Rent-Way Reports Fiscal 2006 First Quarter Financial Results

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:  [e-mail] 

DATASOURCE: Rent-Way, Inc.



CONTACT:  Bill Short  of Rent-Way, [phone] 



Web site:  http://www.rentway.com/ 

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