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Aaron Rents, Inc. (RNT)
Q2 2008 Earnings Call
July 23, 2008 10:30 am ET
Gilbert Danielson – Chief Financial Officer
Lee Wilder – Investor Relations
Robert Loudermilk – Chief Executive Officer
Charles Loudermilk – Chairman
Ken Butler – President of Aaron Sales & Lease Ownership
Dennis Telzrow – Stephens Inc.
Arvind Bhatia – Sterne, Agee & Leach
John Baugh – Stifel Nicolaus & Company, Inc.
John Harlow – Barlow Henley
Laura Champine – Morgan, Keegan & Company
Chris Rapalje – SunTrust Robinson Humphrey
Robert Straus – Merriman, Curhan, Ford & Co.
Welcome to the Aaron Rents second-quarter earnings call. (Operator Instructions) I will now turn the call over to Mr. Gil Danielson.
Previous Statements by AAN
» Aaron Rents Inc. Q4 2008 Earnings Call Transcript
» Aaron Rents, Inc. Q3 2008 (Quarter End 9/30/2008) Earnings Call Transcript
» Aaron Rents, Inc. Q1 2008 Earnings Call Transcript
My name is Lee Wilder and I assist in Investor Relations for Aaron Rents. The company’s earnings release issued yesterday and a related form 8K are available on our website, www.aaronrents.com in the Investor Relations Section. This webcast will be archived for replay there as well.
Joining us today are Charlie Loudermilk, Chairman, Robert Loudermilk, CEO, Ken Butler, President of Aaron Sales & Lease Ownership and Gil Danielson, CFO. Before we discuss the results, I would like to read the company's Safe Harbor Statement.
Except for the historical information, the matters discussed today are forward-looking statements of the company, as such, they will involve a number of risks and uncertainties including factors such as changes in general economic conditions, competition, pricing, customer demands and other issues that could cause actual results to differ materially from such statements, including the risks and uncertainties discussed under risk factors in the company's 2007 annual report on form 10K. Including without limitation the company's projected revenues, earnings and store openings for future periods.
Robert Loudermilk will have a few opening remarks. Charlie Loudermilk will follow and Ken will talk specifically about the Aaron’s sales and lease ownership results and then Gil will add some further information. Robert?
Thank you, Lee. I would like to again say that we are quite pleased with our second quarter results that have exceeded both our revenue and earnings expectations. Our associates across the board in all divisions both in the field and the corporate offices have worked extremely hard especially in the past two quarters to achieve this record results. Even in these challenging times, I believe our customers are seeing our products and unique payment programs to reposition our household with traditional credit continuing to comeback in line with historical facts that I believe will continue to see more and more individuals realizing the value of the Aaron’s offerings.
Our same store revenue growth in both company operating and franchise store were once again strong in the quarter and we continue to see improvement in our collections as we call renewal efforts nearing our low historical levels. This is again a testament to the hard work of our associates. The flaws of financial results continue to be negatively impacted by the new store startup expenses we call ‘new store drag’ related to all the new stores we have opened in our last 18 to 24 months.
As these stores continue to ramp up in revenue and we slow down the pace of the new store openings, this new store drag will continue to subside and should return to a more normal levels of Q4 of this year. Aaron Direct corporate furnishing divisions continue to reposition itself in this tough corporate climate and MacTavish upholstery manufacturing shows an approximately 12% increase for the second quarter and for the same period last year, six month, a 4% increase and we see that continuing as we go into our traditionally busy season in the fall.
Going forward, as we have stated our plans for the next several years to grow our store base on average in the 10% to 12% range. This year 2008, our net corporate store growth will be somewhat less than the 10% to 12% as we consolidate and sell stores that have not been achieving our revenue and/or profit goals. This slowdown in yearend growth will allow management to build bench strength and should improve future profitability and overall financial performance.
Before I close, I would like to say I am probably one of the luckiest guys alive. We have a great company, built and operated by dedicated associates. My recent promotion to CEO is another chapter and a dream life. Notice that it was impossible without the 53 years of hardworking and personal dedication to this company and associates by our chairman, my father, Charles Loudermilk. I could not ask for a better situation being CEO while have backing foundation and continuing mentoring he provides on a daily basis. I want to thank him publicly for his dedication to this company, myself and our family.
Thank you for your support to our company and we will now will continue to turn the call over to Charlie for his comments.
Well, thank you Robert. I would say that was an unexpected comment. So, thank you very much for those. It is great to have a son that has the ability that Robert has and let me say to him becoming the CEO, he has been accepted by everyone that I know of and the team is intact. He has done extremely well. I want to thank all of our associates who have made these last two quarters what they are today and I can see where we are going to continue to drive the decision that we made to slow down on store openings has been the right decision and I think that we have a bright future in front of us and Ken, you..?