Hartco Income Fund
TSX : HCI.UN

Hartco Income Fund

February 19, 2009 13:18 ET

Hartco Announces 2008 Fourth Quarter and Year-end Results

MONTREAL, QUEBEC--(Marketwire - Feb. 19, 2009) - Hartco Income Fund (TSX:HCI.UN) today announced financial results for the fourth quarter and the year ended December 31, 2008. For the fourth quarter, the Fund posted consolidated revenues from continuing operations of $119.4 million and net earnings of $2.5 million, or $0.19 per unit, compared to revenues of $121.2 million and earnings of $0.5 million, or $0.04 per unit, for the corresponding period last year.

Fourth quarter revenues declined by $1.8 million or 1.5% compared to the same period last year. The decrease came from the Commercial segment while the Distribution and Franchising segment revenues remained stable.

Consolidated EBITDA from continuing operations was $4.6 million for the quarter ended December 31, 2008 compared to $2.8 million for the same quarter the previous year, an increase of $1.8 million.

Consolidated results for the year ended December 31, 2008

For the year ended December 31, 2008, net earnings from continuing operations amounted to $8.1 million, or $0.60 per unit, compared to net earnings of $5.6 million or $0.41 per unit for the previous year. Earnings from discontinued operations were nil for the year ended December 31, 2008, compared to a loss $8.3 million or $0.61 per unit for the previous year.

Consolidated revenues totalled $468.8 million for the year ended December 31, 2008, compared to $495.9 million for the previous year. Net revenues in the Distribution and Franchising segment were $68.9 million compared to net revenues of $94.2 million for the year ended December 31, 2007 due mainly to loss of revenues from the CompuSmart segment. Revenues in the Commercial segment totalled $399.9 million for the year ended December 31, 2008 compared to $401.7 million for the same period in 2007.

Consolidated EBITDA stood at $13.9 million for the year ended December 31, 2008, compared to $12.1 million for the previous year due to lower operating expenses of $6.2 million partially offset by lower margins of $2.5 million and lower volumes of $1.9 million.

"We are pleased to close the year with strong operating results," said Pat Waid, president and chief operating officer of the Fund. "Despite lower revenues, operational improvements, including cost and inventory reductions, contributed to a significant increase in profitability and enabled the Fund to maintain a debt-free position at year-end."

Cash Distributions

During the fourth quarter of 2008, the Fund made cash distributions totalling $2.0 million to its unitholders and tracking shareholders. On January 15, 2009, the Fund declared a distribution of $0.05 per unit to be paid on February 16, 2009 to unitholders and tracking shareholders of record on January 31, 2009. On February 16, 2009, the Fund declared another distribution of $0.05 per unit to unitholders of record on February 28, 2009 to be paid on March 16, 2009.

Hartco Income Fund Outlook

Given the uncertainty related to the duration and magnitude of the current economic slowdown, the Fund expects lower demand for IT products and services and continued pressure on its revenues over the coming months. The Fund will continue to focus on maximizing synergies between its business segments and will maintain an appropriate cost structure in order to optimize operating results.

Detailed Financial Information

Detailed financial information pertaining to the Fund's fourth quarter and year-end 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, which together include more than 60 locations operating across Canada under the banners of Metafore™, MicroAge®, Microserv® and Northwest Digital®, 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 quarterly Management's Discussion & Analysis.



FINANCIAL HIGHLIGHTS
(In thousands of dollars, except per unit amounts)

December 31
Fourth Quarter Year end
2008 2007 2008 2007
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Revenues 119,427 121,180 468,789 495,928
EBITDA (1) 4,644 2,806 13,926 12,142

Net earnings from continuing operations 2,524 510 8,109 5,584
Earnings (loss) from discontinued
operations - 399 - (8,285)
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Net earnings (loss) 2,524 909 8,109 (2,701)

Earnings per unit from continuing
operations 0.19 0.04 0.60 0.41
Earnings (loss) per unit from
discontinued operations - 0.03 - (0.61)
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Earnings (loss) per unit 0.19 0.07 0.60 (0.20)

Adjusted standardized distributable
cash (2) 2,256 9,483 11,148 16,195
Cash distributions 2,000 2,000 7,999 7,999


(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 and discontinued operating activities, less
capital expenditures, net of proceeds from disposal of assets, plus
collection of loans receivable. Adjusted Standardized Distributable
cash is a non-GAAP measure as defined in the MD&A.


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