2009 was a difficult but important year for easyhome.
David Ingram, CEO, easyhome

easyhome Ltd. (TSX:EH), Canada's largest merchandise leasing company, today announced its unaudited results for the fourth quarter and full year ended December 31, 2009.

For the fourth quarter of the year, revenue was $43.9 million, virtually unchanged from the fourth quarter of 2008. Net income for the quarter was $1.4 million or $0.14 per share compared with $1.8 million or $0.17 per share for the same period last year. Excluding before tax restructuring charges of $0.7 million recorded in the fourth quarter of 2009, earnings per share were $0.18 per share, an improvement of $0.01 per share over the same period last year. Revenue for the 12-month period was $173.7 million compared with $162.5 million in 2008, an increase of 6.9%. Net income for the 12 months was $5.8 million or $0.55 per share compared with $9.0 million or $0.85 per share one year ago. Excluding before tax restructuring charges of $1.9 million recorded in the third and fourth quarters of 2009, earnings per share were $0.67 per share.

After several years of significant growth, the Company had to respond to a negative economic environment and ensure that its operational focus and practices were appropriate. "2009 was a difficult but important year for easyhome. The steps we took in the third quarter to increase operational effectiveness and control costs led to measurable performance improvements in the fourth quarter of the year," said David Ingram, President and Chief Executive Officer of easyhome. "Despite the challenging operating environment, easyhome increased the number of customers and lease agreements during the quarter, and improved collections to achieve meaningful reductions in accounts receivable and charge-offs. We improved every key metric during the quarter, and approximately doubled the number of new customer agreements obtained compared with the fourth quarter of 2008." We expect that these operational changes, combined with the benefits associated with the business restructuring announced at the end of the third quarter, will enable easyhome to deliver improved results in the subsequent periods.

In spite of the disappointing earnings achieved during 2009, easyhome was able to generate strong cash flow in 2009. Cash flow provided by operating activities was $15.5 million after investing $6.2 million to increase easyfinancial's loan portfolio. The Company reduced debt by a total of $6.0 million during the year. In addition, easyhome repurchased 86,700 shares for $0.8 million under a normal course issuer bid and distributed $3.6 million in total dividend payments during 2009.

Fourth Quarter Results

For the three months ended December 31, easyhome recorded revenue of $43.9 million compared with $44.1 million in the fourth quarter of 2008. Same store revenue declined 1.1% during the quarter as the growth of easyfinancial was offset by revenue declines in our leasing business. "Although leasing revenues continue to be affected by lower consumer demand as a result of the economic slowdown, revenues in our easyfinancial business are showing strong growth," Mr. Ingram said. "easyfinancial increased revenues 132.7% from $0.7 million to $1.6 million during the quarter. In addition, easyfinancial opened 10 new kiosks during the quarter."

Operating expenses before amortization increased to $26.7 million in the fourth quarter of 2009 compared with $25.5 million for the same period last year. The increase is a result of a number of factors, primarily driven by the $0.7 million in restructuring costs.

The restructuring costs are part of a previously announced initiative to reorganize the Company's operational and administrative functions to achieve greater efficiency. The restructuring began in the third quarter of 2009 and is expected to be completed by the second quarter of 2010 at a total cost of $2.6 million.

Operating income was $2.3 million for the fourth quarter of 2009, down 31.1% compared with $3.4 million for the same period last year. Excluding restructuring costs, operating income was $3.0 million, a decrease of 10.2%.

During the fourth quarter of 2009, the current and future income tax provisions were adjusted to reflect reductions in income tax rates and the finalization of income tax estimates. As a result, the income tax rate declined to 26.1% for the fourth quarter of 2009 compared to 41.3% for the fourth quarter of 2008.

Net income was $1.4 million for the quarter compared with $1.8 million in the fourth quarter of 2008. On a per share basis, earnings were $0.14 compared with $0.17. Excluding restructuring charges, earnings were $0.18 per share.

Annual Results

Revenue for the year ended December 31, 2009 was $173.7 million, an increase of $11.2 million or 6.9% over 2008 with same store revenue increasing by 2.3% in 2009 compared to an increase of 9.1% in 2008. Revenue from the Canadian leasing business increased by $4.7 million, largely due to the Insta-rent acquisition which was completed on September 25, 2008. The U.S. leasing business and easyfinancial grew by $4.1 million and $2.5 million respectively both due to the additional stores and kiosks opened in 2008 and 2009 and due to the continuing strong growth of the existing lease and loan portfolios.

Operating income for the twelve month period was $10.4 million compared with $15.9 million for the same period last year. The decrease is attributable to higher operating expenses, including before tax restructuring charges of $1.9 million. Excluding restructuring costs, operating income for the year was $12.3 million, a decrease of 22.7%. Net income for 2009 was $5.8 million, or $0.55 per share, compared with $9.0 million, or $0.85 per share. Excluding restructuring costs, earnings per share were $0.67.

Outlook

"From any perspective, fiscal 2009 was a challenging year, and our annual results reflect that," said Mr. Ingram. "We have, however, made substantial progress in managing our costs, re-focusing our leasing efforts, and improving our collections procedures. I believe that the changes we have made will continue to gather momentum through the first quarter of 2010 and beyond. Although we do not expect consumer demand to recover significantly during the next twelve months, the restructuring of our operations and the consolidation of administrative functions are expected to result in improved bottom line performance."

"In 2010 we will build on the improving metrics of the fourth quarter in our leasing business," Mr. Ingram continued, "as we continue to focus on improving operational performance. We will also direct our energies to expanding our U.S. franchise platforms and our easyfinancial network of kiosks." We anticipate opening 5 to 10 corporate stores, 20 to 30 franchise stores and 20 to 30 easyfinancial kiosks in 2010. We expect that the strong cash flows generated by our operating activities will enable us to continue with the expansion of our store network, replenish our leased assets and fund the growth of our easyfinancial loan portfolio while still meeting our term loan repayment obligations and operating within our existing operating lines.

Donald K. Johnson, Chairman of the Board, commented, "This was a difficult year for many Canadian retailers. We are pleased with the decisive leadership that easyhome's management has demonstrated in restructuring for greater efficiency. We are confident that easyhome is now successfully positioned to manage within this economic environment and pursue growth."

The Board of Directors has approved a dividend payment of $0.085 per share payable on April 9, 2010 to the holders of common shares of record as at the close of business on March 31, 2010.

As at December 31, 2009, easyhome Ltd. had 240 stores, including 206 Canadian corporate stores, 12 U.S. corporate stores, 15 U.S. franchised stores, 6 Canadian franchised stores and 1 licensed Canadian store.