Release Details

Total Revenues Increased 7.4%

Same Store Sales Increased 2.8%

Diluted Earnings per Share of $0.74

Repurchased Approximately 489,000 Shares of Common Stock

PLANO, Texas--(BUSINESS WIRE)--Jul. 23, 2012-- Rent-A-Center, Inc. (the “Company”) (NASDAQ/NGS: RCII), the nation’s largest rent-to-own operator, today announced revenues and earnings for the quarter ended June 30, 2012.

Second Quarter 2012 Results

Total revenues for the quarter ended June 30, 2012, were $749.7 million, an increase of $51.4 million from total revenues of $698.3 million for the same period in the prior year. This 7.4% increase in total revenues was primarily due to growth in the RAC Acceptance segment. Same store sales for the quarter ended June 30, 2012, increased 2.8%.

Net earnings and net earnings per diluted share for the three months ended June 30, 2012, were $44.2 million and $0.74, respectively, as compared to $39.9 million and $0.63, respectively, for the same period in the prior year. Net earnings and net earnings per diluted share for the three months ended June 30, 2011, were reduced by $4.9 million, and approximately $0.05 per share, respectively, due to a pre-tax restructuring charge related to the acquisition of The Rental Store, Inc., as discussed below.

Net earnings per diluted share for the three months ended June 30, 2012, were $0.74, as compared to adjusted net earnings per diluted share of $0.68, when excluding the pre-tax restructuring charge above, for the three months ended June 30, 2011, an increase of 8.8%. These results include dilution related to the Company’s international growth initiatives of approximately $0.08 per share for the three months ended June 30, 2012, and $0.03 per share for the same period in the prior year.

“We are generally pleased with our results in the quarter, as total revenues increased over 7% and earnings per share increased close to 9%,” said Mark E. Speese, the Company's Chairman and Chief Executive Officer. “The RAC Acceptance segment performed exceptionally well nearly doubling revenue from a year ago to $77 million, with a gross profit margin of 58% and an operating profit of $7 million,” Speese continued. “Our Core U.S. segment experienced a 1.6% growth in total revenue in the quarter keeping us on track to achieve our 2012 total revenue guidance of 7% to 10% growth and our 2012 diluted earnings per share guidance of $3.00 to $3.20,” Speese concluded.

Six Months Ended June 30, 2012 Results

Total revenues for the six months ended June 30, 2012, were $1.585 billion, an increase of $145.0 million from total revenues of $1.440 billion for the same period in the prior year. This 10.1% increase in total revenues was primarily due to growth in the RAC Acceptance segment as well as growth in the Core U.S. segment. Same store sales for the six months ended June 30, 2012, increased 4.5%.

Net earnings and net earnings per diluted share for the six months ended June 30, 2012, were $96.1 million and $1.61, respectively, as compared to $84.1 million and $1.32, respectively, for the same period in the prior year.

Net earnings and net earnings per diluted share for the six months ended June 30, 2011, were impacted by the following significant items, as discussed below:

• A $4.9 million pre-tax restructuring charge, or approximately $0.05 per share, related to the acquisition of The Rental Store, Inc.;
• A $7.3 million pre-tax impairment charge, or approximately $0.07 per share, related to the discontinuation of the financial services business; and
• A $2.8 million pre-tax litigation expense, or approximately $0.03 per share, related to the settlement of wage and hour claims in California.

Collectively, these items reduced net earnings per diluted share by approximately $0.15 for the six months ended June 30, 2011.

Net earnings per diluted share for the six months ended June 30, 2012, were $1.61, as compared to adjusted net earnings per diluted share for the six months ended June 30, 2011, of $1.47 when excluding the items above, an increase of 9.5%.

Through the six month period ended June 30, 2012, the Company generated cash flow from operations of approximately $161.1 million, while ending the quarter with approximately $101.1 million of cash on hand. During the six month period ended June 30, 2012, the Company repurchased 488,731 shares of its common stock for approximately $16.5 million in cash under its common stock repurchase program. To date, the Company has repurchased a total of 29,811,484 shares and has utilized approximately $732.0 million of the $800.0 million authorized by its Board of Directors since the inception of the plan. Also, reflecting continued confidence in its strong cash flows by returning cash to stockholders, the Company will pay its ninth consecutive quarterly cash dividend on July 25, 2012.

2012 Guidance

The Company began presenting segmented financial information commencing with its Annual Report on Form 10-K for the year ended December 31, 2011. Accordingly, quarterly segmented operating results were initiated with the quarter ended March 31, 2012. The Company is committed to high levels of disclosure and transparency with respect to its operating segments.

In addition, the Company made certain changes to its guidance practices. Beginning with the fourth quarter 2011 earnings press release, the Company began providing annual guidance with quarterly updates on the metrics below. The Company will no longer provide quarterly earnings per share guidance; however, the Company has made available on its web site (investor.rentacenter.com) a range of the percentage contribution to full year diluted earnings per share by quarter based on historical results since 2009. In future years, the Company will provide its initial annual guidance for the following fiscal year with the fourth quarter earnings press release. We believe these changes in guidance practice will allow management to focus on the Company’s long-term performance and the execution of our strategic plan as communicated in November 2010.

2012 Guidance

• 7% to 10% total revenue growth.
  • Low single digit growth in the Core U.S.
  • Over $300 million contribution from RAC Acceptance.
• 2.5% to 4.5% same store sales growth.
  • Split evenly between Core U.S. and the impact of RAC Acceptance.
• 100 basis points gross profit margin decrease.
  • Primarily due to the impact of RAC Acceptance.
• 50 basis points operating profit margin decrease.
• Diluted earnings per share in the range of $3.00 to $3.20, including approximately $0.25 to $0.30 per share dilution related to our international growth initiatives, which now includes corporate allocations consistent with our segment reporting.
• Capital expenditures of approximately $105 million.
• The Company expects to open approximately 50 domestic rent-to-own store locations.
• The Company expects to open approximately 200 domestic RAC Acceptance kiosks.
• The Company expects to open approximately 60 rent-to-own store locations in Mexico.
• The Company expects to open approximately 10 rent-to-own store locations in Canada.
• The 2012 guidance does not include the potential impact of any repurchases of common stock the Company may make, changes in future dividends, material changes in outstanding indebtedness, or the potential impact of acquisitions, dispositions or store closures that may be completed or occur after July 23, 2012.

2011 Significant Items

Restructuring Charge. As previously reported, the Company recorded a $4.9 million pre-tax restructuring charge during the second quarter of 2011 related to post-acquisition lease terminations in connection with the December 2010 acquisition of The Rental Store, Inc. This pre-tax restructuring charge of $4.9 million reduced net earnings per diluted share by approximately $0.05 in both the three month and six month periods ended June 30, 2011.

Financial Services Charge. As previously reported, the Company recorded a pre-tax impairment charge of $7.3 million during the first quarter of 2011 related primarily to loan write-downs, fixed asset disposals (store reconstruction) and other miscellaneous items in connection with the discontinuation of the financial services business. For the six months ended June 30, 2011, this pre-tax impairment charge of $7.3 million reduced net earnings per diluted share by approximately $0.07.

Settlement of Wage & Hour Claims in California. As previously reported, the Company recorded a $2.8 million pre-tax litigation expense during the first quarter of 2011 in connection with the settlement of certain putative class actions pending in California alleging various claims, including violations of California wage and hour laws. For the six months ended June 30, 2011, this pre-tax litigation expense of $2.8 million reduced net earnings per diluted share by approximately $0.03.

Rent-A-Center, Inc. will host a conference call to discuss the second quarter results, guidance and other operational matters on Tuesday morning, July 24, 2012, at 10:45 a.m. ET. For a live webcast of the call, visit http://investor.rentacenter.com. Certain financial and other statistical information that will be discussed during the conference call will also be provided on the same website.

Rent-A-Center, Inc., headquartered in Plano, Texas, is the largest rent-to-own operator in North America, focused on improving the quality of life for its customers by providing them the opportunity to obtain ownership of high-quality, durable goods such as consumer electronics, appliances, computers, furniture and accessories, under flexible rental purchase agreements with no long-term obligation. The Company owns and operates approximately 3,070 stores in the United States, Canada, Mexico and Puerto Rico, and approximately 810 RAC Acceptance kiosk locations in the United States and Puerto Rico. ColorTyme, Inc., a wholly owned subsidiary of the Company, is a national franchiser of approximately 220 rent-to-own stores operating under the trade name of "ColorTyme." For additional information about the Company, please visit www.rentacenter.com.

This press release and the guidance above contain forward-looking statements that involve risks and uncertainties. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “could,” “estimate,” “should,” “anticipate,” or “believe,” or the negative thereof or variations thereon or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements will prove to be correct, the Company can give no assurance that such expectations will prove to have been correct. The actual future performance of the Company could differ materially from such statements. Factors that could cause or contribute to such differences include, but are not limited to: uncertainties regarding the ability to open new locations; the Company’s ability to acquire additional stores or customer accounts on favorable terms; the Company’s ability to control costs and increase profitability; the Company’s ability to enhance the performance of acquired stores; the Company’s ability to retain the revenue associated with acquired customer accounts; the Company’s ability to identify and successfully market products and services that appeal to its customer demographic; the Company’s ability to enter into new and collect on its rental or lease purchase agreements; the passage of legislation adversely affecting the rent-to-own industry; the Company’s failure to comply with applicable statutes or regulations governing its transactions; changes in interest rates; changes in the unemployment rate; economic pressures, such as high fuel costs, affecting the disposable income available to the Company’s current and potential customers; economic conditions affecting consumer spending; changes in the Company’s stock price, the number of shares of common stock that it may or may not repurchase, and future dividends, if any; changes in estimates relating to self-insurance liabilities and income tax and litigation reserves; changes in the Company’s effective tax rate; fluctuations in foreign currency exchange rates; the Company’s ability to maintain an effective system of internal controls; changes in the number of share-based compensation grants, methods used to value future share-based payments and changes in estimated forfeiture rates with respect to share-based compensation; the resolution of the Company’s litigation; and the other risks detailed from time to time in the Company’s SEC reports, including but not limited to, its annual report on Form 10-K for the year ended December 31, 2011 and its quarterly report on Form 10-Q for the quarter ended March 31, 2012. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company is not obligated to publicly release any revisions to these forward-looking statements to reflect the events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.

Rent-A-Center, Inc. and Subsidiaries
STATEMENT OF EARNINGS HIGHLIGHTS
(In thousands of dollars, except per share data)			Three Months Ended June 30,
			2012				2011				2011
			After				Before				After
			Significant Items				Significant Items				Significant Items
			(GAAP				(Non-GAAP				(GAAP
			Earnings)				Earnings)				Earnings)
Total Revenues			$	749,698			$	698,253			$	698,253
Operating Profit				79,027				78,085				73,152		(1)
Net Earnings				44,182				42,975				39,888		(1)
Diluted Earnings per Common Share			$	0.74			$	0.68			$	0.63		(1)
Adjusted EBITDA			$	98,846			$	95,370			$	95,370
Reconciliation to Adjusted EBITDA:
Earnings Before Income Taxes			$	70,806			$	68,709			$	63,776
Add back:
Restructuring Charge				—				—				4,933
Interest Expense, net				8,221				9,376				9,376
Depreciation of Property Assets				18,338				16,153				16,153
Amortization and Write-down of Intangibles				1,481				1,132				1,132
Adjusted EBITDA			$	98,846			$	95,370			$	95,370
(In thousands of dollars, except per share data)			Six Months Ended June 30,
			2012				2011				2011
			After				Before				After
			Significant Items				Significant Items				Significant Items
			(GAAP				(Non-GAAP				(GAAP
			Earnings)				Earnings)				Earnings)
Total Revenues			$	1,584,952			$	1,440,431			$	1,440,431
Operating Profit				171,061				168,624				153,571		(1)(2)(3)
Net Earnings				96,123				93,526				84,118		(1)(2)(3)
Diluted Earnings per Common Share			$	1.61			$	1.47			$	1.32		(1)(2)(3)
Adjusted EBITDA			$	210,209			$	202,445			$	202,445
Reconciliation to Adjusted EBITDA:
Earnings Before Income Taxes			$	154,044			$	149,642			$	134,589
Add back:
Impairment Charge				—				—				7,320
Restructuring Charge				—				—				4,933
Litigation Expense				—				—				2,800
Interest Expense, net				17,017				18,982				18,982
Depreciation of Property Assets				36,332				31,831				31,831
Amortization and Write-down of Intangibles				2,816				1,990				1,990
Adjusted EBITDA			$	210,209			$	202,445			$	202,445

(1)		Includes the effects of a $4.9 million pre-tax restructuring charge in the second quarter of 2011 for lease terminations related to The Rental Store acquisition. The charge reduced net earnings per diluted share by approximately $0.05 in both the three month and six month periods ended June 30, 2011.
(2)		Includes the effects of a $7.3 million pre-tax impairment charge in the first quarter of 2011 related to the discontinuation of the financial services business. The charge reduced net earnings per diluted share by approximately $0.07 for the six month period ended June 30, 2011.
(3)		Includes the effects of a $2.8 million pre-tax litigation expense in the first quarter of 2011 related to the settlement of wage and hour claims in California. The expense reduced net earnings per diluted share by approximately $0.03 for the six month period ended June 30, 2011.

SELECTED BALANCE SHEET HIGHLIGHTS
(In thousands of dollars)			June 30,
			2012				2011
Cash and Cash Equivalents			$	101,131			$	74,031
Receivables, net				45,383				44,573
Prepaid Expenses and Other Assets				70,207				66,872
Rental Merchandise, net
On Rent				731,433				673,431
Held for Rent				189,203				194,239
Total Assets			$	2,789,383			$	2,643,599
Senior Debt			$	367,755			$	361,544
Senior Notes				300,000				300,000
Total Liabilities				1,355,885				1,272,501
Stockholders’ Equity			$	1,433,498			$	1,371,098

Rent-A-Center, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands of dollars, except per share data)			Three Months Ended June 30,
				2012					2011
			Unaudited
Revenues
Store
Rentals and Fees			$	658,987				$	617,796
Merchandise Sales				60,622					50,973
Installment Sales				16,170					16,571
Other				4,537					4,143
				740,316					689,483
Franchise
Merchandise Sales				8,022					7,525
Royalty Income and Fees				1,360					1,245
Total Revenues				749,698					698,253
Cost of Revenues
Store
Cost of Rentals and Fees				159,790					139,295
Cost of Merchandise Sold				49,525					39,510
Cost of Installment Sales				5,728					5,898
Franchise Cost of Merchandise Sold				7,682					7,195
Total Cost of Revenues				222,725					191,898
Gross Profit				526,973					506,355
Operating Expenses
Salaries and Other Expenses				412,035					395,091
General and Administrative Expenses				34,430					32,047
Amortization and Write-down of Intangibles				1,481					1,132
Restructuring Charge				—					4,933
Total Operating Expenses				447,946					433,203
Operating Profit				79,027					73,152
Interest Expense				8,343					9,613
Interest Income				(122	)				(237	)
Earnings Before Income Taxes				70,806					63,776
Income Tax Expense				26,624					23,888
NET EARNINGS			$	44,182				$	39,888
BASIC WEIGHTED AVERAGE SHARES				59,160					62,450
BASIC EARNINGS PER COMMON SHARE			$	0.75				$	0.64
DILUTED WEIGHTED AVERAGE SHARES				59,578					63,148
DILUTED EARNINGS PER COMMON SHARE			$	0.74				$	0.63

Rent-A-Center, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands of dollars, except per share data)			Six Months Ended June 30,
				2012					2011
			Unaudited
Revenues
Store
Rentals and Fees			$	1,336,968				$	1,228,224
Merchandise Sales				183,481					150,239
Installment Sales				33,665					33,258
Other				9,469					9,482
				1,563,583					1,421,203
Franchise
Merchandise Sales				18,635					16,671
Royalty Income and Fees				2,734					2,557
Total Revenues				1,584,952					1,440,431
Cost of Revenues
Store
Cost of Rentals and Fees				323,149					274,944
Cost of Merchandise Sold				144,541					108,089
Cost of Installment Sales				12,026					11,946
Franchise Cost of Merchandise Sold				17,846					15,949
Total Cost of Revenues				497,562					410,928
Gross Profit				1,087,390					1,029,503
Operating Expenses
Salaries and Other Expenses				842,838					792,289
General and Administrative Expenses				70,675					66,600
Amortization and Write-down of Intangibles				2,816					1,990
Impairment Charge				—					7,320
Restructuring Charge				—					4,933
Litigation Expense				—					2,800
Total Operating Expenses				916,329					875,932
Operating Profit				171,061					153,571
Interest Expense				17,320					19,373
Interest Income				(303	)				(391	)
Earnings Before Income Taxes				154,044					134,589
Income Tax Expense				57,921					50,471
NET EARNINGS			$	96,123				$	84,118
BASIC WEIGHTED AVERAGE SHARES				59,206					62,902
BASIC EARNINGS PER COMMON SHARE			$	1.62				$	1.34
DILUTED WEIGHTED AVERAGE SHARES				59,757					63,720
DILUTED EARNINGS PER COMMON SHARE			$	1.61				$	1.32

Rent-A-Center, Inc. and Subsidiaries
SEGMENT INFORMATION HIGHLIGHTS
(In thousands of dollars)			Three Months Ended June 30, 2012
			Core U.S.				RAC Acceptance					International					ColorTyme				Total
Revenues			$	654,356			$	77,060				$	8,900				$	9,382			$	749,698
Gross profit				474,414				44,617					6,242					1,700				526,973
Operating profit				79,463				6,897					(7,811	)				478				79,027
Depreciation				15,952				856					1,506					24				18,338
Amortization				585				896					—					—				1,481
Capital expenditures				16,692				1,047					3,153					—				20,892
(In thousands of dollars)			Three Months Ended June 30, 2011
			Core U.S.				RAC Acceptance					International					ColorTyme				Total
Revenues			$	644,129			$	40,892				$	4,462				$	8,770			$	698,253
Gross profit				476,649				24,959					3,172					1,575				506,355
Operating profit				82,556				(7,540	)				(2,556	)				692				73,152
Depreciation				15,137				521					455					40				16,153
Amortization				94				1,038					—					—				1,132
Capital expenditures				27,758				1,794					2,520					—				32,072
(In thousands of dollars)			Six Months Ended June 30, 2012
			Core U.S.				RAC Acceptance					International					ColorTyme				Total
Revenues			$	1,382,186			$	164,788				$	16,609				$	21,369			$	1,584,952
Gross profit				984,471				87,787					11,609					3,523				1,087,390
Operating profit				174,671				9,765					(14,571	)				1,196				171,061
Depreciation				31,708				1,684					2,891					49				36,332
Amortization				1,023				1,793					—					—				2,816
Capital expenditures				37,033				2,391					8,896					—				48,320
Rental merchandise, net
On rent				553,683				165,798					11,952					—				731,433
Held for rent				180,351				2,130					6,722					—				189,203
Total assets				2,476,417				247,854					62,132					2,980				2,789,383
(In thousands of dollars)			Six Months Ended June 30, 2011
			Core U.S.				RAC Acceptance					International					ColorTyme				Total
Revenues			$	1,333,659			$	79,305				$	8,239				$	19,228			$	1,440,431
Gross profit				973,333				47,044					5,847					3,279				1,029,503
Operating profit				164,616				(8,126	)				(4,379	)				1,460				153,571
Depreciation				30,052				925					775					79				31,831
Amortization				200				1,790					—					—				1,990
Capital expenditures				48,267				2,719					8,230					—				59,216
Rental merchandise, net
On rent				580,834				87,071					5,526					—				673,431
Held for rent				190,106				1,133					3,000					—				194,239
Total assets				2,451,699				165,723					23,329					2,848				2,643,599
			Location Activity - Three Months Ended June 30, 2012
			Core U.S.				RAC Acceptance					International					ColorTyme				Total
Locations at beginning of period				2,983				763					87					218				4,051
New location openings				8				77					13					2				100
Closed locations
Merged with existing locations				15				29					—					—				44
Sold or closed with no surviving location				3				—					1					1				5
Locations at end of period				2,973				811					99					219				4,102
Acquired locations closed and accounts merged with existing locations				4				—					—					—				4
			Location Activity - Six Months Ended June 30, 2012
			Core U.S.				RAC Acceptance					International					ColorTyme				Total
Locations at beginning of period				2,994				750					80					216				4,040
New location openings				12				122					20					6				160
Closed locations
Merged with existing locations				29				47					—					—				76
Sold or closed with no surviving location				4				14					1					3				22
Locations at end of period				2,973				811					99					219				4,102
Acquired locations closed and accounts merged with existing locations				6				—					—					—				6

Source: Rent-A-Center, Inc.

Rent-A-Center, Inc.
David E. Carpenter, 972-801-1214
Vice President of Investor Relations
david.carpenter@rentacenter.com