Rent-A-Center, Inc. Reports Second Quarter 2007 Results

Business Wire, July 30, 2007

Same Store Sales Increase 2.7%

Reported Diluted Earnings per Share of $0.58

Board Increases Stock Repurchase Authorization by $100 Million

PLANO, Texas -- 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, 2007.

Second Quarter 2007 Results

The Company reported total revenues for the quarter ended June 30, 2007 of $724.2 million, a $140.6 million increase from the reported total revenues of $583.6 million for the same period in the prior year. This 24.1% increase in revenues was primarily driven by the Rent-Way acquisition that closed on November 15, 2006, and a 2.7% increase in same store sales.

Reported net earnings for the quarter ended June 30, 2007 were $41.3 million, an increase of $1.5 million, or 3.8% from the reported net earnings of $39.8 million for the same period in the prior year. Reported diluted earnings per share were $0.58, an increase of $0.02, or 3.6% from the reported diluted earnings per share of $0.56 for the same period in the prior year.

"Although our second quarter financial results for revenue and earnings per diluted share were within our guidance range and our same store sales increased 2.7%, the business environment has been very challenging as of late," commented Mark E. Speese, the Company's Chairman and Chief Executive Officer. "We believe that the financial challenges facing our customers have increased recently, resulting in a softer outlook for the balance of this year. As a result, we are lowering our guidance for the remainder of 2007," Speese continued. "We will continue to invest in our core business and carry out initiatives to improve execution at the store level as we work our way through, what we believe, will be a temporarily difficult period," Speese stated.

Six Months Ended June 30, 2007 Results

Total reported revenues for the six months ended June 30, 2007 increased to $1.479 billion, a 24.2% increase from $1.191 billion for the same period in the prior year. Same store revenues for the six month period ending June 30, 2007 increased 2.8%.

Reported net earnings for the six months ended June 30, 2007 were $56.4 million, when including the Perez litigation charges discussed below, a decrease of $23.8 million from the reported net earnings of $80.2 million for the same period in the prior year. Reported diluted earnings per share were $0.79, when including the Perez litigation charges discussed below, a decrease of $0.35 from the reported diluted earnings per share of $1.14 for the same period in the prior year.

Net earnings, when adjusting for the $51.3 million Perez litigation charge discussed below, for the six months ended June 30, 2007 were $88.5 million, an increase of $8.3 million, or 10.3% from the reported net earnings of $80.2 million for the same period in the prior year. Diluted earnings per share, when adjusting for the $51.3 million Perez litigation charge discussed below, were $1.25, an increase of $0.11, or 9.7% from the reported diluted earnings per share of $1.14 for the same period in the prior year.

The Company also announced today that its Board of Directors has increased the authorization for stock repurchases under the Company's common stock repurchase plan from $400 million to $500 million. Under the Company's common stock repurchase plan, shares may be repurchased in the open market or in privately negotiated transactions at times and amounts considered appropriate by the Company. To date, the Company has repurchased a total of 15,928,550 shares for approximately $395.8 million in cash under the plan since inception. Through the six month period ended June 30, 2007, the Company has repurchased a total of 1,299,750 shares for approximately $35.0 million in cash.

Through the six month period ended June 30, 2007, the Company generated cash flow from operations of approximately $143.1 million, while ending the quarter with approximately $79.0 million of cash on hand.

Operations Highlights

During the second quarter of 2007, the Company opened four new store locations, acquired 13 stores as well as accounts from three locations, consolidated 19 stores into existing locations and sold one store, for a net reduction of three stores and an ending balance as of June 30, 2007 of 3,375 company-owned stores. During the second quarter of 2007, the Company added financial services to 58 existing rent-to-own store locations, consolidated five stores with financial services into existing locations, and closed nine locations, ending the quarter with a total of 221 stores providing these services.

Through the six month period ended June 30, 2007, the Company opened 10 new store locations, acquired 13 stores as well as accounts from six additional locations, consolidated 52 stores into existing locations, and sold two stores, for a net reduction of 31 stores since December 31, 2006. Through the six month period ending June 30, 2007, the Company added financial services to 87 existing rent-to-own store locations, consolidated seven stores with financial services into existing locations, and closed nine locations, for a net addition of 71 stores providing these services.