RentACenter Inc. Reports Operating Results (10-Q)
Rentacenter Inc. has a market cap of $1.8 billion; its shares were traded at around $27.44 with a P/E ratio of 11.1 and P/S ratio of 0.7. 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, Charles Brandes of Brandes Investment, Jeremy Grantham of GMO LLC.
Highlight of Business Operations:As of March 31, 2010, the amount accrued for losses within our self-insured retentions with respect to workers compensation, general liability and auto liability insurance was $130.6 million, as compared to $128.8 million at December 31, 2009 and $122.2 million at March 31, 2009. If any of the factors that contribute to the overall cost of insurance claims were to change, the actual amount incurred for our self-insurance liabilities would be directly affected. While we believe our loss prevention programs will reduce our total cost for self-insurance claims, our actual cost could be greater than the amounts currently accrued.
Store Revenue. Total store revenue decreased by $10.3 million, or 1.4%, to $708.7 million for the three months ended March 31, 2010 from $719.0 million for the three months ended March 31, 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 quarter ended March 31, 2009.
Amortization and Write-Down of Intangibles. Amortization of intangibles increased by $714,000, or 211.9%, to $1.1 million for the three months ended March 31, 2010 from $337,000 in 2009. This increase was due to the write-down of goodwill associated with stores sold in 2010 as compared to 2009.
Cash provided by operating activities decreased by $67.9 million to $71.9 million for the three months ended March 31, 2010 from $139.8 million in 2009. This decrease was primarily attributable to an increase in rental merchandise purchases in the 2010 period as compared to 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 $251.5 million was available at April 27, 2010. At April 27, 2010, we had $75.9 million in cash. To the extent we have available cash that is not necessary to fund the items listed above, we may repurchase additional shares of our common stock or make additional payments to service our existing debt. 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.
Read the The complete Report