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

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

                     Diluted Earnings per Share of $0.51

                   RAC Acceptance Revenues Increased 47.7%

     Cash Flow from Operations of Approximately $173 million Year-to-Date

Business Wire

PLANO, Texas -- October 21, 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 September30, 2013.

Third Quarter 2013 Results

Total revenues for the quarter ended September 30, 2013, were $754.8 million,
an increase of $15.5 million from total revenues of $739.3 million for the
same period in the prior year. This 2.1% increase in total revenues was
primarily due to increases of approximately $40.0 million in the RAC
Acceptance segment and approximately $4.1 million in the International
segment, partially offset by a decrease of approximately $26.2 million in the
Core U.S. segment. For the quarter ended September30, 2013, same store sales
declined 0.8% as compared to the same period in the prior year, primarily
attributable to a 5.1% decrease in the Core U.S. segment, partially offset by
increases of 29.3% and 33.1% in the RAC Acceptance and International segments,
respectively.

Net earnings and net earnings per diluted share for the quarter ended
September 30, 2013, were $27.6 million and $0.51, respectively, as compared to
$39.9 million and $0.67, respectively, for the same period in the prior year.
These results include dilution related to the Company's international growth
initiatives of approximately $0.09 per share in the quarter ended September
30, 2013, and approximately $0.10 per share for the same period in the prior
year.

"I am pleased with our progress in building our portfolio of agreements in our
Core U.S. business as we surpassed prior-year levels in the third quarter.
Traffic remained strong again this quarter with deliveries up 7.3%
year-over-year. I am encouraged by the improving trend in this metric as it
indicates improving market share. However, continued electronic product
deflation coupled with promotional activity in the quarter to attract
customers who remain under pressure caused our average revenue per agreement
or ticket to be down year-over-year and is the primary reason for our same
store sales decline in our Core U.S. segment and the lowering of our 2013
diluted earnings per share guidance to $2.80 to $2.85,” said Mark E. Speese,
the Company's Chairman and Chief Executive Officer. “Two consecutive quarters
of approximately 7% increase in deliveries gives us confidence in our
long-term strategy of improving the results in our Core U.S. segment,” Speese
added.

"Our growth initiatives continue to perform very well. RAC Acceptance results
are tracking to our new store economic model with revenues of approximately
$124 million in the quarter, an increase of close to 48%, and contributing
over 16% of our total revenues and over 33% of our total operating profit.
Mexico grew revenues over 91% and has met its store opening goal for the year
by ending the quarter with 150 locations," Speese continued. “We believe we
will continue to exploit the opportunities in our growth initiatives as part
of our long-term strategy,” Speese concluded.

Nine Months Ended September 30, 2013 Results

Total revenues for the nine months ended September 30, 2013, were $2,334.6
million, an increase of $10.3 million from total revenues of $2,324.3 million
for the same period in the prior year. This 0.4% increase in total revenues
was primarily due to increases of approximately $119.8 million in the RAC
Acceptance segment and approximately $13.9 million in the International
segment, substantially offset by a decrease of approximately $119.2 million in
the Core U.S. segment. For the nine months ended September 30, 2013, same
store sales declined 2.3% as compared to the same period in the prior year,
primarily attributable to a 6.7% decrease in the Core U.S. segment, partially
offset by increases of 31.6% and 48.3% in the RAC Acceptance and International
segments, respectively.

Net earnings and net earnings per diluted share for the nine months ended
September 30, 2013, were $116.1 million and $2.08, respectively, as compared
to $136.0 million and $2.28, respectively, for the same period in the prior
year. These results include dilution related to the Company's international
growth initiatives of approximately $0.23 per share for the nine months ended
September 30, 2013, and approximately $0.25 per share for the same period in
the prior year.

Through the nine month period ended September 30, 2013, the Company generated
cash flow from operations of approximately $172.9 million, while ending the
quarter with $52.9 million of cash on hand. Reflecting continued confidence in
its strong cash flows by returning cash to stockholders, the Company will pay
its 14th consecutive quarterly cash dividend on October 24, 2013.

During the nine month period ended September 30, 2013, the Company repurchased
5,057,458 shares of its common stock for approximately $217.4 million under
its common stock repurchase plan. This includes the initial delivery of
approximately 4.6 million shares for $200 million pursuant to the previously
announced accelerated stock buyback (“ASB”) program, which represents
approximately 80% of the shares expected to be purchased in the ASB
transaction. The total number of shares that the Company ultimately purchases
in the ASB transaction will be determined based on the average of the daily
volume-weighted average share price of its common stock over the duration of
the ASB transaction, less an agreed discount, and is subject to certain
adjustments under the term of the ASB agreement. Final settlement of the ASB
transaction is expected to occur in or before February 2014, although the
completion date may be accelerated or extended.

To date, the Company has repurchased a total of 36,177,737 shares and has
utilized approximately $994.8 million of the $1.25 billion authorized by its
Board of Directors since the inception of the plan.

The Company also announced today that its wholly owned subsidiary, ColorTyme,
Inc., a franchisor of rent-to-own stores operating under the trade name of
“ColorTyme,” changed its name to Rent-A-Center Franchising International, Inc.
in connection with an offer to its current franchisees of the opportunity to
convert their ColorTyme stores to the Rent-A-Center brand. The Company
believes that a unified network of both company-owned and franchised stores
operating under the Rent-A-Center name creates a stronger service offering for
our customers and leverages our growth efforts to reach more customers.

To facilitate the conversion of ColorTyme branded stores to Rent-A-Center, the
Company will sell some of its company-owned stores to existing franchisees,
purchase some of the former ColorTyme stores and either operate them under the
Rent-A-Center brand or merge them with existing stores, and some franchise
stores will continue to operate under the ColorTyme brand. The Company will
also bear certain re-imaging costs incurred by franchisees who elect to
re-brand. The Company anticipates recording a pre-tax restructuring charge in
the fourth quarter of 2013 in connection with this re-branding initiative in
the range of $1 million to $3 million. No restructuring charges were incurred
in the third quarter of 2013.

2013 Guidance

  *Approximately 1.0% total revenue growth.

       *Approximately $515 million contribution from RAC Acceptance.

  *Approximate decline of 1.5% in same store sales.
  *Approximately 10 basis points gross profit margin decrease.

       *Due to the growth of RAC Acceptance.

  *Approximately 100 basis points operating profit margin decrease.
  *EBITDA of approximately $370 million.
  *Annual effective tax rate of approximately 37.3%
  *Diluted earnings per share in the range of $2.80 to $2.85.

       *Includes approximately $0.30 per share dilution related to our
         international growth initiatives after giving effect to lower share
         count due to the accelerated stock buyback ("ASB") program.

  *Capital expenditures of approximately $110 million.
  *The Company expects to open approximately 365 domestic RAC Acceptance
    kiosks and net approximately 325.
  *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 October 21, 2013.

Rent-A-Center, Inc. will host a conference call to discuss the third quarter
results, guidance and other operational matters on Tuesday morning, October
22, 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 3,140 stores in the United States, Canada, Mexico and Puerto
Rico, and approximately 1,255 RAC Acceptance 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 215 rent-to-own stores. 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 technology and data security costs; the Company's ability to
maintain an effective system of internal controls; the resolution of the
Company's litigation; uncertainties regarding the number of franchisees who
accept the offer to convert; uncertainties regarding the number and location
of stores that the Company may buy in connection with the conversion offer;
uncertainties regarding the number and location of Company owned stores that
may be sold to one or more franchisees to facilitate conversion; ability to
market franchises under the “Rent-A-Center” brand; the Company’s ability to
support both “ColorTyme” and “Rent-A-Center” franchise brands, to the extent
necessary; the Company's ability to retain the revenue associated with
customer accounts acquired from any franchisees; the Company's compliance with
applicable statutes or regulations governing the conversion offer; 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, 2012, and its quarterly reports on Form 10-Q for the quarters
ended March 31, 2013, and June 30, 2013. 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, except per share data)         Three Months Ended September 30,
                                                 2013            2012
     Total Revenues                           $   754,780        $  739,314
     Operating Profit                             56,532            68,113
     Net Earnings                                 27,622            39,910
     Diluted Earnings per Common Share        $   0.51           $  0.67
     Adjusted EBITDA                          $   76,592         $  88,972
                                                                 
     Reconciliation to Adjusted EBITDA:
                                                                 
     Earnings Before Income Taxes             $   45,799         $  60,184
     Add back:
     Interest Expense, net                        10,733            7,929
     Depreciation of Property Assets              19,421            18,412
     Amortization and Write-down of              639              2,447
     Intangibles
                                                                 
     Adjusted EBITDA                          $   76,592         $  88,972
                                              
(In thousands of dollars, except per share    Nine Months Ended September 30,
data)
                                                 2013             2012
     Total Revenues                           $   2,334,572      $  2,324,266
     Operating Profit                             213,252           239,174
     Net Earnings                                 116,083           136,033
     Diluted Earnings per Common Share        $   2.08           $  2.28
     Adjusted EBITDA                          $   272,600        $  299,181
                                                                 
     Reconciliation to Adjusted EBITDA:
                                                                 
     Earnings Before Income Taxes             $   185,138        $  214,228
     Add back:
     Interest Expense, net                        28,114            24,946
     Depreciation of Property Assets              56,654            54,744
     Amortization and Write-down of              2,694            5,263
     Intangibles
                                                                 
     Adjusted EBITDA                          $   272,600        $  299,181

                                  
SELECTED BALANCE SHEET HIGHLIGHTS
(Unaudited)
                                    
(In thousands of dollars)           September 30,
                                     2013        2012
Cash and Cash Equivalents           $ 52,857      $ 81,800
Receivables, net                      48,527        44,284
Prepaid Expenses and Other Assets     73,910        71,914
Rental Merchandise, net
On Rent                               854,580       733,724
Held for Rent                         217,388       214,158
Total Assets                        $ 2,937,310   $ 2,799,915
                                                  
Senior Debt                         $ 284,575     $ 293,300
Senior Notes                          550,000       300,000
Total Liabilities                     1,589,592     1,339,117
Stockholders' Equity                $ 1,347,718   $ 1,460,798

                                              
Rent-A-Center, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
                                                 
(In thousands,    Three Months Ended September   Nine Months Ended September
except per        30,                            30,
share data)
                    2013         2012        2013         2012      
Revenues
Store
Rentals and       $  671,334       $ 652,059     $ 2,013,885     $ 1,989,027
fees
Merchandise          53,808          58,854        227,171         242,335
sales
Installment          17,474          15,560        52,138          49,225
sales
Other                4,483           2,811         14,244          12,280
Franchise
Merchandise          6,396           8,697         23,072          27,332
sales
Royalty income      1,285         1,333       4,062         4,067     
and fees
                     754,780         739,314       2,334,572       2,324,266
Cost of
revenues
Store
Cost of rentals      170,979         158,805       507,826         481,954
and fees
Cost of
merchandise          42,344          47,497        175,903         192,038
sold
Cost of
installment          5,983           5,376         18,141          17,402
sales
Franchise cost
of merchandise      6,142         8,295       22,072        26,141    
sold
                     225,448         219,973       723,942         717,535
Gross profit         529,332         519,341       1,610,630       1,606,731
Operating
expenses
Salaries and         435,107         410,693       1,280,457       1,248,732
other expenses
General and
administrative       37,054          38,088        114,227         113,562
expenses
Amortization
and write-down      639           2,447       2,694         5,263     
of intangibles
                     472,800         451,228       1,397,378       1,367,557
                                                                 
Operating            56,532          68,113        213,252         239,174
profit
Interest             10,916          8,096         28,773          25,416
expense
Interest income     (183     )     (167    )    (659      )    (470      )
Earnings before      45,799          60,184        185,138         214,228
income taxes
Income tax          18,177        20,274      69,055        78,195    
expense
NET EARNINGS      $  27,622       $ 39,910     $ 116,083      $ 136,033   
                                                                 
Basic weighted      53,438        58,882      55,423        59,098    
average shares
                                                                 
Basic earnings
per common        $  0.52         $ 0.68       $ 2.09         $ 2.30      
share
                                                                 
Diluted
weighted            53,812        59,312      55,800        59,609    
average shares
                                                                 
Diluted
earnings per      $  0.51         $ 0.67       $ 2.08         $ 2.28      
common share

             
Rent-A-Center, Inc. and Subsidiaries

SEGMENT INFORMATION HIGHLIGHTS
(Unaudited)
               
(In
thousands of   Three Months Ended September 30, 2013
dollars)
               Core U.S.    RAC         International  Franchising  Total
                             Acceptance
Revenue        $ 608,333     $  123,798   $  14,968       $   7,681     $ 754,780
Gross profit     442,971        74,083       10,739           1,539       529,332
Operating
profit           44,943         18,855       (7,665   )       399         56,532
(loss)
Depreciation
of property      16,401         1,323        1,677            20          19,421
assets
Amortization
and
write-down       497            142          —                —           639
of
intangibles
Capital          22,340         2,819        3,781            —           28,940
expenditures
               
(In
thousands of   Three Months Ended September 30, 2012
dollars)
               Core U.S.     RAC          International   Franchising   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
profit           69,544         7,259        (9,046   )       356         68,113
(loss)
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   Nine Months Ended September 30, 2013
dollars)
               Core U.S.     RAC          International   Franchising   Total
                             Acceptance
Revenue        $ 1,897,586   $  368,454   $  41,398       $   27,134    $ 2,334,572
Gross profit     1,365,980      209,960      29,628           5,062       1,610,630
Operating        179,608        52,384       (20,384  )       1,644       213,252
profit
Depreciation
of property      48,319         3,574        4,701            60          56,654
assets
Amortization
and
write-down       2,267          427          —                —           2,694
of
intangibles
Capital          57,537         7,021        9,203            —           73,761
expenditures
Rental
merchandise,
net
On rent          574,871        261,967      17,742           —           854,580
Held for         205,674        3,579        8,135            —           217,388
rent
Total assets     2,513,251      351,407      71,443           1,209       2,937,310
               
(In
thousands of   Nine Months Ended September 30, 2012
dollars)
               Core U.S.     RAC          International   Franchising   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
               
               Location Activity - Three Months Ended September 30, 2013
               Core U.S.     RAC          International   Franchising   Total
                             Acceptance
Locations at
beginning of     2,972          1,153        148              221         4,494
period
New location     6              112          22               4           144
openings
Acquired
locations        6              —            —                —           6
remaining
open
Closed
locations
Merged with
existing         10             10           2                —           22
locations
Sold or
closed with     —             1           —              12         13
no surviving
location
Locations at
end of          2,974         1,254       168            213        4,609
period
Acquired
locations
closed and
accounts         5              —            —                —           5
merged with
existing
locations
               
               Location Activity - Three Months Ended September 30, 2012
               Core U.S.     RAC          International   Franchising   Total
                             Acceptance
Locations at
beginning of     2,973          811          99               219         4,102
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     1             —           —              4          5
no 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 - Nine Months Ended September 30, 2013
               Core U.S.     RAC          International   Franchising   Total
                             Acceptance
Locations at
beginning of     2,990          966          108              224         4,288
period
New location     15             320          62               9           406
openings
Acquired
locations        12             —            —                —           12
remaining
open
Closed
locations
Merged with
existing         40             31           2                —           73
locations
Sold or
closed with     3             1           —              20         24
no surviving
location
Locations at
end of          2,974         1,254       168            213        4,609
period
Acquired
locations
closed and
accounts         18             —            —                —           18
merged with
existing
locations
               
               Location Activity - Nine Months Ended September 30, 2012
               Core U.S.     RAC          International   Franchising   Total
                             Acceptance
Locations at
beginning of     2,994          750          80               216         4,040
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     5             14          1              7          27
no 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

Contact:

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