easyhome Ltd. Completes an Exchange of Stores
MISSISSAUGA, ONTARIO - (Marketwire - Jan. 2, 2013) - easyhome Ltd. (TSX:EH) (the "Company" or "easyhome"), Canada's largest merchandise leasing company and a growing provider of financial services, is pleased to announce an exchange of stores with Rent-A-Center, Inc., a U.S. based merchandise leasing company (the "Transaction"). The Transaction, which closed on December 31, 2012, consisted of the concurrent sale of the assets and operations of 15 leasing stores owned by easyhome in the United States and the purchase of the assets and operations of 15 leasing stores in Canada owned by Rent-A-Centre Canada, Ltd.
The Transaction is consistent with easyhome's strategic goal of improving the profitability of its leasing business. It builds upon the positive results arising from the restructuring and store rationalization that occurred in the second quarter of 2012. Management of easyhome believes that these activities, when combined with the recent successes in increasing deliveries and growing the leasing portfolio, should positively impact performance for 2013.
The first component of the exchange involved the sale of 15 leasing stores, all located in the State of New York. After the close of the Transaction, easyhome no longer operates any corporately owned locations outside of Canada.
"The journey to scale and acceptable returns with our corporately owned stores will take too long," said David Ingram, easyhome's President & CEO. "Our U.S. franchise business combined with our unique Be-A-Contender program has demonstrated its ability to stand out and succeed in a competitive market. With the sale of our corporately owned stores in the U.S., we can now focus all of our U.S expansion efforts through our franchise business."
The second component of the exchange involved the purchase of the assets and operations of 15 Rent-A-Centre Canada, Ltd. leasing stores located across Canada.
Since most of the acquired stores are located in markets already served by easyhome, there is an opportunity to gain greater efficiencies by merging the newly acquired stores with existing stores into a single location. This will be accomplished over the next several weeks while minimizing the impact on the affected customers. After this consolidation is completed, the Company anticipates increasing its total number of Canadian locations by 4 stores.
"We are excited by the opportunity to acquire additional operations in Canada," continued Mr. Ingram. "The acquired locations provide us with a large portfolio of assets and customer agreements. We will work hard to welcome these customers to easyhome and provide them with the excellent level of service that they expect and deserve. The proximity of many of these new locations to our existing stores also provides us with an opportunity to gain further efficiencies leading to better overall results."
Since the Transaction represented an exchange of similar portfolios, no significant net cash consideration was exchanged and the Company does not expect any material impact to its balance sheet. The sale of the U.S. corporate stores is expected to enhance the overall profitability of the Company's U.S. operations and allow it to more quickly utilize the cumulative tax losses which have been carried forward to apply against future earnings. Overall, the Company expects that the sale of the U.S. corporate stores, together with the increased revenues from the expanded Canadian operations, will be slightly accretive to earnings in 2013.
As of December 31st, easyhome Ltd. operated 206 easyhome leasing stores (including 10 consolidated franchise locations), 103 easyfinancial locations and had 48 franchise locations.
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 and prepaid cards, through its easyfinancial Services business. easyhome Ltd. is listed on the TSX under the symbol 'EH'. For more information, visit www.easyhome.ca.
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, react to uncertainties related to regulatory actions, raise capital under favourable terms, manage the impact of litigation (including shareholder 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.
President & Chief Executive Officer
Senior Vice President and Chief Financial Officer