First Quarter Rental Business Revenues Up 1.7%; Opens 5 New Stores ERIE, Pa., Feb. 2 /PRNewswire-FirstCall/ -- Rent-Way, Inc. (NYSE:RWY) today reported financial results for its fiscal 2006 first quarter ended December 31, 2005. For the quarter, the company reported revenues of $127.9 million versus $126.3 million in the same quarter last year. Revenues from the company's core rental business (which excludes the company's dPi Teleconnect unit) were $124.0 million versus $121.9 million in the same quarter last year, an increase of 1.7%. Same store rental business revenues decreased 2.4% versus last year's quarter. Operating income in the quarter was $7.4 million, down from $11.2 million in the same period last year. Net income was $0.6 million versus net income of $1.0 million in the first quarter last year. Net income allocable to common stockholders was $0.03 million compared with $0.5 million in the 2005 first quarter. Net income was positively impacted by a $1.7 million adjustment in the 2006 quarter and negatively impacted by a $2.2 million adjustment in the 2005 quarter related to the conversion feature of the company's preferred stock. The positive adjustment in the 2006 quarter is reversed in the calculation of net income per diluted share, resulting in a net loss per share of $(0.04) compared with net income per diluted share of $0.02 in last year's quarter. The financial results discussed in this release reflect the company's previously disclosed changes in lease accounting and revenue recognition. "We experienced strong growth in potential weekly rental revenue in the fiscal 2006 first quarter, which we believe signals a recovery from the difficult business conditions we faced last summer and early fall," stated William Short, Rent-Way's President. "As a result of those difficult conditions, we began the fiscal year with fewer agreements on rent, which resulted in our first quarter of negative same store revenues in more than two years. Our team has worked hard to regain the momentum we lost and we believe our strong performance in the first quarter bodes well for our business the rest of the year. We are forecasting 2006 full year rental business revenues in the range of $515 - $525 million, operating income in the range of $44 - $48 million, and EBITDA in the range of $58 - $62 million. We expect our same store revenues to turn positive in the second quarter, and remain positive for the balance of the fiscal year," concluded Mr. Short. During the quarter the Company opened five new stores, and acquired the rental agreements of another fourteen, which were merged into existing RentWay locations. The company ended the quarter with $41.0 million outstanding on its bank revolver, up from $28.0 million at the end of December 31, 2004. The company reported EBITDA for the quarter of $11.1 million versus $15.7 million in the same quarter last year. EBITDA as defined by the company is operating income plus depreciation of property and equipment and amortization of intangibles. The company believes EBITDA provides investors useful information regarding its ability to service its debt and generate cash for other purposes, including for capital expenditures and working capital. The company reported net cash used in operations for the quarter of $10.6 million versus $17.1 million in the same quarter last year. Reconciliations of the non-GAAP measures mentioned above to the nearest comparable GAAP measures are presented in the chart of supplemental information accompanying this release. Rent-Way is the one of the largest operators of rental-purchase stores in the United States. Rent-Way rents quality name brand merchandise such as home entertainment equipment, computers, furniture and appliances from 791 stores in 34 states. RENT-WAY, INC. SELECTED BALANCE SHEET DATA (all dollars in thousands) December 31, 2005 September 30, 2005 (unaudited) Cash and cash equivalents $10,246 $6,439 Prepaid expenses 4,573 7,962 Rental merchandise, net 224,256 194,178 Total Assets 493,394 460,485 Accounts payable 35,973 23,744 Debt 243,414 221,313 Total Liabilities 358,644 324,322 Shareholders' Equity 118,341 118,234 RENT-WAY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (all dollars in thousands except per share data) For the three months ended December 31, 2005 2004 Restated Revenues: Rental revenue $107,233 83.9% $105,942 83.9% Prepaid phone service revenue 4,040 3.2% 4,561 3.6% Other revenues 16,583 13.0% 15,794 12.5% Total Revenues 127,856 100.0% 126,297 100.0% Costs and operating expenses: Depreciation and amortization: Rental merchandise 33,643 26.3% 32,516 25.7% Property and equipment 3,571 2.8% 4,511 3.6% Amortization of intangibles 185 0.1% 28 0.0% Cost of prepaid phone service 2,536 2.0% 2,906 2.3% Salaries and wages 36,635 28.7% 34,819 27.6% Advertising, net 5,954 4.7% 5,353 4.2% Occupancy 9,935 7.8% 9,060 7.2% Other operating expenses 28,023 21.9% 25,942 20.5% Total costs and operating expenses 120,482 94.2% 115,135 91.2% Operating income 7,374 5.8% 11,162 8.8% Other income (expense): Interest expense (6,974) -5.5% (7,067) -5.6% Interest income 21 0.0% 6 0.0% Amortization of deferred financing costs (318) -0.2% (280) -0.2% Other income (expense), net 1,915 1.5% (1,264) -1.0% Income before income taxes and discontinued operations 2,018 1.6% 2,557 2.0% Income tax expense 1,388 1.1% 1,395 1.1% Income before discontinued operations 630 0.5% 1,162 0.9% Loss from discontinued operations (23) 0.0% (128) -0.1% Net income $607 0.5% $1,034 0.8% Preferred stock dividend and accretion of preferred stock (579) -0.5% (535) -0.4% Net income allocable to common shareholders $28 0.0% $499 0.4% Earnings (loss) per common share: Basic earnings (loss) per common share Income (loss) before discontinued operations $0.02 $0.04 Net income (loss) allocable to common shareholders $- $0.02 Diluted earnings (loss) per common share Income (loss) before discontinued operations $(0.04) $0.04 Net income (loss) allocable to common shareholders $(0.04) $0.02 Weighted average common shares outstanding: Basic 26,381 26,244 Diluted 29,789 26,244 Calculation of EBITDA and Reconciliation of Net Cash Used in Operations to EBITDA For the Three Months Ended December 31, 2005 and 2004 (all dollars in thousands) Three Months Ended 12/31/05 12/31/04 (unaudited) (unaudited) Restated Calculation of EBITDA Operating income $7,374 $11,162 Depreciation - property and equipment 3,571 4,511 Amortization of intangibles 185 28 EBITDA $11,130 $15,701 Reconciliation of Net Cash Used in Operations to EBITDA Three Months Ended 12/31/05 12/31/04 (unaudited) (unaudited) Restated Net cash used in operating activities $(10,561) $(17,050) Net cash used in discontinued operations 23 128 Adjustments to reconcile net income to net cash used in operating activities (37,635) (40,689) Changes in assets and liabilities 48,780 58,645 Depreciation - property and equipment 3,571 4,511 Amortization of intangibles 185 28 Interest expense 6,974 7,067 Interest income (21) (6) Amortization of deferred financing costs 318 280 Other income (1,915) 1,264 Income taxes 1,388 1,395 Loss from discontinued operations 23 128 EBITDA $11,130 $15,701 First Call Analyst: FCMN Contact: dspeterson@rentway.com DATASOURCE: Rent-Way, Inc. CONTACT: Bill Short of Rent-Way, +1-814-455-5378 Web site: http://www.rentway.com/

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