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Aaron’s, Inc. (AAN)
Q3 2012 Earnings Conference Call
October 26, 2012 10:00 a.m. ET
Lee Wilder – IR
Ron Allen – CEO
Gil Danielson – CFO
Ken Butler – COO
Laura Champine – Canaccord
Arvind Bhatia – Sterne Agee
David Magee – SunTrust Robinson & Company
John Rowan – Sidoti & Co
Brad Thomas – KeyBanc
John Baugh – Stifel
Budd Bugatch – Raymond James
Rob Straus – Gilford Securities
Previous Statements by AAN
» Aaron's CEO Discusses Q2 2012 Results - Earnings Call Transcript
» Aaron's CEO Discusses Q1 2012 Results - Earnings Call Transcript
» Aaron's CEO Discusses Q4 2011 Results - Earnings Call Transcript
Well, thank you all for joining us this morning. As usual, I’m going to turn the call over to Lee Wilder who works in Investor Relations for us and she’ll read our Safe Harbor Statement. And then Ron and Ken will have some comments and I’ll follow at the end. Lee?
Good morning. My name is Lee Wilder and I assist in Investor Relations for Aaron’s. The company’s earnings released issued today and the related form 8-K are available on our website, www.aaronsinc.com in the Investor Relations section. This webcast will be archived for replay there as well. With us today is Ron Allen, CEO; and Ken Butler, COO; and Gil Danielson, CFO.
Before we discussed through 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 demand, litigation, 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 2011 annual report on form 10K. Including, without limitation, the company’s projected revenues, earnings and store openings and acquisitions and disposition activities for future periods. Ron and Ken will have a few comments and then Gil will add further information followed by Q&A. Ron?
Thank you, Lee. Good morning, ladies and gentlemen. Thank you for joining us today. We’re pleased to announce another outstanding quarter for Aaron’s. Through the first nine months of year we’ve met our business goals and objectives and we expect 2012 to be another record year for the company in both revenues and earnings. As many of you know, Aaron’s financial performance has been remarkably consistent through the years in all types of economic conditions. As we’ve noted before, we believe the current tight credit environment for customers actually has been a positive for our business and of course, high unemployment levels are a negative.
We believe these economic conditions will continue into the foreseeable future. However as conditions improve, Aaron’s should continue to perform well as we’ve done in the past. Our customers’ desire and need our quality, basic home furnishings to live out their daily lives and usually cannot readily get this merchandise at traditional retailers due to credit constraints. However they can obtain these products at Aaron’s with our flexible payment plans and superior personalized service.
Aaron’s experienced management team knows our business and they know our customers, and we believe are folks perform at an exceptional level. We’re confident that we will meet our 2012 new store opening plans and also continue to see substantial growth ahead for our existing and new Aaron’s sales and lease ownership stores. We anticipate opening about the same number of Aaron stores in 2013 as we do in 2012.
Now the HomeSmart stores continue to ramp up in revenues, and we are optimistic about this weekly pay concept, but we still have some work some to do in perfecting the business model and currently anticipate not opening any significant number of new stores until at least the last half of 2013.
On September 28, we celebrated the opening of our 2,000th store which is located in the Bronx, New York. The Bronx and the other boroughs in New York are areas we have historically had very little presence, and that gives us plenty of more opportunity to open stores there.
Now as I complete my first year as CEO, I’m very proud of all the associates and their accomplishments during this 12 month period. Not only has our financial performance of the company met expectations, we have put in place many strategic and tactical initiatives to improve our infrastructure. We’ve greatly enhanced our associate resource functions, focusing on management development, retention and organization. We put increased emphasis on long-term planning. We invested in information technology, and have other initiatives in process that will result in great value to the company, now and in future years, as this business continues to grow and expand. I’ve been extremely impressed with the ability of our Aaron’s management team and our dedicated associates.
Let me close by reflecting on the fact that our Founder and Chairman, Charlie Loudermilk, retired in the middle of September. I visited with Charlie his last week here, and he told me, he said, Ron I’ve really let go. I said will Charlie that’s great because now you can sit back and look at the company that you’ve created and be very proud of it. But I said, more importantly, I want to look back in two years and feel very good and be very proud of what we’ve done as we build the company that you started. We’ll all miss Charlie, believe me, but we wish him well in his well-deserved retirement.