Rent-to-own News - easyhome reports 2011 Q2 results, same store growth up 6.4%

easyhome, Canada's largest rent-to-own company, today announced its results for the second quarter and six months ended June 30, 2011.

easyhome continued to show strong revenue increases during the second quarter of 2011. Revenue for the quarter increased 8.0% to $46.3 million, driven primarily by the expansion of the easyfinancial Services business and the growth of its consumer loans receivable portfolio. Reported net income for the quarter was $2.7 million, an increase of 36.0% over the second quarter of 2010.

The company reported diluted earnings per share of $0.23, compared to $0.19 for the second quarter of 2010. On a year-to-date basis, revenues have increased 7.7% and diluted earnings per share have increased from $0.38 in 2010 to $0.43 in 2011. The 2011 diluted earnings per share reflect the impact of the equity offering completed in December 2010.

Other highlights for the second quarter of 2011 include:

--  Corporate same store revenue growth of 6.4% compared with an increase of
    1.3% in 2010
--  18.2% growth during the quarter of the consumer loans receivable
    portfolio representing a year-over-year increase of 104% and an ending
    gross consumer loans receivable portfolio of $35.3 million
--  Return on equity of 11.5%
--  Cash flow from operating activities of $12.2 million
 
Commenting on the results, David Ingram, easyhome's President and Chief Executive Officer stated "Our results for the second quarter maintain the trend of revenue and earnings growth. The continuing investment to improve both our internal processes and infrastructure are providing a platform for positive sustainable growth. These enhancements, coupled with the increased capital secured through our recent bank refinancing and the December 2010 equity offering, will support the growth of all business units, in particular easyfinancial Services."

Second Quarter Results

For the second quarter ended June 30, 2011, easyhome generated revenues of $46.3 million, an increase from $42.9 million in the second quarter of 2010. At the store level, including easyfinancial, same store revenue growth for the quarter was 6.4% compared with a growth of 1.3% for the second quarter of 2010.

On a segmented basis, the Company's leasing operations recorded revenues of $40.3 million, unchanged from same period last year. Franchising contributed revenues of $0.3 million, also unchanged from the same period last year. easyfinancial Services revenues increased to $5.6 million from $2.3 million for the same period last year. The improvement is a result of the increase in the consumer loans receivable portfolio from $17.3 million to $35.3 million.

Operating income, which is income before interest expense and income taxes, increased 25.3% to $3.9 million from $3.1 million in the second quarter of 2010. Quarterly revenue increases were offset by additional costs resulting from additional stores and kiosks, higher bad debt expenses arising from a larger consumer loans receivable portfolio and a greater level of corporate costs to support sustainable growth. Operating income was also increased by a reduction in depreciation and amortization. As a percentage of revenue, operating income improved from 7.2% to 8.4%.

Net income increased 36% to $2.7 million for the second quarter of 2011, compared with $2.0 million for the second quarter of 2010. On a per share basis, earnings were $0.23 compared with $0.19. Adjusted for the restructuring charges and bad debt expenses related to the employee fraud in the prior year, earnings were $2.5 million, or $0.23 per share, a year ago.

Six Months Results

For the first half of the year, easyhome recorded revenues of $92.5 million, up 7.7% compared with $85.9 million in the first six months of 2010. Operating income for the period was $7.7 million, an increase of 16.3% compared with $6.6 million in the first six months of 2010. Diluted earnings per share increased from $0.38 to $0.43. Net income, adjusted for unusual items, was $5.1 million compared with $4.8 million for the same period last year. On a per share basis and excluding unusual items, diluted earnings per share was $0.43 compared with $0.46 a year ago.

Cash flow provided by operating activities for the six months ended June, 2011 was $15.8 million. Included in these cash flows was a net investment in the easyfinancial Services consumer loans receivable portfolio of $14.2 million. If this net investment in the loan portfolio was treated as cash flow from investing activities, cash flow from operating activities would be $30.0 million. This cash flow enabled the Company to invest in the portfolios to drive future revenue growth of all business units, strengthen the management and infrastructure to support sustainable growth and maintain its total dividend payments for the quarter. Subsequent to June 30, 2011, and as previously announced, the Company increased its bank revolving credit facility by $10 million which will provide additional funding to further the growth of the easyfinancial Services business.

Donald K. Johnson, Chairman of the Board, commented, "The Board is pleased with the continued progress and improved profitability of the Company. We are confident that management is taking the necessary steps to support the Company's strategy for sustainable growth and look forward to the resulting improved value for easyhome's shareholders."

About easyhome

The Board of Directors has approved a quarterly dividend payment of $0.085 per share payable on October 5, 2011 to common shareholders of record as at the close of business on September 27, 2011.

As at June 30, 2011, easyhome Ltd. had 258 stores, including 41 franchised/licensed locations. The Company also operated 72 easyfinancial kiosks within existing easyhome stores, one stand- alone easyfinancial location and one national loan office.

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, prepaid cards and cheque cashing 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 that 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. Although measures such as operating income and same store revenue growth do not have standardized meanings prescribed by IFRS, these measures are defined in our management discussion and analysis 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 because we believe that they facilitate the understanding of the results of our operations and financial position.