The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from Marketwire

easyhome Ltd. Reports First Quarter Results

Monday, May 06, 2013

easyhome Ltd. Reports First Quarter Results

18:45 EDT Monday, May 06, 2013

MISSISSAUGA, ONTARIO--(Marketwired - May 6, 2013) - easyhome Ltd. (TSX:EH) (the "Company" or "easyhome"), Canada's largest merchandise leasing company and a growing provider of financial services, today announced its results for the first quarter ended March 31, 2013.

easyhome delivered record revenues and improved earnings in the first quarter of 2013. Revenue for the quarter increased 5.2% to $52.4 million, driven primarily by the expansion of the easyfinancial Services business and the related growth of its consumer loans receivable portfolio. Operating income for the quarter was $5.1 million, up 20.9% from $4.2 million reported in the first quarter of 2012. Net income for the quarter was $2.9 million, up 11.0% from $2.6 million reported in the first quarter of 2012. Earnings per share for the quarter was 24 cents compared to 22 cents for the first quarter of 2012.

"Our results for the first quarter continue the trend of increased revenues and improved performance," said David Ingram, easyhome's President and Chief Executive Officer. "The increase in earnings was driven by the growth in easyfinancial Services and by the improved results of our leasing business which benefited from the restructuring activities and changes to our retail footprint which occurred last year. The improvements in the operating results of our leasing business would have been even stronger when compared to the first quarter of the prior year but the first quarter of 2013 was negatively impacted by 4 cents per share due to lower cash collections and revenue from three less trading days in 2013 than 2012, including the leap year in 2012."

Highlights for the first quarter of 2013 include:

easyhome Leasing

  • Successful integration of the 15 stores acquired from a large U.S. based rent-to-own company.
  • Same store revenue growth excluding easyfinancial Services of 5.9%.
  • Same store deliveries up 10.2%.
  • Although the first quarter of 2013 featured three less trading days than the first quarter of 2012, operating income for the leasing business increased 4.1%.
  • The leasing business enters the second quarter with a larger than planned lease portfolio.

easyfinancial Services

  • The consumer loans receivable portfolio closed at $74.7 million, representing a year- over-year increase of 53.1%.
  • Revenue for the first quarter of 2013 increased 44.4% compared to the first quarter of 2012.
  • Operating margin of 28.0% was reduced from the previous quarter due to higher loan book growth requiring a larger provision against future losses (although the actual charge off rate improved in 2013), additional drag from new stand alone store openings over the past 12 months, additional marketing expenditures and increased amortization related to the new loan system.

easyhome Franchising

  • Franchise system wide revenue increased 20.2% compared to the first quarter of 2012.

Overall

  • Same store revenue growth of 12.0%.
  • Operating margin of 9.7% and EBITDA margin of 12.3%, up from 8.4% and 10.9%, respectively, from the first quarter of 2012.
  • Operating income for the quarter was negatively impacted by a $0.6 million (4 cents per share) increase in stock based incentive compensation plan expenses, which are based on expected performance versus targets and movements in the Company's share price.

First Quarter Results

For the first quarter ended March 31, 2013, easyhome generated revenues of $52.4 million, an increase from $49.8 million in the first quarter of 2012. At the store level, including easyfinancial, same store revenue growth for the quarter was 12.0% compared with growth of 8.3% for the first quarter of 2012.

On a segmented basis, easyfinancial Services revenues increased 44.4% to $11.8 million from $8.2 million for the same period last year. The improvement is a result of the increase in the consumer loans receivable portfolio from $48.8 million to $74.7 million. The Company's leasing operations recorded revenues of $40.1 million and franchising operations recorded revenues of $0.4 million. Leasing revenues for the first quarter of 2013 were negatively impacted by $0.6 million due to three less trading days in 2013 when compared to the first quarter of 2012.

Operating income, which is income before interest expense and income taxes, increased 20.9% to $5.1 million from $4.2 million in the first quarter of 2012. Quarterly revenue increases (although muted by the lower number of trading days) and lower costs within the leasing business more than offset a greater level of costs within easyfinancial due to the larger loan portfolio and store count. As a percentage of revenue, operating income was 9.7% compared to 8.4% in the first quarter of 2012.

Net income increased to $2.9 million for the first quarter of 2013, compared with net income of $2.6 million for the first quarter of 2012. On a per share basis, earnings were $0.24 compared with $0.22.

Outlook

David Ingram commented, "We feel optimistic about the continuous growth of easyfinancial and our multi-channel strategy for distribution of new loans. The new store schedule is on track for 25 + locations this year and our automated on-line transaction capability will soft launch this quarter. This positions us to have a fully functional ecommerce platform by the end of this year. As such, we expect to meet or exceed our loan book target of $95 to $100 million for 2013. Together, these actions will enable easyfinancial to achieve its goal of becoming Canada's largest provider of consumer loans as an alternative to traditional banks and payday lenders."

"Our leasing business also continues to show solid consumer demand and we are on track for higher revenues and operating income for the ensuing quarters," continued Mr. Ingram. "We remain committed to our strategic plan as outlined in our annual report. The Company will focus on growing easyfinancial, increasing the profitability of the leasing business and growing the franchise network."

Donald K. Johnson, Chairman of the Board, commented, "The Board is pleased with the Company's performance during the first quarter of the year. We are confident that the strategic initiatives completed last year will support increasing returns in the periods to come. 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 quarterly dividend payment of $0.085 per share payable on July 5, 2013 to the holders of common shares of record as at the close of business on June 24, 2013.

About easyhome

As of March 31, 2013, easyhome Ltd. operated 191 easyhome leasing stores (including 9 consolidated franchise locations), 100 easyfinancial locations and 49 franchise locations.

easyhome Ltd. is Canada's largest merchandise leasing Company, 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 and prepaid cards, through its easyfinancial Services business. easyhome Ltd. is listed on the TSX under the symbol 'EH'. For more information, visit www.easyhome.ca.

The above analysis refers to certain financial measures, including same store revenue growth, gross consumer loans receivable, adjusted earnings, adjusted operating earnings and adjusted EBITDA, which 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. These measures are defined in our Management's Discussion and Analysis for the period 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 as we believe that they facilitate the understanding of the results of our operations and financial position.

Forward-Looking Statements

This 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, react to uncertainties related to regulatory actions, raise capital under favourable terms, manage the impact of litigation (including shareholder 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.

easyhome Ltd.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(unaudited)
(expressed in thousands of Canadian dollars)
As at As at
March 31, December 31,
2013 2012
ASSETS
Current assets
Cash 6,327 4,631
Amounts receivable 4,735 4,536
Consumer loans receivable 40,722 34,425
Prepaid expenses 1,331 964
Total current assets 53,115 44,556
Amounts receivable 743 1,000
Consumer loans receivable 29,316 32,159
Lease assets 66,805 68,075
Property and equipment 14,244 13,729
Deferred tax assets 4,797 4,232
Intangible assets 6,269 6,213
Goodwill 19,963 19,963
TOTAL ASSETS 195,252 189,927
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank revolving credit facility 29,219 21,281
Accounts payable and accrued liabilities 20,241 31,696
Income taxes payable 5,617 4,216
Dividends payable 1,015 1,012
Deferred lease inducements 644 564
Unearned revenue 4,344 3,922
Provisions 301 379
Total current liabilities 61,381 63,070
Accounts payable and accrued liabilities 1,392 1,459
Deferred lease inducements 1,926 1,898
Term loan 23,334 18,330
Provisions 91 157
Total liabilities 88,124 84,914
Shareholders' equity
Share capital 60,889 60,885
Contributed surplus 3,118 3,035
Accumulated other comprehensive loss (2 ) (137 )
Retained earnings 43,123 41,230
Total shareholders' equity 107,128 105,013
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 195,252 189,927
easyhome Ltd.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(expressed in thousands of Canadian dollars except earnings per share)
Three months ended
March 31, March 31,
2013 2012
REVENUE
Lease revenue 38,919 40,239
Interest income 7,867 5,240
Other 5,603 4,308
52,389 49,787
EXPENSES BEFORE DEPRECIATION AND AMORTIZATION
Salaries and benefits 15,890 16,168
Stock-based compensation 904 297
Advertising and promotion 1,775 1,853
Bad debts 3,146 2,001
Occupancy 6,720 6,663
Distribution and travel 1,726 1,781
Other 3,872 3,537
34,033 32,300
DEPRECIATION AND AMORTIZATION
Depreciation of lease assets 11,933 12,076
Depreciation of property and equipment 1,108 975
Amortization of intangible assets 294 114
Impairment, net (62 ) 116
13,273 13,281
Total operating expenses 47,306 45,581
Operating income 5,083 4,206
Finance costs 1,184 484
Income before income taxes 3,899 3,722
Income tax expense (recovery)
Current 1,552 917
Deferred (565 ) 182
987 1,099
Net income 2,912 2,623
Basic earnings per share 0.24 0.22
Diluted earnings per share 0.24 0.22

FOR FURTHER INFORMATION PLEASE CONTACT:

Contact Information:
easyhome Ltd.
David Ingram
President & Chief Executive Officer
(905) 272-2788


easyhome Ltd.
Steve Goertz
Senior Vice President and Chief Financial Officer
(905) 272-2788
www.easyhome.ca

Products
  • Globe Unlimited

    Digital all access pass across devices. subscribe

  • The Globe and Mail Newspaper

    Newspaper delivered to your doorstep. subscribe

  • Globe2Go

    The digital replica of our newspaper. subscribe

  • Globe eBooks

    A collection of articles by the Globe. subscribe

See all Globe Products

Advertise with us

GlobeLink.ca

Your number one partner for reaching Canada's Influential Achievers. learn more

The Globe at your Workplace
Our Company
Customer Service
Globe Recognition
Mobile Apps
NEWS APP
INVESTING APP
Other Sections