All of easyhome's business units are showing year-over-year improvements.
David Ingram, President and Chief Executive Officer, easyhome

easyhome Ltd. (TSX:EH), Canada s largest rent-to-own company, today announced its results for the fourth quarter and full year ended December 31, 2010.

• Fourth Quarter Results
• Fiscal 2010 Results
• Outlook

"easyhome delivered improved revenues and earnings in 2010," said David Ingram, easyhome's President and Chief Executive Officer. "Normalized earnings for the year were 92 cents compared with 63 cents in 2009. The increase in earnings reflects our commitment to extracting efficiencies from all aspects of our operations, and the growth of our easyfinancial Services business. All business segments are also beginning to benefit from renewed consumer confidence."

"The growth of easyfinancial Services was slowed in the fourth quarter by the fraud we discovered in October (see story). Rather than expanding the business, we applied ourselves to reviewing our processes, strengthening our team and enhancing our internal controls (see story). We are encouraged by the growth prospects of our easyfinancial Services business unit."

Fourth Quarter Results

For the three months ended December 31, 2010, easyhome increased revenues 8.3% to $46.9 million from $43.3 million for the same period last year. Strong revenue growth of $2.9 million from easyfinancial Services and $0.5 million from easyhome s U.S. operations complemented the modest revenue growth in the Company s Canadian leasing operations. Same-store revenue growth, which includes revenue growth from easyfinancial Services, was 10.9%, up from -1.7% in the fourth quarter of 2009.

Mr. Ingram continued, "all of easyhome s business units are showing year-over-year improvements. Our potential monthly lease revenue, a key measure of the size of our lease portfolio, increased by $0.6 million during the fourth quarter of 2010 and our consumer loan portfolio increased by $3.4 million over the same period. Both of these increases will lead to improved revenues in the upcoming quarters."

Operating income for the quarter was $0.3 million compared with $1.6 million for the fourth quarter of 2009. Operating income for the fourth quarter of 2010, however, was negatively impacted by the costs associated with the forensic investigation of the fraud previously discovered at easyfinancial Services. Excluding non-recurring charges associated with the fraud investigation for 2010 and restructuring and other charges for 2009, operating income was $2.7 million compared with $2.5 million for the same period last year, an increase of 9.5%.

The Company recorded net income of $0.5 million for the quarter compared with net income of $0.9 million in the fourth quarter of 2009. On a per share basis, earnings were $0.04 compared with $0.09. Excluding non-recurring charges associated with the fraud investigation for 2010 and the restructuring and other charges for 2009, net income was $2.2 million and earnings per share were $0.20 compared with net income of $1.5 million and earnings per share of $0.14 in the fourth quarter of 2009, an increase of 43%.

Fiscal 2010 Results

For the full year, easyhome generated revenues of $180.8 million, an increase of 4.3% compared with $173.4 million at the end of fiscal 2009. Canadian leasing contributed $158.6 million to total revenues, down slightly from $161.5 million for the same period last year. U.S. leasing revenues increased to $9.3 million from $7.7 million at the end of 2009. easyfinancial Services generated revenues of $12.9 million compared with $4.1 million in fiscal 2009.

Operating income for the year was $10.4 million compared with $9.4 million for the same period last year. Adjusted to exclude non-recurring charges associated with the fraud investigation, restructuring and other charges, operating income was $14.4 million compared with $11.9 million, an increase of 20.9%. Reported net income was $6.9 million, or $0.65 per share, compared with $5.1 million, or $0.48 per share a year earlier.

Reported net income and earnings per share for the year were impacted most significantly by:

• the final charges of $0.6 million related to the restructuring announced in the fall of 2009, decreasing earnings per share by $(0.04);
• write-offs and bad debt charges of $0.9 million associated with the employee fraud, decreasing earnings per share by $(0.06);
• fraud investigation costs of $2.4 million, impacting earnings per share by $(0.17); and
• an increase of $0.9 million to the consumer loans receivable provision resulting from the refinement of the methodology used for estimating the provision, decreasing earnings per share by $(0.06).

The Company continues to generate strong cash flows. Cash flow provided by operating activities for the year ended December 31, 2010 was $10.2 million compared to $15.5 million in 2009. Included in these cash flows was a net investment in the easyfinancial Services loan portfolio of $12.9 million for 2010 and $4.9 million for 2009. If this net investment in the easyfinancial Services loan portfolio is treated as cash flow from investing activities, cash flow from operations grew from $20.4 million in 2009 to $23.1 million in 2010, an increase of 13.4%. When combined with the net $10.7 million raised from an equity offering in December 2010, this available cash flow of $33.8 million allowed easyhome to invest in the future revenue growth of all business units while reducing external debt and continuing its dividend payments.

Outlook

In 2011, we anticipate opening 1 to 2 new corporate stores. We will also continue to expand our U.S. presence through franchising. We plan to add a total of 10 to 15 new franchise locations in 2011, including 5 franchise locations that will be entirely financed by the Company and so will be included in our consolidated financial results. Finally, the Company intends to add an additional 20 to 25 new easyfinancial kiosks. We expect easyfinancial Services to continue with its strong growth throughout 2011 and anticipate a gross loan book of approximately $30.0 million at the end of the first quarter. Based on these assumptions, we are targeting total revenue growth of 11-13%. The achievement of these targets by the Company is predicated on a number of factors, including the availability of sufficient capital.

Donald K. Johnson, Chairman of the Board, commented, "The Board is pleased with the overall performance of the Company during 2010. Despite the challenges of the Employee Fraud, easyhome increased revenues and earnings during the year."

"The Board also wants to recognize the efforts of easyhome s management team throughout the fraud investigation," said Mr. Johnson. "We are confident that the Company has taken the appropriate steps to enhance its management of risk."

The Board of Directors has approved a dividend payment of $0.085 per share payable on April 13, 2011 to the holders of common shares of record as at the close of business on April 6, 2011.

About easyhome
As at December 31, 2010, easyhome Ltd. had 256 stores, including 39 franchised/licensed locations. The Company also operated 67 easyfinancial kiosks within existing easyhome stores and one national virtual loan kiosk.

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 check cashing through its easyfinancial services business. easyhome Ltd. is listed on the TSX under the symbol "EH".