Hartco Inc.
TSX : HCI

Hartco Inc.

November 12, 2009 13:56 ET

Hartco Announces 2009 Third Quarter Results

MONTREAL, QUEBEC--(Marketwire - Nov. 12, 2009) - Hartco Inc. (TSX:HCI) today announced financial results for the third quarter and the nine-month period ended September 30, 2009. For the third quarter, Hartco posted consolidated revenues of $99.0 million compared to $102.5 million the previous year, and net earnings of $1.6 million, or $ 0.11 per share on a diluted basis, compared to earnings of $0.7 million, or $0.05 per share, for the corresponding quarter in 2008.

"We are pleased to have achieved improved earnings during the recent quarter despite challenging business conditions," said Pat Waid, Hartco's president and chief operating officer. "Cost reduction initiatives implemented earlier this year allowed us to operate the business more profitably, in spite of lower revenues resulting from soft demand for IT offerings."

Consolidated EBITDA was $2.7 million for the quarter ended September 30, 2009, compared to $1.5 million for the same quarter in 2008, an increase of $1.2 million or 76.6%.

Consolidated results for the nine-month period ended September 30, 2009

For the nine-month period ended September 30, 2009, net earnings amounted to $2.6 million or $0.19 per share (basic and diluted), compared to net earnings of $5.6 million or $0.41 per share (basic and diluted) for the same period last year. Consolidated EBITDA was $5.0 million for the nine-month period ended September 30, 2009 compared to $9.3 million for the nine-month period ended September 30, 2008.

Consolidated revenues amounted to $317.0 million for the nine-month period ended September 30, 2009, compared to $349.4 million for the same period last year. Challenging economic and market conditions, including weaker demand for IT products and services, persisted throughout the nine-month period of 2009.

Hartco Outlook

"We expect business and IT-related investment levels to remain relatively soft throughout the remainder of the year, placing pressure on the company's revenues and margins over the coming quarter," said Pat Waid, Hartco's president and chief operating officer. "However, we expect to operate our business profitably and benefit from the cost reduction program which was implemented earlier this year. We will continue to monitor market conditions, adjust our business model accordingly, and resource Hartco's strategic priorities adequately as we strive to deliver strong operating results. Focus will be maintained on maximizing Hartco's cash position during this period."

Detailed Financial Information

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

Hartco's Profile

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 operating across Canada under the banners of Metafore™, MicroAge®, Microserv® and Northwest Digital®, Hartco Inc. delivers IT infrastructure solutions to private and public sector organizations of every size.

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)

September 30
Third Quarter Nine-month period
2009 2008 2009 2008
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$ $ $ $
Revenues 99,041 102,500 317,005 349,362
EBITDA (1) 2,679 1,517 4,988 9,283
Operating Income 2,228 946 3,498 7,487
Net earnings 1,614 659 2,577 5,586
Diluted Earnings per share (2) 0.11 0.05 0.19 0.41
Adjusted Free Cash Flow (3) 3,713 5,253 12,905 8,892
Cash distributions (4) - 1,999 3,000 5,999

(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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