Our reported first quarter earnings per share exceeded our previous guidance, primarily as a result of higher than anticipated revenue.
Mark E. Speese, Rent-A-Center CEO

Rent-A-Center (RCII) announced revenues and net earnings for the quarter ended March 31, 2006 totaled $607.0 million, a $5.2 million increase from $601.8 million for the same period in the prior year. This increase of 0.9% in revenues was primarily driven by a 1.8% increase in same store sales plus an increase in incremental revenues generated in new and acquired stores, offset by an overall lower average store base as a result of the Company's previously announced store restructuring plan substantially completed in 2005 as well as stores closed due to hurricane damage.

Net earnings for the quarter ended March 31, 2006 were $40.3 million, or $0.57 per diluted share, representing an increase of 1.8% from the $0.56 per diluted share, or net earnings of $42.7 million for the same period in the prior year, when excluding the litigation reversion credit discussed below. The increase in net earnings per diluted share is primarily attributable to the increase in same store sales as well as the reduction in the number of Rent-A-Center's outstanding shares offset by increases in normal operating costs, such as utility and fuel costs, and expenses related to stock options. When including the litigation reversion credit discussed below, net earnings per diluted share for the quarter decreased 9.5% from the $0.63 per diluted share, or reported net earnings of $47.7 million for the same period in the prior year.

"Our reported first quarter earnings per share exceeded our previous guidance, primarily as a result of higher than anticipated revenue," commented Mark E. Speese, Rent-A-Center's Chairman and Chief Executive Officer. "Our same store sales increased 1.8% for the quarter, which is primarily related to changes in our promotional activities as well as a slight increase in customer traffic," Speese continued. "We believe that relatively stable utility and fuel costs during the quarter contributed to this slight increase in customer traffic. However, notwithstanding our better than expected first quarter results, we are not increasing our fiscal 2006 guidance at this time, due primarily to concerns regarding rising fuel prices and its potential impact on customer demand as well as our operating costs," Speese stated.

SECOND QUARTER 2006 GUIDANCE:

Revenues

-- Rent-A-Center expects total revenues to be in the range of $578 million to $586 million.

-- Store rental and fee revenues are expected to be between $523 million and $529 million.

-- Total store revenues are expected to be in the range of $569 million to $577 million.

-- Same store sales are expected to be in the flat to 1.0% range.

-- Rent-A-Center expects to open 5-15 new rent-to-own store locations.

-- Rent-A-Center expects to add financial services to 30-40 rent-to-own store locations.

Expenses

-- Rent-A-Center expects cost of rental and fees to be between 21.5% and 21.9% of store rental and fee revenue and cost of goods merchandise sales to be between 73% and 78% of store merchandise sales.

-- Store salaries and other expenses are expected to be in the range of 58.0% to 59.5% of total store revenue.

-- General and administrative expenses are expected to be between 3.6% and 3.8% of total revenue.

-- Net interest expense is expected to be approximately $12.0 million, depreciation of property assets to be approximately $13.5 million and amortization of intangibles is expected to be approximately $1.0 million.

-- The effective tax rate is expected to be approximately 37.0% of pre-tax income.

-- Diluted earnings per share are estimated to be in the range of $0.50 to $0.54.

-- Diluted shares outstanding are estimated to be between 70.1 million and 71.1 million.

FISCAL 2006 GUIDANCE:

Revenues

-- Rent-A-Center expects total revenues to be in the range of $2.338 billion and $2.368 billion.

-- Store rental and fee revenues are expected to be between $2.085 billion and $2.110 billion.

-- Total store revenues are expected to be in the range of $2.302 billion and $2.332 billion.

-- Same store sales are expected to be approximately 1%.

-- Rent-A-Center expects to open 60-80 new store locations.

-- Rent-A-Center expects to add financial services to 100-160 rent-to-own store locations.

Expenses

-- Rent-A-Center expects cost of rental and fees to be between 21.5% and 21.9% of store rental and fee revenue and cost of goods merchandise sales to be between 70% and 75% of store merchandise sales.

-- Store salaries and other expenses are expected to be in the range of 58.0% to 59.5% of total store revenue.

-- General and administrative expenses are expected to be between 3.6% and 3.8% of total revenue.

-- Net interest expense is expected to be between $44.0 million and $49.0 million, depreciation of property assets is expected to be between $52.0 million and $57.0 million and amortization of intangibles is expected to be approximately $3.5 million.

-- The effective tax rate is expected to be approximately 37.0% of pre-tax income.

-- Diluted earnings per share are estimated to be in the range of $2.00 to $2.10.

-- Diluted shares outstanding are estimated to be between 70.0 million and 71.5 million
 

Rent-A-Center, Inc. operates 2,751 company-owned stores nationwide and in Canada and Puerto Rico.