Hartco Income Fund

Hartco Income Fund

May 08, 2008 09:10 ET

Hartco Income Fund announces 2008 First Quarter Results

MONTREAL, QUEBEC--(Marketwire - May 8, 2008) - Hartco Income Fund (TSX:HCI.UN) today announced financial results for the first quarter ending March 31, 2008. The Fund posted consolidated revenues from continuing operations of $129.2 million compared to $145.7 million the previous year and net earnings of $2.0 million, or $0.15 per unit this year compared to $1.9 million, or $0.15 per unit, for the corresponding period the previous year.

The revenue decline for the first quarter of 2008 compared to the same period last year is primarily attributable to the impact of the divestiture of the CompuSmart retail business on the Fund's Franchising and Distribution segment revenues. The Commercial segment recorded modest growth.

Consolidated EBITDA from continuing operations was $3.2 million for the quarter ended March 31, 2008 compared to $3.5 million for the same quarter the previous year, a decrease of $0.3 million. Lower volume in the Franchising and Distribution segment and lower margins across the board had a negative impact of $1.5 million on EBITDA. Operating expenses were reduced by $1.2 million, despite restructuring costs of $0.4 million in the Commercial segment to adapt our cost structure in the technical service area to the current business environment.

"Our first quarter results reflect the impact of the CompuSmart divestiture on our Franchising and Distribution revenues, as well as moderate improvements in the performance of our Commercial segment," said Pat Waid, president and chief operating officer of the Fund. "Uncertainty pertaining to the economy appears to have negatively impacted business investments in IT across certain regions of the country."

Cash Distributions

During the first quarter of 2008, the Fund made cash distributions totalling $2.0 million to its unitholders and tracking shareholders. On April 15, 2008, the Fund declared a distribution of $0.05 per unit to be paid on May 15, 2008 to unitholders and tracking shareholders of record on April 30, 2008.

Hartco Income Fund Outlook

The Fund is working towards growing its Commercial segment revenues and improving its profitability and cash flow throughout the year. Several initiatives are underway to stimulate sales and to standardize systems and processes to maximize operating synergies between the Fund's business segments and ensure an appropriate cost structure.

Detailed Financial Information

Detailed financial information pertaining to the Fund's first quarter and year to date 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 under the Metafore, Microserv, MicroAge and Northwest Digital banners across Canada, 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 annual Management's Discussion & Analysis.

(In thousands of dollars, except per
unit amounts)
Quarter end
March 31
2008 2007
$ $
Revenues 129,176 145,689
EBITDA (1) 3,245 3,541

Net earnings from continuing operations 1,974 1,948
Loss from discontinued operations - (2,694)
Net earnings (loss) 1,974 (746)

Earnings per unit from continuing operations 0.15 0.15
Loss per unit from discontinued operations - (0.20)
Earnings (loss) per unit 0.15 (0.05)

Adjusted Standardized Distributable cash (2) (2,965) (1,205)
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.

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