Hartco Inc.
TSX : HCI

Hartco Inc.

February 18, 2010 14:49 ET

Hartco Announces 2009 Fourth Quarter and Year-end Results

MONTREAL, QUEBEC--(Marketwire - Feb. 18, 2010) - Hartco Inc. (TSX:HCI) today announced financial results for the fourth quarter and the year ended December 31, 2009. For the fourth quarter, Hartco posted consolidated revenues of $105.6 million compared to $119.4 million the previous year, and net earnings of $0.7 million, or $0.05 per share on a diluted basis, compared to earnings of $2.5 million, or $0.19 per share, for the corresponding quarter in 2008.

Fourth quarter revenues declined by $13.8 million or 11.6% compared to the same period last year. Revenues from the Commercial segment decreased by 12% while the Distribution and Franchising Segment decreased by 8%. Consolidated EBITDA was $1.9 million for the quarter ended December 31, 2009, compared to $4.6 million for the same quarter in 2008, a decrease of $2.7 million or 60% as a result of lower revenues and lower margins across all networks.

"We experienced challenging business conditions during the fourth quarter, resulting in disappointing revenues and earnings, although we improved the Company's cash position" said Pat Waid, Hartco's President and Chief Operating Officer. "Towards the end of the year, we announced the merger of Microserv® and Metafore™, now operating under the Metafore brand, with the goal of accelerating our leadership standing amongst Canadian IT solution providers and to better position the Company for the future".

Consolidated results for the year ended December 31, 2009

For the year ended December 31, 2009, net earnings amounted to $3.3 million or $0.23 per share on a diluted basis, compared to net earnings of $8.1 million or $0.60 per share for the same period last year. Consolidated EBITDA was $6.9 million for the year ended December 31, 2009 compared to $13.9 million for the year ended December 31, 2008.

Consolidated revenues amounted to $422.6 million for the year ended December 31, 2009, compared to $468.8 million for the same period last year. Challenging economic and market conditions, including weaker demand for IT products and services, persisted throughout 2009.

In 2009, Hartco generated free cash flow of $18.5 million, compared to $11.1 million in 2008 contributing to a cash position of $22.0 million at the end of the year. Hartco's policy, following the conversion from an income trust in April 2009, is to preserve cash to support future growth.

Hartco Outlook

"Although we continue to face some economic uncertainty, we expect business and IT-related investment levels to improve throughout 2010" said Pat Waid. "We will continue to monitor market conditions and adjust our business model to maximize the Company's operating results and cash position. Hartco intends to use its free cash flow to fund growth opportunities and strategic priorities, such as the implementation of an integrated enterprise resource planning (ERP) solution in late 2010 which will generate operational improvements and enhanced customer service capabilities."

Detailed Financial Information

Detailed financial information pertaining to Hartco's fourth quarter and annual results can be accessed at www.sedar.com.

About Hartco Inc.

Hartco Inc. (TSX:HCI) has been a leader in the Canadian information technology business for more than thirty years. Through its operating divisions, which together include more than 60 locations across Canada, Hartco Inc. delivers information technology solutions to private and public sector organizations of every size. For more information, please visit www.hartco.com.

Forward-Looking Statements

This news release contains forward-looking information. Except for historical information contained herein, the statements in this document are forward-looking. Forward-looking statements involve known and unknown risks and uncertainties, which may cause actual results in future periods to differ materially from forecasted results. Those risks include, among others, changes in customer demand for information technology products or services, changes in supplier pricing actions or terms, customer orders, pricing actions by competitors, changes in laws and regulations and general changes in economic conditions. Risks that could cause our results to differ materially from our expectations are discussed in our Annual Management's Discussion & Analysis.

FINANCIAL HIGHLIGHTS        
(In thousands of dollars, except per share amounts)        
 
    December 31  
  Fourth Quarter Year
  2009 2008 2009 2008
  $ $ $ $
Revenues 105,556 119,427 422,562 468,789
EBITDA (1) 1,868 4,644 6,855 13,926
 
Net earnings from continuing operations 434 2,524 3,011 8,109
Earnings from discontinued operations 246 - 246 -
Net earnings 680 2,524 3,257 8,109
 
Diluted Earnings per share (2) 0.05 0.19 0.23 0.60
 
Adjusted Free Cash Flow (3) 5,575 2,256 18,480 11,148
Cash distributions (4) - 2,000 3,000 7,999
         
1. Earnings from continuing operations before financial expenses, income taxes, depreciation and amortization, share of results of equity investments and non-controller interest. EBITDA is a non-GAAP measure as defined in the MD&A.
   
2. Diluted earnings per share refer to diluted earnings per share or earnings per unit when Hartco operated as an income trust.
   
3. Cash flow from continuing and discontinued operating activities, less capital expenditures, net of proceeds from disposal of assets, plus collection of loans receivable. Adjusted Free Cash Flow is a non- GAAP measure as defined in the MD&A.
   
4. Cash distributions ceased when the company was converted from an income trust on April 15, 2009.

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