Hartco Income Fund

Hartco Income Fund

November 08, 2007 15:30 ET

Hartco Income Fund Announces 2007 Third Quarter Results

MONTREAL, QUEBEC--(Marketwire - Nov. 8, 2007) - Hartco Income Fund (TSX:HCI.UN) today announced financial results for the third quarter ended September 30, 2007. The Fund posted consolidated revenues from continuing operations of $110.8 million and net earnings of $1.3 million, or $0.10 per unit for the quarter compared to revenues of $125.3 million and a loss of $1.7 million, or $0.13 per unit, for the corresponding period last year. Loss from discontinued CompuSmart operations was nil for the third quarter this year, compared to a loss of $4.6 million, or $0.34 per unit, for the corresponding quarter last year.

We view our third quarter results as a validation of our strategy to divest the CompuSmart business in order to better focus our resources on our core commercial activities, said Pat Waid, president and chief operating officer of the Fund. We are pleased to have returned the Fund to profitability and we will continue to concentrate on maximizing operating synergies between our business segments to improve the Fund s earnings and cash flow.

The quarterly revenue decline of $14.5 million, or 11.5% compared to the same period last year is attributable to a $31.1 million reduction in the Fund s Distribution and Franchising segment revenues, due primarily to the elimination of the CompuSmart retail business. The Fund s Commercial segment revenues increased by $16.6 million, or 22.2%, compared to the corresponding quarter of the prior year.

Consolidated EBITDA from continuing operations was $2.7 million for the quarter ended September 30, 2007 compared to $3.5 million for the same quarter the previous year, a decrease of $0.8 million. The volume increase in the Commercial segment had a positive impact on EBITDA, however this increase was offset by lower volumes and margins in the Distribution and Franchising segment.

Cash Distributions

During the third quarter of 2007, the Fund made cash distributions totalling $2.0 million to its unitholders and tracking shareholders. Distributions were also made in October 2007 for an additional $0.7 million. On October 15, 2007, the Fund declared a distribution of $0.05 per unit to be paid on November 15, 2007 to unitholders and tracking shareholders of record on October 31, 2007.

Hartco Income Fund Outlook

We anticipate positive earnings in both our Commercial and Distribution and Franchising segments through the remainder of the year based on favourable projections regarding the Canadian economy and business investments in information technology, said Pat Waid.

Detailed Financial Information

Detailed financial information pertaining to the Fund s third quarter and year to date results can be accessed at www.sedar.com.

Fund Profile

Hartco Income Fund (TSX:HCI.UN) has been a leader in the Canadian information technology business for more than thirty years. Through its operating divisions under the banners of Metafore, Microserv, MicroAge and Northwest Digital, which together include more than 60 locations across Canada, Hartco Income Fund delivers information technology 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.

(In thousands of dollars, except per unit amounts)

Quarter ended Nine-month period ended
September 30 September 30
2007 2006 2007 2006
$ $ $ $
Revenues 110,807 125,273 374,748 397,202
EBITDA (1) 2,711 3,498 9,336 9,952

Net earnings from continuing
operations 1,337 2,889 8,693 8,309
Loss from discontinued
operations - (4,603) (12,303) (11,579)
Net earnings (loss) 1,337 (1,714) (3,610) (3,270)

Earnings per unit from
continuing operations 0.10 0.21 0.64 0.61
Loss per unit from
discontinued operations - (0.34) (0.91) (0.85)
Earnings (loss) per unit 0.10 (0.13) (0.27) (0.24)

Distributable cash (2) 4,947 4,879 4,813 12,984
Standardized distributable
cash (3) 2,064 769 6,714 6,358
Cash distributions 1,999 2,066 5,999 6,015

(1) Earnings from continuing operations before financial expenses, income
taxes, depreciation and amortization, share of results of equity
investments and non- controlling interest. EBITDA is a non-GAAP measure
as defined in the MD&A.

(2) Cash flow from continuing operating activities, less capital
expenditures, net of proceeds from disposal of assets, plus collection
of loans receivable.

(3) Distributable cash plus cash flow from discontinued operations.
Standardized distributable cash is a non-GAAP measure as defined in the

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