GBO Inc. finishes its year with confidence

STE-MARIE DE BEAUCE, QC, June 28, 2011 /CNW Telbec/ - (Note: All amounts are in Canadian dollars.) For the fiscal year ended February 28, 2011, GBO Inc. ("GBO" or the "Company") (TSXV: GBO), through its "Bonneville" windows and doors division, had sales totalling $18.9 million, compared with $29.8 million the previous year. This 36.6% decline (34.2% at a constant exchange rate) is attributable only to Bonneville's disposal of two divisions during the second quarter of the fiscal year ended February 28, 2010, as sales of Bonneville's continuing operations, namely the Ste-Marie de Beauce plant, increased by 9%, or almost $1.5M. More specifically, an analysis of sales for the last two months of this fiscal year compared with the same period last year shows a significant 68% increase. This improvement is primarily due to the deployment of the sales force in the United States; as a result of which the percentage of sales from the United States increased to 53% during the last quarter of this fiscal year compared to 42% for the year ended February 28, 2011 and 24% for the year ended February 28, 2010.

For the first time this year, Bonneville was able to alleviate the impact of the seasonal cycle of its business by preserving its position in traditional markets combined with the opening of new customers in the United States, particularly in the South-East. These new customers have needs which are equally spread out over a 12-month period and contributed greatly to the balancing out of sales. This has had a positive effect on the stability and efficiency of our workforce. "This is proof-positive that our sales strategy deployed over a year ago, coupled with our efforts to reduce operating costs, was the catalyst needed to reinvigorate the company" declared Christopher Wood, Chairman and Chief Executive Officer of GBO.

Over the course of the last quarters, traditional markets of Quebec and Ontario have been hit by an economic slowdown. While this slowdown has hit much later than the one in the United States, a major recovery is not expected any time soon. However, contracts for residential complexes in Ontario may help reverse the expected trend. Sales efforts, particularly in the United States, have been intense and the sales volumes from the last months have clearly reflected this.

GBO closed fiscal 2011 with a loss before income taxes and unusual items of $4.6 million and a net loss of $4.6 million or $0.20 per share (basic and diluted), compared with a loss before income taxes and unusual items of $3.2 million and a net profit of $0.7 million or $0.02 per share (basic and diluted) for the previous fiscal year.

Results for the fourth quarter

For the three month period ended February 28, 2011, sales at GBO's Bonneville division increased by $1.0 million or 37.8% to $3.8 million, compared with $2.8 million in the same quarter of the previous year. At a constant exchange rate between the Canadian and U.S. dollars, sales increased by close to 42.1%. Domestic sales posted a $0.2 million or 16.3% increase, while exports to the United States increased by $0.8 million or 64.8% (74.3% increase at a constant exchange rate).

However, despite a sales increase of 37.8%, the Company recorded negative EBITDA of $0.8 million in the fourth quarter of 2011, compared with negative EBITDA of $0.7 million in the same period of 2010. The quarterly net loss amounted to $1.9 million or $0.11 per share (basic and diluted), compared with a net loss of $1.4 million or $0.04 per share (basic and diluted) (including unusual items) in the same quarter of the previous year.

Outlook

Management is cautious as to the outlook for fiscal 2012 given the current economic context although it believes that the Company benefits from certain advantages to continue to weather the uncertainty in the marketplace. Such advantages include its solid balance sheet, its lower breakeven point as a result of the initiatives taken in recent years and a more flexible cost structure, partly as a result of the changes introduced in labor management during the past fiscal year as well as the deployment of a new supply strategy.

It is expected that the Quebec and Ontario markets will remain stable. For its part, these markets continue to perform well, although their relative strength is giving rise to fiercer competition. The Company is well positioned to face this competition, given its leadership, its higher end positioning and the quality of the solutions it offers, which combine a broad selection of top performing, innovative and high quality products, excellent customer service and one of the best warranty programs in the industry.

In the United States, management has been witnessing some positive signs in the market, and is of the opinion that the worst of the real estate crisis is behind us. In addition, although a stable Canadian dollar in relation to the US dollar can weaken Canadian exporters competitiveness when selling prices are a predominant factor, management believes this will continue to be alleviated by the fact that a niche strategy to develop the Southeastern US market has been adopted, where it banks on its selection of high-end wood products (all of which are certified in accordance with the highest North American Standards), and where it offers its customers the opportunity to differentiate themselves with distinctive products. Finally, the cost of raw materials are expected to be stable over the upcoming year.

Profile

Founded in 1946, GBO Inc. is an important Canadian window and door manufacturer. The Company designs, develops, manufactures, markets and distributes a selection of mid-range and high-end energy-efficient wood window arrangements, doors and accessories, sold primarily under the "Bonneville" and "Polar" brands. Recently, GBO launched a line of innovative fenestration products resistant to hurricanes and other impacts. The Company sells its windows and doors to the home improvement and construction markets mainly in Quebec, Ontario, the Maritimes and the Eastern and Southern eastern United States. GBO mainly serves independent building material distributors, distributors specializing in windows, doors and millwork, certain retailers, as well as construction and renovation contractors.

Consolidated Earnings and Comprehensive Income
Years ended February 28, 2011 and 2010
(in thousands of dollars, except per share amounts)
 
       
  2011   2010
  $   $
Sales 18,870   29,782
Cost of sales and operating expenses 21,844   30,962
Operating loss before the following items (2,974)
(1,180)
       
Depreciation and write-down of fixed assets 952   1,593
Amortization of intangible assets 299   182
Gain on disposal of fixed assets (6)   (6)
Interest on long-term debt 18   13
Other net financial expenses 395   189
  1,658   1,971
Loss before unusual item and income taxes (4,632)   (3,151)
Unusual item - gain on disposal of assets (Note 4)     4,591
Earnings (loss) before income taxes (4,632)   1,440
       
Income taxes (Note 5)      
  Current     74
  Future     698
      772
Net earnings (loss) and comprehensive income (4,632)   668
       
Net earnings (loss) per share (Note 6)      
  Basic and diluted (0.20)   0.02

     
       
Consolidated Deficit
Years ended February 28, 2011 and 2010
(in thousands of dollars)
       
       
  2011   2010
  $   $
Consolidated Deficit      
Balance, beginning of year (24,310)   (24,978)
Net earnings (loss) (4,632)   668
Balance, end of year (28,942)   (24,310)




Consolidated Cash Flows
Years ended February 28, 2011 and 2010
(in thousands of dollars)
 
       
  2011   2010
OPERATING ACTIVITIES $   $
Net earnings (loss) (4,632)   668
Non-cash items      
  Unusual gain on disposal of assets  (Note 4)     (4,591)
  Gain on disposal of fixed assets (6)   (6)
  Depreciation and write-down of fixed assets 952   1,593
    Amortization of intangible assets 299   182
  Interest income on the note receivable 263   (165)
  Future income tax     698
  Stock-based compensation expense 8   10
  Changes in working capital items  (Note 7) 343   (614)
Cash flows from operating activities (2,773)   (2,225)
INVESTING ACTIVITIES      
Disposal of assets in cash, net of expenses incurred  (Note 4)     10,379
Proceeds on note receivable 1,160   522
Proceed on other receivables 22   22
Fixed assets (409)   (249)
Disposal of fixed assets 15   30
Intangible assets (259)   (176)
Cash flows from investing activities 529   10,528
FINANCING ACTIVITIES      
Bank loan     (3,658)
Advance from a company controlled by a director 492    
Repayment of long-term debt (89)   (99)
Issue of common shares 1   1
Redemption of common shares and preferred shares (3,163)    
Cash flows from financing activities (2,759)   (3,756)
Net change in cash and cash equivalents (5,003)   4,547
Cash and cash equivalents, beginning of year 5,097   550
Cash and cash equivalents, end of year 94   5,097
       
CASH AND CASH EQUIVALENTS      
Cash 94   97
Term deposit     5,000
  94   5,097
       

Consolidated Balance Sheets
February 28, 2011 and 2010
(in thousands of dollars)
 
       
  2011   2010
ASSETS $   $
Current assets      
  Cash 94   97
  Term deposit, 0.1%, maturing on March 1, 2010     5,000
  Accounts receivable  (Note 8) 2,449   2,091
  Note receivable  (Note 4)     1,000
  Income taxes receivable     30
  Inventories  (Note 9) 2,464   2,436
    Prepaid expenses and other 189   288
  Current portion of note receivable 200   200
  5,396   11,142
Note receivable  (Note 10) 908   1,331
Fixed assets  (Note 11) 8,626   9,157
Intangible assets  (Note 12) 603   643
Future income taxes  (Note 5) 2,378   2,378
  17,911   24,651
LIABILITIES      
Current liabilities      
  Advance from a company controlled by a director,
12%, redeemable on demand
492    
  Accounts payable and accrued liabilities 4,058   3,825
  Customer deposit 389    
  Instalments on long-term debt 69   85
  5,008   3,910
Long-term debt  (Note 13) 17   69
  5,025   3,979
       
SHAREHOLDERS' EQUITY      
Capital stock  (Note 14) 23,985   44,527
Contributed surplus 17,843   455
Deficit (28,942)   (24,310)
  12,886   20,672
  17,911   24,651
 

The statements set forth in this press release that describe GBO's objectives, projections, estimates, expectations or forecasts may constitute forward looking statements within the meaning of securities legislation. GBO would like to point out that, by their very nature, forward-looking statements involve a number of risks and uncertainties such that actual results or the measures it adopts could therefore differ materially from those indicated or underlying these forward-looking statements, or could have an impact on the degree of realization of a particular projection. There can be no assurance as to the materialization of the results, performance or achievements as expressed or implied by the forward-looking statements. Unless required to do so pursuant to applicable securities legislation, GBO's management assumes no obligation as to the updating or revision of the forward-looking statements as a result of new information, future events or other changes.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. This press release contains forward-looking statements based on the Company's the current outlook regarding the future. Such information involves a number of risks, uncertainties and assumptions. Actual results and events could differ materially from those indicated or underlying the forward-looking statements. 

 

 

SOURCE GBO INC.

For further information:

Source :   GBO Inc.
Contact :
Christopher M. Wood, Chairman of the Board and Chief Executive Officer
(418) 387-7723

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GBO INC.

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