The Aaron's Company, Inc. Reports Second Quarter 2024 Financial Results

Rhea-AI Summary

The Aaron's Company, Inc. (NYSE: AAN) reported its Q2 2024 financial results, revealing mixed performance. Revenues reached $503.1 million, but the company faced a net loss of $11.9 million. The adjusted EBITDA was $24.5 million, with a loss per share of $0.39 and a non-GAAP loss per share of $0.07.

Key highlights include a definitive agreement to be acquired by IQVentures Holdings, for $10.10 per share. Aaron's Business saw a 6.1% increase in recurring revenue written, driven by 11.1% growth in lease merchandise deliveries. E-commerce recurring revenue written surged by 79.4%. However, BrandsMart comparable sales decreased by 7.3%. The company announced a quarterly cash dividend of $0.125 per share, payable on October 3, 2024.

Positive

• Definitive agreement to be acquired by IQVentures Holdings, for $10.10 per share
• Aaron's Business recurring revenue written increased 6.1%
• E-commerce recurring revenue written increased 79.4%
• Same store lease portfolio size up 1.6% year-over-year
• Quarterly cash dividend of $0.125 per share announced

Negative

• Net loss of $11.9 million
• Loss per share of $0.39
• BrandsMart comparable sales decreased 7.3%
• Overall lease portfolio size down 2.0% year-over-year

Insights

Financial Analyst

The Aaron's Company's Q2 2024 results paint a mixed picture. While revenues reached $503.1 million, the company reported a net loss of $11.9 million, translating to a loss per share of $0.39. The adjusted EBITDA of $24.5 million and non-GAAP loss per share of $0.07 suggest underlying operational challenges.

Positively, the Aaron's Business segment saw a 6.1% increase in recurring revenue written, driven by strong 11.1% growth in lease merchandise deliveries. The e-commerce segment's 79.4% growth in recurring revenue written is particularly impressive, indicating successful digital initiatives.

However, the 7.3% decrease in BrandsMart comparable sales is concerning, pointing to potential market share losses or broader retail sector headwinds. The pending acquisition by IQVentures for $10.10 per share ($504 million enterprise value) provides a clear exit strategy for shareholders, but also raises questions about the company's standalone prospects.

Market Research Analyst

The Aaron's Company's Q2 results reflect broader trends in the lease-to-own and retail sectors. The 6.1% growth in recurring revenue written for Aaron's Business suggests resilience in the lease-to-own model, possibly driven by economic pressures on consumers. The substantial 79.4% increase in e-commerce recurring revenue written underscores the ongoing shift towards digital channels in retail.

However, the 7.3% decline in BrandsMart comparable sales is worrying, potentially indicating increased competition or changing consumer preferences in the appliance and electronics markets. The 2.0% year-over-year decrease in overall lease portfolio size, contrasted with a 1.6% increase in same-store lease portfolio size, suggests a complex market dynamic that merits further investigation.

The acquisition by IQVentures, a fintech organization, at $10.10 per share could signal a strategic shift towards more technology-driven, flexible financial solutions in the lease-to-own space, potentially reshaping the competitive landscape.

ATLANTA, Aug. 5, 2024 /PRNewswire/ -- The Aaron's Company, Inc. (NYSE: AAN) today released its second quarter 2024 financial results. Highlights of those results are included below, in the attached supplement, and at investor.aarons.com.

Second Quarter 2024 Consolidated Results:

• Revenues were $503.1 million
• Net loss was $11.9 million
• Adjusted EBITDA¹ was $24.5 million
• Loss per share was $0.39; Non-GAAP loss per share¹ was $0.07

Key Business Highlights²:

• Announced the Company entered into a definitive agreement to be acquired by IQVentures Holdings, LLC for $10.10 per share
• Aaron's Business recurring revenue written increased 6.1% driven by 11.1% growth in lease merchandise deliveries
• E-commerce recurring revenue written increased 79.4% benefiting from new omnichannel lease decisioning and customer acquisition program
• Lease portfolio size ended Q2 down 2.0% year-over-year and same store³ lease portfolio size ended Q2 up 1.6% year-over-year
• BrandsMart comparable sales decreased 7.3%
• Announced quarterly cash dividend of $0.125 per share to be paid on October 3, 2024

Transaction with IQVentures Holdings, LLC:
As previously announced on June 17, 2024, The Aaron's Company, Inc. has entered into a definitive agreement to be acquired by IQVentures Holdings, LLC ("IQVentures"), a leading fintech organization, for $10.10 per share in cash, or an enterprise value of approximately $504 million. The transaction is expected to close by the end of the year, subject to shareholder approval and other customary closing conditions.

In light of the pending transaction, the Company will not be hosting an earnings conference call to discuss its results for the quarter and is withdrawing outlook for 2024.

About The Aaron's Company, Inc.
Headquartered in Atlanta, The Aaron's Company, Inc. (NYSE: AAN) is a leading, technology-enabled, omnichannel provider of lease-to-own and retail purchase solutions of appliances, electronics, furniture, and other home goods across its brands: Aaron's, BrandsMart U.S.A., BrandsMart Leasing, and Woodhaven. Aaron's offers a direct-to-consumer lease-to-own solution through its approximately 1,210 Company-operated and franchised stores in 47 states and Canada, as well as its e-commerce platform. BrandsMart U.S.A. is one of the leading appliance retailers in the country with 12 retail stores in Florida and Georgia, as well as its e-commerce platform. BrandsMart Leasing offers lease-to-own solutions to customers of BrandsMart U.S.A. Woodhaven is the Company's furniture manufacturing division. For more information, visit investor.aarons.com, aarons.com, and brandsmartusa.com.

____________________
1.	Item is a Non-GAAP financial measure. Refer to the "Use of Non-GAAP Financial Information" and supporting reconciliation tables in the attached supplement. For Adjusted EBITDA, the most comparable GAAP metric is net loss. For Non-GAAP loss per share, the most comparable GAAP metric is loss per share.
2.	Comparisons are to the prior year period unless otherwise noted. Key operating metrics do not include BrandsMart Leasing.
3.	With respect to any metric, "same store" includes all stores open for the 15-month period ended June 30, 2024, excluding stores that received lease agreements from other acquired, closed or merged stores.

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SOURCE The Aaron's Company, Inc.

FAQ

What were The Aaron's Company's (AAN) Q2 2024 revenue and net income?

The Aaron's Company reported revenues of $503.1 million and a net loss of $11.9 million for Q2 2024.

What is the acquisition offer for The Aaron's Company (AAN)?

IQVentures Holdings, has offered to acquire The Aaron's Company for $10.10 per share in cash, representing an enterprise value of approximately $504 million.

How did Aaron's Business perform in Q2 2024?

Aaron's Business saw a 6.1% increase in recurring revenue written, driven by 11.1% growth in lease merchandise deliveries.

What was The Aaron's Company's (AAN) e-commerce performance in Q2 2024?

The Aaron's Company's e-commerce recurring revenue written increased by 79.4% in Q2 2024.

What dividend did The Aaron's Company (AAN) announce for Q2 2024?

The Aaron's Company announced a quarterly cash dividend of $0.125 per share, to be paid on October 3, 2024.