Hartco Inc.
TSX : HCI

Hartco Inc.

August 11, 2011 12:36 ET

Hartco Announces 2011 Second Quarter Results

MONTREAL, QUEBEC--(Marketwire - Aug. 11, 2011) - Hartco Inc. (TSX:HCI) today announced financial results for the second quarter and the six-month period ended June 30, 2011. Hartco posted consolidated revenues of $115.5 million for the second quarter, compared to $114.3 million for 2010, and net earnings of $0.9 million, or $0.06 per share on a diluted basis, compared to earnings of $0.7 million, or $0.05 per share on a diluted basis, for the corresponding quarter in 2010.

Second quarter consolidated revenues increased by $1.1 million compared to the same period last year. Revenues from the Commercial segment increased by 7.1% while the Franchising and Distribution segment net revenues decreased by 18.8%. Consolidated EBITDA was $1.1 million for the quarter ended June 30, 2011, compared to $2.3 million for the same quarter in 2010.

The Company's profitability was impacted by lower than usual gross profit margins, as well as investments in sales resources and information systems which are expected to contribute to improved results in 2012.

"We experienced encouraging revenue trends during the second quarter of 2011, particularly in the Commercial segment" said Pat Waid, Hartco's President and Chief Operating Officer. "Several cost reduction initiatives have been implemented with the goal of improving our profitability".

Consolidated results for the six-month period ended June 30, 2011

For the six-month period ended June 30, 2011, net earnings amounted to $1.2 million, or $0.09 per share on a diluted basis, on consolidated revenues of $230.8 million, compared to net earnings of $2.6 million, or $0.19 per share on a diluted basis, on consolidated revenues of $235.2 million for the same period last year. Consolidated EBITDA was $1.5 million for the six-month period ended June 30, 2011 compared to $5.7 million for the corresponding six- month period in 2010.

Financial Position

In spite of lower earnings and the impact of postal disruptions on our cash flow, effective management of our working capital enabled Hartco to end the second quarter of 2011 with a cash position of $9.4 million and no debt. Hartco's strategy is to preserve cash to invest in future growth and productivity improvements.

Hartco Outlook

"As one of Canada's leading providers of IT infrastructure solutions, Hartco is extremely well positioned to help Canadian organizations improve their productivity and competitiveness." said Pat Waid. "We will leverage our strong financial position to invest in the capabilities that will enable us to strengthen our presence with existing and new customers."

Detailed Financial Information

Detailed financial information pertaining to Hartco's second quarter and the first six months can be accessed at www.sedar.com. The second quarter and six-month interim financial statements have been prepared in accordance with the International Financial Reporting Standards ("IFRS").

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 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)
Quarter ended Six-month period ended
June 30 June 30
2011 2010 2011 2010
$ $ $ $
Revenues 115,460 114,322 230,809 235,178
EBITDA (1) 1,127 2,315 1,501 5,698
Net earnings 879 743 1,239 2,594
Diluted Earnings per share 0.06 0.05 0.09 0.19
Adjusted Free Cash Flow (deficiency) (2) (10,065 ) 40 (14,660 ) 2,147
Cash position 9,369 23,531 9,369 23,531
1. Earnings before net financial costs, income tax expense, depreciation and amortization and share of results of equity investments. EBITDA is a non-IFRS 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 net collection of loans and other assets. Adjusted Free Cash Flow is a non-IFRS measure as defined in the MD&A.

Contact Information