Rent-Way Reports Fiscal 2006 Second Quarter Financial Results

Second Quarter Rental Business Revenues Up 5.2%; Same Store Revenues Up 1.2% 


ERIE, Pa., May 3  /PRNewswire-FirstCall/ -- Rent-Way, Inc. (NYSE:RWY) today reported financial results for the three and six months ended March 31, 2006.

For the second quarter, the Company reported revenues of $142.4 million versus $136.2 million in the same quarter last year.  Revenues from the Company's core rental business (which excludes the Company's dPi Teleconnect unit) were $138.4 million versus $131.6 million in the same quarter last year, an increase of 5.2%. Same store rental business revenue increased 1.2% versus last year's quarter.  Operating income in the quarter was $11.2 million, compared to $14.3 million in the same period last year.  Net income was $2.1 million, compared to $6.3 million in the second quarter last year.  Net income allocable to common shareholders was $1.6 million or $0.06 per diluted share versus net income of $5.8 million last year or $0.19 per diluted share.  Net income for the quarter gives effect to a non-cash $0.1 million FAS 133 gain related to the conversion feature of the Company's preferred stock.  The FAS 133 gain was $0.6 million in last year's quarter.

William Short, Rent-Way's President, commented, "We experienced strong growth in potential weekly rental revenue during the quarter, and as predicted our same-store revenue comparisons were positive in the quarter. Looking forward for the balance of the fiscal and calendar year, we expect to see same store revenues in the 3% - 5% range."  Mr. Short continued, "During the quarter we opened 2 new stores, sold 2 stores, and acquired the rental agreements of another 2 which were merged into existing RentWay locations. This brings our total new store count to 8 this fiscal year, and 53 over the past 18 months. These stores continue to meet our expectations and our plan for the balance of the fiscal year is to continue to open new stores and seek out strategic acquisitions. We believe very strongly that continuing to invest in the growth of our business is the best way to maximize earnings and shareholder value."

The Company ended the quarter with $37.0 million outstanding on its bank revolver, up from $18.0 million at March 31, 2005.  The Company reported EBITDA for the quarter of $15.0 million versus $18.2 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 provided by operations for the quarter of $6.8 million versus $13.3 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.

About Rent-Way

Rent-Way is one of the nation's largest operators of rental-purchase stores.  Rent-Way rents quality name brand merchandise such as home entertainment equipment, computers, furniture and appliances from 784 stores in 34 states.

Safe-Harbor Statements

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements contain the words "projects," "anticipates," "believes," "expects," "intends," "will," "may" and similar words and expressions.  Each such statement is subject to uncertainties, risks and other factors that could cause actual results or performance to differ materially from the results or performance expressed in or implied by such statements.  The forward-looking statements in this news release that contain projections of the company's expected financial performance and other projections regarding future performance are inherently subject to change given the nature of projections and the company's actual performance may be better or worse than projected.  Uncertainties, risks and other factors that may cause actual results or performance to differ materially from any results or performance expressed or implied by forward- looking statements in this news release include: (1) the company's ability to control its operating expenses and to realize operating efficiencies, (2) the company's ability to develop, implement and maintain adequate and reliable internal accounting systems and controls, (3) the company's ability to retain existing senior management and to attract additional management employees, (4) general economic and business conditions, including demand for the company's products and services, (5) general conditions relating to the rental-purchase industry, including the impact of state and federal laws regulating or otherwise affecting the rental-purchase transaction, (6) competition in the rental-purchase industry, including competition with traditional retailers, (7) the company's ability to make principal and interest payments on its high level of outstanding debt, and (8) the company's ability to open new stores and cause those new stores to operate profitably.  A discussion of other risk factors that may cause actual results to differ from the results expressed in or implied by these forward-looking statements can be found in the company's filing with the SEC.  The company disclaims any duty to provide updates to the forward-looking statements made in this news release.

                              RENT-WAY, INC.
                       SELECTED BALANCE SHEET DATA
                        (all dollars in thousands)

                                         March 31, 2006  September 30, 2005
                                          (unaudited)

  Cash and cash equivalents                    $7,378            $6,439
  Prepaid expenses                              6,637             7,962
  Rental merchandise, net                     234,551           194,178
  Total Assets                                505,156           460,485

  Accounts payable                             40,768            23,744
  Debt                                        239,522           221,313
  Total Liabilities                           368,659           324,322
  Shareholders' Equity                        120,014           118,234



                              RENT-WAY, INC.
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                               (unaudited)
             (all dollars in thousands except per share data)

                                             For the three months ended


March 31, 020885/00004 BFLODOCS 1532792v1 2006              2005

  Revenues:
     Rental revenue                      $119,564   84.0%  $114,199   83.8%
     Prepaid phone service revenue          4,125    2.9%     4,742    3.5%
     Other revenues                        18,695   13.1%    17,257   12.7%

  Total Revenues                          142,384  100.0%   136,198  100.0%

  Costs and operating expenses:
     Depreciation and amortization:
        Rental merchandise                 38,950   27.4%    36,005   26.4%
        Property and equipment              3,655    2.6%     3,902    2.9%
        Amortization of intangibles           196    0.1%        28    0.0%
     Cost of prepaid phone service          2,733    1.9%     2,871    2.1%
     Salaries and wages                    36,950   26.0%    34,764   25.5%
     Advertising, net                       5,156    3.6%     4,733    3.5%
     Occupancy                             10,195    7.2%     9,289    6.8%
     Other operating expenses              33,351   23.4%    30,305   22.3%
           Total costs and operating
            expenses                      131,186   92.1%   121,897   89.5%

           Operating income                11,198    7.9%    14,301   10.5%

  Other income (expense):
  Interest expense                         (7,334)  -5.2%    (7,291)  -5.4%
  Interest income                              21    0.0%         7    0.0%
  Amortization of deferred financing
   costs                                     (331)  -0.2%      (285)  -0.2%
  Other income (expense), net                 355    0.2%     1,025    0.8%
        Income before income taxes and
         discontinued operations            3,909    2.7%     7,757    5.7%

  Income tax expense                        1,697    1.2%     1,395    1.0%

  Income before discontinued operations     2,212    1.6%     6,362    4.7%

  Loss from discontinued operations           (69)   0.0%       (53)   0.0%

  Net income                               $2,143    1.5%    $6,309    4.6%

  Preferred stock dividend and accretion
   of preferred stock                        (585)  -0.4%      (534)  -0.4%

  Net income allocable to common
   shareholders                            $1,558    1.1%    $5,775    4.2%


  Earnings per common share:
      Basic earnings per common share
          Income before discontinued
           operations                       $0.08             $0.24
          Net income allocable to common
           shareholders                     $0.06             $0.22

      Diluted earnings per common share
          Income before discontinued
           operations                       $0.08             $0.19
          Net income allocable to common
           shareholders                     $0.06             $0.19

  Weighted average common shares
   outstanding:
      Basic                                26,387            26,244
      Diluted                              26,612            29,992



                              RENT-WAY, INC.
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                               (unaudited)
             (all dollars in thousands except per share data)

                                              For the six months ended
                                                     March 31,
                                               2006              2005
  Revenues:
     Rental revenue                      $226,798   83.9%  $220,141   83.9%
     Prepaid phone service revenue          8,164    3.0%     9,304    3.5%
     Other revenues                        35,278   13.1%    33,050   12.6%

  Total Revenues                          270,240  100.0%   262,495  100.0%

  Costs and operating expenses:
     Depreciation and amortization:
        Rental merchandise                 72,593   26.9%    68,521   26.1%
        Property and equipment              7,226    2.7%     8,413    3.2%
        Amortization of intangibles           381    0.1%        56    0.0%
     Cost of prepaid phone service          5,269    1.9%     5,777    2.2%
     Salaries and wages                    73,585   27.2%    69,584   26.5%
     Advertising, net                      11,109    4.1%    10,085    3.8%
     Occupancy                             20,130    7.4%    18,349    7.0%
     Other operating expenses              61,374   22.7%    56,247   21.4%
           Total costs and operating
            expenses                      251,667   93.1%   237,032   90.3%

           Operating income                18,573    6.9%    25,463    9.7%

  Other income (expense):
  Interest expense                        (14,308)  -5.3%   (14,358)  -5.5%
  Interest income                              42    0.0%        13    0.0%
  Amortization of deferred financing
   costs                                     (649)  -0.2%      (565)  -0.2%
  Other income (expense), net               2,269    0.8%      (239)  -0.1%
        Income before income taxes and
         discontinued operations            5,927    2.2%    10,314    3.9%

  Income tax expense                        3,085    1.1%     2,790    1.1%

  Income before discontinued operations     2,842    1.1%     7,524    2.9%

  Loss from discontinued operations           (92)   0.0%      (181)  -0.1%

  Net income                               $2,750    1.0%    $7,343    2.8%

  Preferred stock dividend and accretion
   of preferred stock                      (1,164)  -0.4%    (1,069)  -0.4%

  Net income allocable to common
   shareholders                            $1,586    0.6%    $6,274    2.4%


  Earnings per common share:
      Basic earnings per common share
          Income before discontinued
           operations                       $0.11             $0.29
          Net income allocable to common
           shareholders                     $0.06             $0.24

      Diluted earnings per common share
          Income before discontinued
           operations                       $0.03             $0.28
          Net income allocable to common
           shareholders                     $0.03             $0.23

  Weighted average common shares
   outstanding:
      Basic                                26,384            26,244
      Diluted                              29,827            26,728



  Calculation of EBITDA and Reconciliation of Net Cash Provided by (Used in)
   Operations to EBITDA
  For the Three and Six Months Ended March 31, 2006 and 2005
  (all dollars in thousands)

                                  Three Months Ended     Six Months Ended
                                  03/31/06   03/31/05   03/31/06   03/31/05
                                (unaudited)(unaudited)(unaudited)(unaudited)

  Calculation of EBITDA

  Operating income                $11,198    $14,301    $18,573    $25,463
  Depreciation - property
   and equipment                    3,655      3,902      7,226      8,413
  Amortization of intangibles         196         28        381         56

  EBITDA                          $15,049    $18,231    $26,180    $33,932



  Reconciliation of Net Cash Provided by (Used in) Operations to EBITDA

                                  Three Months Ended     Six Months Ended
                                  03/31/06   03/31/05   03/31/06   03/31/05
                                (unaudited)(unaudited)(unaudited)(unaudited)

  Net cash provided by (used in)
   operating activities            $6,761    $13,338    $(3,800)   $(4,711)
  Net cash used in discontinued
   operations                          69         53         92        181
  Adjustments to reconcile net
   income to net cash provided
   by (used in) operating
   activities                     (45,125)   (40,749)   (82,760)   (80,438)
  Changes in assets and
   liabilities                     40,438     33,667     89,218     92,311
  Depreciation - property
   and equipment                    3,655      3,902      7,226      8,413
  Amortization of intangibles         196         28        381         56
  Interest expense                  7,334      7,291     14,308     14,358
  Interest income                     (21)        (7)       (42)       (13)
  Amortization of deferred
   financing costs                    331        285        649        565
  Other income                       (355)    (1,025)    (2,269)       239
  Income taxes                      1,697      1,395      3,085      2,790
  Loss from discontinued
   operations                          69         53         92        181
  EBITDA                          $15,049    $18,231    $26,180    $33,932


DATASOURCE: Rent-Way, Inc.



CONTACT: John Lombardi of Rent-Way, [phone]



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

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