The Aaron’s Company Reports Second Quarter Revenues and Earnings
The Aaron’s Company, Inc. (the “Company”), a leading, technology-enabled, omnichannel provider of lease-to-own and purchase solutions, today announced financial results for the second quarter ended June 30, 2021.
“We are pleased to announce another quarter of strong operating results, a significant return of capital to shareholders, and an increase in our revenue and earnings outlook for the full year 2021,” said Douglas Lindsay, Chief Executive Officer of The Aaron’s Company.
“Robust demand for our products, continued strength in customer payments, and ongoing execution of our strategic initiatives have led to a larger lease portfolio generating higher revenues, double-digit earnings growth and strong free cash flow. Our continued investments in customer-focused decisioning technology, digital payment and servicing platforms, and both in-store and online shopping experiences are yielding positive results and are collectively driving greater productivity and margin expansion.”
Results of Operations – Second Quarter 2021
For the second quarter of 2021, total revenues were $467.5 million compared with $431.0 million for the second quarter of 2020, an increase of 8.5%. The increase in revenues was primarily due to the improving size and quality of our lease portfolio and strong customer payment activity during the quarter, partially offset by the planned net reduction of 42 company-operated stores during the 15-month period ended June 30, 2021. E-commerce revenues were up 15.8% compared to the prior year quarter and represented 14.0% of lease revenues compared to 12.8% in the prior year quarter.
On a same store basis, lease and retail revenues increased 11.2% in the second quarter compared to the prior year quarter. Same store revenue growth was primarily driven by a larger same store lease portfolio size to begin the quarter, growth in the portfolio during the second quarter, and strong customer payment activity.
Net earnings for the second quarter of 2021 were $33.0 million compared to $22.4 million in the prior year period. Net earnings in the second quarter of 2021 included $1.8 million in pre-tax restructuring charges and $1.2 million in pre-tax spin-related separation charges. Net earnings in the second quarter of 2020 included $7.0 million in pre-tax restructuring charges.
Adjusted EBITDA for the Company was $65.3 million for the second quarter of 2021, compared with $56.2 million for the same period in 2020, an increase of $9.1 million, or 16.3%. As a percentage of revenues, Adjusted EBITDA was 14.0% in the second quarter of 2021 compared with 13.0% for the same period in 2020, an improvement of 100 basis points. The improvement in Adjusted EBITDA margin was primarily due to the items described above related to the revenue increase and an 80 basis point reduction in lease merchandise write-offs, partially offset by incremental public company costs and a return to more normalized levels of operating expenses compared to the second quarter of 2020, a period that included store shutdowns, employment furloughs, curtailment of marketing activities, franchisee royalty abatement, and other short-term actions related to the COVID-19 pandemic.
Diluted earnings per share for the second quarter of 2021 were $0.95 compared with diluted earnings per share of $0.66 in the year ago same period. On a non-GAAP basis, diluted earnings per share were $1.05 in the second quarter of 2021 compared with non-GAAP diluted earnings per share of $0.83 for the same quarter in 2020, an increase of $0.22 or 26.5%.
During the second quarter, the Company repurchased 1,166,010 shares of Aaron’s common stock for a total purchase price, including brokerage commissions, of approximately $38.6 million. For the year-to-date period through July 23, 2021, the company repurchased 1,839,313 shares of Aaron’s common stock for a total purchase price, including brokerage commissions, of approximately $57.4 million. As of July 23, 2021, the Company had approximately $92.6 million remaining under its $150 million share repurchase program.
During the quarter, the Company’s board of directors declared a quarterly cash dividend of $0.10 per share which was paid on July 6, 2021.
As of June 30, 2021, the company had a cash balance of $48.0 million, no debt, and total available liquidity of $281.5 million including availability under the Company’s existing revolving credit facility.
Franchisee revenues totaled $82.5 million for the three months ended June 30, 2021, a decrease of 20.9% from the three months ended June 30, 2020 primarily due to a reduction in franchise locations. Same store revenues for franchised stores increased 1.9% for the three months ended June 30, 2021 compared with the same quarter in 2020. Revenues and customers of franchisees are not revenues and customers of the Company.
The Company has revised its full year 2021 outlook. For the full year 2021, we increased our expected total revenues to between $1.775 billion and $1.800 billion. We also increased our expected Adjusted EBITDA to between $215 million and $225 million.
For the full year 2021 updated outlook, we have assumed an effective tax rate for 2021 of approximately 26%, depreciation and amortization of between $70 million and $75 million, and a diluted weighted average share count of approximately 34 million shares. This outlook assumes no significant deterioration in the current retail environment, state of the U.S. economy, or global supply chain, as compared to its current condition.
Basis of Presentation
The financial statements and related results discussed herein for periods prior to and through the date of the separation and distribution, November 30, 2020, were prepared on a combined standalone basis and were derived from the consolidated financial statements and accounting records of PROG Holdings, Inc. The financial statements for the periods subsequent to December 1, 2020 and through June 30, 2021 are consolidated financial statements of the Company and its subsidiaries, each of which is wholly-owned, and is based on the financial position and results of operations of the Company as a standalone company.
The combined financial statements prepared through November 30, 2020 include all revenues and costs directly attributable to the Company and an allocation of expenses from PROG Holdings, Inc. related to certain corporate functions and actions. These costs include executive management, finance, treasury, tax, audit, legal, information technology, human resources and risk management functions and the related benefit cost associated with such functions, including stock-based compensation. These expenses have been allocated to the Company based on direct usage or benefit where specifically identifiable, with the remaining expenses allocated primarily on a pro rata basis using an applicable measure of revenues, headcount or other relevant measures.
For the full second quarter results, click here.
About The Aaron’s Company Inc.
Headquartered in Atlanta, The Aaron’s Company, Inc. (NYSE: AAN), is a leading, technology-enabled, omnichannel provider of lease-to-own and purchase solutions. The Aaron’s Company engages in the sales and lease ownership and specialty retailing of furniture, appliances, consumer electronics and accessories through its approximately 1,300 Company-operated and franchised stores in 47 states and Canada, as well as its e-commerce platform, Aarons.com. For more information, visit investor.aarons.com and Aarons.com.
Michael P. Dickerson – Vice President Corporate Communications & Investor Relations – email@example.com – (678) 402-3590
Source: The Aaron’s Company, Inc.