Hartco Announces 2009 Second Quarter Results

MONTREAL, QUEBEC--(Marketwire - Aug. 13, 2009) - Hartco Inc. HCI today announced financial results for the second quarter and the six-month period ended June 30, 2009. For the second quarter, Hartco posted consolidated revenues of $102.7 million compared to $117.7 million the previous year and net earnings of $0.6 million, or $0.04 per share, compared to earnings of $3.0 million, or $0.22 per share, for the corresponding quarter in 2008. Challenging economic conditions and ongoing weakness in the demand for IT offerings had an impact on our operating results during the second quarter, said Pat Waid, Hartco's president and chief operating officer. Cost reduction initiatives implemented during the recent quarter are expected to deliver operational benefits in the second half of the year. During the last quarter we incurred over $800,000 of non-recurring restructuring charges which impacted our second quarter earnings. Consolidated EBITDA was $1.3 million for the quarter ended June 30, 2009, compared to $4.5 million for the same quarter in 2008, a decrease of $3.2 million or 72.3%, on consolidated revenues of $102.7 million, which declined by $15.0 million, or 12.7%, compared to the same period last year. Consolidated results for the six-month period ended June 30, 2009 For the six-month period ended June 30, 2009, net earnings amounted to $1.0 million, or $0.07 per share, compared to net earnings of $4.9 million or $0.36 per share for the same period last year. Consolidated EBITDA was $2.3 million for the six-month period ended June 30, 2009 compared to $7.8 million for the six-month period ended June 30, 2008. Consolidated revenues amounted to $218.0 million for the six-month period ended June 30, 2009, compared to $246.9 million for the same period last year. Challenging economic and market conditions, including weaker demand for IT products and services, persisted throughout the first half of the 2009. Hartco Outlook Hartco has undertaken a cost reduction program and has increased its focus on the public sector in order to mitigate risks associated with ongoing economic challenges and lower demand for IT products and services. Despite these actions, the company expects to continue experiencing pressure on its revenues and margins over the coming quarter. The company will continue to monitor market conditions, adjust its cost structure accordingly, and resource its strategic priorities adequately. Detailed Financial Information Detailed financial information pertaining to Hartco's second quarter results can be accessed at www.sedar.com. Hartco's Profile Hartco Inc. 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 60 locations operating across Canada under the banners of Metafore , MicroAge(R), Microserv(R) and Northwest Digital(R), Hartco Inc. delivers IT infrastructure 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. /T/ FINANCIAL HIGHLIGHTS (In thousands of dollars, except per share amounts) June 30 Second Quarter Six-month period 2009 2008 2009 2008 -------------------------------------------------------------------------- $ $ $ $ Revenues 102,705 117,686 217,965 246,863 EBITDA(1) 1,254 4,520 2,307 7,766 Operating Income 801 3,920 1,267 6,540 Net earnings 608 2,952 963 4,926 Earnings per share - Basic and diluted(2) 0.04 0.22 0.07 0.36 Adjusted Free Cash Flow(3) 4,103 6,604 9,192 3,639 Cash distributions(4) 1,000 2,000 3,000 4,000 (1) Earnings from continuing operations before financial expenses, income taxes, depreciation and amortization, share of results of equity investments and non-controller interest. EBITDA is a non-GAAP measure as defined in the MD&A. (2) Earnings per share refer to earnings per share or earnings per unit when Hartco operated as an income trust. (3) 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. (4) Cash distributions ceased when the company was converted from an income trust on April 15, 2009. /T/