easyhome Ltd.

easyhome Ltd.

March 07, 2005 20:56 ET

easyhome Ltd. Announces 50% Increase in Dividend, Based on Record 2004 Results


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: EASYHOME LTD.

TSX SYMBOL: EH

MARCH 7, 2005 - 20:56 ET

easyhome Ltd. Announces 50% Increase in Dividend,
Based on Record 2004 Results

EDMONTON, ALBERTA--(CCNMatthews - March 7, 2005) - easyhome Ltd.
(TSX:EH) Canada's leading merchandise rental company, today announced
record quarterly revenue for the fourth quarter ended December 31, 2004
and record annual revenue and net income.

easyhome increased revenue for the fourth quarter to $23.9 million, the
sixth consecutive quarterly record for the Company and an increase of
17% from $20.4 million a year ago. Same store revenue growth (revenue
from stores open for the comparable periods) was 9.9% for the quarter,
up from 7.7% for the comparable period last year. The record revenues
were driven by an increase in the rental agreement portfolio. An
increased customer base accounted for 89% of this portfolio growth.

For the quarter income before taxes increased to $2.7 million from $2
million, an increase of 37.7%. To increase future customer growth,
during the quarter, the National TV advertising campaign introduced in
2004 increased advertising costs by $0.5 million over last year and 10
additional stores increased salaries and benefits expense by $0.3
million.

Net income for the quarter was $1.7 million compared with $1.3 million
in the fourth quarter of last year after adjusting for the impact of the
reduced fourth quarter tax provision.

Revenue for the year ended December 31, 2004 was $88.5 million, up 13.3%
from $78.1 million last year. Same store revenue growth was 9.4% for the
year ended December 31, 2004 compared to 5.9% last year. The Company has
achieved 39 consecutive months of year-over-year revenue growth.

Operating income for the year ended December 31, 2004 was $10.4 million
compared with $7.4 million last year, an increase of 40.3%. Income
before income taxes increased to $10.1 million from $5.7 million, an
increase of 77.7%. Net income increased to $8.8 million from $4 million
and diluted earnings per share were $1.30 for the year ended December
31, 2004 compared with $0.75 last year.

During the third quarter of 2004, a future tax asset valuation reserve
in the amount of $2.3 million was reversed through income tax expense as
Management is of the view that the magnitude, timing and sustainability
of future taxable income is sufficient to support the value of the
future tax assets. Before the reversal of the future tax asset valuation
reserve, net income for the year was $6.5 million and diluted earnings
per share were $0.96.

Commenting on the results, David Ingram, President and CEO said, " I am
delighted to report that easyhome executed on all its key objectives for
2004. We committed to opening 12 new stores and surpassed that with 14
locations opened in the year. We were particularly pleased with the
speed at which the average new store achieved profitability in month 5
compared to our model based on historical run rates of 10-12 months. We
also targeted greater than 5% same store revenue growth and achieved
9.4% with evidence of an improving trend. Lastly, we concluded that a
continued disciplined approach to our finances would drive forward our
profitability and increase shareholder return. As a result, income
before income taxes increased to $10.1 million from $5.7 million and the
company's share price increased to $19.00 as at December 31, 2004 from
$8.75 as at December 31, 2003."

Mr. Ingram concluded, "While we invested more in marketing costs for the
Holiday Season we are very pleased to report that net customers and
units on rent achieved record quarterly growth in 2004 resulting in 12
month increases of 16.3% and 24.3% respectively. We now have a monthly
rental revenue portfolio to start 2005 that is $887,000 higher than
January 2004. Our plan remains consistent with the previously announced
strategy to grow our store base by a minimum of 15% per year through
2007."

Donald K. Johnson, Chairman of the Board, commented, "On behalf of the
Board of Directors, I would like to compliment the senior management
team for their vision in creating the company's strategic growth plan
and their disciplined execution of the plan. The settlement of the
class-action lawsuit announced on March 4, 2005 is certainly in the best
interests of the Company and all stakeholders. Management can now devote
all of its time to executing the Company's growth strategy. I would also
like to thank each of our directors for their continued contribution to
the Company's success."

The Board of Directors approved a 3 for 2 stock split which is subject
to shareholder and regulatory approval. The shareholders will be asked
to approve the stock split at the Annual and Special meeting of
shareholders to be held on May 10, 2005.

The Board of Directors also approved a dividend payment of $0.06 per
share on April 4, 2005 on a pre-split basis to the holders of common
shares of record as at the close of business on March 18, 2005. This
increases the quarterly dividend payment by 50%, from $0.04 per share to
$0.06 per share.

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.

easyhome Ltd., with 142 locations, is Canada's largest merchandise
rental company and the fourth largest in North America, offering top
quality, brand-name household furnishings, appliances and home
electronic products to consumers under weekly or monthly rental
agreements. easyhome Ltd. is listed on the TSX under the symbol 'EH'.

Certain information included in this news release may constitute
forward-looking statements. Forward-looking statements are based on
current expectations and entail various risks and uncertainties. These
risks and uncertainties could cause or contribute to actual results that
are materially different from those expressed or implied. The Company
disclaims any obligation or intention to update or revise any
forward-looking statement, whether as a result of new information,
future events, or otherwise.



easyhome Ltd.
CONSOLIDATED BALANCE SHEETS
(unaudited)
As at:

December 31, December 31,
(in 000's) 2004 2003
------------------------------------------------------------------------
$ $
ASSETS (restated)

Amounts receivable 1,454 1,677
Prepaid expenses 796 664
Rental assets 41,485 32,440
Capital assets 5,435 5,213
Future tax assets 9,058 10,425
Intangible assets 267 354
Deferred costs 12 113
Goodwill 10,779 10,779
------------------------------------------------------------------------
69,286 61,664
------------------------------------------------------------------------
------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Bank revolving term loan 2,237 3,684
Trade accounts payable 6,776 7,159
Accrued liabilities 1,053 1,423
Accrued bonuses and other employee costs 3,105 2,153
Dividends payable 245 -
Deferred lease inducements 279 52
Unearned revenue 363 315
Income taxes payable 244 271
Note payable - 160
------------------------------------------------------------------------
14,302 15,217
------------------------------------------------------------------------

Commitments and contingencies
Shareholders' equity
Common shares, without par value 44,632 44,350
6,124,989 shares issued and outstanding
(December 31, 2003 - 6,036,049)
Contributed surplus 240 8
Retained earnings 10,112 2,090
------------------------------------------------------------------------
54,984 46,448
------------------------------------------------------------------------
69,286 61,665
------------------------------------------------------------------------
------------------------------------------------------------------------


easyhome Ltd.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (DEFICIT)

(unaudited)
Three months ended Twelve months ended
(in 000's, except December 31, December 31,
earnings per share) 2004 2003 2004 2003
-------------------------------------------------- --------------------
$ $ $ $
(restated) (restated)
REVENUE
Rental 20,159 17,241 74,479 66,129
Other 3,755 3,191 13,971 11,961
-------------------------------------------------- --------------------
23,914 20,432 88,450 78,090
-------------------------------------------------- --------------------

EXPENSES
Salaries and benefits 6,943 5,965 25,888 22,913
Selling, general and
administrative 2,866 2,252 9,681 8,726
Occupancy costs 2,948 2,743 11,550 10,886
Automotive and travel 955 759 3,571 2,948
-------------------------------------------------- --------------------
13,712 11,719 50,690 45,473
-------------------------------------------------- --------------------
Amortization
Amortization of rental assets 7,009 5,984 25,789 23,341
Amortization of capital assets,
intangible assets and deferred
costs 447 400 1,583 1,873
-------------------------------------------------- --------------------
7,456 6,384 27,372 25,214
-------------------------------------------------- --------------------
Total operating expenses
and amortization 21,168 18,103 78,062 70,687
-------------------------------------------------- --------------------
Operating income 2,746 2,329 10,388 7,403
Interest expense 46 368 269 1,708
-------------------------------------------------- --------------------
Income before income taxes 2,700 1,961 10,119 5,695
-------------------------------------------------- --------------------
Income tax expense 972 360 1,367 1,668
-------------------------------------------------- --------------------
Net income for the period 1,728 1,601 8,752 4,027
-------------------------------------------------- --------------------
Retained earnings (deficit),
beginning of period 8,629 572 2,090 (1,629)
Preferred share dividends - (83) - (308)
Common share dividends (245) - (730) -
-------------------------------------------------- --------------------
Retained earnings, end of period 10,112 2,090 10,112 2,090
-------------------------------------------------- --------------------
-------------------------------------------------- --------------------
Earnings per share
Basic earnings per share 0.28 0.33 1.44 0.83
Diluted earnings per share 0.25 0.30 1.30 0.75
-------------------------------------------------- --------------------


easyhome Ltd.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

Three months ended Twelve months ended
December 31, December 31,
(in 000's) 2004 2003 2004 2003
-------------------------------------------------- --------------------
$ $ $ $
(restated) (restated)
OPERATING ACTIVITIES
Net income for the period 1,728 1,600 8,752 4,027
Items not affecting cash:
Recognition of stock based
compensation 74 3 232 8
Amortization of rental assets 7,009 5,984 25,789 23,341
Amortization of capital
assets, intangible assets
and deferred costs 470 549 1,673 2,473
Future income taxes 972 356 1,367 1,592
Gain on sale of land held
for resale - - - (143)
Net change in non-cash
operating items -
Rental assets (10,782) (8,109) (34,834) (27,937)
Other 349 1,443 538 2,629
-------------------------------------------------- --------------------
Cash flow from operating
activities (180) 1,826 3,517 5,990
-------------------------------------------------- --------------------

INVESTING ACTIVITIES
Purchase of capital assets (400) (419) (1,746) (3,248)
Proceeds on disposition of
capital assets 7 9 39 160
Proceeds on sale of land held
for resale - - - 826
Repayment of note payable
related to acquisition (17) (46) (160) (176)
-------------------------------------------------- --------------------
Cash flow from investing
activities (410) (456) (1,867) (2,438)
-------------------------------------------------- --------------------

FINANCING ACTIVITIES
Net receipt (repayment) of bank
revolving term loan 689 (11,190) (1,447) (13,209)
Financing costs for bank
revolving term loan - (90) - (90)
Proceeds from equity financing - 13,881 - 13,881
Issuance of common shares on
exercise of options and
warrants 144 5 282 67
Share issue costs - (1,393) - (1,393)
Redemption of preferred shares - (2,500) - (2,500)
Preferred share dividend
payments - (83) - (308)
Common share dividend payments (243) - (485) -
-------------------------------------------------- --------------------
Cash flow from financing
activities 590 (1,370) (1,650) (3,552)
-------------------------------------------------- --------------------

Net change in cash - - - -
-------------------------------------------------- --------------------
-------------------------------------------------- --------------------


-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    easyhome Ltd.
    Donald K. Johnson
    Chairman of the Board
    (416) 359-4119
    or
    easyhome Ltd.
    David Ingram
    President and Chief Executive Officer
    (905) 272-2788
    or
    easyhome Ltd.
    Bill Johnson
    Executive Vice President & Chief Financial Officer
    (780) 930-3012
    (780) 481-7426 (FAX)