Following the Sale of Two Divisions to Concentrate on its Core Business, GBO
Inc. Closes the Second Quarter with Net Earnings of $3.5 Million and a
Virtually Debt-Free Balance Sheet

STE-MARIE DE BEAUCE, QC, Oct. 27 /CNW Telbec/ - (Note: All amounts are in Canadian dollars.) During the three-month period ended August 31, 2009, GBO INC. ("GBO" or "the Company"; ticker symbol GBO/TSX Venture Exchange), manufacturer of the "Bonneville" windows and doors, recorded sales of $11.3 million, compared with $17.6 million in the same period of the previous year. This decline is mainly attributable to the mid-quarter disposal of two divisions, as sales from continuing operations, namely the Bonneville division ("Bonneville"), operating from the Ste-Marie de Beauce plant and specializing exclusively in wood window arrangements, doors and accessories, decreased by only 6% in light of the current economic context. Bonneville's Canadian sales amounted to $8.8 million, down from $14.2 million. The Ontario market remained particularly affected by the economic downturn, given its exposure to the weakened automotive industry. In Quebec, the home construction and improvement market remained relatively stable. The Company's U.S. sales, which continued to be affected by challenging economic conditions, decreased to $2.4 million from $3.4 million in the second quarter of the previous year this despite the fact that Bonneville maintained and even expanded its customer base in its targeted territories in the United States over the past year.

GBO recorded operating earnings before amortization, interest and income taxes (or EBITDA) of $0.5 million during the second quarter, down from $0.9 million a year earlier. Besides the disposal of two divisions, the decline in EBITDA is primarily attributable to the impact of the economic slowdown on Bonneville's sales in Ontario and the United States. GBO is carrying on its continuous optimization efforts to further lower its breakeven point and better align its cost structure with the seasonal fluctuations in its industry, notably through improved flexibility of its labour force. In addition, in the weeks that followed the sale of the two divisions, GBO undertook to restructure and streamline its organization in order to better reflect the new reality of its more focused and specialized business. GBO realized a $4.7 million unusual gain on the sale of the two divisions effective July 13, 2009. Therefore, GBO posted quarterly net earnings of $3.5 million or $0.11 per share (basic and diluted), compared with net earnings of $0.3 million or $0.01 per share in the same quarter of fiscal 2009.

During the six-month period ended August 31, 2009, sales declined to $20.9 million from $29.8 million a year earlier. Canadian sales amounted to $17.0 million compared to $23.8 million. Exports to the United States totalled $3.9 million, compared with $6.0 million in the first half of the previous year. GBO incurred a year-to-date operating loss (i.e. negative EBITDA) of $0.5 million, as opposed to positive EBITDA of $0.6 million a year earlier. Including the $4.7 million unusual gain realized in the second quarter, GBO posted net earnings of $2.3 million or $0.07 per share (basic and diluted), compared with a net loss of $0.2 million or $0.01 per share in the same period of the previous year.

Furthermore, thanks to the $12.5 million proceeds from the sale of the two divisions, of which $11.5 million has been received thus far, GBO closed the second quarter with an excellent financial position, marked by short-term available cash of $8.4 million and virtually no debt.

    
    Outlook
    -------
    

Management is cautious as to GBO's outlook for fiscal 2010, as demand remains weak and volatile while competition is fierce, especially in the United States and Ontario. The Quebec market is somewhat stronger, although highly competitive also. Management believes that Bonneville is well positioned to face this competition as it pursues a niche and differentiation strategy in the United States and Ontario, and enjoys significant leadership in Quebec as a supplier of mid-range and high-end wood products. Across its markets, Bonneville can bank on its selection of top-performing, innovative and high-quality products - all of which are certified in accordance with the highest North American standards - excellent customer service and strong warranty program. Its solid financial health also represents an advantage within the market.

GBO expects its profit margins to benefit from the increased added value of Bonneville's sales mix as a result of its focus on wood products, the continuing organizational restructuring and the ongoing operational optimization efforts aimed at further lowering the Company's breakeven point. Having optimized its overall operations in recent years, GBO's organization is now structured to be competitive and profitable in a normal market context.

Over the short, medium and long term, GBO's key objectives are to grow its sales and alleviate the seasonal cycle of its business, notably through the targeted development of markets along the U.S. East Coast where it expects to achieve more than half of its sales on an annualized basis. To this end, GBO broadened its representation in the Southeastern United States over the last fiscal year and launched its new "Impact" line of hurricane-resistant products - which it has had certified in the United States. Furthermore, the Company has undertaken to develop an external customer base for its wood processing operations in order to eventually build this area of expertise into a revenue and profit centre.

    
    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 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.

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.

The TSX Venture Exchange accepts no responsibility for the adequacy or accuracy of this press 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.

    
    CONSOLIDATED EARNINGS AND COMPREHENSIVE INCOME
    Period ended August 31, 2009
    (unaudited) (in thousands of dollars, except per share amounts)

                                    Three months            Six months
                           ------------------------ -------------------------
                                   2009        2008        2009        2008
                           ------------- ----------- ----------- ------------
                                      $           $           $           $

    Sales                        11,251      17,571      20,924      29,805
    Cost of sales and
     operating expenses          10,724      16,651      21,437      29,195
                           ------------- ----------- ----------- ------------

    Operating income (loss)
     before the following
     items                          527         920        (513)        610

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

    Depreciation of fixed
     assets                         317         387         712         769
    Amortization of
     intangible assets               34          37          69          69
    Amortization of
     deferred charges                24          13          42          13
    Gain on disposal of
     fixed assets                    (5)          -          (8)          -
    Interest on long-term
     debt                             1           3           2           5
    Other financial
     expenses                         4         (16)        217          58
                           ------------- ----------- ----------- ------------

                                    375         424       1,034         914
                           - - - - - - -  - - - - -  - - - - - -  - - - - - -

    Earnings (loss) before
     unusual item and
     income taxes                   152         496      (1,547)       (304)
    Unusual item                  4,715           -       4,715           -
                           ------------- ----------- ----------- ------------
    Earnings (loss) before
     income taxes                 4,867         496       3,168        (304)
    Future income taxes           1,337         160         878         (97)
                           ------------- ----------- ----------- ------------


    Net earnings (net loss)
     and comprehensive
     income                       3,530         336       2,290        (207)
                           ------------- ----------- ----------- ------------
                           ------------- ----------- ----------- ------------

    Earnings (loss) per
     share and diluted
     earnings (loss) per
     share                         0.11        0.01        0.07       (0.01)
                           ------------- ----------- ----------- ------------
                           ------------- ----------- ----------- ------------

    Weighted average number
     of common shares
     outstanding             32,676,569  32,676,569  32,676,569  32,676,569



    CONSOLIDATED DEFICIT
    Period ended August 31, 2009
    (unaudited) (in thousands of dollars)

                                    Three months            Six months
                           ------------------------ -------------------------
                                   2009        2008        2009        2008
                           ------------- ----------- ----------- ------------
                                      $           $           $           $
    Deficit beginning of
     period                     (26,218)    (24,085)    (24,978)    (23,542)
    Net earnings (net loss)       3,530         336       2,290        (207)
                           ------------- ----------- ----------- ------------
    Deficit, end of period      (22,688)    (23,749)    (22,688)    (23,749)
                           ------------- ----------- ----------- ------------
                           ------------- ----------- ----------- ------------



    CONSOLIDATED CASH FLOWS
    Period ended August 31, 2009
    (unaudited) (in thousands of dollars)

                                    Three months            Six months
                           ------------------------ -------------------------
                                   2009        2008        2009        2008
                           ------------- ----------- ----------- ------------
                                      $           $           $           $
    OPERATING ACTIVITIES
    Net earnings (net loss)       3,530         336       2,290        (207)
      Non-cash items
        Unusual item             (4,715)          -      (4,715)          -
        Gain on disposal
         of fixed assets             (5)          -          (8)          -
        Depreciation of
         fixed assets               317         387         712         769
        Amortization of
         intangible assets
         and deferred
         charges                     58          50         111          82
        Stock-based
         compensation
         expense                      4           4           7           6
        Future income taxes       1,337         160         878         (97)
        Changes in working
         capital items              985      (1,151)        360      (3,847)
                           ------------- ----------- ----------- ------------

    Cash flows from
     operating activities         1,511        (214)       (365)     (3,294)
                           ------------- ----------- ----------- ------------

    INVESTING ACTIVITIES
      Cash proceeds on
       the disposal of
       assets, net of
       related charges           10,503           -      10,503           -
      Fixed assets                  (52)       (165)       (158)       (395)
      Disposal of fixed
       assets                        20           -          25           -
      Note receivable               100         118         176         168
      Intangible assets &
       deferred charges               -          (6)         24         (11)
                           ------------- ----------- ----------- ------------

    Cash flows from
     investing activities        10,571         (53)     10,570        (238)

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

    FINANCING ACTIVITIES
      Bank loan                  (6,211)      1,444      (3,658)      4,866
      Repayment of
       long-term debt                (7)          3         (33)        (10)
                           ------------- ----------- ----------- ------------

    Cash flows from
     financing activities        (6,218)      1,447      (3,691)      4,856

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

    Net increase in cash
     and cash equivalents         5,864       1,180       6,514       1,324
    Cash and cash
     equivalents,
     beginning of period          1,200         431         550         287
                           ------------- ----------- ----------- ------------
    Cash and cash
     equivalents, end
     of period                    7,064       1,611       7,064       1,611
                           ------------- ----------- ----------- ------------
                           ------------- ----------- ----------- ------------
    CASH AND CASH
     EQUIVALENTS
    Cash                          2,064       1,611       2,064       1,611
    Term deposit                  5,000           -       5,000           -
                           ------------- ----------- ----------- ------------
                                  7,064       1,611       7,064       1,611
                           ------------- ----------- ----------- ------------
                           ------------- ----------- ----------- ------------



    CONSOLIDATED BALANCE SHEET
    (in thousands of dollars)

                                        August 31, 2009   February 28, 2009
                                      ------------------  -------------------
                                                      $                   $
    ASSETS                                   (unaudited)

    Current assets
      Cash                                        2,064                 550
      Term deposit                                5,000                   -
      Accounts receivable                         5,562               3,830
      Income taxes receivable                       103                 103
      Inventories                                 2,496               4,045
      Prepaid expenses and other                    399                 517
      Current portion of note
       receivable                                 1,356                 356
                                      ------------------  -------------------
                                                 16,980               9,401

    Note receivable                               1,356               1,532
    Fixed assets                                  9,028              13,938
    Fixed assets held for sale                      813                 831
    Intangible assets                               387                 471
    Deferred charges                                171                 238
    Future income taxes                           2,198               3,076
                                      ------------------  -------------------
                                                 30,933              29,487
                                      ------------------  -------------------
                                      ------------------  -------------------
    LIABILITIES

    Current liabilities
      Bank loan                                       -               3,658
      Accounts payable                            8,554               5,806
      Instalments on long-term debt                  38                  13
                                      ------------------  -------------------
                                                  8,592               9,477

    Long-term debt                                   51                  17
                                      ------------------  -------------------

                                                  8,643               9,494
                                      ------------------  -------------------

    SHAREHOLDER'S EQUITY

    Capital stock                                44,526              44,526
    Contributed surplus                             452                 445
    Deficit                                     (22,688)            (24,978)
                                      ------------------  -------------------

                                                 22,290              19,993
                                      ------------------  -------------------

                                                 30,933              29,487
                                      ------------------  -------------------
                                      ------------------  -------------------
    

SOURCE GBO INC.

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

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GBO INC.

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