Best quote
"These are mature stores. The growth is as pure as it gets. No acquisitions, no new stores, just good old fashioned hard work and focused execution by our ops team."
CEO Bill Morgenstern commenting on Rent Way's quarterly performance
 

Rent Way (RWY) held it's quarterly conference call today at 4:30pm EST. A summary of the call follows. (audio is available from My RTO Portfolio)

In the quarter ending December 31, 2003, Rent Way increased agreement count by 40,000 agreements. More than double the amount gained in all of fiscal 2003. CEO Morgenstern attributed this performance to Rent Way employees. He described the effort as "The best performance I have seen in my 20 plus years in this business".

Rent Way's "turn", the target multiple of cost gained by each piece of rental merchandise, increased slightly to 3.95 from 3.91 last year.

The company increased guidance for this quarter's same store sales to between 3% and 4%. Prior guidance was 1% to 3%

Morgenstern noted that this increase was done the old fashioned way. "These are mature stores. The growth is as pure as it gets. No acquisitions, no new stores, just good old fashioned hard work and focused execution by our ops team."

Rent Way subsidiary DPIteleconnect has gained customers every month since October, 2003. At it's peak DPI had nearly 60,000 customers. That number shrank to 35,000 in September 2003. Since improving the companies provisioning process and adding Rent a Center as a client, DPI's customer count now stands at 45,000. Morgenstern expects DPI to be back around the 60,000 level by late 2004.

Rent Way will make an announcement within the next 45 days detailing the company's growth plans for this year.

Bill Short, Rent Way's Senior Vice President of Operations, noted that the company earned improvement during the quarter on "Every key metric we track." Key metrics include

• Customer count: Up 16,700 (22 per store) to 251,000 total
   

• Agreements on rent: Up 39,800 (53 per store) to 431,000 total
   

• Potential weekly rental revenue: Up $816,000 ($1,084 per store) to $8.8 million total
   

• Performance percentage (collections) 89.7% versus last years 88.3% for the same period
   

Short attributed the results to an increase in deliveries of 6,800 versus last year and a decrease in agreement returns of over 7,000. Payouts remained flat for the quarter.

Mr. Short said it was too early to judge the long term impact of the companies 180 days same as cash option introduced last year.

"Our operations team continues to execute the basics of our business and they continue to deliver on the high expectations they developed for themselves."
Bill Short

Depreciation expense increased to 28% of revenue versus 26% last year. Chief financial officer Bill McDonnell attributed this increase to Rent Ways addition of large numbers of game systems and computers to the lineup in preparation for the recent holiday season.

Wages were down to 27.2% of revenue versus 28.2% last year.

Quarterly interest expense decreased to $7.9 million versus $8.7 million last year. The company ended the quarter with $47.8 million outstanding on it's $60 million revolving credit facility. Rent Way's total debt stands at $252 million.