RAC Reports First Quarter 2016 Results
Rent-A-Center, Inc. (the “Company”) (NASDAQ/NGS: RCII) today announced results for the quarter ended March 31, 2016.
Notable Items for the Quarter
Explanations of performance are compared to the prior year unless otherwise noted
- Diluted earnings per share was $0.47 compared to $0.51 for the first quarter of 2015
Excluding Special Items (see non-GAAP reconciliation below)
- Diluted earnings per share was $0.48 compared to $0.52 for the first quarter of 2015
- Consolidated total revenues decreased 4.8 percent to $835.7 million and same store sales decreased 2.5 percent
- Acceptance Now revenue increased by 2.7 percent driven by revenue growth in locations open less than 12 months. Same store sales were flat and were negatively impacted sequentially due to completing the lap of 90 day option pricing changes by the end of the quarter, further deterioration in oil affected markets, and the Company’s increased focus on driving profitable sales
- Core U.S. same store sales decreased by 3.8 percent driven by continued declines in the computer/tablet category, the impact resulting from the ongoing recast of the smartphone category, further deterioration in oil affected markets, and lower merchandise sales revenue
- The Company’s operating profit as a percent of total revenues decreased to 6.1 percent, a 40 basis point decline over the prior year
- For the three months ended March 31, the Company generated $226.5 million of cash from operations, capital expenditures totaled $14.4 million, and the Company ended the first quarter with $46.4 million of cash and cash equivalents
- The Company reduced its outstanding debt balance by $212.1 million in the quarter and the Consolidated Leverage Ratio was at 2.52x as of March 31, 2016
- The Company declared a quarterly dividend of $0.08 per share in the first quarter of 2016, which was paid April 21, 2016
“We have made significant progress on our profit optimization initiatives and capital allocation strategy. In the Core business, our pricing and supply chain initiatives increased gross profit margin and our flexible labor initiative continues to improve productivity. Additionally, more efficient use of working capital allowed us to improve leverage more swiftly than anticipated, and our path to achieve profitability in Mexico is ahead of plan,” said Robert D. Davis, the Chief Executive Officer of Rent-A-Center, Inc.
Mr. Davis continued, “Our first quarter sales results were impacted by macro as well as company-specific headwinds, the latter of which reflect some conscious decisions to improve our profitability. We are also making significant progress with our new Acceptance Now commercial capabilities team which has already translated into a stronger pipeline of new retail partner opportunities,” Mr. Davis concluded.
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