Rent-A-Center, Inc. Reports Third Quarter 2012 Results

  Rent-A-Center, Inc. Reports Third Quarter 2012 Results

                        Total Revenues Increased 5.0%

                       Same Store Sales Increased 1.2%

                     Diluted Earnings per Share of $0.67

        Board Increases Stock Repurchase Authorization by $200 million

Business Wire

PLANO, Texas -- October 22, 2012

Rent-A-Center, Inc. (the "Company") (NASDAQ/NGS: RCII), the nation's largest
rent-to-own operator, today announced revenues and earnings for the quarter
ended September30, 2012.

Third Quarter 2012 Results

Total revenues for the quarter ended September30, 2012, were $739.3 million,
an increase of $35.0 million from total revenues of $704.3 million for the
same period in the prior year. This 5.0% increase in total revenues was
primarily due to growth in the RAC Acceptance segment. For the quarter ended
September30, 2012, the same store sales increase of 1.2% was primarily
attributable to growth in the RAC Acceptance segment, partially offset by a
decrease in the Core U.S. segment.

Net earnings and net earnings per diluted share for the three months ended
September 30, 2012, were $39.9 million and $0.67, respectively, as compared to
$31.2 million and $0.52, respectively, for the same period in the prior year.
Net earnings and net earnings per diluted share for the three months ended
September 30, 2011, were reduced by $7.6 million, and approximately $0.08 per
share, respectively, due to a pre-tax restructuring charge related to store
closings, as discussed below.

Net earnings per diluted share for the three months ended September 30, 2012,
were $0.67, as compared to adjusted net earnings per diluted share of $0.60,
when excluding the pre-tax restructuring charge above, for the three months
ended September 30, 2011, an increase of 11.7%. These results include dilution
related to the Company's international growth initiatives of approximately
$0.10 per share for the three months ended September 30, 2012, and $0.04 per
share for the same period in the prior year.

“We are generally pleased with our results in the quarter, as total revenues
increased 5% and earnings per diluted share increased approximately 12%,” said
Mark E. Speese, the Company's Chairman and Chief Executive Officer. “The RAC
Acceptance segment continued to perform commendably, growing revenue over 60%
from a year ago to $84 million, with a gross margin of 59.3% and an operating
profit of over $7 million and ending the quarter with 882 stores,” Speese
continued. “For the first nine months of the year, each of our business
segments has grown their revenue and all segments combined grew 8.4% and, with
the exception of our international segment, have contributed to our
year-to-date earnings per diluted share of $2.28. As such, we remain
optimistic in achieving our 2012 total revenue and earnings per diluted share
guidance outlined in our 2011 fourth quarter earnings press release,” Speese
concluded.

Nine Months Ended September30, 2012 Results

Total revenues for the nine months ended September 30, 2012, were $2.324
billion, an increase of $179.6 million from total revenues of $2.145 billion
for the same period in the prior year. This 8.4% increase in total revenues
was primarily due to growth in the RAC Acceptance segment as well as growth in
both the Core U.S. and International segments. Same store sales for the nine
months ended September 30, 2012, increased 2.8%.

Net earnings and net earnings per diluted share for the nine months ended
September 30, 2012, were $136.0 million and $2.28, respectively, as compared
to $115.3 million and $1.84, respectively, for the same period in the prior
year.

Net earnings and net earnings per diluted share for the nine months ended
September 30, 2011, were impacted by the following significant items, as
discussed below:

  *A $7.6 million pre-tax restructuring charge, or approximately $0.08 per
    share, related to store closings;
  *A $4.9 million pre-tax restructuring charge, or approximately $0.05 per
    share, related to the acquisition of The Rental Store, Inc.;
  *A $7.3 million pre-tax impairment charge, or approximately $0.07 per
    share, related to the discontinuation of the financial services business;
    and
  *A $2.8 million pre-tax litigation expense, or approximately $0.03 per
    share, related to the settlement of wage and hour claims in California.

Collectively, these items reduced net earnings per diluted share by
approximately $0.23 for the nine months ended September 30, 2011.

Net earnings per diluted share for the nine months ended September 30, 2012,
were $2.28, as compared to adjusted net earnings per diluted share for the
nine months ended September 30, 2011, of $2.07 when excluding the items above,
an increase of 10.1%. These results include dilution related to the Company's
international growth initiatives of approximately $0.25 per share for the nine
months ended September 30, 2012, and $0.08 per share for the same period in
the prior year.

The Company also announced today that its Board of Directors has increased the
authorization for stock repurchases under the Company's common stock
repurchase plan from $800 million to $1 billion. Under the Company's common
stock repurchase plan, shares may, from time to time, be repurchased in the
open market or in privately negotiated transactions at amounts considered
appropriate by the Company. To date, the Company has repurchased a total of
30,189,738 shares for an aggregate purchase price of approximately $745.6
million since the inception of the plan. During the nine months ended
September 30, 2012, the Company repurchased 866,985 shares for approximately
$30.1 million in cash.

Through the nine months ended September 30, 2012, the Company generated cash
flow from operations of approximately $258.7 million, while ending the quarter
with approximately $81.8 million of cash on hand. Also, reflecting continued
confidence in its strong cash flows by returning cash to stockholders, the
Company will pay its tenth consecutive quarterly cash dividend on October24,
2012.

2012 Guidance

The Company began presenting segmented financial information commencing with
its Annual Report on Form 10-K for the year ended December31, 2011.
Accordingly, quarterly segmented operating results were initiated with the
quarter ended March31, 2012. The Company is committed to high levels of
disclosure and transparency with respect to its operating segments.

In addition, the Company made certain changes to its guidance practices.
Beginning with the fourth quarter 2011 earnings press release, the Company
began providing annual guidance with quarterly updates on the metrics below.
The Company will no longer provide quarterly earnings per share guidance;
however, the Company has made available on its web site
(investor.rentacenter.com) a range of the percentage contribution to full year
diluted earnings per share by quarter based on historical results since 2009.
In future years, the Company will provide its initial annual guidance for the
following fiscal year with the fourth quarter earnings press release. We
believe these changes in guidance practice will allow management to focus on
the Company's long-term performance and the execution of our strategic plan as
communicated in November 2010.

2012 Guidance

  *7.0% to 8.5% total revenue growth.

       *Low single digit growth in the Core U.S.
       *Over $325 million contribution from RAC Acceptance.

  *Approximately 2.0% same store sales growth.

       *The fourth quarter same store sales growth is expected to be
         approximately 2.0%.

  *Approximately 175 basis points gross profit margin decrease.
  *Approximately 50 basis points operating profit margin decrease.
  *Diluted earnings per share in the range of $3.05 to $3.15, including
    approximately $0.30 per share dilution related to our international growth
    initiatives, which now includes corporate allocations consistent with our
    segment reporting.
  *Capital expenditures of approximately $105 million.
  *The Company expects to open approximately 35 domestic rent-to-own store
    locations.
  *The Company expects to open approximately 300 domestic RAC Acceptance
    kiosks.
  *The Company expects to open approximately 40 rent-to-own store locations
    in Mexico.
  *The Company expects to open 6 rent-to-own store locations in Canada.
  *The 2012 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 October 22, 2012.

2011 Significant Items

Restructuring Charges. As previously reported, the Company recorded a $7.6
million pre-tax restructuring charge during the third quarter of 2011 related
to lease terminations, fixed asset disposals and other miscellaneous items in
connection with the closure of eight Home Choice stores in Illinois and 24 RAC
Limited locations within third party grocery stores, all of which had been
operated on a test basis, as well as the closure of 26 core rent-to-own stores
following the sale of all customer accounts at those locations. This pre-tax
restructuring charge of $7.6 million reduced net earnings per diluted share by
approximately $0.08 in both the three month and nine month periods ended
September 30, 2011.

Also previously reported, the Company recorded a $4.9 million pre-tax
restructuring charge during the second quarter of 2011 related to
post-acquisition lease terminations in connection with the December 2010
acquisition of The Rental Store, Inc. For the nine months ended September 30,
2011, this pre-tax restructuring charge of $4.9 million reduced net earnings
per diluted share by approximately $0.05.

Financial Services Charge. As previously reported, the Company recorded a
pre-tax impairment charge of $7.3 million during the first quarter of 2011
related primarily to loan write-downs, fixed asset disposals (store
reconstruction) and other miscellaneous items in connection with the
discontinuation of the financial services business. For the nine months ended
September30, 2011, this pre-tax impairment charge of $7.3 million reduced net
earnings per diluted share by approximately $0.07.

Settlement of Wage& Hour Claims in California. As previously reported, the
Company recorded a $2.8 million pre-tax litigation expense during the first
quarter of 2011 in connection with the settlement of certain putative class
actions pending in California alleging various claims, including violations of
California wage and hour laws. For the nine months ended September30, 2011,
this pre-tax litigation expense of $2.8 million reduced net earnings per
diluted share by approximately $0.03.

Rent-A-Center, Inc. will host a conference call to discuss the third quarter
results, guidance and other operational matters on Tuesday morning,
October23, 2012, 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 goods 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 3,100 stores in the United States, Canada, Mexico and Puerto
Rico, and approximately 880 RAC Acceptance kiosk locations in the United
States and Puerto Rico. ColorTyme, Inc., a wholly owned subsidiary of the
Company, is a national franchiser of approximately 220 rent-to-own stores
operating under the trade name of "ColorTyme." For additional information
about the Company, please visit 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. Although the Company believes that the expectations
reflected in such forward-looking statements will prove to be correct, the
Company can give no assurance that such expectations will prove to have been
correct. The actual future performance of the Company could differ materially
from such statements. Factors that could cause or contribute to such
differences include, but are not limited to: 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 identify
and successfully market products and services that appeal to its customer
demographic; 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 failure to comply with applicable
statutes or regulations governing its transactions; changes in interest rates;
changes in the unemployment rate; economic pressures, such as high fuel costs,
affecting the disposable income available to the Company's current and
potential customers; the general strength of the economy and other economic
conditions affecting consumer preferences and spending; 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; information security costs; the Company's ability to maintain an
effective system of internal controls; changes in the number of share-based
compensation grants, methods used to value future share-based payments and
changes in estimated forfeiture rates with respect to share-based
compensation; 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 December31,
2011 and its quarterly reports on Form 10-Q for the quarters ended March31,
2012 and June 30, 2012 . 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.

Rent-A-Center, Inc. and Subsidiaries

STATEMENT OF EARNINGS HIGHLIGHTS
                            
                              Three Months Ended September 30,
                              2012          2011          2011
                              After           Before          After
                              Significant     Significant     Significant
                              Items           Items           Items
                              (GAAP           (Non-GAAP       (GAAP
(In thousands of dollars,     Earnings)       Earnings)       Earnings)
except per share data)
Total Revenues                $  739,314      $  704,271      $  704,271
Operating Profit                 68,113          65,382          57,796   ^(1)
Net Earnings                     39,910          36,033          31,224   ^(1)
Diluted Earnings per Common   $  0.67         $  0.60         $  0.52     ^(1)
Share
Adjusted EBITDA               $  88,972       $  82,750       $  82,750
Reconciliation to Adjusted
EBITDA:
Earnings Before Income        $  60,184       $  56,662       $  49,076
Taxes
Add back:
Restructuring Charge             —               —               7,586
Interest Expense, net            7,929           8,720           8,720
Depreciation of Property         18,412          16,107          16,107
Assets
Amortization and Write-down     2,447          1,261          1,261
of Intangibles
Adjusted EBITDA               $  88,972       $  82,750       $  82,750
                                                                          

                 Nine Months Ended September 30,
                  2012            2011           2011
                  After             Before           After
                  Significant       Significant      Significant
                  Items             Items            Items
                  (GAAP             (Non-GAAP        (GAAP
(In thousands
of dollars,       Earnings)         Earnings)        Earnings)
except per
share data)
Total Revenues    $  2,324,266      $  2,144,702     $ 2,144,702
Operating            239,174           234,006         211,367   ^(1)(2)(3)(4)
Profit
Net Earnings         136,033           129,559         115,342   ^(1)(2)(3)(4)
Diluted
Earnings per      $  2.28           $  2.07          $ 1.84      ^(1)(2)(3)(4)
Common Share
Adjusted EBITDA   $  299,181        $  285,195       $ 285,195
Reconciliation
to Adjusted
EBITDA:
Earnings Before   $  214,228        $  206,304       $ 183,665
Income Taxes
Add back:
Restructuring        —                 —               12,519
Charge
Impairment           —                 —               7,320
Charge
Litigation           —                 —               2,800
Expense
Interest             24,946            27,702          27,702
Expense, net
Depreciation of      54,744            47,938          47,938
Property Assets
Amortization
and Write-down      5,263            3,251          3,251
of Intangibles
Adjusted EBITDA   $  299,181        $  285,195       $ 285,195

^(1) Includes the effects of a $7.6 million pre-tax restructuring charge in
the third quarter of 2011 related to the closure of eight Home Choice stores
in Illinois and 24 RAC Limited locations within third party grocery stores, as
well as the closure of 26 core rent-to-own stores following the sale of all
customer accounts at these locations. The charge reduced net earnings per
diluted share by approximately $0.08 for the three and nine month periods
ended September 30, 2011.

^(2) Includes the effects of a $4.9 million pre-tax restructuring charge in
the second quarter of 2011 for lease terminations related to The Rental Store
acquisition. The charge reduced net earnings per diluted share by
approximately $0.05 for the nine month period ended September 30, 2011.

^(3) Includes the effects of a $7.3 million pre-tax impairment charge in the
first quarter of 2011 related to the discontinuation of the financial services
business. The charge reduced net earnings per diluted share by approximately
$0.07 for the nine month period ended September 30, 2011.

^(4) Includes the effects of a $2.8 million pre-tax litigation expense in the
first quarter of 2011 related to the settlement of wage and hour claims in
California. The charge reduced net earnings per diluted share by approximately
$0.03 for the nine month period ended September 30, 2011.

                                  
SELECTED BALANCE SHEET HIGHLIGHTS
                                    
                                    September 30,
(In thousands of dollars)           2012          2011
Cash and Cash Equivalents           $ 81,800        $ 76,025
Receivables, net                      44,284          43,441
Prepaid Expenses and Other Assets     71,914          65,366
Rental Merchandise, net
On Rent                               733,724         689,975
Held for Rent                         214,158         187,342
Total Assets                        $ 2,799,915     $ 2,666,517
                                                
Senior Debt                         $ 293,300       $ 388,340
Senior Notes                          300,000         300,000
Total Liabilities                     1,339,117       1,347,147
Stockholders' Equity                $ 1,460,798     $ 1,319,370
                                                      

                                              
Rent-A-Center, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS
                                                   
                 Three Months Ended                Nine Months Ended September 30,
                 September 30,
                 2012          2011              2012            2011
(In thousands,
except per       Unaudited                         Unaudited
share data)
Revenues
Store
Rentals and      $ 652,059       $ 622,474         $ 1,989,027       $ 1,850,698
fees
Merchandise        58,854          52,802            242,335           203,041
sales
Installment        15,560          16,348            49,225            49,606
sales
Other              2,811           4,147             12,280            13,629
Franchise
Merchandise        8,697           7,250             27,332            23,921
sales
Royalty income    1,333         1,250           4,067           3,807     
and fees
                   739,314         704,271           2,324,266         2,144,702
Cost of
revenues
Store
Cost of
rentals and        158,805         142,796           481,954           417,740
fees
Cost of
merchandise        47,497          43,170            192,038           151,259
sold
Cost of
installment        5,376           5,655             17,402            17,601
sales
Franchise cost
of merchandise    8,295         6,926           26,141          22,875    
sold
                   219,973         198,547           717,535           609,475
Gross profit       519,341         505,724           1,606,731         1,535,227
Operating
expenses
Salaries and       412,567         405,633           1,255,405         1,197,922
other expenses
General and
administrative     36,214          33,448            106,889           100,048
expenses
Amortization
and write-down     2,447           1,261             5,263             3,251
of intangibles
Restructuring      —               7,586             —                 12,519
charge
Impairment         —               —                 —                 7,320
charge
Litigation        —             —               —               2,800     
expense
                   451,228         447,928           1,367,557         1,323,860
Operating          68,113          57,796            239,174           211,367
profit
Interest           8,096           8,811             25,416            28,184
expense
Interest          (167    )      (91     )        (470      )      (482      )
income
Earnings
before income      60,184          49,076            214,228           183,665
taxes
Income tax        20,274        17,852          78,195          68,323    
expense
NET EARNINGS     $ 39,910       $ 31,224         $ 136,033        $ 115,342   
                                                                     
Basic weighted    58,882        60,030          59,098          61,944    
average shares
                                                                     
Basic earnings
per common       $ 0.68         $ 0.52           $ 2.30           $ 1.86      
share
                                                                     
Diluted
weighted          59,312        60,504          59,609          62,648    
average shares
                                                                     
Diluted
earnings per     $ 0.67         $ 0.52           $ 2.28           $ 1.84      
common share
                                                                                 

             
Rent-A-Center, Inc. and Subsidiaries

SEGMENT INFORMATION HIGHLIGHTS
               
(In
thousands of   Three Months Ended September 30, 2012
dollars)
               Core U.S.     RAC           International   ColorTyme   Total
                               Acceptance
Revenue        $ 634,575       $ 83,838        $  10,871         $  10,030     $ 739,314
Gross profit     460,353         49,737           7,516             1,735        519,341
Operating        69,544          7,259            (9,046   )        356          68,113
profit
Depreciation
of property      15,981          936              1,475             20           18,412
assets
Amortization
and
write-down       583             897              967               —            2,447
of
intangibles
Capital          22,056          1,191            1,536             —            24,783
expenditures
               
               
(In
thousands of   Three Months Ended September 30, 2011
dollars)
               Core U.S.       RAC             International     ColorTyme     Total
                               Acceptance
Revenue        $ 639,806       $ 51,310        $  4,655          $  8,500      $ 704,271
Gross profit     470,185         30,717           3,248             1,574        505,724
Operating        63,590          (3,356  )        (3,342   )        904          57,796
profit
Depreciation
of property      14,890          595              595               27           16,107
assets
Amortization
and
write-down       365             896              —                 —            1,261
of
intangibles
Capital          28,901          1,643            2,219             —            32,763
expenditures
               
               
(In
thousands of   Nine Months Ended September 30, 2012
dollars)
               Core U.S.       RAC             International     ColorTyme     Total
                               Acceptance
Revenue        $ 2,016,761     $ 248,626       $  27,480         $  31,399     $ 2,324,266
Gross profit     1,444,824       137,524          19,125            5,258        1,606,731
Operating        244,215         17,024           (23,617  )        1,552        239,174
profit
Depreciation
of property      47,689          2,620            4,366             69           54,744
assets
Amortization
and
write-down       1,606           2,690            967               —            5,263
of
intangibles
Capital          59,089          3,582            10,432            —            73,103
expenditures
Rental
merchandise,
net
On rent          534,812         184,372          14,540            —            733,724
Held for         204,235         3,099            6,824             —            214,158
rent
Total assets     2,464,875       265,496          67,907            1,637        2,799,915
               
               
(In
thousands of   Nine Months Ended September 30, 2011
dollars)
               Core U.S.       RAC             International     ColorTyme     Total
                               Acceptance
Revenue        $ 1,973,465     $ 130,615       $  12,894         $  27,728     $ 2,144,702
Gross profit     1,443,518       77,761           9,095             4,853        1,535,227
Operating        228,206         (11,482 )        (7,721   )        2,364        211,367
profit
Depreciation
of property      44,942          1,520            1,370             106          47,938
assets
Amortization
and
write-down       565             2,686            —                 —            3,251
of
intangibles
Capital          77,168          4,362            10,449            —            91,979
expenditures
Rental
merchandise,
net
On rent          565,186         118,995          5,794             —            689,975
Held for         181,592         1,846            3,904             —            187,342
rent
Total assets     2,437,063       197,485          29,196            2,773        2,666,517
                                                                                 

            
              Location Activity - Three Months Ended September 30, 2012
              Core     RAC           International   ColorTyme   Total
              U.S.       Acceptance
Locations
at            2,973      811             99                219           4,102
beginning
of period
New
location      11         100             16                5             132
openings
Acquired
locations     2          —               —                 —             2
remaining
open
Closed
locations
Merged with
existing      2          29              1                 —             32
locations
Sold or
closed with
no            1          —               —                 4             5
surviving
location
Locations
at end of     2,983      882             114               220           4,199
period
Acquired
locations
closed and
accounts      9          —               —                 —             9
merged with
existing
locations
              
              
              Location Activity - Three Months Ended September 30, 2011
              Core       RAC             International     ColorTyme     Total
              U.S.       Acceptance
Locations
at            2,989      611             33                210           3,843
beginning
of period
New
location      16         120             11                5             152
openings
Acquired
locations     5          2               —                 —             7
remaining
open
Closed
locations
Merged with
existing      16         3               —                 —             19
locations
Sold or
closed with
no            36         9               —                 2             47
surviving
location
Locations
at end of     2,958      721             44                213           3,936
period
Acquired
locations
closed and
accounts      23         —               —                 —             23
merged with
existing
locations
              
              
              Location Activity - Nine Months Ended September 30, 2012
              Core       RAC             International     ColorTyme     Total
              U.S.       Acceptance
Locations
at            2,994      750             80                216           4,040
beginning
of period
New
location      23         222             36                11            292
openings
Acquired
locations     2          —               —                 —             2
remaining
open
Closed
locations
Merged with
existing      31         76              1                 —             108
locations
Sold or
closed with
no            5          14              1                 7             27
surviving
location
Locations
at end of     2,983      882             114               220           4,199
period
Acquired
locations
closed and
accounts      15         —               —                 —             15
merged with
existing
locations
              
              
              Location Activity - Nine Months Ended September 30, 2011
              Core       RAC             International     ColorTyme     Total
              U.S.       Acceptance
Locations
at            2,985      384             23                209           3,601
beginning
of period
New
location      31         359             21                8             419
openings
Acquired
locations     5          5               —                 2             12
remaining
open
Closed
locations
Merged with
existing      24         9               —                 6             39
locations
Sold or
closed with
no            39         18              —                 —             57
surviving
location
Locations
at end of     2,958      721             44                213           3,936
period
Acquired
locations
closed and
accounts      29         —               —                 —             29
merged with
existing
locations

Contact:

Rent-A-Center, Inc.
David E. Carpenter, 972-801-1214
Vice President of Investor Relations
david.carpenter@rentacenter.com