Market Overview

Aaron's, Inc. Reports Second Quarter Revenue and Earnings

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ATLANTA, July 29, 2020 /PRNewswire/ -- Aaron's, Inc. (NYSE:AAN), a leading omnichannel provider of lease-purchase solutions, today announced financial results for the three months ended June 30, 2020.

"The Company's second quarter results significantly exceeded our expectations as we managed the business through the uncertainty caused by the COVID-19 pandemic.  Progressive's results were favorably impacted by improving invoice growth throughout the quarter, operating expense management and strong customer payment activity.  Similarly, the Aaron's Business second quarter financial strength is the result of strong customer payment activity, lower write-offs, and operating expense management. We continue to maintain a conservatively capitalized balance sheet and have experienced strong year-to-date operating cash flow.  Overall, I am very pleased with our second quarter results and would like to express my deepest gratitude to our team members across all of our businesses for their dedication during these challenging times," said John Robinson, Chief Executive Officer of Aaron's, Inc.

Consolidated Results
For the second quarter of 2020, consolidated revenues were $1.03 billion compared with $968.1 million for the second quarter of 2019, an increase of 6.4%. The increase in consolidated revenues was due to an increase in revenues at Progressive partially offset by lower revenues in the Aaron's Business.  

Net earnings for the second quarter of 2020 were $68.4 million compared to net earnings of $42.7 million in the prior year period. Net earnings in the second quarter of 2020 and 2019 included $7.0 million and $18.7 million, respectively, in pre-tax restructuring charges.

Adjusted EBITDA for the Company was $129.8 million for the second quarter of 2020, compared with $107.4 million for the same period in 2019, an increase of $22.4 million, or 20.9%. As a percentage of revenues, Adjusted EBITDA was 12.6% in the second quarter of 2020 compared with 11.1% for the same period in 2019.

Diluted earnings per share for the second quarter of 2020 were $1.01 compared with diluted earnings per share of $0.62 in the year ago period. On a non-GAAP basis, diluted earnings per share were $1.18 in the second quarter of 2020. This compares with non-GAAP earnings per share of $0.93 for the same quarter in 2019, an increase of $0.25 or 26.9%.

The Company generated $360.8 million in cash from operations during the six months ended June 30, 2020 and ended the second quarter with $313.1 million in cash, compared with a cash balance of $57.8 million at the end of 2019. Total available liquidity was approximately $800 million at June 30, 2020.

Progressive Leasing Segment Results
Progressive Leasing's revenues in the second quarter of 2020 increased 14.2% to a record $589.7 million compared to $516.3 million in the second quarter of 2019. Second quarter invoice volume decreased 2.2% due primarily to the COVID-related closure of many retail partner locations, which have recently begun to reopen. Invoice volume per active door was up 1.7% while active doors were down 3.9% to approximately 19,000. Progressive Leasing had 902,000 customers at June 30, 2020, a 0.8% decrease from June 30, 2019.

Earnings before income taxes for the second quarter of 2020 were $59.8 million compared to $58.4 million in the prior year period. EBITDA for the second quarter of 2020 was $70.7 million compared with $68.2 million for the same period of 2019, an increase of 3.6%.  As a percentage of revenues, EBITDA was 12.0% for the second quarter of 2020, a decrease of 120 basis points compared to the second quarter of 2019.  Lower SG&A expenses and merchandise write-offs were more than offset by lower year-over-year gross margins resulting from higher 90-day buyout activity in the second quarter.

The provision for lease merchandise write-offs was 6.1% of revenues in the second quarter of 2020 compared with 7.6% in the same period of 2019. The decrease in the provision for lease merchandise write-offs was due primarily to strong customer payment activity and more conservative decisioning.

The Aaron's Business Segment Results
For the second quarter of 2020, total revenues for the Aaron's Business decreased 2.8% to $431.0 million from $443.2 million in the second quarter of 2019. The decrease was primarily due to the net reduction of 185 stores during the 15-month period ended June 30, 2020, a lower lease portfolio balance entering the quarter, and the temporary impact of COVID-related showroom closures during the second quarter of 2020, partially offset by strong customer payment activity. Same-store revenues were up 1.4% due primarily to strong customer payment activity including early buyout revenue and retail sales and continued growth in e-commerce revenue. Customer count on a same-store basis was down 6.5% during the second quarter of 2020 compared to the same period in 2019. Company-operated Aaron's stores had 898,000 customers at June 30, 2020, an 8.7% decrease from June 30, 2019.

Lease revenue and fees for the three months ended June 30, 2020 decreased 2.8% compared with the same period in 2019.  Non-retail sales, which primarily consist of merchandise sales to the Company's franchisees, decreased 3.2% for the second quarter of 2020 compared with the same period of the prior year.

Earnings before income taxes for the second quarter of 2020 were $32.0 million which includes the impact of $7.0 million in restructuring charges. Adjusted EBITDA for the three months ended June 30, 2020 was $57.1 million, compared to $39.7 million for the same period in 2019, an increase of $17.4 million or 44.0%. The increase in adjusted EBITDA was due primarily to strong customer payment activity, improved merchandise write-offs and lower SG&A expenses, partially offset by the impact of a lower portfolio balance entering the second quarter and the temporary impact of COVID related showroom closures during the second quarter of 2020. 

The provision for lease merchandise write-offs was 3.7% of revenues in the second quarter of 2020, compared with 5.6% for the same period last year. Contributing to the year-over-year improvement in write-offs was strong customer payment activity, both in-store and on Aarons.com.

At June 30, 2020, the Aaron's Business had 1,098 Company-operated stores and 316 franchised stores.

Significant Components of Revenue and Franchise Performance
Consolidated lease revenues and fees for the three months ended June 30, 2020 increased 6.9% over the same period of the prior year. Franchise royalties and fees decreased 60.9% in the second quarter of 2020 compared with the same period a year ago. That decrease resulted from the temporary suspension of franchise royalty fees from early March until late May, as part of the COVID-19 relief the Aaron's Business offered franchisees, and a lower number of franchised stores.  Franchisee revenues totaled $104.2 million for the three months ended June 30, 2020, a decrease of 3.5% from the same period for the prior year.  Same-store revenues for franchised stores increased 6.6% and same-store customer counts declined 7.6% for the second quarter of 2020 compared with the same quarter in 2019.  Franchised stores had 216,000 customers at the end of the second quarter of 2020.  Revenues and customers of franchisees are not revenues and customers of the Aaron's Business or the Company.

2020 Outlook
For the third quarter, we expect consolidated revenues between $950 million and $975 million and Non-GAAP Diluted Earnings Per Share of between $0.80 and $0.90. This outlook assumes no significant deterioration in the current retail environment, some level of continuing government stimulus, and a gradual improvement in global supply chain conditions.

Reconciliation of Non-GAAP Items


Q3 2020 Range


Low

High

Projected Earnings Per Share Assuming Dilution

$

0.74


$

0.84


Add: Projected Intangible Amortization Expense

0.06


0.06


Projected Non-GAAP Earnings Per Share Assuming Dilution

$

0.80


$

0.90


Conference Call and Webcast
The Company will hold a conference call to discuss its quarterly results on Wednesday, July 29, 2020, at 8:30 a.m. Eastern Time. The public is invited to listen to the conference call by webcast accessible through the Company's investor relations website, investor.aarons.com. The webcast will be archived for playback at that same site.

About Aaron's, Inc.
Headquartered in Atlanta, Aaron's, Inc. (NYSE:AAN), is a leading omnichannel provider of lease-purchase solutions.  Progressive Leasing provides lease-purchase solutions through more than 19,000 retail and e-commerce partner locations in 46 states and the District of Columbia. The Aaron's Business engages in the sales and lease ownership and specialty retailing of furniture, home appliances, consumer electronics and accessories through its approximately 1,400 Company-operated and franchised stores in 47 states, Puerto Rico and Canada, as well as its e-commerce platform, Aarons.com. Vive Financial ("Vive", formerly Dent-A-Med, Inc.), provides a variety of second-look credit products that are originated through federally-insured banks.  For more information, visit investor.aarons.com, Aarons.com, ProgLeasing.com, and ViveCard.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this news release regarding our business that are not historical facts are "forward-looking statements" that involve risks and uncertainties which could cause actual results to differ materially from those contained in the forward-looking statements.  Such forward-looking statements generally can be identified by the use of forward-looking terminology, such as "continue", "expect", "outlook" and similar terminology.  These risks and uncertainties include factors such as (i) the impact of the COVID-19 pandemic and related measures taken by governmental or regulatory authorities to combat the pandemic, and whether additional government stimulus payments or supplemental unemployment benefits will be approved, and the nature, amount and timing of any such payments or benefits, including the impact of the pandemic and such measures on: (a) demand for the lease-to-own products offered by our Progressive Leasing and Aaron's Business segments, (b) Progressive Leasing's retail partners, (c) our customers, including their ability and willingness to satisfy their obligations under their lease agreements, (d) our suppliers' ability to provide us with the merchandise we need to obtain from them, (e) our employees and labor needs, including our ability to adequately staff our operations, (f) our financial and operational performance, and (g) our liquidity; (ii) changes in the enforcement of existing laws and regulations and the adoption of new laws and regulations that may unfavorably impact our businesses; (iii) the effects on our business and reputation resulting from Progressive's announced settlement and related consent order with the FTC, including the risk of losing existing retail partners or being unable to establish new partnerships with additional retailers, and of any follow-on regulatory and/or civil litigation arising therefrom; (iv) other types of legal and regulatory proceedings and investigations, including those related to customer privacy, third party and employee fraud and information security; (v) the risks associated with our business transformation strategy for our Aaron's Business not being successful, including our e-commerce and real estate repositioning and optimization initiatives (including the risk that the costs associated with these initiatives exceeds our expectations); (vi) risks associated with the challenges faced by our Aaron's Business, including the commoditization of consumer electronics and the high fixed-cost operating model of the Aaron's Business; (vii) increased competition from traditional and virtual lease-to-own competitors, as well as from traditional and on-line retailers and other competitors; (viii) financial challenges faced by our franchisees, which we believe may be exacerbated by the COVID-19 pandemic and related governmental or regulatory measures to combat the pandemic; (ix) increases in lease merchandise write-offs for our Aaron's Business and increases in lease merchandise write-offs and the provision for returns and uncollectible renewal payments for Progressive Leasing, especially in light of the COVID-19 pandemic; and the other risks and uncertainties discussed under "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020. Statements in this press release that are "forward-looking" include without limitation statements about (i) the strength of our balance sheet and our liquidity; and (ii) our outlook for our consolidated financial performance for the third quarter of 2020. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances after the date of this press release.

Aaron's, Inc. and Subsidiaries

Consolidated Statements of Earnings

(In thousands, except per share amounts)




(Unaudited)
Three Months Ended

(Unaudited)
Six Months Ended



June 30,

June 30,



2020

2019

2020

2019

Revenues:






Lease Revenues and Fees


$

969,987


$

907,565


$

2,017,900


$

1,851,722


Retail Sales


14,020


8,898


23,551


21,707


Non-Retail Sales


33,044


34,124


59,890


71,105


Franchise Royalties and Fees


3,365


8,605


10,089


17,812


Interest and Fees on Loans Receivable


9,414


8,610


19,322


17,256


Other


289


339


641


642


Total


1,030,119


968,141


2,131,393


1,980,244








Costs and Expenses:






Depreciation of Lease Merchandise


547,551


474,868


1,144,958


975,688


Retail Cost of Sales


9,065


5,651


15,927


14,283


Non-Retail Cost of Sales


29,316


28,948


52,897


58,144


Operating Expenses


343,850


383,576


756,820


770,792


Restructuring Expenses, Net


6,991


18,738


29,277


32,019


Impairment of Goodwill




446,893



Other Operating (Income) Expense, Net


(96)


(3,486)


74


(4,383)


Total


936,677


908,295


2,446,846


1,846,543








Operating Profit (Loss)


93,442


59,846


(315,453)


133,701


Interest Income


227


944


419


1,045


Interest Expense


(2,853)


(4,300)


(6,652)


(9,256)


Other Non-Operating Income (Expense), Net


1,721


329


(230)


1,637


Earnings (Loss) Before Income Tax Expense


92,537


56,819


(321,916)


127,127








Income Tax Expense (Benefit)


24,160


14,169


(110,288)


28,399


Net Earnings (Loss)


$

68,377


$

42,650


$

(211,628)


$

98,728








Earnings (Loss) Per Share


$

1.02


$

0.63


$

(3.16)


$

1.46


Earnings (Loss) Per Share Assuming Dilution


$

1.01


$

0.62


$

(3.16)


$

1.44








Weighted Average Shares Outstanding


67,097


67,687


66,959


67,492


Weighted Average Shares Outstanding Assuming Dilution


67,523


68,793


66,959


68,784


 

Aaron's, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands)




(Unaudited)






June 30, 2020


December 31, 2019


ASSETS:






Cash and Cash Equivalents


$

313,057



$

57,755



Accounts Receivable (net of allowances of $73,294 in 2020 and $76,293 in 2019)


79,933



104,159



Lease Merchandise (net of accumulated depreciation and allowances of $878,259 in 2020 and $896,056 in 2019)


1,119,640



1,433,417



Loans Receivable (net of allowances and unamortized fees of $37,649 in 2020 and $21,134 in 2019)


58,870



75,253



Property, Plant and Equipment at Cost (net of accumulated depreciation of $326,340 in 2020 and $311,252 in 2019)


228,088



237,666



Operating Lease Right-of-Use Assets


279,802



329,211



Goodwill


288,801



736,582



Other Intangibles (net of accumulated amortization of $164,324 in 2020 and $151,932 in 2019)


176,104



190,796



Income Tax Receivable


57,487



18,690



Prepaid Expenses and Other Assets


113,920



114,271



Total Assets


$

2,715,702



$

3,297,800



LIABILITIES & SHAREHOLDERS' EQUITY:






Accounts Payable and Accrued Expenses


$

249,182



$

272,816



Accrued Regulatory Expense




175,000



Deferred Income Taxes Payable


234,380



310,395



Customer Deposits and Advance Payments


89,435



91,914



Operating Lease Liabilities


335,705



369,386



Debt


285,801



341,030



Total Liabilities


1,194,503



1,560,541



SHAREHOLDERS' EQUITY:






Common Stock, Par Value $0.50 Per Share: Authorized: 225,000,000 Shares at June 30, 2020 and December 31, 2019; Shares Issued: 90,752,123 at June 30, 2020 and December 31, 2019


45,376



45,376



Additional Paid-in Capital


290,653



290,229



Retained Earnings


1,805,869



2,029,613



Accumulated Other Comprehensive Loss


(1,442)



(19)









Less: Treasury Shares at Cost






Common Stock: 23,613,045 Shares at June 30, 2020 and 24,034,053 at December 31, 2019


(619,257)



(627,940)



Total Shareholders' Equity


1,521,199



1,737,259



Total Liabilities and Shareholders' Equity


$

2,715,702



$

3,297,800



 

Aaron's, Inc. and Subsidiaries

Consolidated Statements of Cash Flows


(Unaudited)

Six Months Ended
June 30,

(In Thousands)

2020


2019

OPERATING ACTIVITIES:




Net (Loss) Earnings

$

(211,628)



$

98,728


Adjustments to Reconcile Net (Loss) Earnings to Cash Provided by Operating Activities:




Depreciation of Lease Merchandise

1,144,958



975,688


Other Depreciation and Amortization

50,154



53,862


Accounts Receivable Provision

158,587



137,611


Provision for Credit Losses on Loans Receivable

16,150



9,223


Stock-Based Compensation

12,487



14,231


Deferred Income Taxes

(73,656)



19,928


Impairment of Goodwill and Other Assets

468,634



26,267


Non-Cash Lease Expense

50,638



58,073


Other Changes, Net

5,109



(3,390)


Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions:




Additions to Lease Merchandise

(1,032,977)



(1,141,863)


Book Value of Lease Merchandise Sold or Disposed

201,058



196,219


Accounts Receivable

(134,467)



(126,112)


Prepaid Expenses and Other Assets

(4,711)



(6,847)


Income Tax Receivable

(38,797)



17,227


Operating Lease Liabilities

(53,544)



(62,541)


Accounts Payable and Accrued Expenses

(19,713)



(21,465)


Accrued Regulatory Expense

(175,000)




Customer Deposits and Advance Payments

(2,527)



(200)


Cash Provided by Operating Activities

360,755



244,639


INVESTING ACTIVITIES:




Investments in Loans Receivable

(39,986)



(29,506)


Proceeds from Loans Receivable

32,248



27,720


Outflows on Purchases of Property, Plant and Equipment

(33,885)



(48,059)


Proceeds from Property, Plant and Equipment

2,220



1,425


Outflows on Acquisitions of Businesses and Customer Agreements, Net of Cash Acquired

(1,209)



(7,612)


Proceeds from Dispositions of Businesses and Customer Agreements, Net of Cash Disposed

359



755


Cash Used in Investing Activities

(40,253)



(55,277)


FINANCING ACTIVITIES:




Repayments on Revolving Facility, Net



(16,000)


Proceeds from Debt

5,625




Repayments on Debt

(60,748)



(61,465)


Dividends Paid

(5,351)



(4,717)


Acquisition of Treasury Stock



(14,414)


Issuance of Stock Under Stock Option Plans

2,250



5,056


Shares Withheld for Tax Payments

(5,877)



(12,977)


Debt Issuance Costs

(1,020)




Cash Used in Financing Activities

(65,121)



(104,517)


EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

(79)



119


Increase in Cash and Cash Equivalents

255,302



84,964


Cash and Cash Equivalents at Beginning of Period

57,755



15,278


Cash and Cash Equivalents at End of Period

$

313,057



$

100,242


 

Aaron's, Inc. and Subsidiaries

Quarterly Revenues by Segment

(In thousands)



(Unaudited)


Three Months Ended


June 30, 2020


Progressive Leasing

Aaron's Business

Vive

Consolidated Total

Lease Revenues and Fees

$

589,749


$

380,238


$


$

969,987


Retail Sales


14,020



14,020


Non-Retail Sales


33,044



33,044


Franchise Royalties and Fees


3,365



3,365


Interest and Fees on Loans Receivable



9,414


9,414


Other


289



289


Total Revenues

$

589,749


$

430,956


$

9,414


$

1,030,119





(Unaudited)


Three Months Ended


June 30, 2019


Progressive Leasing

Aaron's Business

Vive

Consolidated Total

Lease Revenues and Fees

$

516,333


$

391,232


$


$

907,565


Retail Sales


8,898



8,898


Non-Retail Sales


34,124



34,124


Franchise Royalties and Fees


8,605



8,605


Interest and Fees on Loans Receivable



8,610


8,610


Other


339



339


Total Revenues

$

516,333


$

443,198


$

8,610


$

968,141


 

Aaron's, Inc. and Subsidiaries

Six Months Revenues by Segment

(In thousands)



(Unaudited)


Six Months Ended


June 30, 2020


Progressive Leasing

Aaron's Business

Vive

Consolidated Total

Lease Revenues and Fees

$

1,248,283


$

769,617


$


$

2,017,900


Retail Sales


23,551



23,551


Non-Retail Sales


59,890



59,890


Franchise Royalties and Fees


10,089



10,089


Interest and Fees on Loans Receivable



19,322


19,322


Other


641



641


Total Revenues

$

1,248,283


$

863,788


$

19,322


$

2,131,393





(Unaudited)


Six Months Ended


June 30, 2019


Progressive Leasing

Aaron's Business

Vive

Consolidated Total

Lease Revenues and Fees

$

1,039,734


$

811,988


$


$

1,851,722


Retail Sales


21,707



21,707


Non-Retail Sales


71,105



71,105


Franchise Royalties and Fees


17,812



17,812


Interest and Fees on Loans Receivable



17,256


17,256


Other


642



642


Total Revenues

$

1,039,734


$

923,254


$

17,256


$

1,980,244


Use of Non-GAAP Financial Information:

Non-GAAP net earnings, non-GAAP diluted earnings per share, EBITDA and Adjusted EBITDA are supplemental measures of our performance that are not calculated in accordance with generally accepted accounting principles in the United States ("GAAP").  Non-GAAP net earnings and non-GAAP diluted earnings per share for 2020 exclude Progressive Leasing-related intangible amortization expense, and certain Aaron's Business charges including amortization expense resulting from franchisee acquisitions, restructuring charges, early termination charges incurred to terminate a sales and marketing agreement, goodwill impairment charges, legal and accounting fees incurred in conjunction with the Company's implementation of a Holding Company structure and an income tax benefit resulting from the revaluation of a net operating loss carryback. Non-GAAP net earnings and non-GAAP diluted earnings per share for 2019 exclude Progressive Leasing-related intangible amortization expense, certain Aaron's Business charges including amortization expense resulting from franchisee acquisitions, acquisition transaction and transition costs related to franchisee acquisitions and restructuring charges. The amounts for these after-tax non-GAAP adjustments, which are calculated using estimated tax rates which are commensurate with non-GAAP pre-tax earnings, can be found in the Reconciliation of Net Earnings and Earnings Per Share Assuming Dilution to Non-GAAP Net Earnings and Earnings Per Share Assuming Dilution table in this press release.

The EBITDA and Adjusted EBITDA figures presented in this press release are calculated as the Company's earnings before interest expense, depreciation on property, plant and equipment, amortization of intangible assets and income taxes.  Adjusted EBITDA also excludes the other adjustments described in the calculation of non-GAAP net earnings above. The amounts for these pre-tax non-GAAP adjustments can be found in the Quarterly Segment EBITDA tables in this press release.

Management believes that non-GAAP net earnings, non-GAAP diluted earnings per share, EBITDA and Adjusted EBITDA provide relevant and useful information, and are widely used by analysts, investors and competitors in our industry as well as by our management in assessing both consolidated and business unit performance.

Non-GAAP net earnings and non-GAAP diluted earnings provide management and investors with an understanding of the results from the primary operations of our business by excluding the effects of certain items that generally arose from larger, one-time transactions that are not reflective of the ordinary earnings activity of our operations or transactions that have variability and volatility of the amount.  This measure may be useful to an investor in evaluating the underlying operating performance of our business.

EBITDA and Adjusted EBITDA also provide management and investors with an understanding of one aspect of earnings before the impact of investing and financing charges and income taxes.  These measures may be useful to an investor in evaluating our operating performance and liquidity because the measures:

  • Are widely used by investors to measure a company's operating performance without regard to items excluded from the calculation of such measure, which can vary substantially from company to company depending upon accounting methods, book value of assets, capital structure and the method by which assets were acquired, among other factors.
  • Are a financial measurement that is used by rating agencies, lenders and other parties to evaluate our creditworthiness.
  • Are used by our management for various purposes, including as a measure of performance of our operating entities and as a basis for strategic planning and forecasting.

Finally, this press release presents pre-tax, pre-provision loss for Vive, which is also a supplemental measure not calculated in accordance with GAAP.  Management believes this measure is useful because it gives management and investors an additional, supplemental metric to assess Vive's underlying operational performance for the period. Management uses this measure as one of its bases for strategic planning and forecasting for Vive.  Our use of pre-provision, pre-tax loss may not be comparable to similar measures disclosed by other companies, because not all companies and analysts calculate these measures in the same manner.

Non-GAAP financial measures, however, should not be used as a substitute for, or considered superior to, measures of financial performance prepared in accordance with GAAP, such as the Company's GAAP basis net earnings and diluted earnings per share and the GAAP revenues and earnings before income taxes of the Company's segments, which are also presented in the press release.  Further, we caution investors that amounts presented in accordance with our definitions of non-GAAP net earnings, non-GAAP diluted earnings per share, EBITDA, Adjusted EBITDA, and pre-tax, pre-provision loss may not be comparable to similar measures disclosed by other companies, because not all companies and analysts calculate these measures in the same manner.

Reconciliation of Net Earnings (Loss) and Earnings (Loss) Per Share Assuming Dilution to      

Non-GAAP Net Earnings and Earnings Per Share Assuming Dilution

(In thousands, except per share)



(Unaudited)
Three Months Ended


(Unaudited)
Six Months Ended


June 30,


June 30,


2020

2019


2020

2019

Net Earnings (Loss)

$

68,377


$

42,650



$

(211,628)


$

98,728


Add: Progressive Leasing-Related Intangible Amortization Expense (1)(2)

4,260


4,069



8,229


8,420


Add: Franchisee-Related Intangible Amortization Expense(3)(4)

1,130


2,971



2,291


6,216


Add: Restructuring Expenses, net (5)(6)

5,494


14,065



22,221


24,866


Add: Acquisition Transaction and Transition Costs(7)


150




243


Add: Sales and Marketing Early Contract Termination Fees(8)




11,129



Add: Holding Company Legal and Accounting Fees(9)

1,982




1,914



Add: Impairment of Goodwill(10)




339,191



Less: NOL Carryback Revaluation

(1,350)




(35,540)



Non-GAAP Net Earnings

$

79,893


$

63,905



$

137,807


$

138,473








Earnings (Loss) Per Share Assuming Dilution(10)

$

1.01


$

0.62



$

(3.16)


$

1.44


Add: Progressive Leasing-Related Intangible Amortization Expense (1)(2)

0.06


0.06



0.12


0.12


Add: Franchisee-Related Intangible Amortization Expense(3)(4)

0.02


0.04



0.03


0.09


Add: Restructuring Expenses, net(5)(6)

0.08


0.20



0.33


0.36


Add: Acquisition Transaction and Transition Costs(7)






Add: Sales and Marketing Early Contract Termination Fees(8)




0.16



Add: Holding Company Legal and Accounting Fees(9)

0.03




0.03



Add: Impairment of Goodwill(10)




5.01



Less: NOL Carryback Revaluation

(0.02)




(0.53)









Non-GAAP Earnings Per Share Assuming Dilution(11)(12)

$

1.18


$

0.93



$

2.04


$

2.01








Weighted Average Shares Outstanding Assuming Dilution

67,523


68,793



67,694


68,784




(1)

Net of taxes of $1,161 and $2,613 for the three and six months ended June 30, 2020 calculated using the estimated tax rates of 21.4% and 24.1% for the respective periods.

(2)

Net of taxes of $1,352 and $2,422 for the three and six months ended June 30, 2019 calculated using the effective tax rate for the respective periods.

(3)

Net of taxes of $308 and $727 for the three and six months ended June 30, 2020 calculated using the estimated tax rates of 21.4% and 24.1% for the respective periods.

(4)

Net of taxes of $987 and $1,788 for the three and six months ended June 30, 2019 calculated using the effective tax rate for the respective periods.

(5)

Net of taxes of $1,497 and $7,056 for the three and six months ended June 30, 2020 calculated using the estimated tax rates of 21.4% and 24.1% for the respective periods.

(6)

Net of taxes of $4,673 and $7,153 for the three and six months ended June 30, 2019 calculated using the effective tax rate for the respective periods.

(7)

Net of taxes of $50 and $70 for the three and six months ended June 30, 2019 calculated using the effective tax rate for the respective periods.

(8)

Net of taxes of $3,534 for the six months ended June 30, 2020 calculated using the estimated tax rate of 24.1% for the respective periods.

(9)

Net of taxes of $540 and $608 for the three and six months ended June 30, 2020 calculated using the estimated tax rates of 21.4% and 24.1% for the respective periods.

(10)

Net of taxes of $107,702 for the six months ended June 30, 2020 calculated using the estimated tax rate of 24.1% for the period.

(11)

For the six months ended June 30, 2020, the GAAP Weighted Average Shares Outstanding Assuming Dilution was 66,959 and the Non-GAAP Weighted Average Shares Outstanding Assuming Dilution was 67,694.

(12)

In some cases, the sum of individual EPS amounts may not equal total non-GAAP EPS calculations due to rounding.

 

Vive Pre-tax, Pre-provision Loss

(In thousands)



(Unaudited)
Three Months Ended

(Unaudited)
Six Months Ended


June 30,

June 30,


2020

2019

2020

2019

Earnings (Loss) Before Income Taxes

$

714


$

(1,725)


$

(7,369)


$

(4,393)


Adjustment to (Decrease) Increase Allowance for Loan Losses During Period

(901)


420


6,319


(187)


Pre-tax, Pre-provision Loss

$

(187)


$

(1,305)


$

(1,050)


$

(4,580)


 

Aaron's, Inc. and Subsidiaries

Non-GAAP Financial Information

Quarterly Segment EBITDA

(In thousands)



(Unaudited)


Three Months Ended


June 30, 2020


Progressive Leasing

Aaron's Business

Vive

Consolidated Total

Net Income




$

68,377


Income Taxes1




24,160


Earnings Before Income Taxes

$

59,814


$

32,009


$

714


92,537


Interest Expense

3,299


(1,358)


912


2,853


Depreciation

2,179


15,300


210


17,689


Amortization

5,421


1,632


145


7,198


EBITDA

$

70,713


$

47,583


$

1,981


$

120,277


Holding Company Legal and Accounting Fees


2,522



2,522


Restructuring Expenses


6,991



6,991


Adjusted EBITDA

$

70,713


$

57,096


$

1,981


$

129,790




(Unaudited)


Three Months Ended


June 30, 2019


Progressive Leasing

Aaron's Business

Vive

Consolidated Total

Net Earnings




$

42,650


Income Taxes1




14,169


Earnings (Loss) Before Income Taxes

$

58,406


$

138


$

(1,725)


56,819


Interest Expense

2,242


1,209


849


4,300


Depreciation

2,160


15,077


201


17,438


Amortization

5,421


4,296


145


9,862


EBITDA

$

68,229


$

20,720


$

(530)


$

88,419


Restructuring Expenses


18,738



18,738


Acquisition Transaction and Transition Costs


200



200


Adjusted EBITDA

$

68,229


$

39,658


$

(530)


$

107,357




(1)

Taxes are calculated on a consolidated basis and are not identifiable by Company segments.

 

Aaron's, Inc. and Subsidiaries

Non-GAAP Financial Information

Six Months Segment EBITDA

(In thousands)



(Unaudited)


Six Months Ended


June 30, 2020


Progressive Leasing

Aaron's Business

Vive

Consolidated Total

Net Loss




$

(211,628)


Income Tax Benefit1




(110,288)


Earnings (Loss) Before Income Taxes

$

118,801


$

(433,348)


$

(7,369)


(321,916)


Interest Expense

7,019


(2,210)


1,843


6,652


Depreciation

4,300


30,821


427


35,548


Amortization

10,842


3,474


290


14,606


EBITDA

$

140,962


$

(401,263)


$

(4,809)


$

(265,110)


Restructuring Expenses


29,277



29,277


Sales and Marketing Early Termination Fees


14,663



14,663


Holding Company Legal and Accounting Fees


2,522



2,522


Impairment of Goodwill


446,893



446,893


Adjusted EBITDA

$

140,962


$

92,092


$

(4,809)


$

228,245








(Unaudited)


Six Months Ended


June 30, 2019


Progressive Leasing

Aaron's Business

Vive

Consolidated Total

Net Earnings




$

98,728


Income Taxes1




28,399


Earnings (Loss) Before Income Taxes

$

113,794


$

17,726


$

(4,393)


127,127


Interest Expense

4,964


2,563


1,729


9,256


Depreciation

3,947


29,665


391


34,003


Amortization

10,842


8,727


290


19,859


EBITDA

$

133,547


$

58,681


$

(1,983)


$

190,245


Restructuring Expenses, Net


32,019



32,019


Acquisition Transaction and Transition Costs


313



313


Adjusted EBITDA

$

133,547


$

91,013


$

(1,983)


$

222,577




(1)

Taxes are calculated on a consolidated basis and are not identifiable by Company segments.

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/aarons-inc-reports-second-quarter-revenue-and-earnings-301101794.html

SOURCE Aaron's, Inc.

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