Rent-Way Reports Fiscal 2006 Third Quarter Financial Results

Third Quarter Rental Business Revenues up 5.9%; Same Store Revenues Up 4.1% 


ERIE, Pa., Aug. 3  /PRNewswire-FirstCall/ -- Rent-Way, Inc. (NYSE:RWY) today reported financial results for the three and nine months ended June 30, 2006.

For the third quarter, the Company reported revenues of $135.4 million versus $128.3 million in the same quarter last year.  Revenues from the Company's core rental business (which excludes the Company's dPi Teleconnect unit) were $131.5 million versus $124.2 million in the same quarter last year, an increase of 5.9%.  Same store rental business revenue increased 4.1% versus last year's quarter.  Operating income in the quarter was $12.1 million, compared to $12.3 million in the same period last year.  Net income was $2.7 million, compared to a $1.2 million net loss in the third quarter last year. Net income allocable to common shareholders was $2.1 million or $0.08 per diluted share versus a $1.8 million net loss last year or $(0.07) per diluted share.  Net income for the quarter gives effect to a non-cash $0.3 million FAS 133 charge related to the conversion feature of the Company's preferred stock. The Company had a $5.0 million FAS 133 charge in last year's quarter.

William Short, Rent-Way's President, commented, "Our customers appear to be adapting to higher commodity prices and we continue to see business returning to more normalized levels. Our same-store revenue comparisons were solid in the quarter and within the range we predicted."  Mr. Short continued, "During the quarter we opened 1 new store, sold 9 stores, and acquired the rental agreements of another 6 which were merged into existing RentWay locations.  This brings our total new store count to 8 this fiscal year."

The Company ended the quarter with $45.0 million outstanding on its bank revolver.  The Company reported EBITDA for the quarter of $16.1 million versus $16.2 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 used in operations for the quarter of $6.8 million versus $8.3 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 electronics, 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)

                                         June 30, 2006   September 30, 2005
                                          (unaudited)

  Cash and cash equivalents                    $7,145               $6,439
  Prepaid expenses                              5,967                7,962
  Rental merchandise, net                     224,929              194,178
  Total Assets                                494,036              460,485

  Accounts payable                             22,651               23,744
  Debt                                        247,629              221,313
  Total Liabilities                           353,335              324,322
  Shareholders' Equity                        123,668              118,234



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

                                              For the three months ended
                                                       June 30,
                                               2006              2005
                                            (unaudited)       (unaudited)
  Revenues:
     Rental revenue                      $113,701   84.0%  $108,455   84.5%
     Prepaid phone service revenue          4,124    3.0%     4,313    3.4%
     Other revenues                        17,543   13.0%    15,529   12.1%

  Total Revenues                          135,368  100.0%   128,297  100.0%

  Costs and operating expenses:
     Depreciation and amortization:
        Rental merchandise                 35,881   26.5%    31,949   24.9%
        Property and equipment              3,783    2.8%     3,732    2.9%
        Amortization of intangibles           205    0.2%       195    0.2%
     Cost of prepaid phone service          2,464    1.8%     2,684    2.1%
     Salaries and wages                    36,245   26.8%    35,580   27.7%
     Advertising, net                       4,715    3.5%     5,438    4.2%
     Occupancy                             10,324    7.6%     9,526    7.4%
     Other operating expenses              29,665   21.9%    26,886   21.0%
           Total costs and operating
            expenses                      123,282   91.1%   115,990   90.4%

           Operating income                12,086    8.9%    12,307    9.6%

  Other income (expense):
  Interest expense                         (7,403)  -5.5%    (7,304)  -5.7%
  Interest income                              21    0.0%         9    0.0%
  Amortization of deferred financing
   costs                                     (333)  -0.2%      (289)  -0.2%
  Other income (expense), net                (257)  -0.2%    (4,362)  -3.4%
        Income before income taxes and
         discontinued operations            4,114    3.0%       361    0.3%

  Income tax expense                        1,351    1.0%     1,395    1.1%

  Income (loss) before discontinued
   operations                               2,763    2.0%    (1,034)  -0.8%

  Loss from discontinued operations           (27)   0.0%      (181)  -0.1%

  Net income (loss)                        $2,736    2.0%   $(1,215)  -0.9%

  Dividend and accretion of preferred
   stock                                     (605)  -0.4%      (549)  -0.4%

  Net income (loss) allocable to common
   shareholders                            $2,131    1.6%   $(1,764)  -1.4%

  Earnings (loss) per common share:
    Basic earnings (loss) per common share
      Income before discontinued
       operations                           $0.10            $(0.04)
      Net income (loss) allocable to
       common shareholders                  $0.08            $(0.07)

    Diluted earnings (loss) per common share
      Income before discontinued
       operations                           $0.10            $(0.04)
      Net income (loss) allocable to
       common shareholders                  $0.08            $(0.07)

  Weighted average common shares
   outstanding:
      Basic                                26,398            26,250
      Diluted                              26,667            26,250



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

                                             For the nine months ended
                                                      June 30,
                                               2006              2005
                                            (unaudited)       (unaudited)
  Revenues:
     Rental revenue                      $340,499   83.9%  $328,596   84.1%
     Prepaid phone service revenue         12,289    3.0%    13,617    3.5%
     Other revenues                        52,821   13.0%    48,579   12.4%

  Total Revenues                          405,609  100.0%   390,792  100.0%

  Costs and operating expenses:
     Depreciation and amortization:
        Rental merchandise                108,474   26.7%   100,471   25.7%
        Property and equipment             11,009    2.7%    12,145    3.1%
        Amortization of intangibles           586    0.1%       251    0.1%
     Cost of prepaid phone service          7,733    1.9%     8,460    2.2%
     Salaries and wages                   109,831   27.1%   105,164   26.9%
     Advertising, net                      15,824    3.9%    15,524    4.0%
     Occupancy                             30,454    7.5%    27,874    7.1%
     Other operating expenses              91,039   22.4%    83,133   21.3%
           Total costs and operating
            expenses                      374,950   92.4%   353,022   90.3%

           Operating income                30,659    7.6%    37,770    9.7%

  Other income (expense):
  Interest expense                        (21,711)  -5.4%   (21,662)  -5.5%
  Interest income                              64    0.0%        22    0.0%
  Amortization of deferred financing
   costs                                     (982)  -0.2%      (854)  -0.2%
  Other income (expense), net               2,012    0.5%    (4,601)  -1.2%
        Income before income taxes and
         discontinued operations           10,042    2.5%    10,675    2.7%

  Income tax expense                        4,436    1.1%     4,185    1.1%

  Income (loss) before discontinued
   operations                               5,606    1.4%     6,490    1.7%

  Loss from discontinued operations          (120)   0.0%      (361)  -0.1%

  Net income (loss)                        $5,486    1.4%    $6,129    1.6%

  Dividend and accretion of preferred
   stock                                   (1,769)  -0.4%    (1,619)  -0.4%

  Net income (loss) allocable to common
   shareholders                            $3,717    0.9%    $4,510    1.2%

  Earnings (loss) per common share:
    Basic earnings (loss) per common share
      Income before discontinued
       operations                           $0.21             $0.24
      Net income (loss) allocable to
       common shareholders                  $0.14             $0.17

    Diluted earnings (loss) per common share
      Income before discontinued
       operations                           $0.14             $0.24
      Net income (loss) allocable to
       common shareholders                  $0.13             $0.17

  Weighted average common shares
   outstanding:
      Basic                                26,388            26,246
      Diluted                              29,856            26,778



  Calculation of EBITDA and Reconciliation of Net Cash Used
   in Operations to EBITDA
  For the Three and Nine Months Ended June 30, 2006 and 2005
  (all dollars in thousands)

                                Three Months Ended      Nine Months Ended
                               06/30/06    06/30/05    06/30/06    06/30/05
                             (unaudited) (unaudited) (unaudited) (unaudited)

  Calculation of EBITDA

  Operating income              $12,086     $12,307     $30,659     $37,770
  Depreciation - property
   and equipment                  3,783       3,732      11,009      12,145
  Amortization of intangibles       205         195         586         251

  EBITDA                        $16,074     $16,234     $42,254     $50,166



  Reconciliation of Net Cash Used in Operations to EBITDA

                                Three Months Ended      Nine Months Ended
                               06/30/06    06/30/05    06/30/06    06/30/05
                             (unaudited) (unaudited) (unaudited) (unaudited)

  Net cash used in operating
   activities                   $(6,826)    $(8,281)   $(10,626)   $(12,992)
  Net cash used in discontinued
   operations                        27         181         120         361
  Adjustments to reconcile net
   income (loss) to net cash
   used in operating activities (42,618)    (41,610)   (125,379)   (122,047)
  Changes in assets and
   liabilities                   52,153      48,495     141,371     140,807
  Depreciation - property and
   equipment                      3,783       3,732      11,009      12,145
  Amortization of intangibles       205         195         586         251
  Interest expense                7,403       7,304      21,711      21,662
  Interest income                   (21)         (9)        (64)        (22)
  Amortization of deferred
   financing costs                  333         289         982         854
  Other income                      257       4,362      (2,012)      4,601
  Income taxes                    1,351       1,395       4,436       4,185
  Loss from discontinued
   operations                        27         181         120         361
  EBITDA                        $16,074     $16,234     $42,254     $50,166


DATASOURCE: Rent-Way, Inc.



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



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

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