GBO Inc. First-Quarter Financial Results

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

%SEDAR: 00002757EF

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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