easyhome Ltd.
TSX : EH

easyhome Ltd.

February 21, 2008 17:39 ET

easyhome Ltd. Reports Fourth Quarter 2007 Results Total Revenue Growth of 21.7%, Same Store Revenue Growth 13.5%, Operating Income Up 24.8%, Dividend Increase of 21.4% and Organizational Changes

EDMONTON, ALBERTA--(Marketwire - Feb. 21, 2008) - easyhome Ltd. (TSX:EH), Canada's leading merchandise leasing company, today announced its results for the fourth quarter ending December 31, 2007.

Fourth quarter highlights are:

- Revenue increased $6.9 million to $38.8 million compared to $31.9 million for the same quarter last year, an improvement of 21.7%.

- Same store revenue growth of 13.5% building on 5.7% for the fourth quarter 2006, and 8.9% in the third quarter 2007.

- Potential monthly lease revenue increased to $11.0 million compared to $9.5 million at the end of the fourth quarter of 2006, an improvement of 15.6%.

- Twenty-five consecutive quarters of comparable revenue growth.

- $0.5 million of earnings drag from stores open less than 12 months (2006 - $0.7 million). In addition, the Company incurred an earnings drag in its Financial Services and U.S. Divisions totaling $0.3 million (less than $0.1 million in 2006).

- Operating income improved $1.0 million to $5.2 million versus $ 4.2 million in 2006, an increase of 24.8%. This increase occurred as a result of leveraging the Company's same store revenue growth.

- Net income increased $0.2 million to $2.7 million. Net income in the fourth quarter of 2007 was adversely impacted by a $0.4 million future tax expense related to reductions in future federal income tax rates. Adjusted net income for the fourth quarter of 2007 of $3.2 million was up $0.7 million or 24.3% from net income in the comparable quarter of 2006 of $2.5 million.

- Diluted earnings per share of $0.26 was up $0.02 from the fourth quarter of 2006. Diluted earnings per share for the fourth quarter of 2007, adjusted for the impact of future tax rate changes was $0.30 up $0.06 or 25.0% from the comparable period in 2006.

- Opened 7 stores.

Year-to-Date highlights are:

- Revenue increased $24.1 million or 20.2%; total revenue of $119.6 million in 2006 increased to $143.7 million in 2007.

- Same store revenue growth of 9.1%.

- Opened 22 stores and 4 financial services kiosks.

- Net income was $11.7 million in 2007 versus $9.0 million in 2006. Net income for the 12 months of 2007 was favorably impacted by improved operating leverage, including the $1.2 million impact on net income as a result of the change in the method of leased asset amortization, which occurred on October 1, 2006. Net income in both 2007 and 2006 was adversely impacted by a $0.4 million charge relating to the impact of changes in future income tax rates on the Company's deferred tax assets. Adjusted net income for 2007 of $12.1 million was up $2.7 million or 29.0% from 2006's adjusted net income of $9.4 million.

- Diluted earnings per share of $1.11 in 2007 versus $0.86 in 2006. Adjusted diluted earnings per share in 2007 are $1.15 up $0.25 or 27.8% from 2006's adjusted diluted earnings per share of $0.90.

David Ingram, President & CEO commented, "Once again, we finished the year with a record fourth quarter performance. This was our twenty-fifth consecutive quarter of comparable revenue growth that contributed to our stronger net income, despite the $0.04 EPS drag from the reduction in our future tax assets. By any measure, fiscal 2007 was a remarkable year for easyhome. We achieved record revenue and record earnings, and with the opening of 3 stores in New York State, began our transformation from a Canadian company to a North American company."

Mr. Ingram added, "In recent months, there has been increased attention to North America entering a period of economic turbulence. The trigger for this was the sub-prime mortgage crisis in the United States, which has been attributed to excessively easy credit and dubious lending practices in the major housing markets. As a result, there are clear signs that the North American economy will slow significantly in 2008. Our experience is that the merchandise leasing business is less sensitive to economic cycles than the typical retailer. In addition, as consumers' access to conventional credit is diminished, easyhome offers the financial flexibility to maintain their lifestyle goals without credit approval. In that sense, easyhome is truly a business for all seasons."

Contributing to the Company's long term growth will be an increasing emphasis on our people. Mr. Ingram noted, "With a strategic plan that is centered on continued store growth in both Canada and the U.S., easyhome has decided to double its focus on people by introducing the new position of Senior Vice President of Human Resources. This also signaled to our employees, that they remain our top priority. This position was filled by Pauline Holman, a human resources professional with over 20 years of experience in the field, most recently at Prime Restaurants. The increased profile of human resources has been paralleled by a streamlining of other responsibilities at head office. We have combined the responsibility for merchandise, marketing and operations into a single Senior Vice President position, reflecting the benefit for close collaboration between those areas. In his newly expanded role, Dave Maries, previously Vice President, Marketing and Merchandising, will draw on his 21 years of experience gained in the U.K., U.S. and Canada in the merchandise leasing industry. We have also appointed Charley Hamill as Divisional Vice President Operations, who joins the team after 14 years with a major U.S. merchandising leasing company, where he was a regional manager based in Utah with responsibility for 42 locations. Finally, on behalf of the organization, we wish Randy Robertson, former Senior Vice President Operations, continued good fortune as a new franchisee with easyhome. Mr. Robertson joined the organization in 1990 and made a substantial contribution to our success, particularly since our brand transition in 2003 to easyhome. He has purchased 2 stores in Canada and has been awarded the exclusive rights to a territory in Michigan, U.S. We are thrilled that he will provide the leadership to expand the easyhome store base and remain part of our organization."

easyhome has established the following targets for fiscal 2008:

- Total revenue growth of 15-18%

- Same store revenue growth of 5.5%-7.5%

- New store openings of 28-32

Donald K. Johnson, Chairman of the Board, commented that, "With the recent additions of executive talent to the organization, we continue to believe that easyhome is well positioned to deliver above average growth in both the Canadian and US markets during the next few years. Furthermore, our business is not materially affected by the recent global credit crisis and turmoil in the capital markets. Our fourth consecutive annual dividend increase reflects the board's confidence in management continuing to achieve future guidance targets. On behalf of the Board of Directors I would like to thank Randy Robertson for 18 years of contribution to our Company's success."

The Board of Directors have approved a quarterly dividend payment of $ 0.085 per share payable on April 10, 2008 to the holders of common shares of record as at the close of business on March 31, 2008. The change in the quarterly dividend from $0.07 to $0.085 represents a 21.4% increase. It also marks the fourth consecutive year in which the Company has raised its dividend and reflects the Company's philosophy of increasing dividends in line with increases in trailing earnings.

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. has 209 stores, of which 206 are Canadian corporate stores, 3 are U.S. corporate stores and 1 is a 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 theTSX 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:

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

Amounts receivable 5,976 4,542
Prepaid expenses 1,740 928
Lease assets 77,072 64,327
Property and equipment 12,799 9,637
Future tax assets 5,947 6,689
Intangible assets and deferred costs 1,946 143
Goodwill 10,779 10,779
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116,259 97,045
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LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Bank revolving term loan 13,770 6,275
Accounts payable and accrued liabilities 14,025 11,707
Accrued employee costs 3,078 2,397
Dividends payable 726 609
Deferred lease inducements 2,590 1,782
Unearned revenue 498 398
Income taxes payable 1,624 4,686
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36,311 27,854
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Shareholders' equity
Common shares 48,521 46,738
Contributed surplus 1,985 1,735
Retained earnings 29,442 20,718
----------------------------------------------------------------------------
79,948 69,191
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116,259 97,045
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CONSOLIDATED STATEMENTS OF INCOME
(unaudited)

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


REVENUE
Lease 31,422 25,983 116,805 98,264
Other 7,379 5,888 26,870 21,302
----------------------------------------------------------------------------
38,801 31,871 143,675 119,566
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Salaries and benefits 10,916 9,125 40,583 34,132
Selling, general and
administrative 3,699 3,222 13,789 11,701
Occupancy 5,064 4,395 19,368 15,629
Automotive and travel 1,661 1,338 6,162 5,146
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21,340 18,080 79,902 66,608
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Amortization
Amortization of lease assets 11,406 8,866 40,429 35,240
Amortization of property
and equipment, intangible
assets and deferred costs 842 747 2,846 2,220
----------------------------------------------------------------------------
12,248 9,613 43,275 37,460
----------------------------------------------------------------------------
Total operating expenses
and amortization 33,588 27,693 123,177 104,068
----------------------------------------------------------------------------
Operating income 5,213 4,178 20,498 15,498
Interest expense 185 95 747 254
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Income before income taxes 5,028 4,083 19,751 15,244
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Income taxes
Current 2,510 865 7,324 6,062
Future (211) 674 742 199
----------------------------------------------------------------------------
2,299 1,539 8,066 6,261
----------------------------------------------------------------------------
Net income for the period 2,729 2,544 11,685 8,983
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Earnings per share
Basic 0.26 0.25 1.13 0.89
Diluted 0.26 0.24 1.11 0.86
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CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(unaudited)


Three months ended Twelve months ended
December 31, December 31,
(in 000's) 2007 2006 2007 2006
----------------------------------------------------------------------------
$ $ $ $
----------------------------------------------------------------------------

Retained earnings, beginning
of period 27,457 18,795 20,718 14,209
Transitional adjustment on
the adoption of new
accounting policies - - (27) -
----------------------------------------------------------------------------
Retained earnings, beginning
of period as restated 27,457 18,795 20,691 14,209
Net income for the period 2,729 2,544 11,685 8,983
Common share dividends (744) (621) (2,934) (2,474)
----------------------------------------------------------------------------
Retained earnings,
end of period 29,442 20,718 29,442 20,718
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

Three months ended Twelve months ended
December 31, December 31,
(in 000's) 2007 2006 2007 2006
----------------------------------------------------------------------------
$ $ $ $
----------------------------------------------------------------------------
CASH PROVIDED BY (USED IN)

OPERATING ACTIVITIES
Net income for the period 2,729 2,544 11,685 8,983
Items not affecting cash:
Recognition of stock based
compensation 269 301 1,033 1,016
Amortization of lease assets 11,406 8,866 40,429 35,240
Amortization of property
and equipment, intangible
assets and deferred costs 842 747 2,846 2,220
Future income taxes (211) 674 742 199
Net change in non-cash
operating items - -
Lease assets (19,022) (13,938) (53,173) (48,621)
Other 4,181 2,103 (1,428) 3,267
----------------------------------------------------------------------------
194 1,297 2,134 2,304
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INVESTING ACTIVITIES
Purchase of property
and equipment (1,527) (2,313) (6,311) (6,159)
Purchase of intangible
assets and deferred costs (4) - (1,939) -
Proceeds on disposition of
property and equipment 62 200 430 391
----------------------------------------------------------------------------
(1,469) (2,113) (7,820) (5,768)
----------------------------------------------------------------------------

FINANCING ACTIVITIES
Advance (repayment) of bank
revolving term loan 1,958 1,416 7,495 5,160
Issuance of common shares on
exercise of options
and warrants 43 9 963 526
Common share dividend payments (726) (609) (2,772) (2,222)
----------------------------------------------------------------------------
1,275 816 5,686 3,464
----------------------------------------------------------------------------

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
    Senior Vice President and Chief Financial Officer
    (905) 272-2788
    or
    easyhome Ltd.
    Donald K. Johnson
    Chairman of the Board
    (416) 359-4119