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The Aaron’s pany(AAN) - 2024 Q2 - Quarterly Report
AANThe Aaron’s pany(AAN)2024-08-05 20:22

Company Operations - The Aaron's Company operates approximately 1,210 stores and an e-commerce platform, focusing on lease-to-own and retail purchase solutions for home goods[17]. - BrandsMart U.S.A. operates 12 stores in Florida and Georgia, contributing to the company's retail presence in the southeast United States[19]. Financial Performance - Total revenues for the three months ended June 30, 2024, were 503.1million,adecreaseof5.2503.1 million, a decrease of 5.2% from 530.4 million in the same period of 2023[78]. - Total revenues for the six months ended June 30, 2024, reached 1,014,622,000,comparedto1,014,622,000, compared to 1,084,733,000 for the same period in 2023, indicating a decline of 6.5%[109][113]. - Gross profit for the three months ended June 30, 2024, was 272,018,000,downfrom272,018,000, down from 282,272,000 in the prior year, reflecting a decrease of 3.6%[103][106]. - The gross profit for the six months ended June 30, 2024, was 545,901,000,downfrom545,901,000, down from 577,966,000 in the previous year, representing a decrease of 5.5%[110][114]. - The company reported a gross profit margin of approximately 54.0% for the three months ended June 30, 2024, compared to 53.2% for the same period in 2023[103][106]. - The net loss for the quarter ending June 30, 2024, was 11,903,000,comparedtoanetlossof11,903,000, compared to a net loss of 14,181,000 for the previous quarter, indicating an improvement of about 16.5%[56]. Costs and Expenses - For the three months ended June 30, 2024, the company incurred acquisition-related costs of 7.5millionprimarilyrelatedtothemergerwithIQVentures[24].−ThetotaladvertisingcostsforthethreemonthsendedJune30,2024,were7.5 million primarily related to the merger with IQVentures[24]. - The total advertising costs for the three months ended June 30, 2024, were 19.9 million, with net advertising costs of 11.8millionaftercooperativeadvertisingconsiderations[31].−Thecompanyrecordedaprovisionforwrite−offsof11.8 million after cooperative advertising considerations[31]. - The company recorded a provision for write-offs of 41.1 million for the six months ended June 30, 2024, compared to 39.2millionforthesameperiodin2023,anincreaseof4.939.2 million for the same period in 2023, an increase of 4.9%[39]. - The loss before income taxes for the Unallocated Corporate category for the three months ended June 30, 2024, was 16,250,000, impacted by restructuring charges of 2.9millionandacquisition−relatedcostsof2.9 million and acquisition-related costs of 8.0 million[102][103]. Assets and Liabilities - Accounts receivable as of June 30, 2024, totaled 35.1million,adecreasefrom35.1 million, a decrease from 39.8 million as of December 31, 2023[33]. - The company maintains an allowance for accounts receivable, with an ending balance of 9.2millionasofJune30,2024[35].−MerchandiseonleaseasofJune30,2024,is9.2 million as of June 30, 2024[35]. - Merchandise on lease as of June 30, 2024, is 412.0 million, a decrease of 1.2% from 419.5milliononDecember31,2023[37].−Merchandisenotonleaseincreasedto419.5 million on December 31, 2023[37]. - Merchandise not on lease increased to 210.6 million as of June 30, 2024, up from 202.7millionasofDecember31,2023,representingagrowthof3.9202.7 million as of December 31, 2023, representing a growth of 3.9%[37]. - Accounts payable decreased to 114.3 million as of June 30, 2024, from 134.2millionasofDecember31,2023,areductionof14.8134.2 million as of December 31, 2023, a reduction of 14.8%[51]. - The company reported total debt of 215.8 million as of June 30, 2024, an increase of 11.3% from 194.0millionatDecember31,2023[73].−Long−termdebtincreasedto194.0 million at December 31, 2023[73]. - Long-term debt increased to 203.3 million as of June 30, 2024, compared to 187.6millionattheendof2023[73].ShareholderEquity−AsofJune30,2024,totalshareholders′equitydecreasedto187.6 million at the end of 2023[73]. Shareholder Equity - As of June 30, 2024, total shareholders' equity decreased to 657,686,000 from 670,536,000asofMarch31,2024,reflectingadeclineofapproximately1.3670,536,000 as of March 31, 2024, reflecting a decline of approximately 1.3%[56]. - The balance of additional paid-in capital increased to 756,207,000 as of June 30, 2024, up from 753,253,000asofMarch31,2024,reflectingagrowthofapproximately0.13753,253,000 as of March 31, 2024, reflecting a growth of approximately 0.13%[56]. - The total stock amount decreased from (149,038,000) as of March 31, 2024, to (149,111,000)asofJune30,2024,indicatingadeclineofabout0.05(149,111,000) as of June 30, 2024, indicating a decline of about 0.05%[56]. - The company’s common shares increased from 37,095,000 as of March 31, 2024, to 37,189,000 as of June 30, 2024, representing an increase of approximately 0.25%[56]. Cash Flow and Dividends - Cash dividends paid were 3,937,000 for the quarter ending June 30, 2024, consistent with the previous quarter's dividends of 3,929,000[56].RestructuringPrograms−TheOperationalEfficiencyandOptimizationRestructuringProgramresultedintotalnetrestructuringexpensesof3,929,000[56]. Restructuring Programs - The Operational Efficiency and Optimization Restructuring Program resulted in total net restructuring expenses of 7.3 million for the six months ended June 30, 2024, compared to 4.4millioninthesameperiodoftheprioryear[94].−SincetheinceptionoftheOperationalEfficiencyandOptimizationRestructuringProgram,theCompanyhasincurredcumulativechargesof4.4 million in the same period of the prior year[94]. - Since the inception of the Operational Efficiency and Optimization Restructuring Program, the Company has incurred cumulative charges of 25.4 million[94]. - The Real Estate Repositioning and Optimization Restructuring Program has led to total net restructuring expenses of 3.5millionforthesixmonthsendedJune30,2024,downfrom3.5 million for the six months ended June 30, 2024, down from 5.7 million in the same period of the prior year[96]. - Cumulative charges under the Real Estate Repositioning and Optimization Program amount to 74.3millionsinceitsinception[96].−TheCompanyclosedorconsolidated65storesundertheOperationalEfficiencyandOptimizationRestructuringProgramthroughJune30,2024[94].−TheCompanyhasclosed,consolidated,orrelocated262storesundertheRealEstateRepositioningandOptimizationRestructuringProgramthroughJune30,2024[96].LegalandRegulatoryMatters−AsofJune30,2024,theCompanyaccrued74.3 million since its inception[96]. - The Company closed or consolidated 65 stores under the Operational Efficiency and Optimization Restructuring Program through June 30, 2024[94]. - The Company has closed, consolidated, or relocated 262 stores under the Real Estate Repositioning and Optimization Restructuring Program through June 30, 2024[96]. Legal and Regulatory Matters - As of June 30, 2024, the Company accrued 1.0 million for pending legal and regulatory matters, up from 0.7millionatDecember31,2023[90].InterestRateManagement−Thecompanyenteredintoaninterestrateswapagreementwithanotionalamountof0.7 million at December 31, 2023[90]. Interest Rate Management - The company entered into an interest rate swap agreement with a notional amount of 100.0 million, aimed at converting variable interest rate debt to fixed at a rate of 3.87%[49]. - The company entered into a non-speculative interest rate swap agreement for 100.0milliontoconvertvariableinterestratedebttofixedinterestratedebt,effectivefromApril28,2023,toMarch31,2027[115].−Ahypothetical10100.0 million to convert variable interest rate debt to fixed interest rate debt, effective from April 28, 2023, to March 31, 2027[115]. - A hypothetical 10% increase or decrease in interest rates would affect interest expense by approximately 0.8 million annually based on the company's variable-rate debt[115].