|
Adjusted
EBITDA
|
$
|
256,202
|
|
$
|
157,177
|
|
$
|
(6,815)
|
|
$
|
406,564
|
|
|
|
|
|
|
|
(Unaudited)
|
|
Nine Months
Ended
|
|
September 30,
2019
|
|
Progressive
Leasing
|
Aaron's
Business
|
Vive
|
Consolidated
Total
|
Net
Earnings
|
|
|
|
$
|
138,529
|
|
Income
Taxes1
|
|
|
|
40,263
|
|
Earnings (Loss)
Before Income Taxes
|
$
|
167,267
|
|
$
|
18,658
|
|
$
|
(7,133)
|
|
178,792
|
|
Interest
Expense
|
6,874
|
|
3,773
|
|
2,600
|
|
13,247
|
|
Depreciation
|
5,996
|
|
45,030
|
|
596
|
|
51,622
|
|
Amortization
|
16,262
|
|
11,100
|
|
435
|
|
27,797
|
|
EBITDA
|
$
|
196,399
|
|
$
|
78,561
|
|
$
|
(3,502)
|
|
$
|
271,458
|
|
Restructuring
Expenses, Net
|
—
|
|
37,535
|
|
—
|
|
37,535
|
|
Acquisition
Transaction and Transition Costs
|
—
|
|
635
|
|
—
|
|
635
|
|
Adjusted
EBITDA
|
$
|
196,399
|
|
$
|
116,731
|
|
$
|
(3,502)
|
|
$
|
309,628
|
|
(1)
|
Taxes are calculated
on a consolidated basis and are not identifiable by Company
segments.
|
View original
content:http://www.prnewswire.com/news-releases/aarons-holdings-reports-record-third-quarter-revenues-and-earnings-301162268.html
SOURCE Aaron's, Inc.