Hartco Inc.
TSX : HCI

Hartco Inc.

February 24, 2011 13:08 ET

Hartco Announces 2010 Fourth Quarter and Year End Results

MONTREAL, QUEBEC--(Marketwire - Feb. 24, 2011) - Hartco Inc. (TSX:HCI) today announced financial results for the fourth quarter and the year ended December 31, 2010. Hartco posted consolidated revenues of $120.3 million for the fourth quarter, compared to $105.6 million the previous year, and net earnings of $4.1 million, or $0.30 per share on a diluted basis, compared to earnings of $0.7 million, or $0.05 per share, for the corresponding quarter in 2010.

Fourth quarter revenues increased by $14.7 million, or 13.9%, compared to the same period last year. Revenues from the Commercial segment increased by 11.1% while the Franchising and Distribution segment net revenues increased by 30.7%. Consolidated EBITDA was $4.6 million for the quarter ended December 31, 2010, an increase of 147.0% compared to $1.9 million for the same quarter in 2009. This increase of EBITDA is mainly related to increased volume and margins.

Consolidated results for the year ended December 31, 2010

For the year ended December 31, 2010, net earnings amounted to $7.2 million or $0.50 per share on a diluted basis, compared to net earnings of $3.3 million or $0.23 per share for the year ended December 31, 2009. Consolidated EBITDA was $11.8 million for the year ended December 31, 2010 compared to $6.9 million for the year ended December 31, 2009, an increase of 71.6%.

Consolidated revenues amounted to $471.7 million for the year ended December 31, 2010, compared to $422.6 million for the year ended December 31, 2009, an increase of 11.6%.

"We are very pleased with our performance for 2010, delivering close to 12% revenue growth, more than doubling our earnings from the prior year, and generating over $10.8 million in cash flow from operating activities" said Pat Waid, Hartco's President and Chief Operating Officer. "Our solid execution over the past year has accelerated our momentum and created greater capacity for the Company to invest in strengthening its market position."

Financial Position

Since the beginning of the year, Hartco generated free cash flow of $2.9 million despite an investment of $5.5 million in its IT infrastructure and in an enterprise resource planning ("ERP") solution. This resulted in a cash position of $24.4 million as at December 31, 2010. Hartco's strategy is to preserve cash to support future growth while investing in productivity improvements.

Hartco Outlook

"In spite of enduring economic uncertainty, resulting from global turmoil, we anticipate demand for information technology to remain strong and we expect our positive momentum to carry on throughout 2011," said Pat Waid. "We will invest in our business with the goal of continuously improving our operating performance."

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 50 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)
 
 
  Fourth Quarter ended Year ended
  December 31 December 31
 
  2010   2009 2010 2009
  $   $ $ $
Revenues 120,258   105,556 471,732 422,562
EBITDA (1) 4,617   1,868 11,763 6,855
 
Net earnings from continuing operations 4,080   434 7,201 3,011
Net earnings 4,080   680 7,201 3,257
 
Diluted Earnings per share 0.30   0.05 0.50 0.23
 
Adjusted Free Cash Flow (2) (1,112 ) 5,575 2,914 18,480
 
Cash position 24,356   22,127 24,356 22,127
 
(1) Earnings 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 Free Cash Flow is a non-GAAP measure as defined in the MD&A.

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