UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report:
(Date of earliest event reported)
July 21, 2014
RENT-A-CENTER, INC.
(Exact name of registrant as specified in charter)
Delaware | 0-25370 | 45-0491516 |
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (IRS Employer Identification No.) |
5501 Headquarters Drive
Plano, Texas 75024
(Address of principal executive offices and zip code)
(972) 801-1100
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425). |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12). |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)). |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)). |
Item 2.02 Results of Operations and Financial Condition.
Attached hereto as Exhibit 99.1 is the Registrant's press release reflecting earnings information for the quarter ended June 30, 2014.
The press release contains information regarding EBITDA (earnings before interest, taxes, depreciation and amortization), which is a non-GAAP financial measure as defined in Item 10(e) of Regulation S-K. The press release also contains a reconciliation of EBITDA to the Registrant's reported earnings before income taxes. Management of the Registrant believes that presentation of EBITDA is useful to investors, as among other things, this information impacts certain financial covenants under the Registrant's senior credit facilities and the indentures governing its 6.625% senior unsecured notes due November 2020 and its 4.75% senior unsecured notes due May 2021. While management believes this non-GAAP financial measure is useful in evaluating the Registrant, this information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Further, the non-GAAP financial measure may differ from similar measures presented by other companies.
Pursuant to General Instruction B.2. of Form 8-K, all of the information contained in this Form 8-K and the accompanying exhibit shall be deemed to be "furnished" and not "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and, therefore, shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit 99.1 Press Release, dated July 21, 2014.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
RENT-A-CENTER, INC. | |||||
Date: | July 21, 2014 | By: | /s/ Robert D. Davis | ||
Robert D. Davis | |||||
Chief Executive Officer | |||||
3
EXHIBIT INDEX
Exhibit No. | Description | |
99.1 | Press release, dated July 21, 2014 | |
Exhibit 99.1
For Immediate Release:
RENT-A-CENTER, INC. REPORTS
SECOND QUARTER 2014 RESULTS
Total Revenues Increased 1.7%
Revenue Increased Over 32% in Acceptance Now and Over 56% in Mexico
Diluted Earnings per Share of $0.33, Including a Restructuring Charge of Approximately $0.05 per Diluted Share Related to Store Consolidation Plan
______________________________________________
Plano, Texas, July 21, 2014 — Rent-A-Center, Inc. (the "Company") (NASDAQ/NGS: RCII), the nation's largest rent-to-own operator, today announced results for the quarter ended June 30, 2014.
Second Quarter 2014 Results
Total revenues were $773.2 million, an increase of $12.7 million from total revenues of $760.5 million for the same period in the prior year. This 1.7% increase in total revenues was primarily due to increases of approximately $38.3 million in the Acceptance Now segment and approximately $6.4 million in the Mexico segment, partially offset by a decrease of approximately $30.4 million in the Core U.S. segment.
Same store sales increased 0.6% as compared to the same period in the prior year, primarily attributable to increases of 25.1% and 17.0% in the Acceptance Now and Mexico segments, respectively, partially offset by a 4.7% decrease in the Core U.S. segment.
Net earnings and net earnings per diluted share were $17.5 million and $0.33, respectively, as compared to $41.9 million and $0.76, respectively, for the same period in the prior year. Net earnings and net earnings per diluted share for the quarter ended June 30, 2014 were reduced by a $4.4 million pre-tax restructuring charge, and approximately $0.05 per diluted share, respectively, related to the consolidation of 150 stores into existing Core U.S. stores as discussed below.
Adjusted net earnings per diluted share were $0.38, when excluding the pre-tax restructuring charge, as compared to net earnings per diluted share of $0.76 for the same period in the prior year. These results include dilution related to the Mexico segment of approximately $0.08 per diluted share in the current quarter and $0.07 per diluted share for the same period in the prior year.
“As announced on July 10, we faced a difficult retail environment in the second quarter, not unlike many retailers that serve a similar demographic. As a result, revenue and earnings for the second quarter 2014 did not meet expectations,” said Robert D. Davis, the Chief Executive Officer of Rent-A-Center, Inc.
“We acknowledge the challenging retail environment is not a justification for our financial results, but rather an opportunity to better serve our customers and improve our operating performance. We believe we are up to this challenge. To that end, we have rolled out an exciting new product - smartphones and no-contract airtime plans - this month in substantially all of our Core U.S. stores. In addition, we are in the midst of executing on our transformative strategic initiatives outlined at our investor day and look forward to updating you on our progress during tomorrow’s conference call,” Mr. Davis concluded.
Six Months Ended June 30, 2014 Results
Total revenues were $1,607.0 million, an increase of $27.2 million from total revenues of $1,579.8 million in the same period in the prior year. This 1.7% increase in total revenues was primarily due to increases of approximately $85.3 million in the Acceptance Now segment and approximately $12.8 million in the Mexico segment, partially offset by a decrease of approximately $68.1 million in the Core U.S. segment.
Same store sales decreased 0.2% as compared to the same period in the prior year, primarily attributable to a 5.5% decrease in the Core U.S. segment, partially offset by increases of 25.6% and 18.5% in the Acceptance Now and Mexico segments, respectively.
Net earnings and net earnings per diluted share were $46.4 million and $0.87, respectively, as compared to $88.0 million and $1.55, respectively, in the same period in the prior year.
Net earnings and net earnings per diluted share for the six months ended June 30, 2014, were impacted by the following significant items, as discussed below:
• | A $4.4 million pre-tax restructuring charge, and approximately $0.05 per diluted share, respectively, related to the consolidation of 150 stores into existing Core U.S. stores; and |
• | A $1.9 million pre-tax financing charge, and approximately $0.03 per diluted share, respectively, to write off unamortized financing costs from the previous credit agreement. |
Collectively, these items reduced net earnings per diluted share by approximately $0.08.
Adjusted net earnings per diluted share were $0.95, when excluding the items above, as compared to net earnings per diluted share of $1.55 for the same period in the prior year. These results include dilution related to the Mexico segment of approximately $0.15 per diluted share in the current six-month period and $0.12 per diluted share for the same period in the prior year.
For the six months ended June 30, 2014, the Company generated cash flow from operations of approximately $69.0 million, while ending the quarter with approximately $68.1 million of cash on hand. The Company will pay its 17th consecutive quarterly cash dividend on July 24, 2014.
2014 Guidance
• | 2.5% to 4.0% total revenue growth for 2014. |
◦ | 2.0% to 3.0% for Q3'14. |
• | 1.5% to 2.5% same store sales growth for 2014. |
◦ | 2.0% to 3.0% for Q3'14. |
▪ | (3.5%) to (4.5%) for Core U.S. segment in Q3'14. |
▪ | 25% to 30% for Acceptance Now segment in Q3'14. |
▪ | 15% to 20% for Mexico segment in Q3'14. |
• | EBITDA in the range of $300 to $310 million for 2014. |
• | Annual effective tax rate in the range of 37% to 38% for 2014. |
◦ | 33% to 34% for Q3'14. |
• | Diluted earnings per share in the range of $2.00 to $2.15 for 2014, including approximately $0.25 per share dilution related to Mexico. |
◦ | $0.43 to $0.51 for Q3'14. |
• | Capital expenditures of approximately $95 million. |
• | The Company expects to open approximately 190 domestic Acceptance Now kiosks. |
• | The Company expects to open approximately 30 rent-to-own store locations in Mexico, all of which were opened in the six months ended June 30, 2014. |
• | The 2014 guidance does not include the potential impact of any repurchases of common stock the Company may make, changes in future dividends, material changes in outstanding indebtedness, or the potential impact of acquisitions, dispositions or store closures that may be completed or occur after July 21, 2014. |
"We believe the macro-environment will continue to be challenging in the back half of the year and as a result expect soft customer demand in our Core U.S. segment to persist," said Mr. Davis. "We are excited about the smartphone rollout in the third quarter; however, we believe the impact to our third quarter results will be minimal and expect our diluted earnings per share to be similar to the third quarter of 2013. We believe the smartphone sales trend will accelerate, providing a significant impact in the fourth quarter and giving us confidence in our ability to achieve our updated annual diluted earnings per share guidance," Mr. Davis concluded.
2014 Significant Items
Restructuring Charge. During the second quarter of 2014, the Company closed 150 Core U.S. stores and merged those accounts into existing Core U.S. stores as part of a multi-year program to improve profitability in the Core U.S. segment. The decision to close these stores was based on management's analysis and evaluation of the markets in which the Company operates, including market share, operating results, competitive positioning and growth potential for the affected stores. The store closures resulted in a pre-tax restructuring charge of $4.4 million during the second quarter of 2014. This charge included approximately $3.2 million of accelerated depreciation expense for fixed assets, leasehold improvements and write-off of merchandise inventory, $0.9 million in early lease termination costs and $0.3 million of other operating costs to decommission the stores. This restructuring charge reduced net earnings per diluted share by approximately $0.05 in both the three-month and six-month periods ended June 30, 2014.
We have not recorded a liability for future lease obligations on these properties as the fair value of the liability at the cease-use date was reduced to zero by estimated sublease rentals that could be obtained for the properties. Accordingly, future lease obligations of approximately $4.4 million that remain as of June 30, 2014, will either be expensed monthly as paid or recognized in full upon negotiation of early termination. Approximately $1.8 million of these remaining lease obligations are scheduled to be paid in the second half of 2014, and substantially all the remainder are scheduled to be paid out through 2016.
Senior Credit Facility Financing Charge. During the first quarter of 2014, the Company recorded a pre-tax charge of approximately $1.9 million to write off unamortized financing costs from the previous credit agreement closed in July 2011. This financing charge reduced net earnings per diluted share by approximately $0.03 for the six-month period ended June 30, 2014.
------------------
Rent-A-Center, Inc. will host a conference call to discuss the second quarter results, guidance and other operational matters on Tuesday morning, July 22, 2014, at 10:45 a.m. ET. For a live webcast of the call, visit http://investor.rentacenter.com. Certain financial and other statistical information that will be discussed during the conference call will also be provided on the same website.
Rent-A-Center, Inc., headquartered in Plano, Texas, is the largest rent-to-own operator in North America, focused on improving the quality of life for its customers by providing them the opportunity to obtain ownership of high-quality, durable products such as consumer electronics, appliances, computers, furniture and accessories, under flexible rental purchase agreements with no long-term obligation. The Company owns and operates approximately 3,025 stores in the United States, Mexico, Canada and Puerto Rico, and approximately 1,360 Acceptance Now kiosk locations in the United States and Puerto Rico. Rent-A-Center Franchising International, Inc., a wholly owned subsidiary of the Company, is a national franchiser of approximately 180 rent-to-own stores operating under the trade names of "Rent-A-Center", "ColorTyme", and "RimTyme". For additional information about the Company, please visit our website at www.rentacenter.com.
This press release and the guidance above contain forward-looking statements that involve risks and uncertainties. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "could," "estimate," "should," "anticipate," or "believe," or the negative thereof or variations thereon or similar terminology. The Company believes that the expectations reflected in such forward-looking statements are accurate. However, there can be no assurance that such expectations will occur. The Company's actual future performance could differ materially from such statements. Factors that could cause or contribute to such differences include, but are not limited to: the general strength of the economy and other economic conditions affecting consumer preferences and spending; economic pressures, such as high fuel costs, affecting the disposable income available to the Company's current and potential customers; changes in the unemployment rate; difficulties encountered in improving the financial performance of the Core U.S. segment; the Company’s ability to develop and successfully execute the competencies and capabilities which are the focus of the Company’s multi-year program designed to transform and modernize the Company’s operations; costs associated with the Company's multi-year program designed to transform and modernize the Company’s operations; the Company’s ability to successfully market smartphones and related services to its customers; the Company's ability to develop and successfully implement digital electronic commerce capabilities; the Company's ability to retain the revenue from customer accounts merged into another store location as a result of the store consolidation plan; the Company's ability to execute and the effectiveness of the store consolidation; rapid inflation or deflation in prices of the Company's products; the Company's available cash flow; the Company's ability to identify and successfully market products and services that appeal to its customer demographic; consumer preferences and perceptions of the Company's brand; uncertainties regarding the ability to open new locations; the Company's ability to acquire additional stores or customer accounts on favorable terms; the Company's ability to control costs and increase profitability; the Company's ability to enhance the performance of acquired stores; the Company's ability to retain the revenue associated with acquired customer accounts; the Company's ability to enter into new and collect on its rental or lease purchase agreements; the passage of legislation adversely affecting the rent-to-own industry; the Company's compliance with applicable statutes or regulations governing its transactions; changes in interest rates; adverse changes in the economic conditions of the industries, countries or markets that the Company serves; information technology and data security costs; the Company's ability to protect the integrity and security of individually identifiable data of its customers and employees; the impact of any breaches in data security or other disturbances to the Company's information technology and other networks; changes in the Company's stock price, the number of shares of common stock that it may or may not repurchase, and future dividends, if any; changes in estimates relating to self-insurance liabilities and income tax and litigation reserves; changes in the Company's effective tax rate; fluctuations in foreign currency exchange rates; the Company's ability to maintain an effective system of internal controls; the resolution of the Company's litigation; and the other risks detailed from time to time in the Company's SEC reports, including but not limited to, its annual report on Form 10-K for the year ended December 31, 2013, and its quarterly report on Form 10-Q for the quarter ended March 31, 2014. 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 is not obligated to publicly release any revisions to these forward-looking statements to reflect the events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
Contact for Rent-A-Center, Inc.:
David E. Carpenter
Vice President of Investor Relations
(972) 801-1214
david.carpenter@rentacenter.com
Rent-A-Center, Inc. and Subsidiaries
STATEMENT OF EARNINGS HIGHLIGHTS
(Unaudited)
(In thousands, except per share data) | Three Months Ended June 30, | |||||||||||||
2014 | 2014 | 2013 (2) | ||||||||||||
Before | After | After | ||||||||||||
Significant Items | Significant Items | Significant Items | ||||||||||||
(Non-GAAP | (GAAP | (GAAP | ||||||||||||
Earnings) | Earnings) | Earnings) | ||||||||||||
Total Revenues | $ | 773,217 | $ | 773,217 | $ | 760,511 | ||||||||
Operating Profit | 44,536 | 40,159 | 77,230 | |||||||||||
Net Earnings | 20,216 | (1) | 17,533 | 41,876 | ||||||||||
Diluted Earnings per Common Share | $ | 0.38 | (1) | $ | 0.33 | $ | 0.76 | |||||||
Adjusted EBITDA | $ | 65,164 | $ | 65,164 | $ | 97,155 | ||||||||
Reconciliation to Adjusted EBITDA: | ||||||||||||||
Earnings Before Income Taxes | $ | 32,985 | (1) | $ | 28,608 | $ | 67,557 | |||||||
Add back: | ||||||||||||||
Restructuring charge | — | 4,377 | — | |||||||||||
Finance charges from refinancing | — | — | — | |||||||||||
Interest Expense, net | 11,551 | 11,551 | 9,673 | |||||||||||
Depreciation of Property Assets | 18,583 | 18,583 | 18,760 | |||||||||||
Amortization and Write-down of Intangibles | 2,045 | 2,045 | 1,165 | |||||||||||
Adjusted EBITDA | $ | 65,164 | $ | 65,164 | $ | 97,155 | ||||||||
(1) Excludes the effects of a $4.4 million pre-tax restructuring charge related to the consolidation of 150 stores as discussed above. This charge reduced net earnings and net earnings per diluted share for the quarter ended June 30, 2014, by approximately $2.7 million and $0.05, respectively.
(2) As discussed in our Annual Report on Form 10-K for the year ended December 31, 2013, we identified errors in accounting for our estimates for rental merchandise reserves and for the allowance for doubtful accounts, resulting in an immaterial overstatement of on rent merchandise and understatements of held for rent merchandise and receivables which affected periods through December 31, 2013. We increased (decreased) previously reported salaries and other expenses, operating profit, income tax expense and net earnings by $0.2 million, $(0.2) million, $(0.1) million and $(0.1) million in our historical financial statement highlights and financial statements for the three-month period ended June 30, 2013, reported herein.
(In thousands, except per share data) | Six Months Ended June 30, | |||||||||||||
2014 | 2014 | 2013 (4) | ||||||||||||
Before | After | After | ||||||||||||
Significant Items | Significant Items | Significant Items | ||||||||||||
(Non-GAAP | (GAAP | (GAAP | ||||||||||||
Earnings) | Earnings) | Earnings) | ||||||||||||
Total Revenues | $ | 1,606,963 | $ | 1,606,963 | $ | 1,579,792 | ||||||||
Operating Profit | 104,299 | 99,922 | 156,014 | |||||||||||
Net Earnings | 50,287 | (3) | 46,390 | 88,009 | ||||||||||
Diluted Earnings per Common Share | $ | 0.95 | (3) | $ | 0.87 | $ | 1.55 | |||||||
Adjusted EBITDA | $ | 144,813 | $ | 144,813 | $ | 195,302 | ||||||||
Reconciliation to Adjusted EBITDA: | ||||||||||||||
Earnings Before Income Taxes | $ | 81,583 | (3) | $ | 75,260 | $ | 138,633 | |||||||
Add back: | ||||||||||||||
Restructuring charge | — | 4,377 | — | |||||||||||
Finance charges from refinancing | — | 1,946 | — | |||||||||||
Interest Expense, net | 22,716 | 22,716 | 17,381 | |||||||||||
Depreciation of Property Assets | 37,722 | 37,722 | 37,233 | |||||||||||
Amortization and Write-down of Intangibles | 2,792 | 2,792 | 2,055 | |||||||||||
Adjusted EBITDA | $ | 144,813 | $ | 144,813 | $ | 195,302 | ||||||||
(3) Excludes the effects of a $4.4 million pre-tax restructuring charge in the second quarter related to the consolidation of 150 stores as discussed above, and the effects of a $1.9 million pre-tax charge in the first quarter to write off unamortized financing costs from the previous credit agreement closed in July 2011. These charges reduced net earnings and net earnings per diluted share for the six months ended June 30, 2014, by approximately $3.9 million and $0.08, respectively.
(4) As discussed in our Annual Report on Form 10-K for the year ended December 31, 2013, we identified errors in accounting for our estimates for rental merchandise reserves and for the allowance for doubtful accounts, resulting in an immaterial overstatement of on rent merchandise and understatements of held for rent merchandise and receivables which affected periods through December 31, 2013. We increased (decreased) previously reported salaries and other expenses, operating profit, income tax expense and net earnings by $0.7 million, $(0.7) million, $(0.3) million and $(0.4) million in our historical financial statement highlights and financial statements for the six-month period ended June 30, 2013, reported herein. We also increased (decreased) previously reported accounts receivable, on rent rental merchandise inventory, held for rent rental merchandise, total assets, total liabilities and stockholders' equity by $4.3 million, $(15.5) million, $1.2 million, $(10.0) million, $(3.8) million and $(6.2) million, respectively, at June 30, 2013.
(In thousands of dollars) | June 30, | |||||||||
2014 | 2013 (4) | |||||||||
Cash and Cash Equivalents | $ | 68,068 | $ | 78,491 | ||||||
Receivables, net | 59,520 | 52,627 | ||||||||
Prepaid Expenses and Other Assets | 75,063 | 70,441 | ||||||||
Rental Merchandise, net | ||||||||||
On Rent | 855,821 | 833,725 | ||||||||
Held for Rent | 247,375 | 219,485 | ||||||||
Total Assets | $ | 3,017,760 | $ | 2,930,459 | ||||||
Senior Debt | $ | 393,238 | $ | 323,775 | ||||||
Senior Notes | 550,000 | 550,000 | ||||||||
Total Liabilities | 1,647,118 | 1,610,457 | ||||||||
Stockholders' Equity | $ | 1,370,642 | $ | 1,320,002 | ||||||
Rent-A-Center, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In thousands, except per share data) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2014 | 2013 (2) | 2014 | 2013 (4) | ||||||||||||
Revenues | |||||||||||||||
Store | |||||||||||||||
Rentals and fees | $ | 684,134 | $ | 668,947 | $ | 1,378,302 | $ | 1,342,551 | |||||||
Merchandise sales | 59,610 | 59,790 | 167,671 | 173,363 | |||||||||||
Installment sales | 18,054 | 17,537 | 36,410 | 34,664 | |||||||||||
Other | 3,734 | 5,001 | 7,992 | 9,761 | |||||||||||
Franchise | |||||||||||||||
Merchandise sales | 5,963 | 7,843 | 13,287 | 16,676 | |||||||||||
Royalty income and fees | 1,722 | 1,393 | 3,301 | 2,777 | |||||||||||
773,217 | 760,511 | 1,606,963 | 1,579,792 | ||||||||||||
Cost of revenues | |||||||||||||||
Store | |||||||||||||||
Cost of rentals and fees | 177,512 | 168,928 | 355,382 | 336,847 | |||||||||||
Cost of merchandise sold | 47,113 | 47,260 | 126,730 | 133,559 | |||||||||||
Cost of installment sales | 6,358 | 6,189 | 12,740 | 12,158 | |||||||||||
Franchise cost of merchandise sold | 5,737 | 7,514 | 12,737 | 15,930 | |||||||||||
236,720 | 229,891 | 507,589 | 498,494 | ||||||||||||
Gross profit | 536,497 | 530,620 | 1,099,374 | 1,081,298 | |||||||||||
Operating expenses | |||||||||||||||
Salaries and other expenses | 443,799 | 413,865 | 901,429 | 846,056 | |||||||||||
General and administrative expenses | 46,117 | 38,360 | 90,854 | 77,173 | |||||||||||
Amortization and write-down of intangibles | 2,045 | 1,165 | 2,792 | 2,055 | |||||||||||
Restructuring charge | 4,377 | — | 4,377 | — | |||||||||||
496,338 | 453,390 | 999,452 | 925,284 | ||||||||||||
Operating profit | 40,159 | 77,230 | 99,922 | 156,014 | |||||||||||
Finance charges from refinancing | — | — | 1,946 | — | |||||||||||
Interest expense | 11,796 | 9,856 | 23,197 | 17,857 | |||||||||||
Interest income | (245 | ) | (183 | ) | (481 | ) | (476 | ) | |||||||
Earnings before income taxes | 28,608 | 67,557 | 75,260 | 138,633 | |||||||||||
Income tax expense | 11,075 | 25,681 | 28,870 | 50,624 | |||||||||||
NET EARNINGS | $ | 17,533 | $ | 41,876 | $ | 46,390 | $ | 88,009 | |||||||
Basic weighted average shares | 52,824 | 54,885 | 52,809 | 56,416 | |||||||||||
Basic earnings per common share | $ | 0.33 | $ | 0.76 | $ | 0.88 | $ | 1.56 | |||||||
Diluted weighted average shares | 53,074 | 55,253 | 53,047 | 56,794 | |||||||||||
Diluted earnings per common share | $ | 0.33 | $ | 0.76 | $ | 0.87 | $ | 1.55 | |||||||
Rent-A-Center, Inc. and Subsidiaries
SEGMENT INFORMATION HIGHLIGHTS
(Unaudited)
On January 1, 2014, the Company realigned its reporting structure to include its 18 Canadian stores in the Core U.S. segment, which were previously reported in the International segment. The accompanying prior-year amounts and store counts have been revised to reflect this change, and we now refer to the segment formerly reported as "International" as "Mexico" since only that country's results are reported therein.
(In thousands of dollars) | Three Months Ended June 30, 2014 | ||||||||||||||||||
Core U.S. | Acceptance Now | Mexico | Franchising | Total | |||||||||||||||
Revenue | $ | 592,040 | $ | 155,797 | $ | 17,695 | $ | 7,685 | $ | 773,217 | |||||||||
Gross profit | 431,920 | 89,876 | 12,753 | 1,948 | 536,497 | ||||||||||||||
Operating profit (loss) | 28,161 | 18,399 | (6,818 | ) | 417 | 40,159 | |||||||||||||
Depreciation of property assets | 17,884 | 1,426 | 1,788 | 51 | 21,149 | ||||||||||||||
Amortization and write-down of intangibles | 1,903 | 142 | — | — | 2,045 | ||||||||||||||
Capital expenditures | 13,685 | 3,073 | 1,584 | — | 18,342 | ||||||||||||||
(In thousands of dollars) | Three Months Ended June 30, 2013 | ||||||||||||||||||
Core U.S. | Acceptance Now | Mexico | Franchising | Total (2) | |||||||||||||||
Revenue | $ | 622,469 | $ | 117,493 | $ | 11,313 | $ | 9,236 | $ | 760,511 | |||||||||
Gross profit | 451,920 | 68,770 | 8,208 | 1,722 | 530,620 | ||||||||||||||
Operating profit (loss) | 65,656 | 17,394 | (6,362 | ) | 542 | 77,230 | |||||||||||||
Depreciation of property assets | 16,203 | 1,162 | 1,375 | 20 | 18,760 | ||||||||||||||
Amortization and write-down of intangibles | 1,023 | 142 | — | — | 1,165 | ||||||||||||||
Capital expenditures | 20,191 | 2,262 | 2,731 | — | 25,184 | ||||||||||||||
(In thousands of dollars) | Six Months Ended June 30, 2014 | ||||||||||||||||||
Core U.S. | Acceptance Now | Mexico | Franchising | Total | |||||||||||||||
Revenue | $ | 1,226,803 | $ | 330,004 | $ | 33,568 | $ | 16,588 | $ | 1,606,963 | |||||||||
Gross profit | 888,509 | 182,783 | 24,231 | 3,851 | 1,099,374 | ||||||||||||||
Operating profit (loss) | 72,018 | 39,976 | (13,095 | ) | 1,023 | 99,922 | |||||||||||||
Depreciation of property assets | 33,921 | 2,850 | 3,431 | 86 | 40,288 | ||||||||||||||
Amortization and write-down of intangibles | 2,508 | 284 | — | — | 2,792 | ||||||||||||||
Capital expenditures | 31,721 | 5,857 | 3,872 | — | 41,450 | ||||||||||||||
Rental merchandise, net | |||||||||||||||||||
On rent | 538,222 | 296,133 | 21,466 | — | 855,821 | ||||||||||||||
Held for rent | 227,118 | 8,139 | 12,118 | — | 247,375 | ||||||||||||||
Total assets | 2,545,380 | 396,158 | 74,361 | 1,861 | 3,017,760 | ||||||||||||||
(In thousands of dollars) | Six Months Ended June 30, 2013 | ||||||||||||||||||
Core U.S. | Acceptance Now | Mexico | Franchising | Total (4) | |||||||||||||||
Revenue | $ | 1,294,877 | $ | 244,656 | $ | 20,806 | $ | 19,453 | $ | 1,579,792 | |||||||||
Gross profit | 926,992 | 135,877 | 14,906 | 3,523 | 1,081,298 | ||||||||||||||
Operating profit (loss) | 132,734 | 33,044 | (11,009 | ) | 1,245 | 156,014 | |||||||||||||
Depreciation of property assets | 32,377 | 2,251 | 2,565 | 40 | 37,233 | ||||||||||||||
Amortization and write-down of intangibles | 1,770 | 285 | — | — | 2,055 | ||||||||||||||
Capital expenditures | 35,243 | 4,202 | 5,376 | — | 44,821 | ||||||||||||||
Rental merchandise, net | |||||||||||||||||||
On rent | 581,363 | 240,010 | 12,352 | — | 833,725 | ||||||||||||||
Held for rent | 209,091 | 3,506 | 6,888 | — | 219,485 | ||||||||||||||
Total assets | 2,542,102 | 328,644 | 58,104 | 1,609 | 2,930,459 | ||||||||||||||
SAME STORE SALES
(Unaudited)
2014 | 2013 | |||||||||||||||||||||||
Period | Core U.S. | Acceptance Now | Mexico | Total | Core U.S. | Acceptance Now | Mexico | Total | ||||||||||||||||
Three months ended March 31, | (6.1 | )% | 26.1 | % | 20.3 | % | (0.8 | )% | (8.7 | )% | 33.8 | % | 80.0 | % | (4.3 | )% | ||||||||
Three months ended June 30, | (4.7 | )% | 25.1 | % | 17.0 | % | 0.6 | % | (5.8 | )% | 32.0 | % | 61.3 | % | (1.6 | )% | ||||||||
Six months ended June 30, | (5.5 | )% | 25.6 | % | 18.5 | % | (0.2 | )% | (7.3 | )% | 32.9 | % | 69.3 | % | (3.0 | )% | ||||||||
Rent-A-Center, Inc. and Subsidiaries
LOCATION ACTIVITY
(Unaudited)
Location Activity - Three Months Ended June 30, 2014 | ||||||||||||||
Core U.S. | Acceptance Now | Mexico | Franchising | Total | ||||||||||
Locations at beginning of period | 2,997 | 1,355 | 173 | 178 | 4,703 | |||||||||
New location openings | 2 | 25 | 8 | 8 | 43 | |||||||||
Acquired locations remaining open | 1 | — | — | — | 1 | |||||||||
Closed locations | ||||||||||||||
Merged with existing locations | 144 | 21 | 5 | — | 170 | |||||||||
Sold or closed with no surviving location | 9 | — | — | 6 | 15 | |||||||||
Locations at end of period | 2,847 | 1,359 | 176 | 180 | 4,562 | |||||||||
Acquired locations closed and accounts merged with existing locations | 6 | — | — | — | 6 | |||||||||
Location Activity - Three Months Ended June 30, 2013 | ||||||||||||||
Core U.S. | Acceptance Now | Mexico | Franchising | Total | ||||||||||
Locations at beginning of period | 3,001 | 1,053 | 110 | 224 | 4,388 | |||||||||
New location openings | 2 | 110 | 20 | 2 | 134 | |||||||||
Acquired locations remaining open | 3 | — | — | — | 3 | |||||||||
Closed locations | ||||||||||||||
Merged with existing locations | 14 | 10 | — | — | 24 | |||||||||
Sold or closed with no surviving location | 2 | — | — | 5 | 7 | |||||||||
Locations at end of period | 2,990 | 1,153 | 130 | 221 | 4,494 | |||||||||
Acquired locations closed and accounts merged with existing locations | 9 | — | — | — | 9 | |||||||||
Location Activity - Six Months Ended June 30, 2014 | ||||||||||||||
Core U.S. | Acceptance Now | Mexico | Franchising | Total | ||||||||||
Locations at beginning of period | 3,010 | 1,325 | 151 | 179 | 4,665 | |||||||||
New location openings | 8 | 85 | 30 | 9 | 132 | |||||||||
Acquired locations remaining open | 1 | — | — | — | 1 | |||||||||
Closed locations | ||||||||||||||
Merged with existing locations | 163 | 50 | 5 | — | 218 | |||||||||
Sold or closed with no surviving location | 9 | 1 | — | 8 | 18 | |||||||||
Locations at end of period | 2,847 | 1,359 | 176 | 180 | 4,562 | |||||||||
Acquired locations closed and accounts merged with existing locations | 6 | — | — | — | 6 | |||||||||
Location Activity - Six Months Ended June 30, 2013 | ||||||||||||||
Core U.S. | Acceptance Now | Mexico | Franchising | Total | ||||||||||
Locations at beginning of period | 3,008 | 966 | 90 | 224 | 4,288 | |||||||||
New location openings | 9 | 208 | 40 | 5 | 262 | |||||||||
Acquired locations remaining open | 6 | — | — | — | 6 | |||||||||
Closed locations | ||||||||||||||
Merged with existing locations | 30 | 21 | — | — | 51 | |||||||||
Sold or closed with no surviving location | 3 | — | — | 8 | 11 | |||||||||
Locations at end of period | 2,990 | 1,153 | 130 | 221 | 4,494 | |||||||||
Acquired locations closed and accounts merged with existing locations | 13 | — | — | — | 13 | |||||||||