GBO Inc. Stable Despite Tough Market

STE-MARIE DE BEAUCE, QC, Jan. 28 /CNW Telbec/ - (Note: All amounts are in Canadian dollars.) During the three-month period ended November 30, 2009, GBO INC. ("GBO" or "the Company"; ticker symbol GBO/TSX Venture Exchange), manufacturer of the "Bonneville" windows and doors, recorded sales of $6.1 million, compared with $18.3 million in the same period of the previous year. This decline is mainly attributable to the second 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 12% in light of the current economic context. Bonneville's Canadian sales amounted to $4.1 million, down from $14.5 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 $2.0 million from $3.8 million in the third 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 $0.05 million during the third quarter, down from $1.9 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. Bonneville 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. Excluding the unusual gain, the Company posted a pre-tax net loss of $0.3 million and a net loss of $0.3 million or $0.01 per share (basic and diluted), compared with net earnings of $1.2 million or $0.04 per share (basic and diluted) in the same quarter of fiscal 2009.

During the nine-month period ended November 30, 2009, sales declined to $27.0 million from $48.1 million a year earlier. Canadian sales amounted to $21.1 million compared to $38.3 million. Exports to the United States totalled $5.9 million, compared with $9.9 million in the first nine months 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 $2.5 million a year earlier. Including the $4.7 million unusual gain realized in the second quarter, GBO posted net earnings of $2.0 million or $0.06 per share (basic and diluted), compared with net earnings of $1.0 million or $0.03 per share in the same period of the previous year.

    
    Outlook
    -------
    

Management continues to be cautious as to Bonneville's outlook for fiscal 2010 as demand remains weak and volatile while competition is fierce in all markets, especially in the United States and Ontario. Management believes Bonneville is well positioned to face this competition as it implements a niche and differentiation strategy in the United States and Ontario, all the while enjoying significant leadership in Quebec as a supplier of mid and high-end wood products. Bonneville's competitive advantage remains 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.

Having optimized its overall operations to reflect its new reality, Bonneville is now structured to be competitive and profitable in a normal market context, with profit margins likely benefiting from continued operational optimization efforts aimed at lowering its breakeven point and securing a more flexible cost structure that is better aligned with the seasonal sales cycle.

GBO's key objectives are to grow its sales and alleviate the seasonal cycle of Bonneville's business, notably through the targeted developments 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, Bonneville broadened its representation in the Southeastern United States over the last fiscal year and developed its new "StormBuster" line of hurricane-resistant products - which has been certified in the United States. Furthermore, Bonneville continues 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.

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 November 30, 2009
    (unaudited)(in thousands of dollars, except per share amounts)

                                  Three months              Nine months
                           ------------------------  ------------------------
                              2009         2008         2009         2008
                           -----------  -----------  -----------  -----------
                                $            $            $            $

    Sales                       6,101       18,322       27,025       48,127
    Cost of sales and
     operating expenses         6,052       16,452       27,489       45,647

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

    Operating income (loss)
     before the following
     items                         49        1,870         (464)       2,480

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

    Depreciation of fixed
     assets                       284          396          996        1,159
    Amortization of
     intangible assets             33           37          102          112
    Amortization of
     deferred charges              24           17           66           30
    Gain on disposal of
     fixed assets                  (5)          (3)         (13)          (3)
    Interest on long-term
     debt                           2            2            9            7
    Other financial
     expenses                       7         (324)         219         (266)
                           -----------  -----------  -----------  -----------

                                  345          125        1,379        1,039

                           - - - - - -  - - - - - -  - - - - - -  - - - - - -
    Earnings (loss)
     before unusual item
     and income taxes            (296)       1,745       (1,843)       1,441

    Unusual item (Note 8)         (60)           -        4,655            -
                           -----------  -----------  -----------  -----------

    Earnings (loss) before
     income taxes                (356)       1,745        2,812        1,441

    Future income taxes           (96)         535          782          438
                           -----------  -----------  -----------  -----------
    Net earnings (net loss)
     and comprehensive
     income                      (260)       1,210        2,030        1,003
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------

    Earnings (loss) per
     share and diluted
     earnings (loss) per
     share                      (0.01)        0.04         0.06         0.03
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------
    Weighted average
     number of common
     shares outstanding    32,676,569   32,676,569   32,676,569   32,676,569



    GBO INC.
    CONSOLIDATED DEFICIT
    Period ended November 30, 2009
    (unaudited)(in thousands of dollars)

                                  Three months              Nine months
                           ------------------------  ------------------------
                              2009         2008         2009         2008
                           -----------  -----------  -----------  -----------
                                $            $            $            $

    Deficit, beginning of
     period                   (22,688)     (23,749)     (24,978)     (23,542)
    Net earnings (net loss)      (260)       1,210        2,030        1,003

                           -----------  -----------  -----------  -----------
    Deficit, end of period    (22,948)     (22,539)     (22,948)     (22,539)
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------


    GBO INC.
    CONSOLIDATED CASH FLOWS
    Period ended November 30, 2009
    (unaudited)(in thousands of dollars)

                                  Three months              Nine months
                           ------------------------  ------------------------
                              2009         2008         2009         2008
                           -----------  -----------  -----------  -----------
                                $            $            $            $
    OPERATING ACTIVITIES
    Net earnings (net loss)      (260)       1,210        2,030        1,003
      Non-cash items
      Unusual item                 60            -       (4,655)           -
      Gain on disposal of
       fixed assets                (5)           -          (13)           -
      Depreciation of fixed
       assets                     284          396          996        1,159
      Amortization of
       intangible assets and
       deferred charges            57           54          168          142
      Stock-based
       compensation expense         3            2           10            7
      Future income taxes         (96)         535          782          438
      Changes in working
       capital items             (136)         138          224       (3,709)
                           -----------  -----------  -----------  -----------
    Cash flows from
     operating activities         (93)       2,335         (458)        (960)

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

    INVESTING ACTIVITIES
      Cash proceeds on the
       disposal of assets,
       net of related charges     (60)           -       10,443            -
      Fixed assets                (72)        (125)        (230)        (519)
      Disposal of fixed
       assets                       5            3           30            3
      Note receivable              58          154          234          322
      Intangible assets &
       deferred charges          (164)         (59)        (140)         (70)
                           -----------  -----------  -----------  -----------
    Cash flows from investing
     activities                  (233)         (27)      10,337         (264)

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

    FINANCING ACTIVITIES
      Bank loan                     -       (3,231)      (3,658)       1,635
      Repayment of long-term
       debt                       (50)         (12)         (83)         (22)
                           -----------  -----------  -----------  -----------
    Cash flows from
     financing activities         (50)      (3,243)      (3,741)       1,613

                           -----------  -----------  -----------  -----------
    Net increase (decrease)
     in cash and cash
     equivalents                 (376)        (935)       6,138          389
    Cash and cash
     equivalents, beginning
     of period                  7,064        1,611          550          287
                           -----------  -----------  -----------  -----------
    Cash and cash
     equivalents, end of
     period                     6,688          676        6,688          676
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------

    CASH AND CASH
     EQUIVALENTS                1,688          676        1,688          676
    Cash                        5,000            -        5,000            -
                           -----------  -----------  -----------  -----------
    Term deposit                6,688          676        6,688          676
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------


    GBO INC.
    CONSOLIDATED BALANCE SHEET

    (in thousands of dollars)
                                                    November 30, February 28,
                                                        2009         2009
                                                    ------------ ------------
                                                          $            $
    ASSETS                                           (unaudited)

    Current assets
      Cash                                                1,688          550
      Term deposit                                        5,000            -
      Accounts receivable                                 4,438        3,830
      Income taxes receivable                               103          103
      Inventories                                         2,394        4,045
      Prepaid expenses and other                            303          517
      Current portion of note receivable                  1,413          356
                                                    ------------ ------------
                                                         15,339        9,401

    Note receivable                                       1,241        1,532
    Fixed assets                                          8,887       13,938
    Fixed assets held for sale                              804          831
    Intangible assets                                       354          471
    Deferred charges                                        311          238
    Future income taxes                                   2,294        3,076
                                                    ------------ ------------
                                                         29,230       29,487
                                                    ------------ ------------
                                                    ------------ ------------

    LIABILITIES

    Current liabilities
      Bank loan                                               -        3,658
      Accounts payable                                    7,025        5,806
      Instalments on long-term debt                          85           13
                                                    ------------ ------------
                                                          7,110        9,477

    Long-term debt                                           87           17
                                                    ------------ ------------
                                                          7,197        9,494
                                                     - - - - - -  - - - - - -

    SHAREHOLDER'S EQUITY

    Capital stock                                        44,526       44,526
    Contributed surplus                                     455          445
    Deficit                                             (22,948)     (24,978)
                                                    ------------ ------------
                                                         22,033       19,993
                                                    ------------ ------------
                                                         29,230       29,487
                                                    ------------ ------------
                                                    ------------ ------------
    

%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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