...To date, 27 [stores] have opened since November 2003 and have averaged break-even in month 6 compared to month 10 in our model
David Ingram, President and CEO

easyhome (EH.TO), Canada's leading merchandise rental company, today announced record quarterly revenue and same store revenue growth for its 2005 second quarter.

easyhome increased revenue for the second quarter to $25.8 million, the eighth consecutive quarterly record for the Company and an increase of $4.2 million, or 19.5%, from $21.6 million a year ago. Same store revenue growth (revenue from stores open for the entirety of the comparable periods) was 11.9% for the quarter, building on the 10.4% increase in the comparable period last year. An increased customer base accounted for all of the growth in the rental agreement portfolio.

During the quarter, and as publicly announced on June 15, 2005, the Company settled a class action lawsuit and recorded a pre-tax provision of $3.6 million to cover the estimated costs of the settlement, including legal fees awarded under the settlement.

Excluding this pre-tax provision of $3.6 million, operating income (income before interest and income taxes) was $3.5 million, an increase of $1.3 million over last year, or 56.8%. Net income would have been $2.1 million, an increase of $700,000 over last year's net income of $1.4 million, or 56%. Diluted earnings per share would have been $0.21 compared with $0.14 last year, a 50% increase.

After the $3.6 million provision referred to above, operating income decreased to an operating loss of $137,000 compared with operating income of $2.2 million during the same quarter last year. Net income decreased from $1.4 million in 2004 to a loss of $96,000 in 2005 and diluted earnings per share decreased from $0.14 to a loss of $0.01.

Revenue for the six months ended June 30, 2005 was $49.8 million compared with $42.5 million for the same period last year, an increase of $7.3 million, or 17.2%. Same store revenue growth (revenue from stores open for the entirety of the comparable periods) for the six months was 8.9% compared with 9.6% last year. The growth in revenue is entirely attributable to an increase in the Company's customer base.

Excluding the class action provision, operating income for the six months ended June 30, 2005 was $6.2 million, an increase of $1.5 million over last year, or 32.2%. Net income would have been $3.8 million, an increase of $900,000 over last year, or 31.5%. Diluted earnings per share would have been $0.37 compared with $0.29 last year, an increase of 27.6%.

After the $3.6 million provision referred to above, operating income for the six months ended June 30, 2005 decreased to $2.6 million from $4.7 million a year ago. Net income was $1.6 million compared to $2.9 million last year and diluted earnings per share were $0.15 compared with $0.29 in the 2004 comparable period.

Commenting on the results, David Ingram, President and CEO said, "We have now completed 45 consecutive months of comparable revenue growth, with 15 quarters of same store revenue improvement. Excluding the fourth quarter of 2004, the customer base increased at its fastest rate ever, contributing to an 18% increase since June 2004. The investment in our brand transition and new store build program has generated 8 sequential quarters of record revenue and a monthly rental revenue portfolio of $7.4 million which is $1.0 million higher than 12 months ago-an increase of 16%. Customers seeking an alternative access model to household consumer goods are making easyhome the store of choice as Canada's only national rental merchandise retailer."

Mr. Ingram continued, "We are particularly pleased with our new stores which have continued to exceed our financial model in revenues and store operating income. To date, 27 have opened since November 2003 and have averaged break-even in month 6 compared to month 10 in our model. We are, therefore, moving our 2005 new store openings to 24 from 21 with 6 and 8 openings in the third and fourth quarters respectively."

Concluding, Mr. Ingram stated, "Despite an increased investment in new stores, record rental asset purchases and class action settlement costs, we remain in excellent financial condition with a debt to equity ratio of less than 5%. With a strong balance sheet, coupled with consumer demand, we expect to achieve balance of year revenue growth consistent with the first 6 months of the year."

Donald K. Johnson, Chairman of the Board, commented, "easyhome's second quarter results demonstrate that our business model is one of the most successful in the North American merchandise rental industry. Excluding the provision for the class action settlement costs, our revenue growth, same store revenue growth, operating margin and percentage growth in earnings per share for Q2 exceeded that of our North American peer group. The management and employees of easyhome are to be congratulated by all stakeholders."

Today, the Board of Directors approved a dividend payment of $0.04 per share payable on October 4, 2005 to the holders of common shares of record on the close of business on September 20, 2005.

easyhome Ltd., with 153 locations, is Canada's largest merchandise rental company and the fourth largest in North America.