Aaron's Company (AAN) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues were $503.1 million, down 5.1% year-over-year, with declines in both Aaron's Business and BrandsMart segments.

• Net loss for Q2 2024 was $11.9 million, compared to net earnings of $6.5 million in Q2 2023; diluted loss per share was $0.39 versus earnings per share of $0.21 last year.

• Adjusted EBITDA was $24.5 million, a 42.3% decrease year-over-year.

• Entered into a definitive merger agreement with IQVentures Holdings for $10.10 per share in cash; transaction expected to close by year-end.

• Restructuring and acquisition-related costs, including $7.5 million for the proposed merger, significantly impacted Q2 results.

Financial highlights

• Lease revenues and fees fell 5.1% year-over-year to $335.7 million; retail sales declined 5.7% to $139.5 million.

• Gross profit decreased 3.6% to $272.0 million, but gross margin improved to 54.1% from 53.2% due to higher margins in both segments.

• Operating loss was $12.3 million, compared to operating profit of $11.3 million in Q2 2023.

• Adjusted free cash flow was $(6.0) million, down from $36.0 million in Q2 2023.

• Cash and cash equivalents were $34.2 million at June 30, 2024, down $24.9 million from year-end 2023.

Outlook and guidance

• Withdrew 2024 outlook due to pending acquisition; no earnings call will be held.

• Management anticipates continued challenging market conditions, including reduced consumer demand and elevated inflation, to persist through 2024 and beyond.

• Cost-cutting and real estate optimization strategies are expected to partially offset these headwinds.

• The company expects to continue paying its quarterly dividend of $0.125 per share, subject to board approval.