easyhome Ltd.
TSX : EH

easyhome Ltd.

May 02, 2007 19:30 ET

easyhome Ltd. Announces Record Quarterly Revenues and Net Income

EPS Improves 43.5% Fueled by Same Store Revenue Growth of 11.0%

EDMONTON, ALBERTA--(CCNMatthews - May 2, 2007) - easyhome Ltd. (TSX:EH), Canada's leading merchandise leasing company, today announced its results for the first quarter ending March 31, 2007.

First quarter highlights are:

- Revenue increased $5.8 million to $34.3 million from $28.5 million for the same quarter last year, an improvement of 20.4%.

- Same store revenue growth of 11.0% building on 8.7% for the first quarter of 2006, and 5.7% in the fourth quarter 2006.

- Potential monthly lease revenue increased to $9,779,000 from $8,337,000 at the end of March 2006, an improvement of 17.3%.

- 22 consecutive quarters of comparable revenue growth.

- Operating income improved $1.8 million to $5.6 million from $3.8 million in 2006, an increase of 45.9%. Part of this increase is a result of improved operating leverage on the majority of it's cost lines, including the change in the method of leased assets amortization that favorably impacted net income by $0.4 million.

- Net income increased $1.1 million to $3.4 million, an improvement of 44.6%.

- Diluted earnings per share of $0.33 up from reported diluted earnings per share in 2006 of $0.23, an improvement of 43.5%.

- Opened 4 Canadian new stores and two financial services kiosks.

Commenting on the results, David Ingram, President and CEO said, "I am very pleased to report a record quarter for both revenue and net income. All of the key indicators achieved positive comparisons to first quarter of 2006, which was primarily driven by the record growth of our portfolio in the fourth quarter of 2006. This momentum continued into 2007, with the potential monthly revenue increasing $260,000 compared to $86,000 achieved in the first quarter of 2006. All 4 major categories experienced comparable revenue growth, lead by furniture at 26%, electronics at 18%, computers at 15%, and appliances at 8%. We have also seen the average amount spent per transaction increase due to the emergence of flat panel TVs in our mix, which has resulted in customer spend improving 7% in the first quarter. These improvements have contributed to an operating margin of 16.4% which reflects the strength of our strategic direction and disciplined execution."

Mr. Ingram continued, "Four new locations were added in the first quarter, resulting in our current total of 192 across Canada (including our licensed location). In addition, we opened 2 easyfinancial kiosks to bring our total to 5. We expect to open 8 new stores in the second quarter, including 2 in the US, and add 1 easyfinancial kiosk."

Mr. Ingram concluded, "We are in a unique position to respond to our customers, to provide them with access to furniture, household goods, appliances and electronics. The strong consumer demand provides us continued optimism for another year of strong revenue and earnings growth. Our outlook, therefore, remains consistent with our disclosed 2007 targets, requiring 21-24 new stores, annual revenue growth of 15-18%, and same store revenue growth of 5-7%."

Donald K. Johnson, Chairman of The Board commented that, "We are very pleased with the first quarter results. The growth in net profits, gross revenues and same-store revenues confirms that easyhome is well positioned to achieve above-average growth in the Canadian market. Also, our low risk expansion strategy into the U.S. market provides the Company with additional long-term growth potential."

The Board of Directors have approved a dividend payment of $0.07 per share payable on the 4th of July, 2007 to the holders of common shares of record as at the close of business on the 15th day of June, 2007. All dividends declared payable by the Company are designated as eligible dividends within the meaning of s.89(1) of the Income Tax Act (Canada).

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 192 stores (including 1 licensed location), as at March 31, 2007 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'.

Certain information included in this news release may constitute forward-looking statements. Forward-looking statements are based on current expectations and may include 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.



CONSOLIDATED BALANCE SHEETS
(unaudited)
As at:

March 31, December 31,
(in 000's) 2007 2006
----------------------------------------------------------------------------
$ $
ASSETS

Amounts receivable 4,357 4,542
Prepaid expenses 1,292 928
Lease assets 68,363 64,327
Property and equipment 10,455 9,637
Future tax assets 5,957 6,689
Intangible assets and deferred costs 156 143
Goodwill 10,779 10,779
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101,359 97,045
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LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Bank revolving term loan 13,467 6,275
Trade accounts payable 8,981 10,588
Accrued liabilities 1,368 1,119
Accrued payables, bonuses and other employee costs 1,853 2,397
Dividends payable 714 609
Deferred lease inducements 1,779 1,782
Unearned revenue 646 398
Income taxes payable 267 4,686
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29,075 27,854
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Shareholders' equity
Common shares 46,861 46,738
Contributed surplus 2,056 1,735
Retained earnings 23,367 20,718
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72,284 69,191
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101,359 97,045
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CONSOLIDATED STATEMENTS OF INCOME
(unaudited)

Three months ended
March 31,
(in 000's, except earnings per share) 2007 2006
----------------------------------------------------------------------------
$ $

REVENUE
Lease 28,103 23,618
Other 6,234 4,912
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34,337 28,530
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EXPENSES
Salaries and benefits 9,688 8,292
Selling, general and administrative 3,120 2,615
Occupancy 4,696 3,668
Automotive and travel 1,387 1,157
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18,891 15,732
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Amortization
Amortization of lease assets 9,167 8,501
Amortization of property and equipment, intangible
assets and deferred costs 634 426
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9,801 8,927
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Total operating expenses and amortization 28,692 24,659
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Operating income 5,645 3,871
Interest expense 151 33
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Income before income taxes 5,494 3,838
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Income taxes
Current 1,360 1,385
Future 732 101
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2,092 1,486
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Net income for the period 3,402 2,352
----------------------------------------------------------------------------
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Earnings per share

Basic 0.33 0.24

Diluted 0.33 0.23
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CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(unaudited)
Three months ended
March 31,
(in 000's) 2007 2006
----------------------------------------------------------------------------
$ $

Retained earnings, beginning of period 20,718 14,209

Transitional adjustment on the adoption of new
accounting policies (27) -
----------------------------------------------------------------------------

Retained earnings, beginning of period as restated 20,691 14,209

Net income for the period 3,402 2,352

Common share dividends (726) (614)
----------------------------------------------------------------------------

Retained earnings, end of period 23,367 15,947
----------------------------------------------------------------------------
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

Three months ended
March 31,
(in 000's) 2007 2006
----------------------------------------------------------------------------
$ $
OPERATING ACTIVITIES
Net income for the period 3,402 2,352
Items not affecting cash:
Recognition of stock based compensation 312 183
Amortization of lease assets 9,167 8,501
Amortization of property and equipment, intangible
assets and deferred costs 634 426
Future income taxes 732 101
Net change in non-cash operating items -
Lease assets (13,203) (10,935)
Other (6,283) (3,632)
----------------------------------------------------------------------------
Cash flow used in operating activities (5,239) (3,004)
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INVESTING ACTIVITIES
Purchase of property and equipment (1,615) (812)
Purchase of intangible assets and deferred costs (37) -
Proceeds on disposition of property and equipment 187 30
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Cash flow used in investing activities (1,465) (782)
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FINANCING ACTIVITIES
Advance of bank revolving term loan 7,192 3,723
Issuance of common shares on exercise of options and
warrants 121 459
Common share dividend payments (609) (396)
----------------------------------------------------------------------------
Cash flow provided by financing activities 6,704 3,786
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Net change in cash - -
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Contact Information

  • easyhome Ltd.
    David Ingram
    President & Chief Executive Officer
    (905) 272-2788
    or
    easyhome Ltd.
    Chris Fregren
    Vice President and Chief Financial Officer
    (905) 272-2788
    or
    easyhome Ltd.
    Donald K. Johnson
    Chairman of the Board
    (416) 359-4119