MONTREAL, QUEBEC--(Marketwired - March 20, 2015) - Hartco Inc. (TSX:HCI) today announced its financial results for the three months and year ended December 31, 2014.
Consolidated results for the three months ended December 31, 2014
Hartco Inc. ("Hartco" or the "Company") posted consolidated revenues of $59.5 million for the three months ended December 31, 2014, compared to $69.6 million for the same period last year, and a net loss of $4.9 million or $0.37 per share on a basic basis compared to net earnings of $0.3 million or $0.03 per share on a basic basis for the corresponding period in 2013. The Company recorded a goodwill impairment charge of $4.4 million in the fourth quarter of 2014. Excluding the impairment charge, the fourth quarter net loss was $0.5 million, or $0.04 per share on a basic basis, compared to net earnings of $0.3 million, or $0.03 per share on a basic basis, for the corresponding period in 2013.
"Fourth quarter results were negatively impacted by weak demand, particularly in the enterprise systems and software segments." said Pat Waid, Hartco's President and Chief Operating Officer.
Consolidated results for the year ended December 31, 2014
Hartco posted consolidated revenues of $249.0 million for the year ended December 31, 2014, compared to $279.7 million in 2013. The net loss for 2014 was $3.6 million, or $0.28 per share on a basic basis, compared to a net loss of $3.3 million, or $0.25 per share on a basic basis, in 2013. Excluding the impairment charge, the Company had net earnings of $0.8 million, or $0.06 per share on a basic basis, compared to a net loss of $3.3 million, or $0.25 per share on a basic basis, for the corresponding period in 2013.
Financial Position
Hartco ended the fourth quarter of 2014 with a cash position of $34.6 million and no debt.
Hartco Outlook
The Company will remain focused on adapting to challenging business conditions and on improving operating results.
Detailed Financial Information
Detailed financial information pertaining to Hartco's quarterly and annual results can be accessed at www.sedar.com or at www.hartco.com. 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 www.hartco.com or www.metafore.ca.
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").
| FINANCIAL HIGHLIGHTS |
| (In thousands of dollars, except per share amounts) |
| |
| |
Q4 2014 |
|
Q4 2013 |
|
YTD 2014 |
|
YTD 2013 |
|
| Revenues |
59,541 |
|
69,571 |
|
249,019 |
|
279,747 |
|
| Adjusted EBITDA (loss) |
(777 |
) |
(863 |
) |
(3,299 |
) |
(6,883 |
) |
| Net loss from continuing operations |
(4,722 |
) |
(1,457 |
) |
(7,709 |
) |
(7,188 |
) |
| Net (loss) earnings from discontinued operations |
(182 |
) |
1,792 |
|
4,064 |
|
3,876 |
|
| Net earnings (loss) |
(4,904 |
) |
335 |
|
(3,645 |
) |
(3,312 |
) |
| Basic earnings (loss) per share |
(0.37 |
) |
0.03 |
|
(0.28 |
) |
(0.25 |
) |
| Free cash flow |
|
|
|
|
1,204 |
|
1,072 |
|
| Adjusted free cash flow |
|
|
|
|
3,281 |
|
1,837 |
|
| Cash |
|
|
|
|
34,551 |
|
29,434 |
|
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 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 is as follows:
Adjusted EBITDA reconciliation
| |
|
|
|
|
|
|
|
|
| |
Q4 2014 |
|
Q4 2013 |
|
YTD 2014 |
|
YTD 2013 |
|
| Net loss from continuing operations |
(4,722 |
) |
(1,457 |
) |
(7,709 |
) |
(7,188 |
) |
| Adjusted for: |
|
|
|
|
|
|
|
|
| |
Income tax recovery |
(322 |
) |
319 |
|
(322 |
) |
(312 |
) |
| |
Share of earnings of equity investments (net of income tax) |
(467 |
) |
(317 |
) |
(1,303 |
) |
(1,453 |
) |
| |
Write-off of goodwill |
4,428 |
|
- |
|
4,428 |
|
- |
|
| |
Net financial costs |
(74 |
) |
82 |
|
111 |
|
177 |
|
| |
Depreciation and amortization (1) |
380 |
|
510 |
|
1,496 |
|
1,893 |
|
| Adjusted EBITDA (loss) |
(777 |
) |
(863 |
) |
(3,299 |
) |
(6,883 |
) |
| |
|
|
|
|
|
|
|
|
| (1) |
Depreciation and amortization is allocated to cost of goods sold, direct expenses, marketing and selling expenses, and general administrative expenses in the Statements of Loss and Comprehensive Loss. |
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:
- financial income; and
- total capital expenditures as reported in accordance with IFRS.
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:
- financial income;
- total capital expenditures as reported in accordance with IFRS;
- dividends received from equity investments; and
- the net decrease (increase) in long-term receivables.
The reconciliation of cash flow from operations to Free Cash Flow and Adjusted Free Cash Flow is as follows:
Free Cash Flow and Adjusted Free Cash Flow reconciliation
| |
|
|
Free Cash Flow and Adjusted Free Cash Flow Reconciliation |
Year Ended
December 31, |
|
| (in thousands of dollars) |
2014 |
|
2013 |
|
| Cash flow used in operating activities |
922 |
|
1,250 |
|
| Financial income |
319 |
|
279 |
|
| Additions to property and equipment and intangible assets |
(37 |
) |
(457 |
) |
| Free cash flow |
1,204 |
|
1,072 |
|
| Dividends received from equity investments |
2,000 |
|
600 |
|
| Net decrease in long-term receivables |
77 |
|
165 |
|
| Adjusted free cash flow |
3,281 |
|
1,837 |
|