easyhome Ltd. Reports 2008 Fourth Quarter and Year-End Results

• Press Release
• Source: easyhome Ltd.
• On 8:29 pm EST, Thursday March 5, 2009

MISSISSAUGA, ONTARIO--(Marketwire - March 5, 2009) - easyhome Ltd. (TSX:EH - News), Canada's leading merchandise leasing company, today announced its results for the fourth quarter and year ended December 31, 2008.

Related Quotes

Symbol	Price	Change
EH.TO	8.99	0.00

{"s" : "eh.to","k" : "c10,l10,p20,t10","o" : "","j" : ""}

Revenue for the quarter ended December 31, 2008 was $44.1 million, an increase of $5.3 million or 13.5% compared with the same period a year ago. Operating income decreased to $3.4 million from $5.2 million a year earlier. Net income for the period was $1.8 million, compared to $2.7 million for 2007. Diluted earnings per share were $0.17 versus $0.26 the previous year.

For the full fiscal year, revenue was $162.5 million compared with $143.7 million for fiscal 2007. Diluted earnings per share were $0.84 versus $1.11 for the previous year.

Factors Affecting the Fourth Quarter

The acquisition of Insta-rent Inc. ("Insta-rent") in the third quarter increased revenue by approximately $3.5 million in the quarter. However, the integration process was a significant effort, and was not completed until year-end. It involved transferring more than 8000 Insta-rent accounts, closing 42 kiosk locations, closing redundant storage locations and the disposition of excess vehicles. As a result, the Company incurred $0.7 million in increased operating costs as the integration took longer than expected to complete.

The Company also incurred higher lease amortization in the quarter (31.8% versus 29.4% in Q4/08). Approximately $0.8 million of this increase relates to damaged or missing inventory which arose as result of weaker inventory disciplines at the store level. The Company believes that these items were isolated to this quarter and reduced diluted earnings per share by approximately $0.10 in the quarter.

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In millions - except
Share Detail          Q4 2008   Q4 2007 Change     FY2008   FY 2007 Change
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Revenue                $44.1m    $38.8m   13.5%   $162.5m   $143.7m   13.1%
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Operating Income        $3.4m     $5.2m  (34.6%)   $15.9m    $20.5m  (22.3%)
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Net Income              $1.8m     $2.7m  (35.2%)    $9.0m    $11.7m  (23.3%)
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Diluted EPS             $0.17     $0.26  (34.6%)    $0.84     $1.11  (24.3%)
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Commenting on the results, David Ingram, President and CEO stated, "Despite the challenges of 2008 we are enthused by the benefits that our new initiatives will provide our growing organization. Our new IT system is more efficient and more adaptable to our different formats, while providing data faster and in more detail than our previous systems. Insta-rent added approximately 10% more customers and expanded our brand in 42 markets where we had co-existed. As we stated in November, 2008, our focus in 2009 will be on rigorous cost controls, improving same store profitability, and keeping the Canadian core business free from new distractions."

Mr. Ingram added, "We anticipate solid sequential improvement to our Q1 results as the operations team execute tighter cost management and improved cash collections which have shown success during the first two months of this quarter. In January, we rolled out a customer benefit program, which will provide unemployment insurance and some peace of mind to customers during this recession. We expect the easyfinancial division to continue growing its operating profit as we add six to eight kiosks in 2009. The US division is targeted to achieve break-even later this year, which will also allow the Company to tax effect its cumulative losses."

easyhome provides an alternative for the cash and credit constrained customer who we believe will benefit from the economic stimulus package proposed in the US and Canada. However, it is impossible to assess the depth and duration of this recession.

In this environment our 2009 targets are:

- Total revenue growth of 13-15%

- Same store revenue growth of 3.5-5.0%.

- New store openings:

-- 8-10 corporate stores

-- 12-15 franchise stores

-- 6-8 easyfinancial kiosks

Mr. Ingram concluded, "The fewer new corporate stores, combined with a reduction in capital spend, has resulted in a targeted reduction of $10 million in net debt. Fiscal 2008 was our first year of earnings decline in eight years, and that is as disappointing to us as it is to shareholders. However, I am very optimistic that in 2009, we will return your Company to a year of solid growth."

Donald K. Johnson, the Chairman of the Board, commented, "2008 was a very challenging and disappointing year for our Company. It was the first time in eight years that our management team has not met or exceeded plan. However, with the distractions associated with the IT conversion and the Insta-rent acquisition now behind us, and management focused on execution of our business plan, we look forward to easyhome returning to its track record of consistent growth in revenues, profits and dividends."

The Board of Directors has approved a dividend payment of $0.085 per share payable on April 10, 2009 to the holders of common shares of record as at the close of business on March 31, 2009.

About easyhome

As at December 31, 2008, easyhome Ltd. had 229 stores, including 209 Canadian corporate stores, eleven U.S. corporate stores, three 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.

CONSOLIDATED BALANCE SHEETS
(unaudited)

As at:

                                                 December 31,   December 31,
(in 000's)                                              2008           2007
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                                                           $              $
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ASSETS

Amounts receivable                                     5,169          4,057
Consumer loans                                         4,064          1,919
Income taxes receivable                                1,118              -
Prepaid expenses                                       2,790          1,740
Lease assets                                          82,443         77,072
Property and equipment                                16,846         12,799
Future tax assets                                      6,609          5,947
Intangible assets and deferred costs                   1,953          1,946
Goodwill                                              17,324         10,779
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                                                     138,316        116,259
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LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Bank revolving term loan                              26,139         13,770
Trade accounts payable                                 6,248         12,615
Accrued liabilities                                    2,759          1,410
Accrued payables, bonuses and other employee costs     2,478          3,078
Dividends payable                                        893            726
Deferred lease inducements                             2,540          2,591
Unearned revenue                                         734            498
Income taxes payable                                       -          1,624
Term debt                                              9,750              -
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                                                      51,541         36,312
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Shareholders' equity

Common shares                                         49,285         48,521
Contributed surplus                                    2,665          1,985
Retained earnings                                     34,825         29,441
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                                                      86,775         79,947
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                                                     138,316        116,259
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CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(unaudited)
                                    Three months ended  Twelve months ended
(in 000's, except earnings per             December 31,         December 31,
 share)                                 2008      2007      2008       2007
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                                           $         $         $          $
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REVENUE
Lease                                 35,342    31,422   130,603    116,805
Other                                  8,710     7,379    31,890     26,870
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                                      44,052    38,801   162,493    143,675
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EXPENSES
Salaries and benefits                 12,835    10,916    47,659     40,583
Selling, general and
 administrative                        5,095     3,699    16,261     13,789
Occupancy                              5,819     5,064    22,317     19,368
Automotive and travel                  1,783     1,661     7,014      6,162
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                                      25,532    21,340    93,251     79,902
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Amortization
Amortization of lease assets          14,001    11,406    49,395     40,429
Amortization of property and
 equipment, intangible assets and
 deferred costs                        1,134       842     3,926      2,846
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                                      15,135    12,248    53,321     43,275
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Total operating expenses and
 amortization                         40,667    33,588   146,572    123,177
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Operating income                       3,385     5,213    15,921     20,498
Interest expense                         370       185     1,089        747
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Income before income taxes             3,015     5,028    14,832     19,751
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Income taxes
Current                                 (165)    2,510     4,013      7,324
Future                                 1,412      (211)    1,863        742
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                                       1,247     2,299     5,876      8,066
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Net income and comprehensive
 income for the period                 1,768     2,729     8,956     11,685
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Earnings per share

Basic                                   0.16      0.26      0.85       1.13
Diluted                                 0.17      0.26      0.84       1.11
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CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(unaudited)
                                     Three months ended Twelve months ended
                                            December 31,        December 31,
(in 000's)                               2008      2007      2008      2007
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                                            $         $         $         $
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Retained earnings, beginning of
 period                                33,941    27,457    29,441    20,718
Transitional adjustment on the
 adoption of new accounting policies        -         -         -       (27)
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Retained earnings, beginning of
 period as restated                    33,941    27,457    29,441    20,691
Net income for the period               1,768     2,729     8,956    11,685
Common share dividends                   (884)     (745)   (3,572)   (2,935)
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Retained earnings, end of period       34,825    29,441    34,825    29,441
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
                                     Three months ended Twelve months ended
                                            December 31,        December 31,
(in 000's)                               2008      2007      2008      2007
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                                            $         $         $         $
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CASH PROVIDED BY (USED IN)

OPERATING ACTIVITIES
Net income for the period               1,768     2,729     8,956    11,685
Items not affecting cash:
 Recognition of stock based
  compensation                            313       269     1,060     1,033
 Amortization of lease assets          14,001    11,406    49,395    40,429
 Amortization of property and
  equipment, intangible assets and
  deferred costs                        1,134       842     3,926     2,846
 Future income taxes                    1,412      (211)    1,863       742
Net change in non-cash operating
 items
 Lease assets                         (13,972)  (19,022)  (48,262)  (53,174)
 Other                                 (6,238)    4,181   (18,218)   (1,427)
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                                       (1,582)      194    (1,280)    2,134
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INVESTING ACTIVITIES
Purchase of property and equipment       (214)   (1,527)   (7,858)   (6,312)
Purchase of intangible assets and
 deferred costs                            37        (4)       (4)   (1,939)
Business acquisition                   (1,303)        -   (10,100)        -
Proceeds on disposition of property
 and equipment                             42        62       119       431
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                                       (1,438)   (1,469)  (17,843)   (7,820)
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FINANCING ACTIVITIES
Advance (repayment) of bank
 revolving term loan                    2,950     1,958    12,400     7,495
Advance of term debt                      953         -     9,750         -
Issuance of common shares on
 exercise of options                        -        43       454       963
Shares purchased for cancellation          17         -       (69)        -
Common share dividend payments           (900)     (726)   (3,412)   (2,772)
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                                        3,020     1,275    19,123     5,686
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Net change in cash for the period           -         -         -         -
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David Ingram
easyhome Ltd.
President & Chief Executive Officer
(905) 272-2788

Chris Fregren
easyhome Ltd.
Senior Vice President & Chief Financial Officer
(905) 272-2788

Donald K. Johnson
easyhome Ltd.
Chairman of the Board
(416) 359-4119