The Aaron's Company, Inc. (NYSE: AAN), a leading, technology-enabled, omnichannel provider of lease-to-own and retail purchase solutions, today announced financial results for the second quarter ended June 30, 2022. This quarter is the Company's first report on a consolidated basis, incorporating results from BrandsMart U.S.A., acquired April 1, 2022.

"With the acquisition of BrandsMart U.S.A., consolidated revenues increased in the second quarter, and we are encouraged by the performance of this new business segment," said Douglas Lindsay, Chief Executive Officer of The Aaron's Company, Inc. "In the Aaron's Business, customer demand and payment activity progressively worsened through the quarter as high inflation impacted the lower-income consumer. In response to these challenging market conditions, we are leveraging our centralized lease decisioning and digital servicing platforms to maintain relationships with our customers and strengthening actions to control costs."

"We continue to strategically invest in our growing e-commerce channel, our high-performing GenNext store program, and the value creation opportunities available through the BrandsMart acquisition," Lindsay added. "Together with our strong balance sheet and liquidity, we believe these investments enable us to continue delivering a market leading value proposition to a large and increasingly diversified customer base that will expand our market share and position us for future growth."

Second Quarter 2022 Financial Highlights

The Aaron's Company, Inc. (the "Company") conducts its operations through two primary operating business segments: 1) the Aaron's Business segment, which includes, Company-operated Aaron's stores, the Aarons.com e-commerce platform, Aaron's franchise operations, BrandsMart Leasing, a lease-to-own solution offered to customers of BrandsMart U.S.A., and Woodhaven, a furniture manufacturing operation (collectively, the "Aaron's Business"); and 2) the BrandsMart segment, which includes, BrandsMart U.S.A. retail stores and the Brandsmartusa.com e-commerce platform (collectively, "BrandsMart"). The financial and operating results for the BrandsMart segment do not include BrandsMart Leasing and neither business segment results include unallocated corporate expenses. Additionally, the Company's financial and operating results for the second quarter of 2022 include the results of operations of BrandsMart subsequent to the April 1, 2022 acquisition, while financial and operating results for all periods prior to the April 1, 2022 acquisition do not include BrandsMart. For all periods presented, the Company has retroactively adjusted disclosures to align with the new reportable segments.

Consolidated Results

The Company's total revenues were $610.4 million in the second quarter of 2022 compared with $467.5 million for the second quarter of 2021. Net losses were $5.3 million for the second quarter of 2022 compared with net earnings of $33.0 million in the prior year period. Net losses for the second quarter of 2022 include the effects of a one-time, non-cash charge for a fair value adjustment to merchandise inventories of $23.0 million, BrandsMart acquisition-related costs of $8.0 million, restructuring charges of $5.6 million, acquisition-related intangible amortization expense of $2.8 million, and separation costs of $0.2 million. These charges were partially offset by a net tax benefit of $4.8 million related to a remeasurement of the Company's deferred state tax balances in conjunction with the BrandsMart acquisition. Net earnings in the second quarter of 2021 included restructuring charges of $1.8 million and separation costs of $1.2 million.

Adjusted EBITDA was $48.1 million in the second quarter of 2022, a decrease of 26.4% compared to the second quarter of 2021. As a percentage of total consolidated revenues, adjusted EBITDA was 7.9% in the second quarter of 2022 compared with 14.0% in the prior year second quarter. The declines in adjusted EBITDA and adjusted EBITDA margin were primarily due to lower lease renewal rates, higher provision for lease merchandise write-offs, and higher other operating expenses, partially offset by lower personnel costs in the Aaron's Business. The decline in adjusted EBITDA was also offset by $10.5 million of adjusted EBITDA generated from the BrandsMart acquisition.

Diluted losses per share were $0.17 in the second quarter of 2022 compared with diluted earnings per share of $0.95 in the second quarter of 2021. On a non-GAAP basis, diluted earnings per share were $0.79 for the second quarter of 2022 compared with $1.05 in the second quarter of 2021.