Rent-A-Center, Inc. Reports Second Quarter 2016 Results
Notable Items for the Quarter
Explanations of performance are compared to the prior year unless otherwise noted
- Diluted earnings per share was $0.19 compared to $0.43 for the second quarter of 2015
Excluding Special Items (see “Non-GAAP Reconciliation” and related tables below)
- Diluted earnings per share was $0.41 compared to $0.50 for the second quarter of 2015
- Consolidated total revenues decreased 8.1 percent to $749.6 million and same store sales decreased 4.9 percent
- Acceptance Now revenue decreased by 0.5 percent driven by headwinds in oil affected markets and the Company’s increased focus on driving profitable sales
- Core U.S. revenue decreased by 10.6 percent driven by the continued rationalization of our store base and same store sales. Core U.S. same store sales decreased by 6.7 percent driven by the impact and acceleration of the point of sale system rollout, the impact resulting from the ongoing recast of the smartphone category, continued declines in the computer/tablet category, further deterioration in oil affected markets, and merged stores reentering the comp store base
- The Company’s EBITDA as a percent of total revenues was 9.0 percent, down 20 basis points to prior year and operating profit as a percent of total revenues was 6.2 percent, down 50 basis points to prior year
- For the six months ended June 30, 2016 the Company generated $303.1 million of cash from operations, capital expenditures totaled $28.2 million, and the Company ended the second quarter with $88.2 million of cash and cash equivalents
- The Company reduced its outstanding debt balance by $20.5 million in the quarter and the Consolidated Leverage Ratio was at 2.37x as of June 30, 2016
- The Company declared a quarterly dividend of $0.08 per share in the second quarter of 2016, which was paid July 21, 2016
“Although I am pleased with the progress made in several areas of our transformation, I am disappointed in our top line performance. The point of sale implementation negatively impacted Core revenue in the second quarter and reduced our portfolio making it necessary to revise our outlook for the year. However, the benefits of the system will play an important role in helping reinvigorate Core revenue in the future by enabling eCommerce and unlocking new pricing capabilities,” said Robert D. Davis, the Chief Executive Officer of Rent-A-Center, Inc.
Mr. Davis continued, “Despite the challenging top line, we have made good progress on improving gross margins, increasing productivity, Mexico profitability, and reducing our leverage ratio. In addition, the Acceptance Now pipeline is progressing nicely with several national retail partner prospects interested in our model,” Mr. Davis concluded.