Hartco Inc.

Hartco Inc.

May 14, 2009 09:18 ET

Hartco Announces 2009 First Quarter Results

MONTREAL, QUEBEC--(Marketwire - May 14, 2009) - Hartco Inc. (TSX:HCI) today announced financial results for the first quarter ended March 31, 2009, during which time the company operated as Hartco Income Fund (the Fund). The Fund posted consolidated revenues of $115.3 million compared to $129.2 million in 2008 and net earnings of $0.4 million, or $0.03 per unit, during the first quarter this year compared to $2.0 million, or $0.15 per unit, for the corresponding quarter in 2008.

First quarter revenues declined by $13.9 million, or 10.8%, compared to the same period last year. The decrease is the result of lower revenues in the Commercial segment, while the Distribution and Franchising segment net revenues increased slightly.

Consolidated EBITDA was $1.1 million for the quarter ended March 31, 2009, compared to $3.2 million for the quarter ended March 31, 2008, a decrease of $2.1 million or 65.6%. EBITDA was affected by lower product sales in the Commercial segment, lower margins in the Distribution and Franchising segment, and non-recurring expenses which are described in our quarterly MD&A.

Our first quarter results reflect the impact of challenging economic conditions and reduced demand for information technology products and services across most regions of the country, said Pat Waid, Hartco s president and chief operating officer. Although public sector organizations have maintained healthy investment levels in IT solutions, most businesses have significantly reduced their IT spending.

Cash Distributions and Dividend Policy

During the first quarter of 2009, the Fund made cash distributions totalling $2.0 million to its unitholders and tracking shareholders. On March 15, 2009, the Fund declared a distribution of $0.05 per unit to unitholders and tracking shareholders of record on March 31, 2009. The distribution of $0.7 million was paid on April 15, 2009 and, accordingly, was accrued for as at March 31, 2009. Also, on April 15, 2009, a final distribution of $0.025 per unit was declared and paid on April 30, 2009.

Today, Hartco's board of directors has adopted a dividend policy with a primary objective of maintaining a high equity ratio. Accordingly, and given current economic conditions, no dividend has been declared for the current period and the board of directors has no plans to do so at the present time.

Hartco Outlook

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

Detailed Financial Information

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

Hartco's Profile

On April 15, 2009, Hartco Income Fund converted to a publicly traded company, 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 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.

(In thousands of dollars, except per unit amounts)

Quarter ended
March 31
2009 2008
$ $
Revenues 115,260 129,176
EBITDA (1) 1,054 3,245
Operating income 464 2,620
Net earnings 355 1,974

Earnings per unit 0.03 0.15

Adjusted Standardized Distributable cash (2) 5,089 (2,965)
Cash distributions 2,000 2,000

(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. Going forward Hartco
Inc. will report Free Cash Flow instead of Distributable Cash.

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