ATLANTA, Oct. 26, 2021
/PRNewswire/ --
Third Quarter Financial Highlights
- Total Revenues of $452.2
Million, a 2.5% Increase
- Same Store Revenues Increased 4.6%; E-commerce Revenues
Increased 13.3%
- Net Income of $24.3 Million;
Adjusted EBITDA of $53.6
Million
- Diluted EPS of $0.73; Non-GAAP
Diluted EPS of $0.83
- Returned $37.5 Million to
Shareholders Through Share Repurchases
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-to-own and
purchase solutions, today announced financial results for the third
quarter ended September 30, 2021.
"I am pleased to announce that Aaron's third quarter results
exceeded our expectations as we continue to track ahead of our
long-term strategic plan. In the nearly one-year since our spin
transaction, we have strengthened Aaron's leadership position in
the direct-to-consumer lease-to-own market. Through continued
investments in our fast-growing e-commerce channel, predictive
lease decisioning engine and high-performing GenNext stores, we are
delivering a better customer experience, greater productivity and
long-term growth in our business.
"With strong third quarter results, we are again raising our
revenue and earnings outlook for the full year 2021. I am
encouraged by the continued year-over-year growth in our lease
portfolio and the robust inventory position we have built as we
enter the peak demand season," said Douglas
Lindsay, Chief Executive Officer of The Aaron's Company.
Results of Operations - Third Quarter 2021
For
the third quarter of 2021, total revenues were $452.2 million compared with $441.0 million for the third quarter of 2020, an
increase of 2.5%. The increase in revenues was primarily due to the
increasing size and quality of our lease portfolio, partially
offset by lower customer payment activity during the quarter and
the reduction of 79 franchised stores during the 15-month period
ended September 30, 2021. E-commerce
revenues were up 13.3% compared to the prior year quarter and
represented 14.3% of lease revenues compared to 13.1% in the prior
year quarter.
On a same store basis, lease and retail revenues increased 4.6%
in the third quarter compared to the prior year quarter. Same store
revenue growth was primarily driven by a larger same store lease
portfolio size to begin the quarter, partially offset by lower
customer payment activity as compared to the prior year.
Net earnings for the third quarter of 2021 were $24.3 million compared to $32.6 million in the prior year period. Net
earnings in the third quarter of 2021 included $2.9 million in pre-tax restructuring charges and
$0.4 million in pre-tax spin-related
separation charges. Net earnings in the third quarter of 2020
included $4.0 million in pre-tax
restructuring charges and $1.7
million in pre-tax spin-related separation and retirement
charges.
Adjusted EBITDA for the Company was $53.6
million for the third quarter of 2021, compared with
$64.3 million for the same period in
2020, a decrease of $10.7 million, or
16.6%. As a percentage of revenues, Adjusted EBITDA margin was
11.9% in the third quarter of 2021 compared with 14.6% for the same
period in 2020. The decline in Adjusted EBITDA and Adjusted EBITDA
margin was primarily due to the expected increase in lease
merchandise write-offs and lower customer payment activity compared
to the stimulus-aided levels in the third quarter of last year.
Diluted earnings per share for the third quarter of 2021 were
$0.73 compared with diluted earnings
per share of $0.96 in the year ago
same period. On a non-GAAP basis, diluted earnings per share
were $0.83 in the third quarter of 2021 compared with non-GAAP
diluted earnings per share of $1.10
for the same quarter in 2020.
During the third quarter, the Company repurchased 1,333,264
shares of Aaron's common stock for a total purchase price of
approximately $37.5 million. For the
year-to-date period through October 22,
2021, the Company repurchased 3,034,097 shares of Aaron's
common stock for a total purchase price of approximately
$90.4 million. As of October 22, 2021, the Company had approximately
$59.6 million remaining under its
$150 million share repurchase
program.
During the quarter, the Company's Board of Directors declared a
quarterly cash dividend of $0.10 per
share which was paid on October 5,
2021.
As of September 30, 2021, the company had no debt and total
available liquidity of $247.5
million, which includes $14.8
million of cash and $232.7
million of availability under the Company's existing
revolving credit facility.
Franchise Performance
Franchisee revenues
totaled $79.8 million for the three months ended September 30, 2021, a decrease of 21.2% from the
three months ended September 30, 2020
primarily due to a reduction in franchise locations. Same store
revenues for franchised stores increased 2.1% for the three months
ended September 30, 2021 compared
with the same quarter in 2020. Revenues and customers of
franchisees are not revenues and customers of the Company.
2021 Outlook
The Company has revised its full
year 2021 outlook. For the full year 2021, we increased our
expected total revenues to between $1.820
billion and $1.830 billion. We
also increased our expected Adjusted EBITDA to between $225 million and $230
million.
For the full year 2021 updated outlook, we have assumed an
effective tax rate for 2021 of approximately 26%, depreciation and
amortization of approximately $70
million, and a diluted weighted average share count of
approximately 34 million shares. We have lowered our 2021 annual
free cash flow outlook to between $30
million and $40 million
primarily as a result of incremental lease merchandise purchased
during the third quarter. This outlook assumes no significant
deterioration in the current retail environment, state of the U.S.
economy or global supply chain as compared to its current
condition.
|
Current
Outlook1
|
Previous
Outlook1
|
|
October 26,
2021
|
July 27,
2021
|
(In
thousands)
|
Low
|
High
|
Low
|
High
|
Total
Revenues
|
$
|
1,820,000
|
|
$
|
1,830,000
|
|
$
|
1,775,000
|
|
$
|
1,800,000
|
|
Adjusted
EBITDA2
|
225,000
|
|
230,000
|
|
215,000
|
|
225,000
|
|
Capital
Expenditures
|
90,000
|
|
100,000
|
|
90,000
|
|
100,000
|
|
Free Cash
Flow2
|
30,000
|
|
40,000
|
|
90,000
|
|
100,000
|
|
Annual Same Store
Revenues
|
7.5%
|
|
8.5%
|
|
6.0%
|
|
8.0%
|
|
|
1 See
the "Use of Non-GAAP Financial Information" section accompanying
this press release.
|
2 See
the "Reconciliation of 2021 Current Outlook" and "Reconciliation of
2021 Previous Outlook" sections accompanying this press
release.
|
The benefits to our customers from government stimulus programs
declined in the third quarter, and as expected, resulted in lower
customer payment activity as compared to the prior year. Over the
next three to four quarters, we expect customer payment activity to
remain above pre-pandemic levels but below that experienced in the
2021 year-to-date period.
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 periods subsequent to December 1, 2020 and through September 30,
2021 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
October 26, 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, omni-channel provider of
lease-to-own and purchase solutions. The Aaron's Company
engages in the sales and lease ownership and specialty retailing of
furniture, appliances, electronics, computers and a variety of
other products 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.
Forward-Looking Statements
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) any ongoing impact of the COVID-19 pandemic due to new
variants or efficacy and rate of vaccinations, as well as related
measures taken by governmental or regulatory authorities to combat
the pandemic, including the impact of federal vaccine mandates on
our workforce 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, (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 business; (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; (x) increases in lease merchandise write-offs, and the
potential limited duration and impact of stimulus and other
government payments made by Federal and State governments to
counteract the economic impact of the pandemic; (xi) the
availability and prices of supply chain resources, including
products and transportation; and (xii) 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.
|
Condensed
Consolidated and Combined Statements of Earnings
|
(In thousands,
except per share amounts)
|
|
|
|
(Unaudited)
Three Months
Ended
|
(Unaudited)
Nine Months
Ended
|
|
September
30,
|
September
30,
|
|
|
2021
|
2020
|
2021
|
2020
|
REVENUES:
|
|
|
|
|
|
Lease and Retail
Revenues
|
|
$
|
413,666
|
|
$
|
397,736
|
|
$
|
1,286,251
|
|
$
|
1,190,903
|
|
Non-Retail
Sales
|
|
32,159
|
|
34,820
|
|
94,563
|
|
94,710
|
|
Franchise Royalties
and Other Revenues
|
|
6,328
|
|
8,405
|
|
19,888
|
|
19,134
|
|
|
|
452,153
|
|
440,961
|
|
1,400,702
|
|
1,304,747
|
|
COST OF
REVENUES:
|
|
|
|
|
|
Cost of Lease and
Retail Revenues
|
|
138,448
|
|
132,288
|
|
433,149
|
|
412,009
|
|
Non-Retail Cost of
Sales
|
|
29,063
|
|
29,109
|
|
85,163
|
|
82,006
|
|
|
|
167,511
|
|
161,397
|
|
518,312
|
|
494,015
|
|
GROSS
PROFIT
|
|
284,642
|
|
279,564
|
|
882,390
|
|
810,732
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
Personnel
Expenses
|
|
122,901
|
|
117,764
|
|
369,190
|
|
351,905
|
|
Other Operating
Expenses, Net
|
|
105,428
|
|
105,364
|
|
327,840
|
|
322,422
|
|
Provision for Lease
Merchandise Write-Offs
|
|
19,799
|
|
9,305
|
|
45,333
|
|
47,478
|
|
Restructuring
Expenses, Net
|
|
2,899
|
|
4,041
|
|
8,134
|
|
33,318
|
|
Impairment of
Goodwill
|
|
—
|
|
—
|
|
—
|
|
446,893
|
|
Retirement
Charges
|
|
—
|
|
574
|
|
—
|
|
574
|
|
Separation
Costs
|
|
397
|
|
1,160
|
|
6,033
|
|
1,160
|
|
|
|
251,424
|
|
238,208
|
|
756,530
|
|
1,203,750
|
|
OPERATING PROFIT
(LOSS)
|
|
33,218
|
|
41,356
|
|
125,860
|
|
(393,018)
|
|
Interest
Expense
|
|
(322)
|
|
(1,973)
|
|
(1,117)
|
|
(8,625)
|
|
Other Non-Operating
(Expense) Income, Net
|
|
(88)
|
|
698
|
|
1,058
|
|
887
|
|
EARNINGS (LOSS)
BEFORE INCOME TAX EXPENSE
(BENEFIT)
|
|
32,808
|
|
40,081
|
|
125,801
|
|
(400,756)
|
|
INCOME TAX EXPENSE
(BENEFIT)
|
|
8,460
|
|
7,468
|
|
32,155
|
|
(131,969)
|
|
NET EARNINGS
(LOSS)
|
|
$
|
24,348
|
|
$
|
32,613
|
|
$
|
93,646
|
|
$
|
(268,787)
|
|
|
|
|
|
|
|
EARNINGS (LOSS)
PER SHARE
|
|
$
|
0.75
|
|
$
|
0.96
|
|
$
|
2.79
|
|
$
|
(7.94)
|
|
EARNINGS (LOSS)
PER SHARE ASSUMING
DILUTION
|
|
$
|
0.73
|
|
$
|
0.96
|
|
$
|
2.74
|
|
$
|
(7.94)
|
|
WEIGHTED AVERAGE
SHARES OUTSTANDING
|
|
32,485
|
|
33,842
|
|
33,513
|
|
33,842
|
|
WEIGHTED AVERAGE
SHARES OUTSTANDING
ASSUMING DILUTION
|
|
33,188
|
|
33,842
|
|
34,216
|
|
33,842
|
|
THE AARON'S
COMPANY, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
|
|
(Unaudited)
|
|
|
|
September 30,
2021
|
|
December 31,
2020
|
ASSETS:
|
|
|
|
Cash and Cash
Equivalents
|
$
|
14,846
|
|
|
$
|
76,123
|
|
Accounts Receivable
(net of allowances of $6,343 at September 30, 2021 and
$7,613 at December 31, 2020)
|
30,316
|
|
|
33,990
|
|
Lease Merchandise (net
of accumulated depreciation and allowances of
$446,806 at September 30, 2021 and $458,405 at December 31,
2020)
|
775,012
|
|
|
697,235
|
|
Property, Plant and
Equipment, Net
|
214,375
|
|
|
200,370
|
|
Operating Lease
Right-of-Use Assets
|
257,496
|
|
|
238,085
|
|
Goodwill
|
13,162
|
|
|
7,569
|
|
Other Intangibles,
Net
|
5,681
|
|
|
9,097
|
|
Income Tax
Receivable
|
3,620
|
|
|
1,093
|
|
Prepaid Expenses and
Other Assets
|
101,904
|
|
|
89,895
|
|
Total
Assets
|
$
|
1,416,412
|
|
|
$
|
1,353,457
|
|
LIABILITIES & SHAREHOLDERS'
EQUITY:
|
|
|
|
Accounts Payable and
Accrued Expenses
|
$
|
259,204
|
|
|
$
|
230,848
|
|
Deferred Income Taxes
Payable
|
88,567
|
|
|
62,601
|
|
Customer Deposits and
Advance Payments
|
55,361
|
|
|
68,894
|
|
Operating Lease
Liabilities
|
291,750
|
|
|
278,958
|
|
Debt
|
—
|
|
|
831
|
|
Total
Liabilities
|
694,882
|
|
|
642,132
|
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
Common Stock, Par
Value $0.50 Per Share: Authorized: 112,500,000 Shares at
September 30, 2021 and December 31, 2020; Shares Issued: 35,525,922
at
September 30, 2021 and 35,099,571 at December 31, 2020
|
17,763
|
|
|
17,550
|
|
Additional Paid-in
Capital
|
720,194
|
|
|
708,668
|
|
Retained
Earnings
|
85,421
|
|
|
1,881
|
|
Accumulated Other
Comprehensive Loss
|
(704)
|
|
|
(797)
|
|
|
822,674
|
|
|
727,302
|
|
Less: Treasury Shares
at Cost
|
|
|
|
3,760,052 Shares
at September 30, 2021 and 894,660 at December 31, 2020
|
(101,144)
|
|
|
(15,977)
|
|
Total Shareholders'
Equity
|
721,530
|
|
|
711,325
|
|
Total
Liabilities & Shareholders' Equity
|
$
|
1,416,412
|
|
|
$
|
1,353,457
|
|
THE AARON'S
COMPANY, INC.
|
CONDENSED
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
Nine Months
Ended
September
30,
|
(In
Thousands)
|
2021
|
|
2020
|
OPERATING
ACTIVITIES:
|
|
|
|
Net Earnings
(Loss)
|
$
|
93,646
|
|
|
$
|
(268,787)
|
|
Adjustments to
Reconcile Net Earnings (Loss) to Net Cash Provided by
Operating Activities:
|
|
|
|
Depreciation of Lease
Merchandise
|
397,701
|
|
|
382,956
|
|
Other Depreciation and
Amortization
|
51,729
|
|
|
50,699
|
|
Provision for Lease
Merchandise Write-Offs
|
45,333
|
|
|
47,478
|
|
Accounts Receivable
Provision
|
18,840
|
|
|
22,089
|
|
Stock-Based
Compensation
|
9,863
|
|
|
9,324
|
|
Deferred Income
Taxes
|
25,966
|
|
|
(83,278)
|
|
Impairment of
Assets
|
3,937
|
|
|
469,783
|
|
Non-Cash Lease
Expense
|
69,205
|
|
|
72,231
|
|
Other Changes,
Net
|
(3,851)
|
|
|
1,398
|
|
Changes in Operating
Assets and Liabilities:
|
|
|
|
Lease
Merchandise
|
(519,139)
|
|
|
(309,745)
|
|
Accounts
Receivable
|
(15,511)
|
|
|
(17,409)
|
|
Prepaid Expenses and
Other Assets
|
(15,151)
|
|
|
5,552
|
|
Income Tax
Receivable
|
(2,527)
|
|
|
636
|
|
Operating Lease
Right-of-Use Assets and Liabilities
|
(78,641)
|
|
|
(81,240)
|
|
Accounts Payable and
Accrued Expenses
|
22,917
|
|
|
33,745
|
|
Customer Deposits and
Advance Payments
|
(13,923)
|
|
|
1,806
|
|
Cash Provided by
Operating Activities
|
90,394
|
|
|
337,238
|
|
INVESTING
ACTIVITIES:
|
|
|
|
Insurance Proceeds
relating to Property, Plant and Equipment
|
373
|
|
|
—
|
|
Proceeds from
Investments
|
1,974
|
|
|
—
|
|
Purchases of Property,
Plant & Equipment
|
(67,456)
|
|
|
(45,704)
|
|
Proceeds from
Dispositions of Property, Plant, and Equipment
|
10,330
|
|
|
3,815
|
|
Acquisitions of
Businesses and Customer Agreements, Net of Cash Acquired
|
(6,934)
|
|
|
(2,875)
|
|
Proceeds from
Dispositions of Businesses and Customer Agreements, Net of Cash
Disposed
|
158
|
|
|
358
|
|
Cash Used in
Investing Activities
|
(61,555)
|
|
|
(44,406)
|
|
FINANCING
ACTIVITIES:
|
|
|
|
Proceeds from
Debt
|
—
|
|
|
5,625
|
|
Repayments on
Debt
|
(740)
|
|
|
(61,515)
|
|
Dividends
Paid
|
(6,770)
|
|
|
—
|
|
Acquisition of
Treasury Stock
|
(81,740)
|
|
|
—
|
|
Issuance of Stock
Under Stock Option Plans
|
1,876
|
|
|
—
|
|
Shares Withheld for
Tax Payments
|
(2,729)
|
|
|
—
|
|
Net Transfers From
Former Parent
|
—
|
|
|
148,189
|
|
Debt Issuance
Costs
|
—
|
|
|
(1,020)
|
|
Cash (Used in)
Provided by Financing Activities
|
(90,103)
|
|
|
91,279
|
|
Effect of Exchange
Rate Changes on Cash and Cash Equivalents
|
(13)
|
|
|
(22)
|
|
(Decrease) Increase in
Cash and Cash Equivalents
|
(61,277)
|
|
|
384,089
|
|
Cash and Cash
Equivalents at Beginning of Period
|
76,123
|
|
|
48,773
|
|
Cash and Cash
Equivalents at End of Period
|
$
|
14,846
|
|
|
$
|
432,862
|
|
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 2021 exclude certain charges including amortization
expense resulting from franchisee acquisitions, restructuring
charges, and separation costs associated with the separation and
distribution transaction that resulted in our spin-off into a
separate publicly-traded company. Non-GAAP net earnings and
non-GAAP diluted earnings per share for 2020 exclude certain
charges including amortization expense resulting from franchisee
acquisitions, early termination charges incurred to terminate a
sales and marketing agreement, goodwill impairment charges,
restructuring charges, separation and retirement costs associated
with the separation and distribution transaction that resulted in
our spin-off into a separate publicly-traded company, and an income
tax benefit resulting from the revaluation of a net operating loss
carryback. 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 Earnings (Loss) Before Income Taxes and Earnings
(Loss) Per Share Assuming Dilution to Non-GAAP Net Earnings and
Non-GAAP 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. Adjusted EBITDA margin
is defined as EBITDA as a percentage of revenue. 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.
The Free Cash Flow figures presented in this press release are
calculated as the Company's cash flows provided by operating
activities less capital expenditures. Management believes that Free
Cash Flow is an important measure of liquidity provides relevant
and useful information, and are widely used by analysts, investors
and competitors in our industry as well as by our management in
assessing liquidity.
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, the
Company's GAAP revenues and earnings before income taxes and GAAP
cash from operating activities, 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 Free Cash Flow 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
Earnings (Loss) Before Income Taxes and Earnings (Loss) Per Share
Assuming Dilution to Non-GAAP Net Earnings and Non-GAAP Earnings
Per Share Assuming Dilution
|
(In thousands,
except per share)
|
|
|
(Unaudited)
Three Months
Ended
|
|
(Unaudited)
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2021
|
2020
|
|
2021
|
2020
|
Earnings (Loss)
Before Income Taxes
|
$
|
32,808
|
|
$
|
40,081
|
|
|
$
|
125,801
|
|
$
|
(400,756)
|
|
Add:
Franchisee-Related Intangible Amortization Expense
|
1,035
|
|
1,465
|
|
|
3,970
|
|
4,484
|
|
Add: Restructuring
Expenses, net
|
2,899
|
|
4,041
|
|
|
8,134
|
|
33,318
|
|
Add: Sales and
Marketing Early Contract Termination Fees
|
—
|
|
—
|
|
|
—
|
|
14,663
|
|
Add: Separation
Costs
|
397
|
|
1,160
|
|
|
6,033
|
|
1,160
|
|
Add: Impairment of
Goodwill
|
—
|
|
—
|
|
|
—
|
|
446,893
|
|
Add: Retirement
Charges
|
—
|
|
574
|
|
|
—
|
|
574
|
|
Non-GAAP Earnings
Before Income Taxes
|
37,139
|
|
47,321
|
|
|
143,938
|
|
100,336
|
|
|
|
|
|
|
|
Income taxes,
calculated using a non-GAAP Effective Tax Rate
|
9,577
|
|
10,184
|
|
$
|
36,791
|
|
$
|
25,044
|
|
Non-GAAP Net
Earnings
|
$
|
27,562
|
|
$
|
37,137
|
|
|
$
|
107,147
|
|
$
|
75,292
|
|
|
|
|
|
|
|
NOL Carryback
Revaluation(1)
|
—
|
|
—
|
|
|
—
|
|
(34,191)
|
|
|
|
|
|
|
|
Earnings (Loss) Per
Share Assuming Dilution
|
$
|
0.73
|
|
$
|
0.96
|
|
|
$
|
2.74
|
|
$
|
(7.94)
|
|
Add:
Franchisee-Related Intangible Amortization Expense
|
0.03
|
|
0.04
|
|
|
0.12
|
|
0.13
|
|
Add: Restructuring
Expenses, net
|
0.09
|
|
0.12
|
|
|
0.24
|
|
0.98
|
|
Add: Sales and
Marketing Early Contract Termination Fees
|
—
|
|
—
|
|
|
—
|
|
0.43
|
|
Add: Separation
Costs
|
0.01
|
|
0.03
|
|
|
0.18
|
|
0.03
|
|
Add: Impairment of
Goodwill
|
—
|
|
—
|
|
|
—
|
|
13.21
|
|
Add: Retirement
Charges
|
—
|
|
0.02
|
|
|
—
|
|
0.02
|
|
Less: NOL Carryback
Revaluation(1)
|
—
|
|
—
|
|
|
—
|
|
(1.01)
|
|
Tax Effect of Non-GAAP
adjustments
|
$
|
(0.03)
|
|
$
|
(0.08)
|
|
|
$
|
(0.14)
|
|
$
|
(3.63)
|
|
Non-GAAP Earnings Per
Share Assuming Dilution(2)
|
$
|
0.83
|
|
$
|
1.10
|
|
|
$
|
3.13
|
|
$
|
2.22
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding Assuming Dilution
|
33,188
|
|
33,842
|
|
|
34,216
|
|
33,842
|
|
|
|
(1)
|
This Non-GAAP
adjustment directly impacted income tax benefit during the nine
months ended September 30, 2020. While the inclusion of this
adjustment is not necessary to reconcile from Non-GAAP earnings
before income taxes to Non-GAAP net earnings in the above table, it
is necessary to reconcile from losses per share assuming dilution
(based on GAAP net earnings) to Non-GAAP earnings per share
assuming dilution for the nine months ended September 30,
2020.
|
(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
|
|
Nine Months
Ended
|
|
September 30,
2021
|
|
September 30,
2020
|
|
September 30,
2021
|
|
September 30,
2020
|
Net Earnings
(Loss)
|
$
|
24,348
|
|
|
$
|
32,613
|
|
|
$
|
93,646
|
|
|
$
|
(268,787)
|
|
Income
Taxes
|
8,460
|
|
|
7,468
|
|
|
32,155
|
|
|
(131,969)
|
|
Earnings (Loss)
Before Income Taxes
|
$
|
32,808
|
|
|
$
|
40,081
|
|
|
$
|
125,801
|
|
|
$
|
(400,756)
|
|
Interest
Expense
|
322
|
|
|
1,973
|
|
|
1,117
|
|
|
8,625
|
|
Depreciation
|
15,980
|
|
|
14,823
|
|
|
47,244
|
|
|
45,585
|
|
Amortization
|
1,202
|
|
|
1,640
|
|
|
4,485
|
|
|
5,114
|
|
EBITDA
|
$
|
50,312
|
|
|
$
|
58,517
|
|
|
$
|
178,647
|
|
|
$
|
(341,432)
|
|
Sales and Marketing
Early Contract
Termination Fees
|
—
|
|
|
—
|
|
|
—
|
|
|
14,663
|
|
Separation
Costs
|
397
|
|
|
1,160
|
|
|
6,033
|
|
|
1,160
|
|
Restructuring
Expenses, net
|
2,899
|
|
|
4,041
|
|
|
8,134
|
|
|
33,318
|
|
Impairment of
Goodwill
|
—
|
|
|
—
|
|
|
—
|
|
|
446,893
|
|
Retirement
Charges
|
—
|
|
|
574
|
|
|
—
|
|
|
574
|
|
Adjusted
EBITDA
|
$
|
53,608
|
|
|
$
|
64,292
|
|
|
$
|
192,814
|
|
|
$
|
155,176
|
|
Reconciliation of
2021 Current Outlook for Adjusted EBITDA
|
(In
thousands)
|
|
|
Fiscal Year 2021
Ranges
|
|
Consolidated
Total
|
Estimated Net
Earnings
|
$104,000 -
$107,000
|
Income
Taxes
|
36,000 -
38,000
|
Projected Earnings
Before Income Taxes
|
140,000 -
145,000
|
Interest
Expense
|
1,000
|
Depreciation and
Amortization
|
70,000
|
Projected
EBITDA
|
$211,000 -
$216,000
|
Projected Other
Adjustments, Net1
|
14,000
|
Projected Adjusted
EBITDA
|
$225,000 -
$230,000
|
|
1 Projected Other Adjustments include
non-GAAP charges related to restructuring charges and separation
costs associated with the separation and distribution transaction
that resulted in our spin-off into a separate publicly-traded
company.
|
Reconciliation of
2021 Current Outlook for Free Cash Flow
|
(In
thousands)
|
|
|
Fiscal Year 2021
Ranges
|
|
Consolidated
Total
|
Cash Provided by
Operating Activities
|
$120,000 -
$140,000
|
Capital
Expenditures
|
90,000 -
100,000
|
Free Cash
Flow
|
$30,000 -
$40,000
|
Reconciliation of
2021 Previous Outlook for Adjusted EBITDA
|
(In
thousands)
|
|
|
Fiscal Year 2021
Ranges
|
|
Consolidated
Total
|
Estimated Net
Earnings
|
$100,000 -
$104,000
|
Income
Taxes
|
35,000 -
36,000
|
Projected Earnings
Before Income Taxes
|
135,000 -
140,000
|
Interest
Expense
|
1,000
|
Depreciation and
Amortization
|
70,000 -
75,000
|
Projected
EBITDA
|
$206,000 -
$216,000
|
Projected Other
Adjustments, Net1
|
9,000
|
Projected Adjusted
EBITDA
|
$215,000 -
$225,000
|
|
1 Projected Other Adjustments include
non-GAAP charges related to restructuring charges and separation
costs associated with the separation and distribution transaction
that resulted in our spin-off into a separate publicly-traded
company.
|
Reconciliation of
2021 Previous Outlook for Free Cash Flow
|
(In
thousands)
|
|
|
Fiscal Year 2021
Ranges
|
|
Consolidated
Total
|
Cash Provided by
Operating Activities
|
$180,000 -
$200,000
|
Capital
Expenditures
|
90,000 -
100,000
|
Free Cash
Flow
|
$90,000 -
$100,000
|
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SOURCE The Aaron's Company, Inc.