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Michael Knell

Consumer loans drive Easyhome's growth as 4Q sales climb 9.3%

MISSISSAUGA, Ontario — Short-term consumer loans drove growth for Easyhome in both the fourth quarter and full year 2011, according to the rent-to-own merchant's latest financial report.

Easyhome generated revenue of C$49.3 million in the quarter, up 9.3% from the same period in 2010 - "driven primarily by the expansion of the Easyfinancial services business and the related growth of its consumer loans receivable portfolio," the company said. Same-store revenues were up 9.3%.

Net income for the quarter was C$2.6 million or 22 cents per share, reversing the comparable period loss of C$400,000 or three cents per share. Excluding the costs from an employee fraud incident in the fourth quarter of 2010, net earnings for that period would have been 13 cents per share.

The company said its Easyfinancial unit more than doubled its top line contribution to C$7.8 million as its loans receivable portfolio jumped from C$23.8 million to C$47.6 million.

Meanwhile, Easyhome's merchandise leasing operation recorded revenues of C$41 million and franchising operations recorded revenues of C$500,000, both little changed from the same period last year.

For the year, Easyhome revenue totaled C$188.3 million, an increase of 8.1% from 2010.

Net income was C$9.7 million or 81 cents per share, compared with C$6.1 million or 58 cents per share the previous year - an increase of 58%.

Once again, the company's merchandise leasing business was relatively flat at C$162.5 million while revenues from the franchise operations were C$1.4 million, up from C$1.1 million the prior year. Real growth came from Easyfinancial, where revenue of C$24.5 million was more than double the C$10.8 generated in fiscal 2010.

Easyhome President and CEO David Ingram said he doesn't expect any immediate upticks in the company's merchandising leasing business.

"We believe that consumers in both Canada and the U.S. will remain cautious until the general economic conditions improve," he said in a statement. "As a result, growth within our leasing and franchising businesses will continue to be modest and the number of new store openings in 2012 will be low."

Ingram told analysts in a conference call that the company expects to open one or two new corporate stores in 2012 plus an additional five to 10 franchise stores.

Easyfinancial is expected to continue to drive the company's growth, at least for the coming year. Ingram said the company anticipates opening 15 to 20 new locations this year, most of which will be freestanding units. Most existing Easyfinanical locations are kiosks inside Easyhome stores.

"Based on these assumptions, we are targeting total revenue growth of approximately 10%," Ingram said, adding that the company will be looking to secure additional debt financing to fund its growth plans over the next few months.

As of December 31, Easyhome operated 261 stores in Canada and the United States, including 48 franchised or licensed locations. It also operated 85 Easyfinancial kiosks, two standalone Easyfinancial locations and one national loan office.

Easyhome is Canada's largest merchandise leasing merchant and the third largest in North
America. Its core product assortment includes furniture, appliances and consumer electronics.

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