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Press release from Marketwire

Hartco Announces 2012 Second Quarter Results

Wednesday, August 08, 2012

Hartco Announces 2012 Second Quarter Results13:10 EDT Wednesday, August 08, 2012MONTREAL, QUEBEC--(Marketwire - Aug. 8, 2012) - Hartco Inc. (TSX:HCI) today announced its financial results for the three and six month periods ended June 30, 2012.Consolidated results for the three months ended June 30, 2012Hartco Inc. ("Hartco") posted consolidated revenues of $102.2 million for the three months ended June 30, 2012, compared to $115.5 million last year, and a net loss of $4.1 million, or -$0.31 per share on a diluted basis compared to net earnings of $0.9 million, or $0.06 per share on a diluted basis, for the corresponding period in 2011.The financial results for the recent quarter reflect an impairment charge of $4.1 million pertaining to Hartco's investment in ScreenScape Networks Inc. ("ScreenScape"). Excluding the impact of this item, second quarter 2012 earnings were nil."In spite of lower than expected demand for IT related products, and considerable margin pressures, we maintained a positive Adjusted EBITDA during the second quarter of 2012 through effective management of our operating expenses," said Pat Waid, Hartco's President and Chief Operating Officer. "We are focusing our resources to optimize performance and maintain a healthy financial position."Consolidated results for the six months ended June 30, 2012For the six months ended June 30, 2012, Hartco's net loss was $7.6 million, or -$0.58 per share on a diluted basis, on consolidated revenues of $209.5 million, compared to net earnings of $1.2 million, or $0.09 per share on a diluted basis, on consolidated revenues of $230.8 million for the same period last year. Consolidated Adjusted EBITDA was $1.3 million in 2012 compared to $0.9 million for the corresponding period in 2011.The financial results for the six months ended June 30, 2012 were negatively impacted by impairment charges of $9.0 million, including $4.9 million pertaining to an internal business transformation project and $4.1 million pertaining to Hartco's investment in ScreenScape. Excluding the impact of these non-recurring items, earnings for the first half of 2012 were $0.1 million."In response to challenging business conditions, rigorous cost discipline enabled us to deliver an Adjusted EBITDA of $1.3 million during the first six months of 2012, a 47% improvement compared to the same period last year," said Pat Waid. "We will maintain our emphasis on improving our operational execution and increasing our profitability throughout the remainder of the year."Financial PositionEffective management of working capital enabled Hartco to end the second quarter of 2012 with a cash position of $18.7 million and no debt.Hartco OutlookHartco will maintain its focus on enhancing performance and maximizing operating results throughout the second half of 2012, although business conditions are expected to remain challenging, with anticipated pricing and margin pressures impacting IT related procurement activities.Detailed Financial InformationDetailed financial information pertaining to Hartco's first quarter and annual results can be accessed at www.sedar.com or at www.hartco.com. The second quarter and annual 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 49 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 StatementsThis 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) Three months ended June 30Six months ended June 302012201120122011$$$$Revenues102,163115,460209,477230,809Adjusted EBITDA (1)8401,5431,287873Net (loss) earnings(4,070)879(7,628)1,239Diluted (loss) earnings per share(0.31)0.06(0.58)0.09Free cash flow (deficiency) (2)(714)(11,179)(3,542)(15,790)Adjusted free cash flow (deficiency) (3)(683)(10,065)(2,175)(14,660)Cash position18,6809,36918,6809,369(1)Adjusted EBITDA is defined as net earnings (loss) excluding financial costs, depreciation and amortization, income tax expense, non-recurring gains or losses, impairment charges, and share of results of equity investments. Adjusted EBITDA is a non-IFRS measure as defined in the MD&A.(2)Cash flow from continuing and discontinued operating activities less capital expenditures. Free Cash Flow is a non-IFRS measure as defined in the MD&A.(3)Cash flow from continuing and discontinued operating activities, less capital expenditures, net of proceeds from disposal of assets, plus net investing activities, plus net collection of loans and other assets. Adjusted Free Cash Flow is a non-IFRS measure as defined in the MD&A.FOR FURTHER INFORMATION PLEASE CONTACT: Vice-President Finance and Chief Financial OfficerHarold GervaisHartco Inc.514-354-3810514-354-8989 (FAX)hgervais@hartco.comwww.hartco.com