Aaron’s, Inc. Reports Second Quarter 2016 Results
For the second quarter of 2016, revenues increased 2.6% to $789.4 million compared with $769.0 million for the second quarter of 2015. Net earnings decreased 5.0% to $38.5 million compared with $40.5 million in the prior year period. Diluted earnings per share were $.53 compared with $.56 per share a year ago. Non-GAAP diluted EPS were $.59 compared with $.61 last year. The results for the second quarter ended June 30, 2016 include the effects of a $2.3 million loss before income taxes at the Company’s Dent-A-Med (“DAMI”) segment, which was acquired in October 2015.
“We are pleased with our overall quarterly results and the progress we are making on our strategic objectives. Revenues increased, as compared to the second quarter of 2015, fueled by strong growth at Progressive,” said John Robinson, President and Chief Executive Officer of Aaron’s. “We achieved solid margins in the quarter, underscoring our commitment to profitably grow our business.”
“Progressive had an exceptional quarter,” continued Mr. Robinson. “Invoice volume and door growth each increased at double digit rates, and the EBITDA margin reached 14%, aided by strong lease portfolio performance. The team is executing well across all aspects of the business, and we believe the acceleration in door growth is a positive indicator of future revenue.”
“A soft demand environment for the core business continued to impact lease activity, which was below our expectations,” said Mr. Robinson. “In light of the core results, we’re taking steps to further address our expense structure, including a thorough review of our store base. We are encouraged by stabilizing trends in comparable store revenues and merchandise write offs over the last few quarters. During the quarter, we also completed the sale of the assets of HomeSmart, which will enable us to sharpen our focus on the performance of our Aaron’s store business.”
“Our balance sheet remains strong. We ended the quarter with $242 million in available cash and net debt to capitalization of approximately 13%, which leaves us well positioned to invest in future growth and increase shareholder value,” Mr. Robinson concluded.
During the first six months of 2016, revenues increased 3.3% to $1.644 billion compared with $1.591 billion for the prior year period. Net earnings were $88.2 million versus $89.8 million last year. Diluted earnings per share were $1.20 compared with $1.23 per share a year ago. The results for the six months ended June 30, 2016 include the effects of a $5.2 million loss before income taxes at our DAMI segment. The effective tax rate for the comparable quarters ending onJune 30 was 37.0% in both periods.
On a non-GAAP basis, net earnings for the first six months of 2016 were $95.3 million compared with $98.1 million for the same period in 2015 and diluted earnings per share were $1.30 compared with $1.35 in 2015. Non-GAAP net earnings and diluted earnings per share in 2016 exclude the effects of amortization expense resulting from the 2014 acquisition of Progressive, a gain on the sale of the Company’s headquarters building, retirement and severance charges and loss resulting from the Company’s previously announced disposition of the assets of its HomeSmart business. In 2015, non-GAAP results exclude the effects of Progressive amortization. See “Use of Non-GAAP Financial Information” and the related non-GAAP reconciliation accompanying this press release.
Adjusted EBITDA for the Company, which excludes the aforementioned other charges and adjustments, was $192.2 million for the six months ended June 30, 2016 compared with $193.5 million for the same period in 2015. Adjusted EBITDA is a non-GAAP measure that is calculated as the Company’s earnings before interest, depreciation on property, plant and equipment, amortization of intangible assets, income taxes and other charges and adjustment