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RentACenter Inc. Reports Operating Results (10-Q)

October 26, 2012 | About:
10qk

10qk

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RentACenter Inc. (RCII) filed Quarterly Report for the period ended 2012-09-30.

Rent-a-center, Inc. has a market cap of $1.99 billion; its shares were traded at around $32.98 with a P/E ratio of 11 and P/S ratio of 0.7. The dividend yield of Rent-a-center, Inc. stocks is 1.9%. Rent-a-center, Inc. had an annual average earning growth of 1.7% over the past 10 years.

Highlight of Business Operations:

Salaries and Other Expenses. Salaries and other expenses increased by $7.0 million, or 1.7%, to $412.6 million for the three months ended September 30, 2012, as compared to $405.6 million in 2011. This increase was attributable to increased expenses associated with the expansion of our RAC Acceptance and International segments, offset by expense reductions in the Core U.S. segment. Charge offs in our Core U.S. rental stores due to customer stolen merchandise, expressed as a percentage of revenues, were approximately 2.6% for the three months ended September 30, 2012, as compared to 2.7% in 2011. Salaries and other expenses expressed as a percentage of total store revenue decreased to 56.6% for the three months ended September 30, 2012, from 58.3% in 2011 due to an increase in store revenue while continuing to manage store-related expenses.

Operating Profit. Operating profit increased by $10.3 million, or 17.9%, to $68.1 million for the three months ended September 30, 2012, as compared to $57.8 million in 2011. Operating profit as a percentage of total revenue increased to 9.2% for the three months ended September 30, 2012 from 8.2% in 2011. Operating profit in 2012 grew primarily due to growth in our RAC Acceptance segment. Operating profit in 2012 also increased compared to 2011 due to the $7.6 million restructuring charge related to the closure of eight Home Choice stores in Illinois, 24 RAC Limited locations within third party grocery stores and 26 core rent-to-own stores following the sale of all customer accounts at those locations in the third quarter of 2011 reported in the Core U.S. segment. These increases were partially offset by an increase in expenses associated with our continued expansion of the International segment.

Net Earnings and Earnings per Share. Net earnings increased by $8.7 million, or 27.8% to $39.9 million for the three months ended September 30, 2012, as compared to $31.2 million in 2011. This increase was primarily attributable to an increase in operating profit, partially offset by an increase in income tax expense in 2012 as compared to 2011. Diluted earnings per share for the three months ended September 30, 2012, were $0.67 compared to $0.52 in 2011.

Salaries and Other Expenses. Salaries and other expenses increased by $57.5 million, or 4.8%, to $1,255.4 million for the nine months ended September 30, 2012, as compared to $1,197.9 million in 2011. This increase was primarily attributable to increased expenses associated with the expansion of our RAC Acceptance and International segments. Charge offs in our Core U.S. rental stores due to customer stolen merchandise, expressed as a percentage of revenues, were approximately 2.3% for the nine months ended September 30, 2012, as compared to 2.4% in 2011. Salaries and other expenses expressed as a percentage of total store revenue decreased to 54.8% for the nine months ended September 30, 2012, from 56.6% in 2011 due to an increase in store revenue while continuing to manage store-related expenses.

Operating Profit. Operating profit increased by $27.8 million, or 13.2%, to $239.2 million for the nine months ended September 30, 2012, as compared to $211.4 million in 2011. Operating profit as a percentage of total revenue increased to 10.3% for the nine months ended September 30, 2012, from 9.9% for 2011. Operating profit in 2012 was favorably impacted by increased gross profit as discussed above. Operating profit in 2012 also increased compared to 2011 due to the $7.6 million restructuring charge related to the closure of eight Home Choice stores in Illinois, 24 RAC Limited locations within third party grocery stores and 26 core rent-to-own stores following the sale of all customer accounts at those locations in the third quarter of 2011, the $7.3 million impairment charge related to the discontinuation of our financial services business and the $2.8 million litigation charge in the first quarter of 2011, all of which were reported in the Core U.S. segment, and the $4.9 million restructuring charge in the second quarter of 2011 for post-acquisition lease terminations related to the acquisition of The Rental Store, which was reported in the RAC Acceptance segment. These increases were partially offset by an increase in expenses associated with our continued expansion of the International segment.

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