easyhome Ltd. Reports 2012 Third Quarter Results

easyhome Ltd. Reports 2012 Third Quarter Results 
Revenue Growth of 5.8%, Net Income Growth of 39% 
MISSISSAUGA, ONTARIO -- (Marketwire) -- 11/12/12 -- 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 third quarter ended September 30, 2012. 
easyhome delivered strong revenue growth during the third quarter of
2012. Revenue for the quarter increased 5.8% to $49.3 million, driven
primarily by the expansion of the easyfinancial Services business and
the related growth of its consumer loans receivable portfolio. Net
income for the quarter was $2.6 million, up from $1.9 million
reported in the third quarter of 2011. Reported earnings per share
for the quarter was 22 cents compared to 16 cents for the third
quarter of 2011. 
During the third quarter of 2012 and as previously announced, the
Company entered into a new $20 million credit facility to support the
growth of easyfinancial Services. In conjunction with this financing,
the Company amended the terms and extended the maturity date of its
revolving operating facility with a syndicate of banks. These
actions, when taken together, will provide the Company with the
capital necessary to achieve its growth objectives as it continues to
build upon positive momentum in its easyfinancial Services business. 
Other highlights for the third quarter of 2012 include: 
easyhome Leasing 


 
--  Stabilization of the operating income, arresting the year over year
    decline experienced in prior quarters 
--  Same store revenue growth excluding easyfinancial Services of 3.1%
    Delivery growth for same stores of 6.8% compared to the third quarter of
    2011 
--  Successful integration of second quarter store closures and the
    migration of the leasing portfolios from closed stores to nearby
    locations 
--  Excluding the impact of changes to the store network, the lease
    portfolio as measured by potential monthly lease revenue increased by
    $0.3 million year over year 

 
easyfinancial Services 


 
--  The consumer loans receivable portfolio closed at $59.6 million,
    representing a year- over-year increase of 40% 
--  Revenue for the third quarter of 2012 increased 52% co
mpared to the
    third quarter of 2011 
--  Operating margin of 33.8% 
--  Successful implementation of, and migration to the new loan management
    system supporting easyfinancial Services 

 
easyhome Franchising 


 
--  Franchise system wide revenue increased 35% compared to the third
    quarter of 2011 
--  Shortly after the end of the third quarter of 2012, the last of the
    three original Be-A- Contender franchise locations that were funded by
    easyhome obtained independent financing and now all three original Be-A-
    Contender franchise locations have repaid their debts to easyhome 

 
Overall 


 
--  Same store revenue growth of 9.8% 
--  Excluding the impact of variable compensation plan expenses, corporate
    expenses for the third quarter of 2012 are consistent with corporate
    expenses for the third quarter of 2011 
--  Operating income increased 28% from the third quarter of 2011 
--  Operating margin of 8.7% and EBITDA margin of 11.0% 
--  Cash flow from operating activities of $16.3 million 

 
"We are pleased with our financial performance and with the
completion of several strategic initiatives during the quarter," said
David Ingram, easyhome's President and Chief Executive Officer. "The
restructuring of our easyhome leasing operations that occurred in the
second quarter of this year delivered the expected results. Our
easyfinancial Services business continued to produce higher earnings
and margin expansion. This was achieved while migrating to our new
loan management system without negatively impacting customers.
Finally, we secured additional financing which will allow us to grow
unencumbered throughout 2013." 
Third Quarter Results 
For the third quarter ended September 30, 2012, easyhome generated
revenues of $49.3 million, an increase from $46.6 million in the
third quarter of 2011. At the store level, including easyfinancial,
same store revenue growth for the quarter was a strong 9.8%, up from
5.1% in the third quarter of 2011. 
On a segmented basis, easyfinancial Services revenues increased 52%
to $9.8 million from $6.4 million for the same period last year. The
improvement is a result of the increase in the consumer loans
receivable portfolio from $42.7 million to $59.6 million. The
Company's leasing operations recorded revenues of $39.1 million, down
from $39.8 for the same period last year and franchising operations
recorded revenues of $0.3 million, relatively unchanged from the same
period last year. 
Operating income, which is income before interest expense and income
taxes, increased 27% to $4.3 million from $3.3 million in the third
quarter of 2011. As a percentage of revenue, operating income was
8.7% compared to 7.2% in the third quarter of 2011. 
Net income increased to $2.6 million or 22 cents per share for the
third quarter of 2012, compared with net income of $1.9 million or 16
cents per share for the third quarter of 2011. 
Nine Months Results 
For the nine months of the year, easyhome recorded revenues of $148.0
million, up 6.4% compared with $139.0 million in the first nine
months of 2011. Operating income for the period was $10.5 million
compared with $10.0 million in the first nine months of 2011.
Adjusted operating earnings for the nine months of 2012, excluding
the restructuring and other charges, was $12.4 million, an increase
of 11.6% over the first nine months of 2011. Diluted earnings per
share increased from 59 cents to 61 cents. Adjusted net income,
adjusted for unusual items, was $7.6 million compared with $7.0
million for the same period last year. On a per share basis and
excluding unusual items, diluted earnings per share was 63 cents
compared with 59 cents a year ago. 
Cash flow provided by operating activities for the nine months ended
September 30, 2012 was $42.5 million. Included in these cash flows
was a net investment in the easyfinancial Services consumer loans
receivable portfolio of $17.9 million. If this net investment in the
loan portfolio was treated as cash flow from investing activities,
cash flow from operating activities would be $60.4 million. This cash
flow from operating activities enabled the Company to invest in the
portfolios to drive future revenue growth of all business units and
maintain its total dividend payments for the quarter. 
Outlook 
"We believe that our business is well positioned for continued
success," commented David Ingram. "easyhome leasing took the
difficult but necessary steps in the second quarter of this year to
restructure its operations and return the focus of field staff from
administrative processes to leasing, collecting and customer
relationships. Over the past 24 months, easyfinancial has tripled the
size of its consumer loans receivable portfolio and has a Canadian
leadership position as an alternative provider of term financing to
consumers. We have completed the build out of our corporate
infrastructure to support the growth plans of all of our business
units. Finally, we have secured the financing that is necessary for
the Company to achieve its growth objectives." 
easyhome has established the following targets for 2013: 


 
--  easyhome leasing does not plan to open any new corporate stores but we
    expect to open 3-4 ne
w Be-A-Contender franchise stores that are
    consolidated for financial reporting purposes 
--  open 3-5 new franchise stores 
--  open 25-35 new easyfinancial locations with most of these being stand-
    alone locations 
--  easyfinancial consumer loans receivable portfolio growing to $90-$100
    million 

 
Based on these assumptions, we are targeting total revenue growth of
8-12%. The achievement of these targets by the Company, however, is
predicated on a number of factors, including the pace of expansion of
easyfinancial. 
Donald K. Johnson, Chairman of the Board, commented, "The Company has
seen significant change over the past two years, especially as
easyfinancial has grown into a significant and sustainable business.
The Board is pleased with the progress and the results for the first
nine months of 2012 and looks forward to continued growth in the
future." 
The Board of Directors has approved a quarterly dividend payment of
$0.085 per share payable on January 9, 2013 to the holders of common
shares of record as at the close of business on December 1, 2012. 
About easyhome 
As of November 12th, easyhome Ltd. operated 206 easyhome leasing
stores (including 8 consolidated franchise locations), 101
easyfinancial locations and had 46 franchise locations. 
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 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
because 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. 
(tables follow) 
easyhome Ltd. 
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 
(Unaudited) 
(expressed in thousands of Canadian dollars) 


 
                                                        As at         As at 
                                                September 30,  December 31, 
                                                         2012          2011 
----------------------------------------------------------------------------
                                                                            
ASSETS                                                                      
Current assets                                                              
Cash                                                    1,041         1,019 
Amounts receivable                                      3,726         5,893 
Income taxes recoverable                                    -           600 
Consumer loans receivable (note 4)                     35,548        32,619 
Prepaid expenses                                        1,159         1,316 
----------------------------------------------------------------------------
Total current assets                                   41,474        41,447 
----------------------------------------------------------------------------
Amounts receivable                                        805         1,365 
Consumer loans receivable (note 4)                     20,560        12,319 
Lease assets                                           63,681        66,996 
Property and equipment (note 5)                        13,268        12,612 
Deferred tax assets (note 10)                           5,578         2,933 
Intangible assets                                       5,475         4,126 
Goodwill                                               17,325        17,325 
----------------------------------------------------------------------------
TOTAL ASSETS                                          168,166       159,123 
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----------------------------------------------------------------------------
                                                                            
LIABILITIES AND SHAREHOLDERS' EQUITY                                        
Current liabilities                                                         
Bank revolving credit facility (note 6)                32,212        33,123 
Accounts payable and accrued liabilities              
 19,484        19,504 
Income taxes payable                                    6,483             - 
Dividends payable (note 7)                              1,012         1,007 
Deferred lease inducement                                 541           598 
Unearned revenue                                        3,910         4,562 
Provisions (note 9)                                       325            24 
----------------------------------------------------------------------------
Total current liabilities                              63,967        58,818 
----------------------------------------------------------------------------
Accounts payable and accrued liabilities                  552           727 
Deferred lease inducements                              1,682         1,959 
Provisions (note 9)                                       246            77 
----------------------------------------------------------------------------
Total liabilities                                      66,447        61,581 
----------------------------------------------------------------------------
                                                                            
Contingencies (note 13)                                                     
                                                                            
Shareholders' equity                                                        
Share capital (note 7)                                 60,667        60,207 
Contributed surplus                                     3,014         3,171 
Accumulated other comprehensive loss                     (441)          (52)
Retained earnings                                      38,479        34,216 
----------------------------------------------------------------------------
Total shareholders' equity                            101,719        97,542 
----------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY            168,166       159,123 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
See accompanying notes to the interim condensed consolidated
financial statements 
easyhome Ltd. 
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME 
(Unaudited) 
(expressed in thousands of Canadian dollars except earnings per
share) 


 
                                   Three months ended     Nine months ended 
                                --------------------------------------------
                                 September  September  September  September 
                                       30,        30,        30,        30, 
                                      2012       2011       2012       2011 
----------------------------------------------------------------------------
                                                                            
REVENUE                                                                     
Lease revenue                       38,014     39,040    116,925    119,198 
Interest income                      6,503      4,369     17,533     10,681 
Other                                4,772      3,157     13,521      9,154 
----------------------------------------------------------------------------
                                    49,289     46,566    147,979    139,033 
----------------------------------------------------------------------------
                                                                            
EXPENSES BEFORE DEPRECIATION AND                                            
 AMORTIZATION                                                               
Salaries and benefits (note 8)      16,378     15,304     48,403     45,129 
Advertising and promotion            1,702      1,748      5,858      5,214 
Bad debts                            2,434      1,729      6,760      4,243 
Occupancy                            6,320      6,145     19,367     18,819 
Distribution and travel              1,821      1,993      5,535      5,932 
Other                                3,376      3,904     10,055     10,492 
Restructuring and other items                                               
 (note 9)                                -          -        436          - 
----------------------------------------------------------------------------
                                    32,031     30,823     96,414     89,829 
----------------------------------------------------------------------------
                                                                            
DEPRECIATION AND AMORTIZATION                                               
Depreciation of lease assets        11,847     11,563     36,045     35,375 
Depreciation of property and                                                
 equipment                           1,007        914      2,978      2,538 
Amortization of intangible                                                  
 assets                                119        120        348        397 
Impairment (net) (note 5)               (7)      (202)       275       (173)
----------------------------------------------------------------------------
                                    12,966     12,395     39,646     38,137 
----------------------------------------------------------------------------
                                                                            
Total operating expenses            44,997     43,218    136,060    127,966 
----------------------------------------------------------------------------
                                                                            
Operating income                     4,292      3,348     11,919     11,067 
                                                                            
Interest expense                       481        423      1,428      1,056 
----------------------------------------------------------------------------
                                                                            
Income before income taxes           3,811      2,925     10,491     10,011 
                                                                            
Income tax expense (recovery)                                               
 (note 10)                                                                  
 Current                             1,394        611      5,845        162 
 Deferred                             (221)       414     (2,645)     2,853 
----------------------------------------------------------------------------
                                     1,173      1,025      3,200      3,015 
----------------------------------------------------------------------------
                                                                            
Net income                           2,638      1,900      7,291      6,996 
----------------------------------------------------------------------------
                                                                            
Basic earnings per share (note                                              
 11)                                  0.22       0.16       0.61       0.59 
Diluted earnings per share (note                                            
 11)                                  0.22       0.16       0.61       0.59 
----------------------------------------------------------------------------
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See accompanying notes to the interim condensed consolidated
financial statements
Contacts:
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