Consumers have reduced their overall expenditures on discretionary items.
David Ingram, President and CEO, easyhome Ltd.

Photo/RTO Online

David Ingram, CEO of easyhome Ltd., at the company's 2009 convention in Toronto. See photo gallery.

easyhome Ltd. (TSX:EH), Canada's leading rent-to-own company, today announced its results for the third quarter and nine months ended September 30, 2009.

Revenue for the quarter increased 9.2% to $42.5 million, driven largely by the contribution of the accounts of Insta-rent and easyfinancial, our consumer loans division, compared with $38.9 million for the same period last year. Same store revenue growth for the quarter was 1.8%. Operating income was $0.3 million compared with $2.9 million in the third quarter of 2008. Net income was $20,000, or $0.00 per share, compared with $1.5 million, or $0.14 per share, in the third quarter of 2008. Excluding restructuring charges of $1.2 million recorded in the third quarter of 2009, diluted earnings per share were $0.08.

"Economic conditions remain challenging for retailers," said David Ingram, President and CEO of easyhome Ltd. "Consumers have reduced their overall expenditures on discretionary items. In the third quarter, we began to scale back our infrastructure, which had been constructed to meet higher consumer demand, to better reflect the realities of the market. A number of spending cuts initiated in the third quarter decreased costs, but the majority of these reductions are not expected to flow through to the bottom line until the fourth quarter of this year."

"We began a reorganization of our operational and administrative functions during the third quarter to rationalize costs and increase operational effectiveness. This included announcing the future closure of our Edmonton administrative office, re-aligning senior management responsibilities, changing our store staff structure, and altering a number of operational procedures and processes. While the restructuring will provide long-term benefits as our operations become more efficient, we recorded $1.2 million in restructuring charges during the quarter." Mr. Ingram said.

"There are a number of positive indicators that point to improved performance for the fourth quarter of the year," Mr. Ingram said. "Beginning in August, key performance indicators such as deliveries, receivables, and chargeoffs have all improved, and customer demand has stabilized since July. Combined with rate increases in our television, computing and furniture categories, and cost reductions in advertising and marketing, we are cautiously optimistic that the worst is now behind us."

The Company's franchising business met its targets for the quarter and is expected to have a total of 22 stores in operation by the end of fiscal 2009. easyfinancial continues to record strong results, increasing revenue from $0.6 million to $1.3 million in the third quarter of the year through solid same revenue store growth of 61% and the addition of 4 new kiosks to a total of 20. The Company expects to operate 30 easyfinancial kiosks across Canada by December 31st, 2009.

Year-to-Date Results

For the first nine months of the year, easyhome grew revenues 9.6% to $129.8 million compared with $118.4 million for the same period last year. Operating income for the year-to-date was $8.1 million compared with $12.5 million for the comparable period in 2008. Net income for the nine month period was $4.3 million compared with $7.2 million for the first nine months of 2008. On a per share basis, fully diluted earnings were $0.41 compared with $0.68. Excluding the restructuring charge, earnings per share for the nine month period would have been $0.49.

In spite of the difficult financial results, easyhome was able to generate strong positive cash flows. For the first nine months of the year, the Company paid down over $5.0 million of debt while investing an additional $3.1 million into the easyfinancial loan portfolio. The Company also repurchased 28,000 common shares for $0.3 million under a Normal Course Issuer Bid in the third quarter and continued its quarterly dividend payment of $0.085 per share.

easyhome has established the following targets for additions in 2010; easyhome leasing to open 8-10 new corporate stores, the opening of 25-30 new franchise stores, the opening of 25-30 new easyfinancial kiosks, and total revenue growth of 5-7%.

Donald K. Johnson, Chairman of the Board, commented, "Although easyhome continues to face challenges during this very difficult economic environment, the Company has a solid growth strategy and disciplined approach that will create long-term value for shareholders."

The Board of Directors has approved a dividend payment of $0.085 per share payable on January 5, 2010 to the holders of common shares of record as at the close of business on December 1, 2009.

As at September 30, 2009, easyhome Ltd. had 237 stores, including 208 Canadian corporate stores, thirteen U.S. corporate stores, ten U.S. franchised stores, five Canadian franchised stores and one licensed Canadian store.