Hartco Income Fund

Hartco Income Fund

August 07, 2008 12:53 ET

Hartco Income Fund Announces 2008 Second Quarter Results

Earnings From Continuing Operations Up 65 Percent Year-Over-Year

MONTREAL, QUEBEC--(Marketwire - Aug. 7, 2008) - Hartco Income Fund (TSX:HCI.UN) today announced financial results for the second quarter and the six-month period ended June 30, 2008. For the second quarter ended June 30, 2008, the Fund posted consolidated revenues from continuing operations of $117.7 million and net earnings of $3.0 million, or $0.22 per unit, compared to revenues of $118.3 million and earnings of $1.8 million, or $0.13 per unit, for the corresponding quarter last year. Net earnings from discontinued operations were nil for the second quarter compared to a loss of $6.0 million, for the same quarter last year.

"While revenues declined slightly during the second quarter, gross margin improvements and operating expense reductions contributed to a 65% increase in our earnings from continuing operations", said Pat Waid, president and chief operating officer of the Fund. "We re pleased with the improvements in the profitability of our business and the significant increase in our cash flow which enabled the Fund to achieve a debt-free position at June 30, 2008".

The quarterly revenue decline compared to the same period last year is attributable to a decrease in the Fund s Franchising and Distribution segment, due primarily to the divestiture of the CompuSmart retail business, while, the Commercial segment enjoyed revenue growth of 4.5%.

Consolidated EBITDA from continuing operations was $4.5 million for the quarter ended June 30, 2008 compared to $3.1 million for the same quarter the previous year, an increase of $1.4 million or 45.2% explained mainly by the lower level of expenses.

Consolidated results for the six-month period ended June 30, 2008

For the six-month period ended June 30, 2008, net earnings from continuing operations amounted to $4.9 million, or $0.36 per unit, compared to net earnings of $3.7 million or $0.28 per unit for the same period last year. Loss from discontinued operations was nil for the six-month period ended June 30, 2008, compared to $8.7 million for the same period last year.

Consolidated revenues amounted to $246.9 million for the six-month period ended June 30, 2008, compared to $263.9 million for the same period last year. Revenues in the Franchising and Distribution segment decreased by $30.6 million due primarily to the CompuSmart divestiture, while Commercial segment revenues increased by $5.1 million or 2.5% .

Consolidated EBITDA was at $7.8 million for the six-month period ended June 30, 2008, compared to $6.6 million for the same period last year. The higher EBITDA is mainly attributable to lower expenses offset by lower margins and lower volume.

Cash Distributions

During the six-month period ended June 30, 2008, the Fund made cash distributions to its unitholders and tracking shareholders totalling $4.0 million. On July 15, 2008, the Fund declared a distribution of $0.05 per unit to unitholders of record on July 31, 2008 to be paid on August 15, 2008.

Hartco Income Fund Outlook

The Fund continues to invest in process and systems improvements to enhance its operational and financial performance and to effectively withstand potentially weaker economic conditions.

Detailed Financial Information

Detailed financial information pertaining to the Fund s second quarter and six-month period 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 across Canada under the banners of Metafore™, MicroAge®, Microserv® and Northwest Digital®. 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 quarterly Management s Discussion & Analysis.

(In thousands of dollars, except per unit amounts)

June 30
Second Quarter Six-month period
2008 2007 2008 2007
$ $ $ $
Revenues 117,686 118,252 246,863 263,941
EBITDA (1) 4,520 3,084 7,766 6,625

Net earnings from
continuing operations 2,952 1,790 4,926 3,737
Loss from discontinued operations - (5,990) - (8,684)
Net earnings (loss) 2,952 (4,200) 4,926 (4,947)

Earnings per unit from
continuing operations 0.22 0.13 0.36 0.28
Loss per unit from
discontinued operations - (0.44) - (0.64)
Earnings (loss) per unit 0.22 (0.31) 0.36 (0.36)

Adjusted Standardized
Distributable cash (2) 6,604 5,855 3,639 4,650
Cash distributions 2,000 2,000 4,000 4,000

(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.

Contact Information