RentACenter Inc. Reports Operating Results (10-Q)
Rentacenter Inc. has a market cap of $1.45 billion; its shares were traded at around $22.03 with a P/E ratio of 8.6 and P/S ratio of 0.6. Rentacenter Inc. had an annual average earning growth of 0.7% over the past 10 years. GuruFocus rated Rentacenter Inc. the business predictability rank of 2.5-star.RCII is in the portfolios of HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Richard Pzena of Pzena Investment Management LLC, Paul Tudor Jones of The Tudor Group, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC, Bruce Kovner of Caxton Associates, Jeremy Grantham of GMO LLC, Charles Brandes of Brandes Investment.
Highlight of Business Operations:Increase in Stock Repurchase Authorization. On July 26, 2010, we also announced that our Board of Directors increased the authorization for stock repurchases under our common stock repurchase program from $500.0 million to $600.0 million. Under our common stock repurchase program, shares may be repurchased in the open market or in privately negotiated transactions at times and amounts considered appropriate by us. To date, we have repurchased a total of 20,153,215 shares for an aggregate purchase price of $473.1 million in cash under the plan since inception. For the period January 1, 2010 through July 30, 2010, we have repurchased a total of 268,365 shares for $6.5 million in cash.
Store Revenue. Total store revenue decreased by $18.8 million, or 1.4%, to $1,372.3 million for the six months ended June 30, 2010 from $1,391.1 million for the six months ended June 30, 2009. This decrease in total store revenue was primarily the result of the November 2009 divestiture of our subsidiary engaged in the prepaid telecommunications and energy business, which contributed approximately $28.0 million in merchandise sales for the six months ended June 30, 2009.
Amortization and Write-Down of Intangibles. Amortization of intangibles increased by $748,000, or 40.6%, to $2.6 million for the six months ended June 30, 2010 from $1.8 million in 2009. This increase was due to the write-down of goodwill associated with stores sold or closed in the first six months of 2010 as compared to 2009.
Store Revenue. Total store revenue decreased by $8.6 million, or 1.3%, to $663.6 million for the three months ended June 30, 2010 from $672.2 million for the three months ended June 30, 2009. This decrease in total store revenue was primarily the result of the November 2009 divestiture of our subsidiary engaged in the prepaid telecommunications and energy business, which contributed approximately $14.0 million in merchandise sales for the three months ended June 30, 2009.
We believe the cash flow generated from operations, together with amounts available under our senior credit facilities, will be sufficient to fund our liquidity requirements as discussed above (including mandatory principal payments) during the next twelve months. Our revolving credit facilities, including our $20.0 million line of credit at Intrust Bank, provide us with revolving loans in an aggregate principal amount not exceeding $370.0 million, of which $252.5 million was available at July 27, 2010. At July 27, 2010, we had $121.7 million in cash. To the extent we have available cash that is not necessary to fund the items listed above, we may declare and pay dividends on our common stock, make additional payments to service our existing debt, or repurchase additional shares of our common stock. While our operating cash flow has been strong and we expect this strength to continue, our liquidity could be negatively impacted if we do not remain as profitable as we expect.
Deferred Taxes. On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (the 2009 Recovery Act) which extends the bonus depreciation provision of the 2008 Stimulus Act by continuing the bonus first-year depreciation deduction of 50% of the adjusted basis of qualified property placed in service during 2009. Accordingly, our cash flow benefited in 2009 from having a lower cash tax obligation which, in turn, provided additional cash flow from operations. We estimate our 2009 operating cash flow increased by approximately $16.0 million as a result of the 2009 Recovery Act, net of the $59.0 million reversal associated with the 2008 Stimulus Act. We estimate the remaining tax deferral associated with the 2008 Stimulus Act and the 2009 Recovery Act approximated $92.0 million at December 31, 2009, of which approximately 79%, or $72.0 million, will reverse in 2010 and the remainder will reverse between 2011 and 2012.
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