MONTREAL, QUEBEC — (Marketwired) — 11/12/14 — Hartco Inc. (TSX: HCI) today announced its financial results for the three and nine months ended September 30, 2014.
Consolidated results for the three months ended September 30, 2014
Hartco Inc. (“Hartco”) posted consolidated revenues of $55.1 million and a net loss of $0.8 million or -$0.06 per share on a diluted basis for the three months ended September 30, 2014, compared to consolidated revenues of $61.6 million and a net loss of $2.0 million or -$0.15 per share on a diluted basis, for the corresponding period in 2013.
“Efforts to increase gross profit margins and reduce operating costs enabled the company to reduce its operating loss by more than 70% versus the comparable quarter last year.” said Pat Waid, Hartco–s President and Chief Operating Officer. “Weak demand for data centre technologies and related professional services contributed to disappointing revenues.”
Consolidated results for the nine months ended September 30, 2014
Hartco posted consolidated revenues of $189.5 million for the nine months ended September 30, 2014, compared to $210.2 million for the same period last year, and net earnings of $1.3 million or $0.09 per share on a diluted basis compared to a net loss of $3.6 million or – $0.28 per share on a diluted basis, for the corresponding period in 2013.
Effective June 30, 2014, the Company sold assets related to its franchising business for proceeds of $3.1 million before closing adjustments and other closing costs, resulting in an after-tax gain of $2.9 million.
Financial Position
Hartco ended the third quarter of 2014 with a cash position of $29.9 million and no debt.
Hartco Outlook
The Company will remain focused on adapting its business model to improve operating performance in response to emerging trends and challenging business conditions over the coming months.
Detailed Financial Information
Detailed financial information pertaining to Hartco–s quarterly and annual results can be accessed at or at . The quarterly 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 and is the parent company of Metafore Technologies Inc. As one of Canada–s leading IT solution providers, Metafore designs, supplies, installs and supports information technology solutions to private and public sector organizations of every size across Canada. For more information, please visit or .
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 (“MD&A”).
Non-IFRS Financial Measures
Non-IFRS financial measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other entities. In the following paragraphs, we have provided a description of our non-IFRS and have reconciled these amounts to IFRS measures. How the non-IFRS measures are used by the Company are described in the captions below.
Adjusted EBITDA
Adjusted EBITDA is a non-IFRS financial measure. Adjusted EBITDA is used by management to evaluate the financial and operating performance of the business at a consolidated level and the contribution of the Company–s segments. Management believes that Adjusted EBITDA provides a better indication of the ongoing financial performance of the Company.
The Company defines Adjusted EBITDA as net (loss) earnings from continuing operations excluding financial costs, depreciation and amortization, income tax expense (recovery), non-recurring gains or losses, impairment charges and the share of results of equity investments.
The reconciliation of Adjusted EBITDA from net loss from continuing operations is as follows:
Adjusted EBITDA reconciliation
Free Cash Flow and Adjusted Free Cash Flow
Free Cash Flow and Adjusted Free Cash flow are non-IFRS measures and are used as indicators of financial strength and performance. Because they exclude many items included in the financial statements, they should not be used as a measure of the Company–s liquidity. Accordingly, investors are encouraged to use IFRS measures when evaluating the Company–s financial performance or liquidity.
The Company uses Free Cash Flow to determine its continuing capacity to generate discretionary cash from operations after using cash to maintain or expand its asset base. It does not represent the cash flow in the period available for management to use at its discretion, which may be affected by other sources and non-discretionary use of cash.
Free Cash Flow is defined as cash flows from operating activities as reported in accordance with IFRS, less adjustments for:
Capital expenditures are defined as cash outlays, capital in nature, required to maintain the business at its current operating capacity and efficiency level, including additions to intangible assets.
The Company believes the use of Adjusted Free Cash Flow is meaningful as the use of this financial measure provides the Company and the users of its financial statements with supplemental information about the impact on the Company–s cash flows from the items specified below. Adjusted
Free Cash Flow is a measure of liquidity that management uses in its business as an alternative to net cash provided by (used in) operating activities.
Adjusted Free Cash Flow is defined as cash flows from operating activities as reported in accordance with IFRS, less adjustments for:
The reconciliation of cash flow from operations to Free Cash Flow and Adjusted Free Cash Flow is as follows:
Contacts:
Michael Lemieux
Chief Financial Officer
Hartco Inc.
514-354-3810
514-354-8989 (FAX)
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