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Rent-A-Center, Inc. Reports First Quarter 2013 Results



  Rent-A-Center, Inc. Reports First Quarter 2013 Results

                     Diluted Earnings per Share of $0.80

                   RAC Acceptance Revenues Increased 45.0%

               Cash Flow from Operations Exceeded $113 Million

           Repurchased Approximately 465,000 Shares of Common Stock

Business Wire

PLANO, Texas -- April 22, 2013

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 March 31, 2013.

First Quarter 2013 Results

Total revenues for the quarter ended March 31, 2013, were $819.3 million, a
decrease of $16.0 million from total revenues of $835.3 million for the same
period in the prior year. This 1.9% decrease in total revenues was primarily
due to a decrease of approximately $58.0 million in the Core U.S. segment,
partially offset by an increase of approximately $39.0 million in the RAC
Acceptance segment and approximately $5.0 million in the International
segment. For the quarter ended March 31, 2013, same store sales declined 4.3%,
primarily attributable to a decrease in the Core U.S. segment, partially
offset by an increase in both the RAC Acceptance and International segments.

Net earnings and net earnings per diluted share for the quarter ended March
31, 2013, were $46.5 million and $0.80, respectively, as compared to $51.9
million and $0.87, respectively, for the same period in the prior year. These
results include dilution related to the Company's international growth
initiatives of approximately $0.06 per share for the quarter ended March 31,
2013, and approximately $0.07 per share for the same period in the prior year.

“I am very pleased with the progress being made in our growth initiatives,”
said Mark E. Speese, the Company's Chairman and Chief Executive Officer. “RAC
Acceptance revenues were over $127 million in the quarter, an increase of 45%
and now represents close to 16% of our total revenues and 20% of our total
operating profit. Mexico grew revenues over 150% in the quarter and added 20
locations, ending the quarter with 110 stores,” Speese continued. “Our Core
U.S. business faced macro headwinds in the quarter. In addition to our
portfolio of agreements in our Core U.S. business being down year-over-year
going into the first quarter, we believe our Core U.S. business was negatively
impacted by the delayed issuance of federal income tax refunds, rising fuel
prices and higher payroll taxes,” Speese added. "Trends in recent weeks have
shown a period-over-period improvement in demand. Nevertheless, the quarter
ending portfolio remains below our expectations and, as a result, we are
lowering our guidance for the remainder of 2013. We believe we are on the
right strategic path and will continue to improve execution in each of our
business segments and I remain optimistic about our future," Speese concluded.

Through the three month period ended March 31, 2013, the Company generated
cash flow from operations of approximately $113.5 million, while ending the
quarter with $82.3 million of cash on hand. During the quarter ended March 31,
2013, the Company repurchased 465,035 shares for approximately $17.4 million.
To date, the Company has repurchased a total of 31,585,314 shares and has
utilized approximately $794.8 million of the $1 billion authorized by its
Board of Directors since the inception of the plan. Also, reflecting continued
confidence in its strong cash flows by returning cash to stockholders, the
Company will pay its twelfth consecutive quarterly cash dividend on April 25,
2013.

2013 Guidance

  * 3.5% to 5.5% total revenue growth.

       * Approximately $540 million contribution from RAC Acceptance.

  * Approximately 1.0% to 2.0% same store sales growth.
  * Approximately 50 basis points gross profit margin decrease.

       * Primarily due to the impact of RAC Acceptance.

  * Approximately 50 basis points operating profit margin decrease.
  * EBITDA of approximately $400 million.
  * Diluted earnings per share in the range of $2.95 to $3.10, including
    approximately $0.25 per share dilution related to our international growth
    initiatives.
  * Capital expenditures of approximately $120 million.
  * The Company expects to open approximately 425 domestic RAC Acceptance
    kiosks and net approximately 350.
  * The Company expects to open approximately 60 rent-to-own store locations
    in Mexico.
  * The 2013 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 April 22, 2013.

Rent-A-Center, Inc. will host a conference call to discuss the first quarter
results, guidance and other operational matters on Tuesday morning, April 23,
2013, 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 3,110 stores in the United States, Canada, Mexico and Puerto
Rico, and approximately 1,055 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 225 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. 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:
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
compliance 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; adverse changes in the economic conditions of the industries,
countries or markets that the Company serves; 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; applicable securities regulation or
accounting standards; 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, 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
(UNAUDITED)
                                                                 
(In thousands of dollars, except per share        Three Months Ended March 31,
data)
                                                  2013             2012
Total Revenues                                    $   819,281      $  835,254
Operating Profit                                      79,283          92,034
Net Earnings                                          46,457          51,941
Diluted Earnings per Common Share                 $   0.80         $  0.87
Adjusted EBITDA                                   $   98,646       $  111,363
                                                                    
Reconciliation to Adjusted EBITDA:
                                                                    
Earnings Before Income Taxes                      $   71,575       $  83,238
Add back:
Interest Expense, net                                 7,708           8,796
Depreciation of Property Assets                       18,473          17,994
Amortization and Write-down of Intangibles            890             1,335
                                                                    
Adjusted EBITDA                                   $   98,646       $  111,363
                                                                       

 
SELECTED BALANCE SHEET HIGHLIGHTS
(UNAUDITED)
                                                 
(In thousands of dollars)           March 31,
                                    2013          2012
Cash and Cash Equivalents           $ 82,254      $ 106,966
Receivables, net                      46,014        44,886
Prepaid Expenses and Other Assets     64,549        69,949
Rental Merchandise, net
On Rent                               832,728       757,670
Held for Rent                         216,144       185,799
Total Assets                        $ 2,908,655   $ 2,815,493
                                                   
Senior Debt                         $ 341,285     $ 351,740
Senior Notes                          300,000       300,000
Total Liabilities                     1,414,540     1,402,134
Stockholders' Equity                $ 1,494,115   $ 1,413,359
                                                     

                                                             
Rent-A-Center, Inc. and Subsidiaries
                                                               
CONSOLIDATED STATEMENTS OF EARNINGS
 
(In thousands, except per share data)        Three Months Ended March 31,
                                             2013             2012
                                             Unaudited
Revenues
Store
Rentals and fees                             $  673,604       $ 677,981
Merchandise sales                               113,573         122,859
Installment sales                               17,127          17,495
Other                                           4,760           4,932
Franchise
Merchandise sales                               8,833           10,613
Royalty income and fees                         1,384           1,374    
                                                819,281         835,254
Cost of revenues
Store
Cost of rentals and fees                        167,919         163,359
Cost of merchandise sold                        86,299          95,016
Cost of installment sales                       5,969           6,298
Franchise cost of merchandise sold              8,416           10,164   
                                                268,603         274,837
Gross profit                                    550,678         560,417
Operating expenses
Salaries and other expenses                     431,692         427,829
General and administrative expenses             38,813          39,219
Amortization and write-down of intangibles      890             1,335    
                                                471,395         468,383
Operating profit                                79,283          92,034
Interest expense                                8,001           8,977
Interest income                                 (293     )      (181    )
Earnings before income taxes                    71,575          83,238
Income tax expense                              25,118          31,297   
NET EARNINGS                                 $  46,457        $ 51,941   
                                                               
Basic weighted average shares                   57,947          59,252   
                                                               
Basic earnings per common share              $  0.80          $ 0.88     
                                                               
Diluted weighted average shares                 58,335          59,935   
                                                               
Diluted earnings per common share            $  0.80          $ 0.87     
                                                                         

                                                                    
Rent-A-Center, Inc. and Subsidiaries
 
SEGMENT INFORMATION HIGHLIGHTS
                                                                      
(In thousands   Three Months Ended March 31, 2013
of dollars)
                Core U.S.   RAC          International   ColorTyme   Total
                            Acceptance
Revenue         $ 669,566   $  127,163   $  12,335       $  10,217   $ 819,281
Gross profit      473,065      67,107       8,705           1,801      550,678
Operating         68,636       15,917       (5,973  )       703        79,283
profit (loss)
Depreciation
of property       15,928       1,089        1,436           20         18,473
assets
Amortization
and               747          143          —               —          890
write-down of
intangibles
Capital           15,050       1,940        2,647           —          19,637
expenditures
                                                                        
(In thousands   Three Months Ended March 31, 2012
of dollars)
                Core U.S.   RAC          International   ColorTyme   Total
                            Acceptance
Revenue         $ 727,830   $  87,728    $  7,709        $  11,987   $ 835,254
Gross profit      510,057      43,170       5,367           1,823      560,417
Operating         95,208       2,868        (6,760  )       718        92,034
profit (loss)
Depreciation
of property       15,756       828          1,385           25         17,994
assets
Amortization
and               438          897          —               —          1,335
write-down of
intangibles
Capital           20,341       1,344        5,743           —          27,428
expenditures
                                                                        
                Location Activity - Three Months Ended March 31, 2013
                Core U.S.   RAC          International   ColorTyme   Total
                            Acceptance
Locations at
beginning of      2,990        966          108             224        4,288
period
New location      7            98           20              3          128
openings
Acquired
locations         3            —            —               —          3
remaining
open
Closed
locations
Merged with
existing          16           11           —               —          27
locations
Sold or
closed with       1            —            —               3          4
no surviving
location
Locations at      2,983        1,053        128             224        4,388
end of period
Acquired
locations
closed and
accounts          9            —            —               —          9
merged with
existing
locations
                                                                        
                Location Activity - Three Months Ended March 31, 2012
                Core U.S.   RAC          International   ColorTyme   Total
                            Acceptance
Locations at
beginning of      2,994        750          80              216        4,040
period
New location      4            45           7               4          60
openings
Closed
locations
Merged with
existing          14           18           —               —          32
locations
Sold or
closed with       1            14           —               2          17
no surviving
location
Locations at      2,983        763          87              218        4,051
end of period
Acquired
locations
closed and
accounts          2            —            —               —          2
merged with
existing
locations

Contact:

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