easyhome Ltd. Reports Results for the Third Quarter Ended September 30, 2013
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easyhome Ltd. Reports Results for the Third Quarter Ended September 30, 2013

Record Revenues Result in a 41% Increase in Diluted Earnings Per Share Company Announces Plans to Significantly Expand easyfinancial

MISSISSAUGA, ONTARIO - (Marketwired - Nov. 6, 2013) - easyhome Ltd. (TSX:EH) ("easyhome" or the "Company"), the Canadian leader in providing goods and financial services to the cash and credit constrained consumer, today announced its results for the third quarter ended September 30, 2013.

Revenue for the third quarter of 2013 increased to $54.9 million, an increase of 11.3% from $49.3 million in the third quarter of 2012. The growth was driven primarily by the expansion of easyfinancial and the related growth of its consumer loans receivable portfolio. Operating income for the quarter was $6.9 million, up $2.7 million or 62% compared to the third quarter of 2012. Net income for the quarter was $3.8 million, an increase of 45% compared with $2.6 million reported in the third quarter of 2012. Diluted earnings per share for the quarter increased by 41% to $0.31 compared to $0.22 for the third quarter of 2012.

"We are delighted to report continued strong growth in revenue, operating income and net income," said David Ingram, easyhome's President and Chief Executive Officer. "Our leasing business delivered a 14.3% improvement in its operating income while easyfinancial's operating income increased 50%."

"The ever increasing demand for easyfinancial's loan products has given us the confidence to embark on a more aggressive growth plan for easyfinancial," continued Mr. Ingram. "We are building on a foundation of strength while enjoying record performance during 2013. We have in place the capital, the systems and analytical tools, the personnel and the required strategic framework to significantly expand our easyfinancial operations and realize easyfinancial's vision of becoming Canada's leading alternative provider of financial services to the cash and credit constrained consumer."

Additionally, the Company announced a $20.0 million equity financing that will close on November 12, as well as a debt refinancing earlier in the year and is well capitalized to deliver its growth plans for easyfinancial.

Announcing Three Year Growth Plan (2014 - 2016)

easyhome plans to strategically invest in growing the number of locations for stand-alone branches of easyfinancial to approximately 225 over the next three years, up from 112 at September 30, 2013. This growth of the retail footprint and the introduction of new delivery channels will help grow easyfinancial's consumer loans receivable portfolio to a target of $250 million by the end of 2016. For 2016, the Company expects easyfinancial to have an operating margin of 32% growing to approximately 35% over time as growth levels moderate.

"The Board is pleased to be moving forward with the strategic growth strategy as the Company is in a position of unprecedented strength," said Donald K. Johnson, Chairman of the Board. "easyhome has all the elements in place to ensure the projected growth will continue to create value for shareholders."
Highlights for the third quarter of 2013 include:

easyhome Leasing

  • Same store revenue growth excluding easyfinancial Services of 7.7%, driven mainly by the migration of the lease portfolio of closed stores to nearby locations and improved retail execution resulting from the restructuring that occurred in the prior year.
  • The operating margin of the leasing business for the third quarter of 2013 was 16.6%, up from 14.6% reported in the third quarter of 2012.

easyfinancial Services

  • The consumer loans receivable portfolio closed at $92.8 million, compared with $59.6 million in the same period of 2012, an increase of 56%.
  • Operating margin of 32.5% for the third quarter of 2013 was down slightly from 33.8% reported for the same period in 2012.
  • During the quarter, easyfinancial opened 10 new stand-alone locations. The Company plans to continue to open new locations and increase its marketing investment to support growth, which is expected to have a downward impact on operating margins in the fourth quarter and continuing until scale is achieved.

Year to date, revenue reached $161.0 million, up 8.8% from $148.0 million in 2012. Net income for the first nine months of 2013 was $9.8 million, up 35% from $7.3 million a year earlier. Diluted earnings per share rose 32.7% to $0.81 in the first three quarters of 2013 from $0.61 in the same period of 2012.

2014 Targets

The Company has established the following targets for 2014:

  • Open 30 - 35 new easyfinancial locations with virtually all of these being stand-alone locations.
  • easyfinancial gross consumer loans receivable portfolio growing to $145-$155 million.
  • easyfinancial margins of 27 - 29% will remain consistent with 2013 due to the impacts of additional marketing and advertising spend, continued investments in the development and implementation of new technologies and the earnings drag from newly opened locations. The Company estimates that this investment in the growth of easyfinancial will be approximately $0.11 per share in 2014.
  • easyhome leasing expects to open 2 new Be-A-Contender franchise stores that are consolidated for financial reporting purposes and 3 new franchise stores.

Based on these assumptions, the Company is targeting total revenue growth of 10 - 12%. The achievement of these targets by the Company, however, is predicated on a number of factors, including the pace of expansion of easyfinancial.

The Board of Directors has approved a quarterly dividend payment of $0.085 per share payable on January 10, 2014 to the holders of common shares of record as at the close of business on December 27, 2013.

About easyhome

As at September 30, 2013, easyhome Ltd. operated 235 easyhome leasing stores (including 8 consolidated franchise locations and 52 other franchise locations) and 112 easyfinancial locations.

easyhome Ltd. is the Canadian leader in providing goods and financial services to the cash and credit constrained consumer. easyhome Ltd. serves its customers through two key operating divisions, easyhome Leasing and easyfinancial. easyhome Leasing 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. easyfinancial is a leading provider of consumer loans as an alternative to traditional banks and payday lenders. 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 and gross consumer loans receivable 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.

Forward-Looking Statements

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.

easyhome Ltd.          
(expressed in thousands of Canadian dollars)          
    As at   As at  
    September 30,   December 31,  
    2013   2012  
Current assets          
Cash   1,803   4,631  
Amounts receivable   5,689   4,536  
Consumer loans receivable   48,667   34,425  
Prepaid expenses   2,043   964  
Total current assets   58,202   44,556  
Amounts receivable   1,342   1,000  
Consumer loans receivable   38,389   32,159  
Lease assets   62,149   68,075  
Property and equipment   15,021   13,729  
Deferred tax assets   4,466   4,232  
Intangible assets   8,106   6,213  
Goodwill   19,963   19,963  
TOTAL ASSETS   207,638   189,927  
Current liabilities          
Bank revolving credit facility   28,166   21,281  
Accounts payable and accrued liabilities   20,269   31,696  
Income taxes payable   6,924   4,216  
Dividends payable   1,015   1,012  
Deferred lease inducements   635   564  
Unearned revenue   3,580   3,922  
Provisions   107   379  
Total current liabilities   60,696   63,070  
Accounts payable and accrued liabilities   1,906   1,459  
Deferred lease inducements   1,757   1,898  
Term loan   30,481   18,330  
Provisions   -   157  
Total liabilities   94,840   84,914  
Shareholders' equity          
Share capital   60,898   60,885  
Contributed surplus   3,791   3,035  
Accumulated other comprehensive income (loss)   82   (137 )
Retained earnings   48,027   41,230  
Total shareholders' equity   112,798   105,013  
easyhome Ltd.                        
(expressed in thousands of Canadian dollars except earnings per share)                    
    Three months ended     Nine months ended  
    September 30,     September 30,     September 30,     September 30,  
    2013     2012     2013     2012  
Lease revenue   37,913     38,014     115,559     116,925  
Interest income   9,844     6,503     26,406     17,533  
Other   7,109     4,772     19,053     13,521  
    54,866     49,289     161,018     147,979  
Salaries and benefits   16,152     15,874     48,968     47,405  
Stock based compensation   895     504     2,454     998  
Advertising and promotion   1,655     1,702     5,538     5,858  
Bad debts   3,974     2,434     10,351     6,760  
Occupancy   6,495     6,320     19,558     19,367  
Distribution and travel   1,720     1,821     5,185     5,535  
Other   3,659     3,376     11,375     10,055  
Restructuring and other items   -     -     -     436  
    34,550     32,031     103,429     96,414  
Depreciation of lease assets   11,968     11,847     35,920     36,045  
Depreciation of property and equipment   1,096     1,007     3,314     2,978  
Amortization of intangible assets   318     119     925     348  
Impairment, net   (14 )   (7 )   (26 )   275  
    13,368     12,966     40,133     39,646  
Total operating expenses   47,918     44,997     143,562     136,060  
Operating income   6,948     4,292     17,456     11,919  
Finance costs   1,686     481     4,224     1,428  
Income before income taxes   5,262     3,811     13,232     10,491  
Income tax expense (recovery)                        
  Current   1,217     1,394     3,619     5,845  
  Deferred   228     (221 )   (233 )   (2,645 )
    1,445     1,173     3,386     3,200  
Net income   3,817     2,638     9,846     7,291  
Basic earnings per share   0.32     0.22     0.82     0.61  
Diluted earnings per share   0.31     0.22     0.81     0.61  


easyhome Ltd.
David Ingram
President & Chief Executive Officer
(905) 272-2788

easyhome Ltd.
Steve Goertz
Senior Vice President and Chief Financial Officer
(905) 272-2788



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