Rent-A-Center ends 2013 with $42.3 million of cash, falls short of expectations

By Lisa Kerner

Charlotte, N.C., Jan. 28 - Rent-A-Center, Inc. ended 2013 with cash and cash equivalents of $42.3 million, senior debt of $355.3 million and senior notes of $550 million.

This compares to revised figures of 2012 of $61.1 million, $387.5 million and $300 million, respectively, according to the company's earnings news release.

Outgoing chairman and chief executive officer Mark Speese said he was disappointed with the results but optimistic about the company's future. He will be replaced by chief financial officer Robert Davis on Feb. 1.

Specifically, revenue and earnings for the quarter and the year fell short.

"We continue to face meaningful headwinds in our domestic U.S. rent-to-own business, including a customer under severe economic pressure and an intensified promotional environment," Speese said.

Davis said the quarter and year ended "well below expectations," and Rent-A-Center must get better and improve its overall business.

Fourth-quarter revenues were $769.6 million, up $11.2 million from the prior-year period. Revenues for the full year rose 0.7% to about $3.1 billion.

Net earnings and net earnings per diluted share for the quarter ended Dec. 31 were $13.1 million and $0.25, respectively, as compared to $47.2 million and $0.80, respectively, for the same period a year ago.

Full-year net earnings and net earnings per diluted share were $128.2 million and $2.32, respectively, as compared to $181.7 million and $3.06, respectively, in the prior year.

Rent-A-Center generated cash flow from operations for the full year of about $134.3 million.

During 2013, the company repurchased 5,874,374 shares for about $217.4 million in cash under its common stock repurchase program, which included $200 million under an accelerated stock buyback that began in May and settled in October.

To date, the Plano, Tex.-based rent-to-own operator has repurchased a total of 36,994,653 shares and used $994.8 million of the $1.25 billion authorized by its board.

The board also approved a 10% increase in its quarterly cash dividend to $0.23 per share, beginning with the dividend for the first quarter of 2014. Rent-A-Center paid its 15th consecutive quarterly cash dividend on Jan. 23.

Looking ahead to 2014, the company is guiding total revenue growth of 4.5% to 7.5% and EBITDA in the range of $325 to $345 million.

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