Despite the Recession, GBO Inc. Reduces its Loss and Maintains a Solid Balance Sheet in 2009



    STE-MARIE DE BEAUCE, QC, June 15 /CNW Telbec/ - (Note: All amounts are in
Canadian dollars.) GBO INC. ("GBO" or "the Company"; ticker symbol GBO / TSX
Venture Exchange), manufacturer of the "Bonneville" windows and doors, today
discloses its financial results for the fiscal year ended February 28, 2009.
Annual sales totalled $54.4 million, compared with $55.1 million the previous
year. This 1.2% decline (1.6% decline at a constant exchange rate) is
primarily attributable to a 17.8% decrease (19.2% at a constant exchange rate)
in exports to the United States. These amounted to $11.7 million compared with
$14.2 million in 2008, due to the mortgage crisis and severe recession which
have been affecting this market for the past two years. GBO nevertheless
maintained and even expanded its customer base by leveraging its high-end
product line in the home improvement segment, less affected than the new
construction segment. Canadian sales grew by $1.9 million or 4.6% to $42.7
million, compared with $40.8 million the previous year. This growth was
primarily achieved in Quebec where GBO increased its market share, notably
through the launch of several new products and enhancement of existing
products during the previous year, the strengthening of its sales organization
and a general improvement in customer service. In addition, the home
construction and improvement market has remained relatively stable in Quebec
since the beginning of the economic slowdown. The Ontario market has been, and
remains, more severely affected by the recession due mainly to the
difficulties encountered by the automotive industry.
    GBO recorded operating earnings (EBITDA) of $0.3 million, compared with
$0.2 million in 2008. Currency fluctuations had an average favourable impact
of $0.1 million on 2009 EBITDA. GBO notably benefited from the significant
efforts invested in recent years to lower its breakeven point by optimizing
its production and overall management. Considering the economic context,
additional initiatives were implemented in the second half of fiscal 2009 to
reduce expenses and to further align the Company's cost structure with the
seasonal fluctuations in its industry, especially by improving the flexibility
of the workforce.
    Net financial expenses posted a $0.8 million favourable variation due
mainly to the recognition of a $0.5 million exchange gain in 2009, as opposed
to a $0.4 million exchange loss in 2008. GBO closed fiscal 2009 with a net
loss of $1.4 million or $0.04 per share (basic and diluted), compared with a
net loss of $1.8 million or $0.05 per share (basic and diluted) the previous
year. The Company maintained a strong balance sheet, ending the fiscal year
with virtually no long-term debt and total net debt representing less than 14%
of shareholders' equity.

    Fourth-Quarter Financial Results
    --------------------------------

    The deterioration of the North American economic climate in the winter of
2008-2009 intensified the seasonal loss normally associated with GBO's fourth
quarter. The three-month period ended February 28, 2009 yielded a net loss of
$2.4 million or $0.07 per share (basic and diluted), compared with a net loss
of $1.8 million or $0.05 per share (basic and diluted) in the same quarter of
the previous year. Sales amounted to $6.3 million, compared with $7.9 million
in the same quarter of the previous year, due to a 21.9% decline in domestic
sales, especially in the Ontario market, and a 16.9% decline in exports to the
United States (32.6% decrease at a constant exchange rate). As the Company
maintained and even expanded its customer base over the past year, GBO's
management attributes these decreases to the economic situation, which has led
to a lower average purchasing volume per customer.

    Outlook
    -------

    "The recession that hit the global economy in the late summer of 2008
prevented GBO from achieving its primary objective for fiscal 2008-2009, which
was to resume its sales growth. However, the difficult economic context gave
us the opportunity to validate the solidity and efficiency of our business
model, as GBO not only preserved its market share, but also recruited some 50
new customers over the past year," said Interim President and Chief Executive
Officer Dennis Wood.
    The President added that management nonetheless remains cautious as to
GBO's financial outlook for fiscal 2010, in light of the current economic
context that continued to affect its first-quarter results. While the Ontario
market continues to be affected by the recession, the Quebec market remains
fairly healthy, although its relative strength is giving rise to fiercer
competition. Management believes GBO is well positioned to face this
competition, given its leadership in its traditional market and the quality of
its offering. In the United States, GBO's management has been witnessing some
positive signs in the market lately, and is of the opinion that the worst of
the real estate crisis is behind us. GBO will carry on the niche strategy
implemented in 2008-2009 to develop the Southeastern U.S. market where it
offers its distributor customers the opportunity to differentiate themselves
with distinctive products, including its wood architectural windows and
hurricane-resistant products. Management believes this high-end positioning
should contribute to mitigate the impact of the recent rise in the Canadian
dollar on GBO's competitiveness in the United States, while also meeting its
medium-term objective of reducing its seasonal sales cycle.
    "GBO's outlook is favourable in the perspective of a future economic
recovery. Our organization is structured to be competitive and profitable in a
normal market context. We have steadily expanded and enhanced our product
selection in recent years. GBO also broadened its customer base over the past
year, which will contribute to its future growth once the current crisis
abates and consumer spending on home purchases and improvements resumes. In
upcoming quarters, while further developing its markets, GBO will carry on its
efforts to continuously improve its product selection, business processes and
operational efficiency," concluded Dennis Wood.

    Employee Stock Option Grant: Correction of the Exercise Price
    -------------------------------------------------------------

    On February 5 2009, GBO announced that it had granted certain employees a
total of 285,000 stock options at an exercise price of $0.065 per unit.
However, under TSX Venture Exchange's policies, the minimum exercise price per
stock option is $0.10. Consequently, the exercise price for the 285,000 stock
options granted on February 5, 2009 has been modified, effective February 5,
2009, in order to respect the TSX Venture Exchange policies.

    Profile
    -------

    Founded in 1946, GBO Inc. is one of the leading window and door
manufacturers in Eastern Canada. The Company, which employs approximately 500
people, designs, develops, manufactures, markets and distributes an extensive
selection of high-end energy-efficient window arrangements sold primarily
under the "Bonneville" and "Polar" brands. This selection includes wood
windows and polyvinyl chloride (PVC) windows, as well as hybrid models made of
wood or PVC and aluminum. Recently, GBO launched a line of innovative
fenestration products resistant to hurricanes and other impacts. GBO also
offers exterior doors, primarily for high-end market niches. The Company sells
its windows and doors to the home improvement and construction markets in
Quebec, Ontario, the Maritimes and the 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, 2009 and February 29, 2008
    (in thousands of dollars, except per share amounts)

    -------------------------------------------------------------------------

                                                              2009      2008
                                                          --------- ---------
                                                                 $         $
    Sales                                                   54,412    55,073
    Cost of sales and operating expenses                    54,072    54,912
                                                          --------- ---------
    Operating income before the following items                340       161
                                                          --------- ---------

    Depreciation of fixed assets                             1,562     1,592
    Amortization of intangible assets                          150        94
    Amortization of deferred charges                            49        16
    Gain on disposal of fixed assets                            (5)      (21)
    Interest on long-term debt                                   6         9
    Other net financial expenses                              (173)      640
                                                          --------- ---------
                                                             1,589     2,330
                                                          --------- ---------
    Loss before income taxes                                (1,249)   (2,169)

    Income taxes
      Future                                                   187      (409)
                                                          --------- ---------
    Net loss and comprehensive income                       (1,436)   (1,760)
                                                          --------- ---------
                                                          --------- ---------
    Net loss per share
      Basic and diluted                                      (0.04)    (0.05)
                                                          --------- ---------
                                                          --------- ---------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Consolidated Deficit
    Years ended February 28, 2009 and February 29, 2008
    (in thousands of dollars)

    -------------------------------------------------------------------------

                                                              2009      2008
                                                          --------- ---------
                                                                 $         $
    Balance, beginning of year                             (23,542)  (21,782)
    Loss                                                    (1,436)   (1,760)
                                                          --------- ---------
    Balance, end of year                                   (24,978)  (23,542)
                                                          --------- ---------
                                                          --------- ---------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Consolidated Cash Flows
    Years ended February 28, 2009 and February 29, 2008
    (in thousands of dollars)

    -------------------------------------------------------------------------

                                                              2009      2008
                                                          --------- ---------
                                                                 $         $
    OPERATING ACTIVITIES
    Net loss                                                (1,436)   (1,760)
    Non-cash items
      Gain on disposal of fixed assets                          (5)      (21)
      Depreciation of fixed assets                           1,562     1,592
      Amortization of intangible assets
       and deferred charges                                    199       110
      Interest income on the note receivable                  (208)     (236)
      Future income tax                                        187      (409)
      Stock-based compensation expense                          10        24
      Changes in working capital items                        (326)      805
                                                          --------- ---------
    Cash flows from operating activities                       (17)      105
                                                          --------- ---------
    INVESTING ACTIVITIES
    Proceeds on note receivable                                562       543
    Fixed assets                                              (623)     (744)
    Disposal of fixed assets                                     5        25
    Intangible assets and deferred charges                    (139)     (535)
                                                          --------- ---------
    Cash flows from investing activities                      (195)     (711)
                                                          --------- ---------
    FINANCING ACTIVITIES
    Bank loan                                                  554      (156)
    Repayment of long-term debt                                (79)      (71)
                                                          --------- ---------
    Cash flows from financing activities                       475      (227)
                                                          --------- ---------
    Net change in cash                                         263      (833)
    Cash, beginning of year                                    287     1,120
                                                          --------- ---------
    Cash, end of year                                          550       287
                                                          --------- ---------
                                                          --------- ---------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Consolidated Balance Sheets
    February 28, 2009 and February 29, 2008
    (in thousands of dollars)

    -------------------------------------------------------------------------

                                                              2009      2008
                                                          --------- ---------
                                                                 $         $
    ASSETS
    Current assets
      Cash                                                     550       287
      Accounts receivable                                    3,830     3,456
      Income taxes receivable                                  103       103
      Inventories                                            4,045     3,665
      Prepaid expenses and other                               517       405
      Current portion of note receivable                       356       356
                                                          --------- ---------
                                                             9,401     8,272
    Note receivable                                          1,532     1,886
    Fixed assets                                            13,938    14,817
    Fixed assets held for sale                                 831       870
    Intangible assets                                          471       611
    Deferred charges                                           238       158
    Future income taxes                                      3,076     3,263
                                                          --------- ---------
                                                            29,487    29,877
                                                          --------- ---------
                                                          --------- ---------
    LIABILITIES
    Current liabilities
      Bank loan                                              3,658     3,104
      Accounts payable and accrued liabilities               5,806     5,266
      Instalments on long-term debt                             13        77
                                                          --------- ---------
                                                             9,477     8,447
    Long-term debt                                              17        11
                                                          --------- ---------
                                                             9,494     8,458
                                                          --------- ---------
    SHAREHOLDERS' EQUITY
    Capital stock                                           44,526    44,526
    Contributed surplus                                        445       435
    Deficit                                                (24,978)  (23,542)
                                                          --------- ---------
                                                            19,993    21,419
                                                          --------- ---------
                                                            29,487    29,877
                                                          --------- ---------
                                                          --------- ---------

    -------------------------------------------------------------------------
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    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.




For further information:

For further information: Dennis Wood, Interim President and Chief
Executive Officer, (418) 387-7723; Source: GBO Inc.

Organization Profile

GBO INC.

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