GBO Inc. solidifies its position despite a difficult market
STE-MARIE DE BEAUCE, QC, July 12 /CNW Telbec/ - (Note: All amounts are in Canadian dollars.) For the three months ended May 31, 2010, GBO INC. ("GBO" or "the Company", symbol GBO / TSX Venture), a manufacturer of windows and doors "Bonneville", had sales of $ 4.6 million compared to $ 9.7 million in the same period last year. This decline is attributable to the divestiture of two divisions in the middle of the second quarter a year earlier. Sales from continuing operations came from the Bonneville division (Bonneville) which specializes exclusively in the manufacture of wooden windows, doors and accessories and operates from its plant in Ste-Marie de Beauce. However, sales of wood products of the Company have increased by about 60% compared to the same quarter last year. Canadian sales of Bonneville totalled $ 2.7 million compared to $ 8.2 million. The Ontario market is recovering slowly and the construction sector is rebounding compared to the manufacturing sector that has remained relatively stable. In Quebec, the Company has continued to solidify its market position and this has led to a significant increase in sales of wood products compared to the same quarter last year.
The sales in the United States are on track and the deployment of the new strategy for the American mid to high-end wood window market has begun to show gains. The sales force now including the Southeast United States has developed new business relationships with significant customers. Sales were $ 2.0 million compared to $ 1.5 million in the first quarter of last year.
GBO recorded an operating loss (or negative EBITDA) of $ 0.8 million in the first quarter of fiscal 2011, compared with a negative EBITDA of $ 1.0 million last year. Despite the fact that the first quarter are always difficult months for income, efforts to reduce costs of operations have been deployed during the past year and have continued their positive effects on outcomes and thereby contributed lowering the breakeven point of the Company. GBO ended the first quarter with a net loss before tax of $ 1.0 million and a net loss of $ 0.8 million or ($ 0.02) per share (basic and diluted) compared to a net loss of $ 1.2 million or ($ 0.04) per share (basic and diluted) in the same quarter of fiscal 2010.
Outlook -------
In the U.S. we continue to receive positive signals from the market and from our sales force which is more widely deployed. We are continuing our strategy to penetrate niche markets in the South eastern U.S., where we can offer to our customers the ability to differentiate themselves with our high performance architectural windows, including our selection of hurricane-resistant products called "Storm Buster".
While our traditional Canadian markets in Quebec and Ontario grew, the Company will deploy over the next quarter a highly targeted advertising campaign to publicize their products to consumers, retailers and architects. We will take this opportunity to promote a more contemporary image that will align better with our strategy of promoting our high end products. This strategy will continue to improve our market share in these key areas and allow us to validate our new marketing concepts that will eventually be extended to other sectors of the market.
We will also begin the implementation of our new management system (ERP / MRP), where sustained efforts of our staff will be required to contribute to the success of this project with a full integration expected at the end of last quarter the current year. Meanwhile, the Company will operate alongside with its existing system, in order to avoid all risks associated with this type of operation. It will be transparent to our customers.
Moreover, the arrival in the last days of the first quarter of the new Vice President of Operations has certainly help solidify the current team and allow other leaders of Company to focus on their strategic activities.
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.
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.
GBO INC. CONSOLIDATED EARNINGS AND COMPREHENSIVE INCOME Period ended May 31, 2010 (unaudited)(in thousands of dollars, except per share amounts) Three months ----------------------- 2010 2009 ----------- ----------- $ $ Sales 4,626 9,673 Cost of sales and operating expenses 5,471 10,713 ----------- ----------- Operating loss before the following items (845) (1,040) ----------- ----------- Depreciation of fixed assets 226 394 Amortization of intangible assets 57 53 Loss (gain) on disposal of fixed assets 1 (3) Interest on long-term debt 6 1 Other financial expenses (income), net (87) 213 ----------- ----------- 203 658 - - - - - - - - - - - - Loss before income taxes (1,048) (1,698) Future income taxes (288) (458) ----------- ----------- Net loss and comprehensive income (760) (1,240) ----------- ----------- ----------- ----------- Loss per share and diluted loss per share (0.02) (0.04) ----------- ----------- ----------- ----------- GBO INC. CONSOLIDATED DEFICIT Period ended May 31, 2010 (unaudited)(in thousands of dollars) Three months ----------------------- 2010 2009 ----------- ----------- $ $ Deficit, beginning of period (24,310) (24,978) Net loss (760) (1,240) ----------- ----------- Deficit, end of period (25,070) (26,218) ----------- ----------- ----------- ----------- GBO INC. CONSOLIDATED CASH FLOWS Period ended May 31, 2010 (unaudited)(in thousands of dollars) Three months ----------------------- 2010 2009 ----------- ----------- $ $ OPERATING ACTIVITIES Net loss (760) (1,240) Non-cash items Loss (gain) on disposal of fixed assets 1 (3) Depreciation of fixed assets 226 394 Amortization of intangible assets 57 53 Stock-based compensation expense 1 3 Future income taxes (288) (458) Changes in working capital items (910) (625) ----------- ----------- Cash flows from operating activities (1,673) (1,876) - - - - - - - - - - - - INVESTING ACTIVITIES Fixed assets (152) (106) Disposal of fixed assets 7 5 Note receivable 36 76 Intangible assets (164) 24 ----------- ----------- Cash flows from investing activities (273) (1) - - - - - - - - - - - - FINANCING ACTIVITIES Bank loan - 2,553 Redemption of shares (15) - Repayment of long-term debt (22) (26) ----------- ----------- Cash flows from financing activities (37) 2,527 ----------- ----------- Net increase (decrease) in cash and cash equivalents (1,983) 650 Cash and cash equivalents, beginning of period 5,097 550 ----------- ----------- Cash and cash equivalents, end of period 3,114 1,200 ----------- ----------- ----------- ----------- CASH AND CASH EQUIVALENTS 114 1,200 Cash 3,000 - ----------- ----------- Term deposit 3,114 1,200 ----------- ----------- ----------- ----------- GBO INC. CONSOLIDATED BALANCE SHEET (in thousands of dollars) May February 31, 2010 28, 2010 ----------- ----------- $ $ ASSETS (unaudited) Current assets Cash 114 97 Term deposit 3,000 5,000 Accounts receivable 3,134 2,091 Note receivable 1,000 1,000 Income taxes receivable - 30 Inventories 2,298 2,436 Prepaid expenses and other 397 288 Current portion of note receivable 200 200 ----------- ----------- 10,143 11,142 Note receivable 1,295 1,331 Fixed assets 9,095 9,157 Intangible assets 750 643 Future income taxes 2,666 2,378 ----------- ----------- 23,949 24,651 ----------- ----------- ----------- ----------- LIABILITIES Current liabilities Accounts payable 3,899 3,825 Instalments on long-term debt 90 85 ----------- ----------- 3,989 3,910 Long-term debt 62 69 ----------- ----------- 4,051 3,979 - - - - - - - - - - - - SHAREHOLDER'S EQUITY Capital stock 44,315 44,527 Contributed surplus 653 455 Deficit (25,070) (24,310) ----------- ----------- 19,898 20,672 ----------- ----------- 23,949 24,651 ----------- ----------- ----------- -----------
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For further information: Christopher M. Wood, Chairman of the Board and Chief Executive Officer, (418) 387-7723; Source: GBO Inc.
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