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Press release from Marketwire

easyhome Ltd. Reports 2011 First Quarter Results

Tuesday, May 31, 2011

easyhome Ltd. Reports 2011 First Quarter Results23:45 EDT Tuesday, May 31, 2011MISSISSAUGA, ONTARIO--(Marketwire - May 31, 2011) -easyhome Ltd. (TSX:EH), Canada's largest merchandise leasing company and a growing provider of financial services, today announced its results for the first quarter ended March 31, 2011.easyhome increased revenues 7.4% to $46.2 million in the first quarter of 2011. The increase was generated by the expansion of the easyfinancial business and the growth of its consumer loans receivable portfolio. Reported net income for the quarter was $2.4 million, an increase of 19.4% over the first quarter of 2010. The company reported earnings per share of $0.20, compared to $0.19 for the first quarter of 2010. The 2011 first quarter earnings per share reflect the impact of the equity offering completed in December 2010.Commentating on the results, David Ingram, easyhome's President and Chief Executive Officer stated "Our results for the first quarter continue the trend of increased revenues and are in line with internal earnings expectations. Our focus during the quarter was on enhancing internal controls, improving process execution and strengthening our management structure. To this end, we invested in additional training and professional services, building the infrastructure which will allow us to scale the expansion of our business units in the future."Concluding, Mr. Ingram said "easyfinancial grew its consumer loans receivable portfolio 26% and increased its customer base 22% since December 31, 2010. With consumer credit reporting agency, TransUnion, we implemented an electronic automated loan decision-making and identity verification tool. The new system is an integral part of the enhanced risk management program that we have put in place during the past two quarters."First Quarter ResultsFor the first three months of the year, easyhome generated revenues of $46.2 million, an increase from $43.0 million in the first quarter of 2010. At the store level, including easyfinancial, same store revenue growth for the quarter was 7.2% compared with a decline of 0.5% for the first quarter of 2010.On a segmented basis, the company's leasing operations recorded revenues of $41.3 million, unchanged from same period last year.Franchising contributed revenues of $0.4 million, up from $0.2 million in the first three months of 2010. The increase in franchising revenue is attributable to the increased number of franchise locations.easyfinancial Services drove revenues to $4.6 million from $1.5 million for the same period last year. The improvement is a result of the increase in the consumer loans receivable portfolio from $11.6 million to $29.9 million.Operating income, which is income before interest expense and income taxes, increased 8.5% to $3.8 million from $3.5 million in the first quarter of 2010. Quarterly revenue increases were offset by additional costs while depreciation and amortization were reduced. As a percentage of revenue, operating income was unchanged at 8.3%.Net income was $2.4 million for the first three months of 2011, compared with $2.0 million for the first three months of 2010. On a per share basis, earnings were $0.20 compared with $0.19. Adjusted for non-recurring charges, earnings were $2.4 million, or $0.20 per share, compared with $2.3 million, or $0.22 per share, a year ago.Cash flow provided by operating activities for the three months ended March 31, 2011 was $3.6 million. Included in these cash flows was a net investment in the easyfinancial Services consumer loans receivable portfolio of $7.6 million. If this net investment in the loan portfolio was treated as cash flow from investing activities, cash flow from operating activities was $11.2 million. This cash flow enabled the Company to invest in the portfolios to drive future revenue growth of all business units, strengthen the management and infrastructure to support sustainable growth and maintain its total dividend payments for the quarter while only increasing external debt by $8.8 million.Donald K. Johnson, Chairman of the Board, commented, "The Board is pleased with the Company meeting expectation for the first quarter of the year. We are confident that management is strengthening its internal controls in a manner that will support the Company's strategy for sustainable growth. We believe that the objectives for each of the business segments are appropriate and will result in improved value for easyhome's shareholders."The Board of Directors has approved a dividend payment of $0.085 per share payable on July 5, 2011 to the holders of common shares of record as at the close of business on June 24, 2011.About easyhomeAs at March 31, 2011, easyhome Ltd. had 255 stores, including 39 franchised/licensed locations. The Company also operated 68 easyfinancial kiosks within existing easyhome stores and one national virtual loan kiosk.easyhome Ltd. is Canada's largest merchandise leasing company and the third largest in North America, offering top quality, brand-name household furnishings, appliances and home electronic products to consumers under weekly or monthly leasing agreements through both corporate and franchise stores. In addition, the Company offers a variety of financial services, including loans, prepaid cards and cheque cashing through its easyfinancial services business. easyhome Ltd. is listed on the TSX under the symbol 'EH'.The above analysis refers to certain financial measures that are not determined in accordance with international financial reporting standards ("IFRS"). These measures do not have standardized meanings and may not be comparable to similar measures presented by other companies. Although measures such as operating income and same store revenue growth do not have standardized meanings prescribed by IFRS, these measures are defined in our management discussion and analysis which is available on SEDAR or on the Company's website at www.easyhome.ca or can be determined by reference to our financial statements. We discuss these measures because we believe that they facilitate the understanding of the results of our operations and financial position.Forward-Looking StatementsThis news release includes forward-looking statements about easyhome Ltd. including its business operations, strategy and expected financial performance and condition. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as 'expects', 'anticipates', 'intends', 'plans', 'believes' or negative versions thereof and similar expressions. In addition, any statement that may be made concerning future financial performance (including revenue, earnings or growth rates), ongoing business strategies or prospects about future events is also a forward-looking statement. Forward- looking statements are based on certain factors and assumptions, including expected growth, results of operations and business prospects and are inherently subject to, among other things, risks, uncertainties and assumptions about our operations, economic factors and the industry generally. They are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied by forward-looking statements made by us, due to, but not limited to important factors such as our ability to enter into new lease and/or financing agreements, collect on existing lease and/or financing agreements, open new locations on favourable terms, secure new franchised locations, purchase products which appeal to our customers at a competitive rate, cope with changes in legislation, raise capital under favourable terms, manage the impact of litigation, control costs at all levels of the organization and maintain and enhance our system of internal controls. We caution that the foregoing list is not exhaustive. The reader is cautioned to consider these and other factors carefully and not place undue reliance on forward-looking statements, which may not be appropriate for other purposes. We are under no obligation (and expressly disclaim any such obligation) to update or alter the forward-looking statements whether as a result of new information, future events or otherwise, unless otherwise required by law.(tables follow)easyhome Ltd.INTERIM STATEMENT OF FINANCIAL POSITIONS(Unaudited)(expressed in thousands of Canadian dollars)As atAs atAs atMarch 31,December 31,January 1,201120102010ASSETSCurrentCash (note 5)1,063731291Amounts receivable (note 6)4,3644,8095,284Income taxes recoverable41-2,987Consumer loans receivable (note 7)23,45618,1627,421Prepaid expenses9781,2961,146Total current assets29,90224,99817,129Amounts receivable (note 6)1,4201,062-Consumer loans receivable (note 7)4,8733,6671,520Lease assets (note 8)66,73168,62271,273Property and equipment (note 9)12,45812,95312,335Deferred tax assets (note 15)7,2148,0478,134Intangible assets (note 10)2,9383,0933,155Goodwill (note 10)17,32517,32517,325TOTAL ASSETS142,861139,767130,871LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilitiesBank revolving credit facility (note 11)25,33615,64923,764Accounts payable and accrued liabilities13,57419,32213,331Income taxes payable-65-Dividends payable1,007892884Deferred lease inducements575578579Unearned revenue4,1955,3104,818Term loan (note 11)1,7292,6023,636Provisions (note 12)245421597Total current liabilities46,66144,83947,609Accounts payable and accrued liabilities579450-Deferred lease inducements1,8701,8811,724Term loan (note 11)--2,484Provisions (note 12)397407231Total liabilities49,50747,57752,048Shareholders' EquityShare capital (note 13)60,20760,07448,880Contributed surplus3,0333,0613,142Other comprehensive income(573)(257)-Retained earnings30,68729,31226,801Total shareholders' equity93,35492,19078,823TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY142,861139,767130,871See accompanying notes to the interim consolidated financial statementseasyhome Ltd.INTERIM CONSOLIDATED STATEMENTS OF INCOME(Unaudited)(expressed in thousands of Canadian dollars except earnings per share)Three months endedMarch 31,March 31,20112010REVENUELease revenue40,78240,707Interest income2,843879Other2,5781,45246,20343,038EXPENSESSalaries and benefits (note 14)14,69012,937Advertising and promotion1,5941,147Bad debts1,124414Occupancy6,4576,061Distribution and travel1,8811,655Other3,2122,677Restructuring charges-31328,95825,204DEPRECIATION AND AMORTIZATIONDepreciation of lease assets (note 8)12,45112,675Depreciation of property and equipment (note 9)846972Amortization of intangible assets (note 10)10694Impairment (net) (notes 8 and 9)-55213,40314,293Operating income3,8423,541Interest expense (note 11)297283Income before income taxes3,5453,258Income tax expense (note 15)Current332792Deferred8314711,1631,263Net income2,3821,995Basic earnings per share (note 16)0.200.19Diluted earnings per share (note 16)0.200.19See accompanying notes to the interim consolidated financial statementseasyhome Ltd.INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY(Unaudited)(expressed in thousands of Canadian dollars)TotalOtherCompre-IssuedContributedTotalRetainedhensiveTotalCapitalSurplusCapitalEarningsIncomeEquityBalance, January 1, 201160,0743,06163,13529,312(257)92,190Shares issued133(191)(58)--(58)Stock-based compensation (note 14)-163163--163Comprehensive income, net of tax---2,382(316)2,066Dividends paid (note 13)---(1,007)-(1,007)Balance, March 31, 201160,2073,03363,24030,687(573)93,354Balance, January 1, 201048,8803,14252,02226,801-78,823Shares issued------Stock-based compensation (note 14)-152152--152Comprehensive income, net of tax---1,995(259)1,736Dividends paid (note 13)---(886)-(886)Balance, March 31, 201048,8803,29452,17427,910(259)79,825See accompanying notes to the interim consolidated financial statementseasyhome Ltd.INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(Unaudited)(expressed in thousands of Canadian dollars)Three months endedMarch 31,March 31,20112010Net income2,3821,995Other comprehensive income for the periodForeign currency translation reserve(316)(259)Comprehensive income2,0661,736See accompanying notes to the interim consolidated financial statementseasyhome Ltd.INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(expressed in thousands of Canadian dollars)Three months endedMarch 31,March 31,20112010OPERATING ACTIVITIESNet income2,3821,995Add (deduct) items not affecting cashDepreciation of lease assets12,45112,675Depreciation of property and equipment846972Impairment (net)-552Amortization of intangible assets10694Stock-based compensation (note 14)163153Bad debt expense1,124414Deferred tax expense831471Gain on sale of property and equipment(42)-17,86117,326Net change in non-cash working capital balances related to operations (note 17)(6,635)(696)Net issuance of consumer loans receivable(7,624)(2,695)Cash provided by operating activities3,60213,935INVESTING ACTIVITIESNet purchase of lease assets(10,784)(9,982)Purchase of property and equipment(599)(1,264)Purchase of intangible assets(20)(101)Proceeds on sale of property and equipment269-Cash used in investing activities(11,134)(11,347)FINANCING ACTIVITIESAdvances (payments) of bank revolving credit facility9,687(957)Payments of term loan (note 11)(873)(877)Payment of common share dividends(892)(884)Redemption of deferred share units(58)-Cash provided by (used in) financing activities7,864(2,718)Net increase (decrease) in cash during the period332(130)Cash, beginning of period731291Cash, end of period1,063161See accompanying notes to the interim consolidated financial statementsFOR FURTHER INFORMATION PLEASE CONTACT: David Ingrameasyhome Ltd.President & Chief Executive Officer(905) 272-2788(905) 272-9886 (FAX)ORSteve Goertzeasyhome Ltd.Senior Vice President and Chief Financial Officer(905) 272-2788(905) 272-9886 (FAX)www.easyhome.ca