easyhome Ltd. Reports First Quarter 2008 Results
Total Revenue Growth of 16.0%, Same Store Revenues Grew 9.0% EPS $0.33, Unchanged from 2007
MISSISSAUGA, ONTARIO--(Marketwire - April 28, 2008) - easyhome Ltd. (TSX:EH),Canada's leading merchandise leasing company, today announced its results for the first quarter ending March 31, 2008.
First quarter highlights are:
- Revenue increased $5.5 million to $39.8 million from $34.3 million for the same quarter last year, an improvement of 16.0%.
- Same store revenue growth of 9.0% building on 11.0% for the first quarter of 2007, and 13.5% in the fourth quarter 2007.
- Potential monthly lease revenue increased to $11.0 million from $9.8 million at the end of March 2007, an improvement of 12.1%.
- 26 consecutive quarters of comparable revenue growth.
- $0.5 million of losses from stores open less than 12 months (2007 - $0.2 million).
In addition the Company incurred an earnings drag on its U.S. Divisions of $0.2 million in the quarter (2007 - $0.1 million).
- Operating was $5.7 million compared to $5.6 million in the first quarter of 2007.
- Net income at $3.5 million, was 1.8% higher than the comparable period last year.
- Diluted earnings per share of $0.33 unchanged from the comparable period in 2007.
- Opened three Canadian corporate stores and three U.S. corporate stores.
Commenting on the results, David Ingram said, "While we experienced record quarterly revenues, the period is best described as a modest disappointment. Despite the record quarterly revenues, net income improved only at a marginal rate. Our planned program to exit older electronic categories such as CRT TVs was partially responsible for a reduction in margins which lead to an increased lease amortization expense. This, combined with a slightly lower lease asset utilization rate, impacted the reported earnings by approximately $0.05. Management is addressing these changes by selective rate increases, inventory reductions and a disciplined liquidation of older technology items." Mr. Ingram added, "A total of six stores were opened in the quarter, split evenly between Canada and the U.S. We also added a financial services kiosk, bringing our total to eight, and we are delighted to report that the easyfinancial team made its first quarterly profit contribution."
Mr. Ingram concluded, "The calendar for the second quarter is slightly positive over the same period in 2007, which should benefit revenue by 1%-2%. As a result, the Company remains committed to our disclosed 2008 targets, requiring 28-32 new stores, annual revenue growth of 15%-17%, and same-store revenue growth of 5%-7%.
Donald K. Johnson, Chairman of the Board commented that, "During the first quarter, we announced a reorganization of our senior management team, combining Marketing and Operations and adding a new Head of Human Resources. We are now well positioned to take the Company to its next stage of growth through corporate store expansion in Canada and the U.S. and franchise stores in the U.S."
The Board of Directors has approved a dividend payment of $0.085 per share payable on July 3, 2008 to the holders of common shares of record as at the close of business on June 16, 2008.
The above analysis refers to certain financial measures that are not determined in accordance with generally accepted accounting principles ("GAAP") in Canada. These measures do not have standardized meanings and may not be comparable to similar measures presented by other companies. Although measures such as operating income and same store revenue growth do not have standardized meanings prescribed by GAAP, these measures are defined herein or can be determined by reference to our financial statements. We discuss these measures because we believe that they facilitate the understanding of the results of our operations and financial position.
easyhome Ltd., with 215 stores as at March 31, 2008 is Canada's largest merchandise leasing company and the third largest in North America, offering top quality, brand-name household furnishings, appliances and home electronic products to consumers under weekly or monthly leasing agreements. easyhome Ltd. is listed on the TSX under the symbol 'EH'.
Certain information included in this news release may constitute forward-looking statements. Forward-looking statements are based on current expectations and may include various risks and uncertainties. These risks and uncertainties could cause or contribute to actual results that are materially different from those expressed or implied. The Company disclaims any obligation or intention to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
CONSOLIDATED BALANCE SHEETS
(unaudited)
As at:
March 31, December 31,
(in 000's) 2008 2007
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$ $
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ASSETS
Amounts receivable 7,179 5,976
Prepaid expenses 1,627 1,740
Lease assets 75,920 77,072
Property and equipment 13,737 12,799
Future tax assets 5,653 5,947
Intangible assets and deferred costs 1,909 1,946
Goodwill 10,779 10,779
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116,804 116,259
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LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Bank revolving term loan 20,852 13,770
Accounts payable and accrued liabilities 6,421 14,025
Accrued employee costs 2,068 3,078
Dividends payable 893 726
Deferred lease inducements 2,526 2,590
Unearned revenue 543 498
Income taxes payable 323 1,624
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33,626 36,311
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Shareholders' equity
Common shares 49,195 48,521
Contributed surplus 1,981 1,985
Retained earnings 32,002 29,442
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83,178 79,948
----------------------------------------------------------------------------
116,804 116,259
----------------------------------------------------------------------------
----------------------------------------------------------------------------
see accompanying notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(unaudited)
Three months ended
March 31,
(in 000's, except earnings per share) 2008 2007
----------------------------------------------------------------------------
$ $
----------------------------------------------------------------------------
REVENUE
Lease 32,701 28,103
Other 7,105 6,234
----------------------------------------------------------------------------
39,806 34,337
----------------------------------------------------------------------------
Salaries and benefits 11,350 9,688
Selling, general and administrative 3,323 3,120
Occupancy 5,386 4,696
Automotive and travel 1,609 1,387
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21,668 18,891
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Amortization
Amortization of lease assets 11,624 9,167
Amortization of property and equipment, intangible
assets and deferred costs 768 634
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12,392 9,801
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Total operating expenses and amortization 34,060 28,692
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Operating income 5,746 5,645
Interest expense 232 151
----------------------------------------------------------------------------
Income before income taxes 5,514 5,494
----------------------------------------------------------------------------
Income taxes
Current 1,757 1,360
Future 294 732
----------------------------------------------------------------------------
2,051 2,092
----------------------------------------------------------------------------
Net income and comprehensive income for the period 3,463 3,402
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings per share
Basic 0.33 0.33
Diluted 0.33 0.33
----------------------------------------------------------------------------
----------------------------------------------------------------------------
see accompanying notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(unaudited)
Three months ended
March 31,
(in 000's) 2008 2007
----------------------------------------------------------------------------
$ $
----------------------------------------------------------------------------
Retained earnings, beginning of period 29,441 20,718
Transitional adjustment on the adoption of new
accounting policies - (27)
----------------------------------------------------------------------------
Retained earnings, beginning of period as restated 29,441 20,691
Net income for the period 3,463 3,402
Common share dividends (902) (726)
----------------------------------------------------------------------------
Retained earnings, end of period 32,002 23,367
----------------------------------------------------------------------------
----------------------------------------------------------------------------
see accompanying notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three months ended
March 31,
(in 000's) 2008 2007
----------------------------------------------------------------------------
$ $
----------------------------------------------------------------------------
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net income for the period 3,463 3,402
Items not affecting cash:
Recognition of stock based compensation 211 312
Amortization of lease assets 11,624 9,167
Amortization of property and equipment, intangible
assets and deferred costs 768 634
Future income taxes 294 732
Net change in non-cash operating items - -
Lease assets (10,471) (13,203)
Other (11,024) (6,283)
----------------------------------------------------------------------------
(5,135) (5,239)
----------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of property and equipment (1,677) (1,615)
Purchase of intangible assets and deferred costs - (37)
Proceeds on disposition of property and equipment 6 187
----------------------------------------------------------------------------
(1,671) (1,465)
----------------------------------------------------------------------------
FINANCING ACTIVITIES
Advance of bank revolving term loan 7,082 7,192
Issuance of common shares on exercise of options 450 121
Common share dividend payments (726) (609)
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6,806 6,704
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Net change in cash for the period - -
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see accompanying notes to consolidated financial statements
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