Easyhome reports flat revenue, lower profit in 4Q

But excluding charges, earnings rose a bit

Michael Knell -- Furniture Today, March 10, 2010

MISSISSAUGA, Ontario — While fourth quarter revenue of C$43.9 million was essentially flat for Easyhome compared with the year prior, profitability fell 18% for Canada's largest furniture and appliance rent-to-own merchant.

Easyhome's net income was C$1.4 million or 14 cents a share, down from C$1.8 million or 17 cents per share a year earlier.

Earnings in the latest quarter were hurt by before-tax restructuring charges of C$700,000. Excluding that, net earnings were 18 cents per share.

Same-store revenues were down 1.1% in the quarter. But the company's financial services arm, Easyfinancial, saw its revenue more than double from a year earlier to C$1.6 million, from C$700,000 in the final frame of 2008.

Easyhome president and CEO David Ingram said that "leasing revenues continue to be affected by lower consumer demand as a result of the economic slowdown."

For the full year, revenues were C$173.7 million, up 6.9% over the C$162.5 million recorded for 2008. Net income was C$5.8 million or 55 cents per share, a drop of 35.3% from the C$9 million or 85 cents per share the prior year. Excluding restructuring charges of C$1.9 million, 2009 net earnings were 67 cents per share.

For the year, same store sales fell 2.3% after gaining 9.1% in 2008.

In a conference call, Ingram called the 2009 performance "disappointing," adding that the company wasn't immune to sagging consumer confidence. But he said management implemented a number of initiatives to increase operational effectiveness and control costs, whose effects were becoming noticeable in the fourth quarter.

"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," he said.

"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," he added.

He also noted that during 2009, Easyhome reduced its debt by C$6 million, bought back 86,700 shares of stock for C$800,000, paid out C$3.6 million in dividends and invested C$6.2 million to increase Easyfinancial's loan portfolio.

Ingram said the improvements made to the company's collections procedures, coupled with a drive to increase sales through the signing of more lease agreements should produce improvements to the company's performance during 2010.

"Although we do not expect consumer demand to recover significantly during the next 12 months, the restructuring of our operations and the consolidation of administrative functions are expected to result in improved bottom line performance," he said.

"We anticipate opening five to 10 corporate stores, 20 to 30 franchise stores and 20 to 30 Easyfinancial kiosks in 2010," Ingram said, adding most of the new corporate stores will be opened in the United States. He added that total revenues should grow between 5% and 8% this year.