As previously announced, we installed our new IT system in the second quarter of 2008. This rollout, coupled with attention to the integration of Insta-rent Inc., has lead to widespread execution issues.
easyhome

easyhome Ltd. (TSX:EH), Canada's largest rent-to-own company, today reported revenue for the quarter ended ended September 30, 2008, was $38.9 million, an increase of 9.4% from $35.5 million for the same period a year ago. Same-store revenue growth was 4.9% compared with 8.9% for the third quarter of 2007. Operating income decreased to $2.9 million from $4.9 million a year earlier. Net income for the period was $1.5 million, compared with $2.7 million, in the third quarter of 2007. Diluted earnings per share were $0.14 versus $0.26 last year.

easyhome said in a statement, "As previously announced, we installed our new IT system in the second quarter of 2008. This rollout, coupled with attention to the integration of Insta-rent Inc. ("Insta-rent"), has lead to widespread execution issues, as our staff's attention to corporate stores was diluted. Consequently, the second quarter experienced softer deliveries, a condition that continued into the first two months of the third quarter. As a result, the Company's lease portfolio didn't grow as planned, causing both reduced revenues and profitability in the third quarter. This was compounded by weaker collections in the quarter which adversely impacted charge-offs. Deliveries, however, began to improve late in the third quarter, with this strengthening continuing into the early part of the fourth quarter. Furthermore, a focused effort on collections in October brought our outstanding amounts down to its lowest level in several years. These improving trends, coupled with the increased revenues from the acquisition of Insta-rent are expected to bring improved results in the upcoming quarters."

The acquisition of Insta-rent is a significant opportunity for easyhome. It has provided experienced personnel, and more importantly, allows the Company to grow its customer base by approximately 10%. Since acquiring 89% of Insta-rent on September 25, 2008, the existing workforce has been reduced by more than 50%, and the majority of the locations have been closed, moving the related business into nearby easyhome stores. Subsequent to the end of the quarter, the Company acquired the remaining 11% of Insta-rent.

"Easyhome has experienced unprecedented change in the second and third quarters of 2008," said David Ingram, President and Chief Executive Officer of easyhome. "In addition to opening five new stores, we implemented a new, system-wide information technology system, and acquired the operations of Insta-rent. The benefits of these changes will be significant and long-term. They will enhance our market position, increase our customer base, grow our revenues, and lead to greater efficiency. This long-term gain has had short-term costs, as a combination of factors depressed our financial results for the second and third quarters."

The Company has opened 100 stores since 2004, significantly increasing both the size and profitability of the Company. This, however, resulted in increased debt levels to fund store openings and start-up losses. For 2009, the Company has shifted its focus to opening fewer corporate stores and an increased number of franchise stores. This will allow stores to focus on the key functions of leasing and collecting. As a result, we expect to utilize less capital in our business in 2009, allowing us to reduce our debt levels by the end of 2009.

David Ingram further commented, "Our business strategy is solid, and with improved technology and the acquisition of Insta-rent, we are better positioned than ever to grow our business. In 2009, we will shift our focus to operational excellence to extract full value from our rapid expansion by executing the basics of our business, and growing from a position of strength. To this end, for 2009 we are targeting 8-10 new corporate stores, 15-20 new franchise stores and total revenue growth of 15-20%.

Donald K. Johnson, Chairman of the Board, commented, "The management team has made progress in executing these transformational steps at easyhome. We believe the benefits of these efforts will be clear to shareholders during ensuing quarters. The Board strongly supports management's intensified focus on our core operations, cash flow, and profitability."