Hartco Inc.

Hartco Inc.

May 31, 2011 10:37 ET

Hartco Announces First Quarter 2011 Results

MONTREAL, QUEBEC--(Marketwire - May 31, 2011) - Hartco Inc. (TSX:HCI) today announced financial results for the first quarter ended March 31, 2011. Hartco posted consolidated revenues of $115.3 million for the first quarter, compared to $120.9 million for 2010, and net earnings of $0.4 million, or $0.03 per share on a diluted basis, compared to earnings of $1.9 million, or $0.14 per share, for the corresponding quarter in 2010.

First quarter revenues decreased by $5.6 million, or 4.6%, compared to the same period last year. Revenues from the Commercial segment decreased by 3.1% while the Franchising and Distribution segment net revenues decreased by 4.6%. Consolidated EBITDA was $0.4 million for the quarter ended March 31, 2011, compared to $3.4 million for the same quarter in 2010.

The Company's profitability was negatively impacted by lower sales volumes, investments in technical pre-sales and service delivery resources for which the Company expects to generate a positive return within the next several quarters, as well as expenses related to delays in the implementation of the Company's new integrated ERP solution.

"We are disappointed with our performance for the first quarter of 2011, particularly following our strong performance in 2010" said Pat Waid, Hartco's President and Chief Operating Officer. "We are determined to address the issues which have negatively impacted the Company's recent performance and we are taking immediate action to correct the situation and improve execution".

Financial Position

In spite of disappointing sales and earnings, effective management of accounts receivable, accounts payable, and inventory enabled Hartco to end the first quarter of 2011 with a cash position of $19.6 million and no debt. Hartco's strategy is to preserve cash to support future growth while investing in productivity improvements.

Hartco Outlook

"We continue to believe that information technology will remain one of the key enablers for Canadian businesses to improve their productivity and competitiveness and we are well positioned to benefit from this trend." said Pat Waid. "Hartco's strong financial position gives us the capability to invest in strengthening our market presence."

Detailed Financial Information

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

(In thousands of dollars, except per share amounts)
Quarter ended
March 31
Revenues115,34 9120,856
EBITDA (1)3733,383
Net earnings3601,854
Diluted Earnings per share0.030.14
Adjusted Free Cash Flow (deficiency) (2)(4,595)2,107
Cash position19,56323,682
1)Earnings before financial expenses, income taxes, 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 receivable. Adjusted Free Cash Flow is a non-IFRS measure as defined in the MD&A.

Contact Information