2009-11-10 01:22:04 -
MISSISSAUGA, ONTARIO -- (Marketwire) -- 11/09/09 -- easyhome Ltd. (TSX: EH), Canada's leading merchandise leasing company, today announced its results for the third quarter and nine months ended September 30, 2009.
Revenue for the quarter increased 9.2% to $42.5 million, driven largely by the contribution of the accounts of Insta-rent and easyfinancial, our consumer loans division, compared with $38.9 million for the same period last year. Same store revenue growth for the quarter was 1.8%. Operating income was $0.3 million compared with $2.9 million in the third quarter of 2008. Net income was $20,000, or $0.00 per share, compared with $1.5 million, or $0.14 per share, in the third quarter of 2008. Excluding restructuring charges of $1.2 million recorded in the third quarter of 2009, diluted earnings per share were $0.08.
"Economic conditions remain challenging for retailers," said David Ingram, President and CEO of easyhome Ltd. "Consumers have reduced their overall expenditures on discretionary items. In the third quarter, we began to scale back our infrastructure, which had been constructed to meet higher consumer demand, to better reflect the realities of the market. A number of spending cuts initiated in the third quarter decreased costs, but the majority of these reductions are not expected to flow through to the bottom line until the fourth quarter of this year."
"We began a reorganization of our operational and administrative functions during the third quarter to rationalize costs and increase operational effectiveness. This included announcing the future closure of our Edmonton administrative office, re-aligning senior management responsibilities, changing our store staff structure, and altering a number of operational procedures and processes. While the restructuring will provide long-term benefits as our operations become more efficient, we recorded $1.2 million in restructuring charges during the quarter." Mr. Ingram said.
"There are a number of positive indicators that point to improved performance for the fourth quarter of the year," Mr. Ingram said. "Beginning in August, key performance indicators such as deliveries, receivables, and chargeoffs have all improved, and customer demand has stabilized since July. Combined with rate increases in our television, computing and furniture categories, and cost reductions in advertising and marketing, we are cautiously optimistic that the worst is now behind us."
The Company's franchising business met its targets for the quarter and is expected to have a total of 22 stores in operation by the end of fiscal 2009. easyfinancial continues to record strong results, increasing revenue from $0.6 million to $1.3 million in the third quarter of the year through solid same revenue store growth of 61% and the addition of 4 new kiosks to a total of 20. The Company expects to operate 30 easyfinancial kiosks across Canada by December 31st, 2009.
Year-to-Date Results
For the first nine months of the year, easyhome grew revenues 9.6% to $129.8 million compared with $118.4 million for the same period last year. Operating income for the year-to-date was $8.1 million compared with $12.5 million for the comparable period in 2008. Net income for the nine month period was $4.3 million compared with $7.2 million for the first nine months of 2008. On a per share basis, fully diluted earnings were $0.41 compared with $0.68. Excluding the restructuring charge, earnings per share for the nine month period would have been $0.49.
In spite of the difficult financial results, easyhome was able to generate strong positive cash flows. For the first nine months of the year, the Company paid down over $5.0 million of debt while investing an additional $3.1 million into the easyfinancial loan portfolio. The Company also repurchased 28,000 common shares for $0.3 million under a Normal Course Issuer Bid in the third quarter and continued its quarterly dividend payment of $0.085 per share.
easyhome has established the following targets for additions in 2010; easyhome leasing to open 8-10 new corporate stores, the opening of 25-30 new franchise stores, the opening of 25-30 new easyfinancial kiosks, and total revenue growth of 5-7%.
Donald K. Johnson, Chairman of the Board, commented, "Although easyhome continues to face challenges during this very difficult economic environment, the Company has a solid growth strategy and disciplined approach that will create long-term value for shareholders."
The Board of Directors has approved a dividend payment of $0.085 per share payable on January 5, 2010 to the holders of common shares of record as at the close of business on December 1, 2009.
About easyhome
As at September 30, 2009, easyhome Ltd. had 237 stores, including 208 Canadian corporate stores, thirteen U.S. corporate stores, ten U.S. franchised stores, five Canadian franchised stores and one licensed Canadian store. 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. 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 generally accepted accounting principles ("GAAP") in Canada. 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 GAAP, these measures are defined herein 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 information about easyhome including its business operations, strategy. 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 statements that may be made concerning future financial performance (including revenues, 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, due to, but not limited to important factors such as the integration of the Insta-rent operations with easyhome's. The reader is cautioned to consider these and other factors carefully and not place undue reliance on easyhome's forward-looking statements. Management of easyhome is 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.
The Company's Management Discussion and Analysis for the third quarter of 2009 is available at www.sedar.com :
www.sedar.com .
Notice Of No Auditor Review Of Interim Financial Statements
Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.
The accompanying unaudited interim consolidated financial statements of the Company have been prepared by and are the responsibility of the Company's management.
The Company's independent auditor has not performed a review of these financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity's auditor.
CONSOLIDATED BALANCE SHEETS
(Continued under the laws of Ontario) (unaudited)
As at: September 30, December 31,
2009 2008
----------------------------------------------------------------------------
(in 000's) $ $
----------------------------------------------------------------------------
ASSETS
Amounts receivable 5,167 5,169
Income taxes recoverable 2,584 1,117
Consumer loans receivable 7,131 4,064
Prepaid expenses 2,183 2,790
Lease assets 77,825 82,443
Property and equipment 16,328 15,879
Future tax assets 4,831 6,609
Intangible assets 2,932 2,790
Goodwill 17,325 17,325
----------------------------------------------------------------------------
136,306 138,186
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Bank revolving credit facility 23,844 26,139
Trade accounts payable 5,884 6,248
Accrued liabilities 4,048 2,759
Accrued employee costs 3,257 2,478
Dividends payable 891 893
Deferred lease inducements 2,363 2,540
Unearned revenue 626 734
Term loan 6,997 9,750
----------------------------------------------------------------------------
47,910 51,541
----------------------------------------------------------------------------
Shareholders' equity
Common shares 49,024 49,285
Contributed surplus 3,016 2,665
Retained earnings 36,356 34,695
----------------------------------------------------------------------------
88,396 86,645
----------------------------------------------------------------------------
136,306 138,186
----------------------------------------------------------------------------
----------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Continued under the laws of Ontario) (unaudited)
Three months ended Nine months ended
September 30, September 30,
(in 000's, except earnings per share) 2009 2008 2009 2008
----------------------------------------------------------------------------
$ $ $ $
----------------------------------------------------------------------------
REVENUE
Lease 32,678 31,111 101,552 95,261
Other 9,777 7,751 28,232 23,180
----------------------------------------------------------------------------
42,455 38,862 129,784 118,441
----------------------------------------------------------------------------
EXPENSES
Salaries and benefits 13,383 11,774 38,669 34,824
Selling, general and administrative 5,899 3,752 16,065 11,166
Occupancy 6,307 5,623 18,398 16,498
Automotive and travel 1,848 1,836 5,252 5,231
----------------------------------------------------------------------------
27,437 22,985 78,384 67,719
----------------------------------------------------------------------------
Amortization
Amortization of lease assets 13,552 11,865 39,954 35,394
Amortization of property and
equipment and intangible assets 1,158 1,139 3,387 2,779
----------------------------------------------------------------------------
14,710 13,004 43,341 38,173
----------------------------------------------------------------------------
Total operating expenses and
amortization 42,147 35,989 121,725 105,892
----------------------------------------------------------------------------
Operating income 308 2,873 8,059 12,549
Interest expense 278 253 736 719
----------------------------------------------------------------------------
Income before income taxes 30 2,620 7,323 11,830
----------------------------------------------------------------------------
Income taxes
Current (817) 1,096 1,207 4,154
Future 827 25 1,778 475
----------------------------------------------------------------------------
10 1,121 2,985 4,629
----------------------------------------------------------------------------
Net income and comprehensive income
for the period 20 1,499 4,338 7,201
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings per share
Basic - 0.14 0.41 0.69
Diluted - 0.14 0.41 0.68
----------------------------------------------------------------------------
----------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(Continued under the laws of Ontario) (unaudited)
Three months ended Nine months ended
September 30, September 30,
(in 000's) 2009 2008 2009 2008
----------------------------------------------------------------------------
$ $ $ $
----------------------------------------------------------------------------
Retained earnings, beginning of
period as previously stated 37,227 33,340 34,825 29,441
Transitional adjustment on the
adoption of new accounting policies - (138) (130) (146)
----------------------------------------------------------------------------
Retained earnings, beginning of
period as restated 37,227 33,202 34,695 29,295
Net income for the period as restated 20 1,499 4,338 7,201
Common share dividends (891) (893) (2,677) (2,688)
----------------------------------------------------------------------------
Retained earnings, end of period 36,356 33,808 36,356 33,808
----------------------------------------------------------------------------
----------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued under the laws of Ontario) (unaudited)
Three months ended Nine months ended
September 30, September 30,
(in 000's) 2009 2008 2009 2008
----------------------------------------------------------------------------
$ $ $ $
----------------------------------------------------------------------------
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net income for the period 20 1,499 4,338 7,201
Add (deduct) items not
affecting cash:
Recognition of stock based
compensation (139) 317 350 747
Amortization of lease assets 13,552 11,865 39,954 35,394
Amortization of property and
equipment and intangible
assets 1,158 1,139 3,387 2,779
Future income taxes 827 25 1,778 451
Net change in non-cash
operating items
Lease assets (12,376) (11,383) (35,336) (34,290)
Other 1,055 (2,247) (2,506) (11,810)
----------------------------------------------------------------------------
4,097 1,215 11,965 472
----------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of property and
equipment (2,141) (3,019) (3,954) (6,832)
Purchase of intangible assets (101) (198) (324) (853)
Business acquisition - (8,797) - (8,797)
Proceeds on disposition of
property and equipment 184 (81) 301 (77)
----------------------------------------------------------------------------
(2,058) (12,095) (3,977) (16,559)
----------------------------------------------------------------------------
FINANCING ACTIVITIES
Advances (repayment) of bank
revolving credit facility 43 2,992 (2,295) 9,419
Advance of term loan - 8,797 - 8,797
Repayment of term loan (928) - (2,753) -
Issuance of common shares on
exercise of options 1 1 1 454
Shares purchased for
cancellation (262) (17) (262) (86)
Common stock dividend payment (893) (893) (2,679) (2,497)
----------------------------------------------------------------------------
(2,039) 10,880 (7,988) 16,087
----------------------------------------------------------------------------
Net change in cash for the
period - - - -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Contacts:
easyhome Ltd.
David Ingram
President & Chief Executive Officer
(905) 272-2788
easyhome Ltd.
Donald K. Johnson
Chairman of the Board
(416) 359-4119
www.easyhome.ca :
www.easyhome.ca
