MISSISSAUGA, ONTARIO - (Marketwired - Aug. 8, 2013) - easyhome Ltd. (TSX:EH) ("easyhome" or the "Company"), Canada's largest merchandise leasing company and a leading provider of consumer loans as an alternative to traditional banks and payday lenders, today announced its results for the second quarter ended June 30, 2013.
Revenue for the second quarter of 2013 was a record for the Company of $53.8 million, an increase of 9.9 percent over last year and driven primarily by the expansion of the easyfinancial Services business and the related growth of its consumer loans receivable portfolio. Operating income for the quarter was $5.4 million, up 59% from $3.4 million reported in the second quarter of 2012. Net income for the quarter was $3.1 million, up 54% from $2.0 million reported in the second quarter of 2012. Earnings per share for the quarter was $0.26 compared to $0.17 for the second quarter of 2012. Adjusting the prior year results for unusual and non-recurring items, net income and earnings per share increased by 33% and 30%, respectively.
"easyhome delivered record revenues and its best second quarter financial performance in the Company's history," said David Ingram, easyhome's President and Chief Executive Officer. "Strong revenue and earnings gains were driven by the continued growth of easyfinancial Services and by the improved results of our leasing business which benefited from the restructuring activities and changes to our retail footprint which occurred last year."
"Additionally, and as previously announced, the Company increased its term loan credit facility supporting easyfinancial Services to $50 million during the quarter and we have negotiated a reduction to the interest rate we pay. The additional financing will allow easyfinancial Services to grow unencumbered and build upon its leadership position as an alternative provider of term financing to consumers. We are confident that the continued growth of easyfinancial Services, coupled with the improved results of our leasing business, will lead to sustained growth of both revenue and earnings in future quarters."
Other highlights for the second quarter of 2013 include:
For the second quarter ended June 30, 2013, easyhome generated revenues of $53.8 million, an increase from $48.9 million in the second quarter of 2012. At the store level, including easyfinancial, same store revenue growth for the quarter was 16.9% compared with growth of 6.4% for the second quarter of 2012.
On a segmented basis, easyfinancial Services revenues increased 51% to $13.3 million from $8.8 million for the same period last year. The improvement is a result of the increase in the consumer loans receivable portfolio from $55.8 million to $83.9 million. The Company's leasing operations recorded revenues of $40.0 million and franchising operations recorded revenues of $0.4 million. Leasing revenues for the second quarter of 2013 were negatively impacted by fewer locations but this decline was more than offset by the migration of the lease portfolio of closed stores to nearby locations and the improved retail execution brought about by the restructuring that occurred in the prior year.
Operating income, which is income before interest expense and income taxes, increased 59% to $5.4 million from $3.4 million in the second quarter of 2012. Adjusting the prior year results for unusual and non-recurring items, operating earnings increased by 41%. Quarterly revenue increases and lower costs within the leasing business more than offset a greater level of costs within easyfinancial due to the larger loan portfolio and store count and increased incentive compensation expenses at corporate. As a percentage of revenue, operating income was 10.1% compared to 7.0% in the second quarter of 2012.
Net income increased to $3.1 million for the second quarter of 2013, compared with net income of $2.0 million for the second quarter of 2012 (or $2.3 million excluding non-recurring or unusual items). On a per share basis, earnings were $0.26 compared with $0.17 for the second quarter of 2012 (or $0.20 excluding non-recurring or unusual items).
For the first half of the year, easyhome recorded revenues of $106.2 million, up 7.6% compared with $98.7 million in the first half of 2012. Operating income for the period was $10.5 million compared with $7.6 million in the first six months of 2012. Adjusted operating earnings for the first half of 2012, excluding the restructuring and other charges, was $8.1 million. Earnings per share increased from $0.39 to $0.50 cents. On a per share basis, excluding unusual items in 2012, earnings per share increased by $0.08 or 19%.
Donald K. Johnson, Chairman of the Board, commented, "The Board is pleased with the Company's performance during the first half of the year. Management's execution of the Company's stated strategy over the past several quarters resulted in the continued growth of both revenues and net income. The additional financing secured in the most recent quarter will ensure that this growth can continue for the balance of the year, resulting in improved value for easyhome's shareholders."
The Board of Directors has approved a quarterly dividend payment of $0.085 per share payable on October 4, 2013 to the holders of common shares of record as at the close of business on September 27, 2013.
As at July 31, 2013, easyhome Ltd. operated 186 easyhome leasing stores (including 9 consolidated franchise locations), 108 easyfinancial locations and had 50 franchise locations.
easyhome Ltd. is Canada's largest merchandise leasing Company, 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 is a leading provider of consumer loans as an alternative to traditional banks and payday lenders 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, including same store revenue growth, gross consumer loans receivable, adjusted earnings, adjusted operating earnings and adjusted EBITDA, which 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. These measures are defined in our Management's Discussion and Analysis for the period 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 as we believe that they facilitate the understanding of the results of our operations and financial position.
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.
|INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION|
|(expressed in thousands of Canadian dollars)|
|As at||As at|
|June 30,||December 31,|
|Consumer loans receivable||44,767||34,425|
|Total current assets||55,327||44,556|
|Consumer loans receivable||33,986||32,159|
|Property and equipment||14,483||13,729|
|Deferred tax assets||4,693||4,232|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Bank revolving credit facility||23,750||21,281|
|Accounts payable and accrued liabilities||21,607||31,696|
|Income taxes payable||6,319||4,216|
|Deferred lease inducements||619||564|
|Total current liabilities||57,850||63,070|
|Accounts payable and accrued liabilities||1,448||1,459|
|Deferred lease inducements||1,819||1,898|
|Accumulated other comprehensive income (loss)||225||(137||)|
|Total shareholders' equity||109,784||105,013|
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY||201,327||189,927|
|INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME|
|(expressed in thousands of Canadian dollars except earnings per share)|
|Three months ended||Six months ended|
|June 30,||June 30,||June 30,||June 30,|
|EXPENSES BEFORE DEPRECIATION AND AMORTIZATION|
|Salaries and benefits||16,926||15,365||32,816||31,532|
|Stock based compensation||655||195||1,559||493|
|Advertising and promotion||2,108||2,303||3,883||4,156|
|Distribution and travel||1,739||1,933||3,465||3,714|
|Restructuring and other items||-||436||-||436|
|DEPRECIATION AND AMORTIZATION|
|Depreciation of lease assets||12,019||12,122||23,952||24,198|
|Depreciation of property and equipment||1,110||996||2,218||1,971|
|Amortization of intangible assets||313||115||607||229|
|Total operating expenses||48,338||45,482||95,644||91,063|
|Income before income taxes||4,071||2,958||7,970||6,680|
|Income tax expense (recovery)|
|Basic earnings per share||0.26||0.17||0.50||0.39|
|Diluted earnings per share||0.26||0.17||0.50||0.39|
President & Chief Executive Officer
Senior Vice President and Chief Financial Officer
(905) 272-9886 (FAX)