GBO Inc. Further Improves its Performance - The window and door manufacturer announces third-quarter net earnings of $1.2 million



    STE-MARIE DE BEAUCE, QC, Jan. 29 /CNW Telbec/ - (Note: All amounts are in
Canadian dollars.) For the three-month period ended November 30, 2008, GBO
INC. ("GBO" or "the Company"; ticker symbol GBO/TSX Venture Exchange) achieved
sales of $18.3 million, compared with $17.1 million for the same quarter of
the previous year. Canadian sales grew by 8.2% to $14.5 million, driven by an
increase in GBO's market share - especially in Quebec - as a result of the
launch of several new products in prior quarters, the strengthening of the
Company's sales and marketing organization and an improvement in customer
service. Exports to the United States amounted to $3.8 million compared with
$3.7 million in the same quarter of the previous year. Excluding the
favourable impact of the decrease in the Canadian dollar in relation to the
U.S. dollar, U.S. exports declined by 6.9% at a constant exchange rate, due to
the slowdown in the U.S. economy in general and the real estate sector in
particular. However, GBO maintained and even expanded its customer base in its
targeted territories in the United States by enhancing its distribution
network, reinforcing its customer service and bringing new products to market.
    GBO recorded third-quarter operating earnings before depreciation,
amortization, financial expenses and income taxes (EBITDA) of $1.9 million, up
from $1.2 million in the same period of the previous year. This 52.5% increase
is attributable to the Company's continued efforts to optimize its production
efficiency and overall management and to further align its cost structure with
the seasonal fluctuations in its industry. Coupled with the selling price
increases that GBO implemented during the year like several other North
American window and door manufacturers, the Company's ongoing operational
optimization process enabled it to mitigate the pressure exerted on its
profitability by the rising cost of certain raw materials. Finally, the
Company recognized a $0.4 million exchange gain this year, as opposed to a
$0.1 million exchange loss in the same quarter last year.
    Consequently, GBO closed the third quarter with net earnings of $1.2
million or $0.04 per share (basic and diluted), compared with net earnings of
$0.4 million or $0.01 per share (basic and diluted) in the same quarter of the
previous year. Interim President and Chief Executive Officer Dennis Wood
indicated that this represents GBO's best quarterly performance in more than
five years, in terms of net earnings.
    For the nine-month period ended November 30, 2008, GBO achieved
year-to-date sales of $48.1 million, up 2.0% over $47.2 million for the same
period of the previous year. Canadian sales grew by 8.9% to $38.3 million,
whereas exports to the United States, which totalled $9.9 million, were down
by 16.5% at a constant exchange rate, due to the economic context. GBO
recorded year-to-date EBITDA of $2.5 million, compared with $1.9 million last
year, an improvement of 31.7%. Also considering the recognition of exchange
gains totalling $0.5 million for the period as a whole, as opposed to exchange
losses totalling $0.4 million a year earlier, GBO closed the first nine months
of fiscal 2009 with net earnings of $1.0 million or $0.03 per share (basic and
diluted), compared with a breakeven last year.

    Outlook
    -------

    According to the seasonal cycle in the window and door industry in
Northeastern North America, the period corresponding to GBO's fourth quarter
(covering the months of December, January and February) is historically the
year's weakest in terms of sales. However, management believes that GBO will
be able to reduce the seasonal loss generally associated with this period
thanks to the initiatives adopted during the past quarters to lower its
general expenses, optimize its operational efficiency and further align its
cost structure with the seasonal cycle of its business.
    GBO's management is also confident as to the Company's outlook for
subsequent quarters, although it remains cautious considering the recession
currently affecting the U.S. economy and the uncertainty as to the forthcoming
trends in the Canadian economy. To meet these challenges, management estimates
that the Company benefits from a much more competitive and profitable
organization than it did a few years ago, as shown by the significant
improvement in its financial performance since the beginning of fiscal 2009,
and especially in the third quarter. In addition, consistent with its
objective to increase its sales and mitigate their seasonal cycle, GBO
continues to develop its new "Impact" line of hurricane-resistant products, in
order primarily to extend its presence into the Southern States along the U.S.
East Coast. After introducing a first "Impact" casement window at the
beginning of fiscal 2009, GBO has just successfully completed the
certification tests in the United States on its new "Impact" hung window, and
is preparing to do the same for the French door model. GBO has also broadened
its representation in the Southeastern United States in recent months.
    In upcoming quarters, while further developing its markets, GBO will
carry on its efforts to continuously enhance its product selection, business
processes and operational efficiency.

    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 wooden 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.

    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.

    
    CONSOLIDATED EARNINGS AND COMPREHENSIVE INCOME
    Periods ended November 30, 2008
    (unaudited) (in thousands of dollars, except per share amounts)

                                    Three months             Nine months
                                  2008        2007        2008        2007
                              ----------- ----------- ----------- -----------
                                   $           $           $           $

    Sales                         18,322      17,127      48,127      47,170

    Cost of sales and
     operating expenses           16,452      15,901      45,647      45,287
                              ----------- ----------- ----------- -----------

    Operating income before
     the following items           1,870       1,226       2,480       1,883

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

    Depreciation of fixed assets     396         411       1,159       1,184
    Amortization of intangible
     assets                           37          10         112          55
    Amortization of deferred
     charges                          17           -          30          16
    Gain on disposal of fixed
     assets                           (3)          -          (3)          -
    Interest on long-term debt         2           2           7           7
    Other financial expenses        (324)        210        (266)        622
                              ----------- ----------- ----------- -----------

                                     125         633       1,039       1,884

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

    Earnings (loss) before
     income taxes                  1,745         593       1,441          (1)


    Future income taxes              535         190         438           -
                              ----------- ----------- ----------- -----------

    Net earnings (net loss)
     and comprehensive income      1,210         403       1,003          (1)
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    Earnings (loss) per share
     and diluted earnings
     (loss) per share               0.04        0.01        0.03       (0.00)
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

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



    CONSOLIDATED CASH FLOWS
    Periods ended November 30, 2008
    (unaudited) (in thousands of dollars)

                                    Three months             Nine months
                                  2008        2007        2008        2007
                              ----------- ----------- ----------- -----------
                                   $           $           $           $

    OPERATING ACTIVITIES
    Net earnings (net loss)        1,210         403       1,003          (1)
      Non-cash items
        Depreciation of fixed
         assets                      396         411       1,159       1,184
        Amortization of
         intangible assets and
         deferred charges             54          10         142          71
        Stock-based compensation
         expense                       2           5           7          18
        Future income taxes          535         190         438           -
        Changes in working
         capital items               138       1,378      (3,709)     (1,552)
                              ----------- ----------- ----------- -----------

    Cash flows from operating
     activities                    2,335       2,397        (960)       (280)
                               - - - - -   - - - - -   - - - - -   - - - - -

    INVESTING ACTIVITIES
      Fixed assets                  (125)        (69)       (519)     (1,013)
      Disposal of fixed assets         3           -           3           -
      Note receivable                154         105         322         253
      Intangible assets &
       deferred charges              (59)          -         (70)          -
                              ----------- ----------- ----------- -----------

    Cash flows from investing
     activities                      (27)         36        (264)       (760)

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

    FINANCING ACTIVITIES
      Bank loan                   (3,231)     (3,428)      1,635         305
      Repayment of long-term
       debt                          (12)        (12)        (22)        (51)
                              ----------- ----------- ----------- -----------

    Cash flows from financing
     activities                   (3,243)     (3,440)      1,613         254

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

    Net change in cash              (935)     (1,007)        389        (786)
    Cash at the beginning of
     period                        1,611       1,341         287       1,120
                              ----------- ----------- ----------- -----------
    Cash at the end of period        676         334         676         334
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------


    CONSOLIDATED BALANCE SHEET
    (in thousands of dollars)
                                                   November 30,  February 29,
                                                       2008          2008
                                                   ------------  ------------
                                                    (unaudited)
    ASSETS                                              $             $

    Current assets
      Cash                                                 676           287
      Accounts receivable                                8,519         3,456
      Income taxes receivable                              104           103
      Inventories                                        5,011         3,665
      Prepaid expenses and other                           326           405
      Current portion of note receivable                   356           356
                                                   ------------  ------------
                                                        14,992         8,272

    Note receivable                                      1,564         1,886
    Fixed assets                                        14,204        14,817
    Fixed assets held for sale                             841           870
    Intangible assets                                      508           611
    Deferred charges                                       188           158
    Future income taxes                                  2,825         3,263
                                                   ------------  ------------
                                                        35,122        29,877
                                                   ------------  ------------
                                                   ------------  ------------
    LIABILITIES

    Current liabilities
      Bank loans                                         4,739         3,104
      Accounts payable                                   7,888         5,266
      Instalments on long-term debt                         51            77
                                                   ------------  ------------
                                                        12,678         8,447

    Long-term debt                                          15            11
                                                   ------------  ------------

                                                        12,693         8,458
                                                   ------------  ------------

    SHAREHOLDER'S EQUITY

    Capital stock                                       44,526        44,526
    Contributed surplus                                    442           435
    Deficit                                            (22,539)      (23,542)
                                                   ------------  ------------

                                                        22,429        21,419
                                                   ------------  ------------

                                                        35,122        29,877
                                                   ------------  ------------
                                                   ------------  ------------
    




For further information:

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

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GBO INC.

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