MISSISSAUGA, ONTARIO--(Marketwire - Aug. 3, 2011) - easyhome Ltd. (TSX:EH), Canada's largest merchandise leasing Company and a growing provider of financial services, today announced its results for the second quarter and six months ended June 30, 2011.
easyhome Ltd. ("easyhome") continued to show strong revenue increases during the second quarter of 2011. Revenue for the quarter increased 8.0% to $46.3 million, driven primarily by the expansion of the easyfinancial Services business and the growth of its consumer loans receivable portfolio. Reported net income for the quarter was $2.7 million, an increase of 36.0% over the second quarter of 2010. The Company reported diluted earnings per share of $0.23, compared to $0.19 for the second quarter of 2010. On a year-to-date basis, revenues have increased 7.7% and diluted earnings per share have increased from $0.38 in 2010 to $0.43 in 2011. The 2011 diluted earnings per share reflect the impact of the equity offering completed in December 2010.
Other highlights for the second quarter of 2011 include:
-- Corporate same store revenue growth of 6.4% compared with an increase of
1.3% in 2010
-- 18.2% growth during the quarter of the consumer loans receivable
portfolio representing a year-over-year increase of 104% and an ending
gross consumer loans receivable portfolio of $35.3 million
-- Return on equity of 11.5%
-- Cash flow from operating activities of $12.2 million
Commenting on the results, David Ingram, easyhome's President and Chief Executive Officer stated "Our results for the second quarter maintain the trend of revenue and earnings growth. The continuing investment to improve both our internal processes and infrastructure are providing a platform for positive sustainable growth. These enhancements, coupled with the increased capital secured through our recent bank refinancing and the December 2010 equity offering, will support the growth of all business units, in particular easyfinancial Services."
Second Quarter Results
For the second quarter ended June 30, 2011, easyhome generated revenues of $46.3 million, an increase from $42.9 million in the second quarter of 2010. At the store level, including easyfinancial, same store revenue growth for the quarter was 6.4% compared with a growth of 1.3% for the second quarter of 2010.
On a segmented basis, the Company's leasing operations recorded revenues of $40.3 million, unchanged from same period last year. Franchising contributed revenues of $0.3 million, also unchanged from the same period last year. easyfinancial Services revenues increased to $5.6 million from $2.3 million for the same period last year. The improvement is a result of the increase in the consumer loans receivable portfolio from $17.3 million to $35.3 million.
Operating income, which is income before interest expense and income taxes, increased 25.3% to $3.9 million from $3.1 million in the second quarter of 2010. Quarterly revenue increases were offset by additional costs resulting from additional stores and kiosks, higher bad debt expenses arising from a larger consumer loans receivable portfolio and a greater level of corporate costs to support sustainable growth. Operating income was also increased by a reduction in depreciation and amortization. As a percentage of revenue, operating income improved from 7.2% to 8.4%.
Net income increased 36% to $2.7 million for the second quarter of 2011, compared with $2.0 million for the second quarter of 2010. On a per share basis, earnings were $0.23 compared with $0.19. Adjusted for the restructuring charges and bad debt expenses related to the employee fraud in the prior year, earnings were $2.5 million, or $0.23 per share, a year ago.
Six Months Results
For the first half of the year, easyhome recorded revenues of $92.5 million, up 7.7% compared with $85.9 million in the first six months of 2010. Operating income for the period was $7.7 million, an increase of 16.3% compared with $6.6 million in the first six months of 2010. Diluted earnings per share increased from $0.38 to $0.43. Net income, adjusted for unusual items, was $5.1 million compared with $4.8 million for the same period last year. On a per share basis and excluding unusual items, diluted earnings per share was $0.43 compared with $0.46 a year ago.
Cash flow provided by operating activities for the six months ended June, 2011 was $15.8 million. Included in these cash flows was a net investment in the easyfinancial Services consumer loans receivable portfolio of $14.2 million. If this net investment in the loan portfolio was treated as cash flow from investing activities, cash flow from operating activities would be $30.0 million. This cash flow enabled the Company to invest in the portfolios to drive future revenue growth of all business units, strengthen the management and infrastructure to support sustainable growth and maintain its total dividend payments for the quarter. Subsequent to June 30, 2011, and as previously announced, the Company increased its bank revolving credit facility by $10 million which will provide additional funding to further the growth of the easyfinancial Services business.
Donald K. Johnson, Chairman of the Board, commented, "The Board is pleased with the continued progress and improved profitability of the Company. We are confident that management is taking the necessary steps to support the Company's strategy for sustainable growth and look forward to the resulting improved value for easyhome's shareholders."
About easyhome
The Board of Directors has approved a quarterly dividend payment of $0.085 per share payable on October 5, 2011 to common shareholders of record as at the close of business on September 27, 2011.
As at June 30, 2011, easyhome Ltd. had 258 stores, including 41 franchised/licensed locations. The Company also operated 72 easyfinancial kiosks within existing easyhome stores, one stand- alone easyfinancial location and one national loan office.
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, prepaid cards and cheque cashing 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 that 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. Although measures such as operating income and same store revenue growth do not have standardized meanings prescribed by IFRS, these measures are defined in our management discussion and analysis 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, raise capital under favourable terms, manage the impact of 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 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)
(expressed in thousands of Canadian dollars)
As at As at
June 30, December 31,
2011 2010
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ASSETS
Current assets
Cash 778 731
Amounts receivable 4,815 4,809
Income taxes recoverable 1,240 -
Consumer loans receivable (note 4) 27,332 18,162
Prepaid expenses 1,011 1,296
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Total current assets 35,176 24,998
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Amounts receivable 1,066 1,062
Consumer loans receivable (note 4) 6,165 3,667
Lease assets 66,041 68,622
Property and equipment (note 5) 12,180 12,953
Deferred tax assets (note 9) 5,605 8,047
Intangible assets 3,040 3,093
Goodwill 17,325 17,325
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TOTAL ASSETS 146,598 139,767
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank revolving credit facility (note 6) 25,808 15,649
Accounts payable and accrued liabilities 15,653 19,322
Income taxes payable - 65
Dividends payable 1,007 892
Deferred lease inducements 558 578
Unearned revenue 4,590 5,310
Term loan (note 6) 867 2,602
Provisions 143 421
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Total current liabilities 48,626 44,839
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Accounts payable and accrued liabilities 753 450
Deferred lease inducements 1,766 1,881
Provisions 380 407
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Total liabilities 51,525 47,577
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Shareholders' equity
Share capital (note 7) 60,207 60,074
Contributed surplus 3,077 3,061
Accumulated comprehensive loss (604) (257)
Retained earnings 32,393 29,312
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Total shareholders' equity 95,073 92,190
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 146,598 139,767
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See accompanying notes to the interim condensed consolidated financial statements
easyhome Ltd.
INTERIM CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(expressed in thousands of Canadian dollars except earnings per share)
Three months ended Six months ended
-----------------------------------------------------------
June 30, June 30, June 30, June 30,
2011 2010 2011 2010
----------------------------------------------------------------------------
REVENUE
Lease revenue 39,376 39,659 80,158 80,366
Interest income 3,469 1,314 6,312 2,193
Other 3,419 1,878 5,997 3,330
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46,264 42,851 92,467 85,889
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EXPENSES
Salaries and
benefits (note
8) 15,135 13,613 29,825 26,550
Advertising and
promotion 1,872 1,606 3,466 2,753
Bad debts 1,390 696 2,514 1,110
Occupancy 6,217 6,084 12,674 12,145
Distribution and
travel 2,058 1,608 3,939 3,263
Other 3,376 2,865 6,588 5,542
Restructuring
items - 328 - 641
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30,048 26,800 59,006 52,004
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DEPRECIATION AND
AMORTIZATION
Depreciation of
lease assets 11,361 11,602 23,812 24,277
Depreciation of
property and
equipment (note
5) 778 951 1,624 1,923
Amortization of
intangible
assets 171 93 277 187
Impairment (net)
(note 5) 29 311 29 863
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12,339 12,957 25,742 27,250
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Operating income 3,877 3,094 7,719 6,635
Interest expense
(note 11) 336 266 633 549
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Income before
income taxes 3,541 2,828 7,086 6,086
Income tax
expense (note 9)
Current (781) (336) (449) 456
Deferred 1,608 1,168 2,439 1,639
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827 832 1,990 2,095
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Net income 2,714 1,996 5,096 3,991
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Basic earnings
per share (note
10) 0.23 0.19 0.43 0.38
Diluted earnings
per share (note
10) 0.23 0.19 0.43 0.38
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See accompanying notes to the interim condensed consolidated financial
statements
easyhome Ltd.
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(expressed in thousands of Canadian dollars)
Three months ended Six months ended
------------------------------------------
June 30, June 30, June 30, June 30,
2011 2010 2011 2010
----------------------------------------------------------------------------
Net income 2,714 1,996 5,096 3,991
Other comprehensive income (loss)
for the period
Foreign currency translation
reserve (31) 407 (347) 148
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Comprehensive income 2,683 2,403 4,749 4,139
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See accompanying notes to the interim condensed consolidated financial
statements
easyhome Ltd.
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
(expressed in thousands of Canadian dollars)
Accumulated
Other
Comprehensive
Issued Contributed Total Retained Income Total
Capital Surplus Capital Earnings (Loss) Equity
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Balance,
January
1, 2011 60,074 3,061 63,135 29,312 (257) 92,190
Shares
issued 133 (191) (58) - - (58)
Stock-
based
compensation
(note 8) - 207 207 - - 207
Comprehensive
income,
net of
tax - - - 5,096 (347) 4,749
Dividends
paid
(note 7) - - - (2,015) - (2,015)
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Balance,
June 30,
2011 60,207 3,077 63,284 32,393 (604) 95,073
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Balance,
January
1, 2010 48,880 3,142 52,022 26,801 - 78,823
Shares
issued 269 - 269 - - 269
Stock-
based
compensation
(note 8) - 195 195 - - 195
Comprehensive
income,
net of
tax - - - 3,991 148 4,139
Dividends
paid
(note 7) - - - (1,775) - (1,775)
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Balance,
June 30,
2010 49,149 3,337 52,486 29,017 148 81,651
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See accompanying notes to the interim condensed consolidated financial
statements
easyhome Ltd.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(expressed in thousands of Canadian dollars)
Three months ended Six months ended
--------------------------------------------
June 30, June 30, June 30, June 30,
2011 2010 2011 2010
----------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income 2,714 1,996 5,096 3,991
Add (deduct) items not affecting
cash
Depreciation of lease assets 11,361 11,602 23,812 24,277
Depreciation of property and
equipment (note 5) 778 951 1,624 1,923
Impairment (net) (note 5) 29 311 29 863
Amortization of intangible
assets 171 93 277 187
Stock-based compensation (note
8) 43 172 206 325
Bad debt expense 1,390 696 2,514 1,110
Deferred tax expense 1,608 1,168 2,439 1,639
Gain on sale of property and
equipment (385) (405) (427) (405)
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17,709 16,584 35,570 33,910
Net change in non-cash working
capital balances
related to operations (note 11) 1,079 4,666 (5,556) 3,970
Net issuance of consumer loans
receivable (6,558) (6,170) (14,182) (8,865)
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Cash provided by operating
activities 12,230 15,080 15,832 29,015
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INVESTING ACTIVITIES
Net purchase of lease assets (10,595) (10,207) (21,379) (20,189)
Purchase of property and
equipment (826) (2,875) (1,425) (4,139)
Purchase of intangible assets (202) (46) (222) (147)
Proceeds on sale of property and
equipment 505 224 774 224
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Cash used in investing
activities (11,118) (12,904) (22,252) (24,251)
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FINANCING ACTIVITIES
Advances (payments) of bank
revolving credit facility 472 (595) 10,159 (1,552)
Payments of term loan (note 6) (862) (878) (1,735) (1,755)
Payment of common share
dividends (1,007) (893) (1,899) (1,777)
Redemption of deferred share
units - - (58) -
Issuance of common shares on
exercise of options - 139 - 139
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Cash provided by (used in)
financing activities (1,397) (2,227) 6,467 (4,945)
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Net increase (decrease) in cash
during the period (285) (51) 47 (181)
Cash, beginning of period 1,063 161 731 291
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Cash, end of period 778 110 778 110
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See accompanying notes to the interim condensed consolidated financial
statements
Contact Information:
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