GBO Increases its Second-Quarter Sales and More Than Triples its Operating Income



    
    -------------------------------------------------------------------------
    - The Company closes the second quarter with net earnings of $0.3 million
      or $0.01 per share.

    - GBO records a net loss of $0.4 million or $0.01 per share for the first
      six months of fiscal 2008, compared with a net loss of $1.0 million or
      $0.03 per share for the same period a year earlier (excluding the
      unusual item).
    -------------------------------------------------------------------------
    

    MONTREAL, Oct. 5 /CNW Telbec/ - (Note: All amounts are in Canadian
dollars.) GBO INC. ("GBO" or "the Company"; ticker symbol GBO/TSX),
manufacturer of "Bonneville" windows and doors, today disclosed its financial
results for the second quarter of fiscal 2008. During the three-month period
ended August 31, 2007, sales grew by 1.2% to $17.7 million. Excluding the
unfavourable impact of fluctuations in the Canadian dollar in relation to the
U.S. dollar, sales would have posted a 2.5% increase. GBO mostly attributes
this growth to the launch of a dozen new products and improvements to existing
products during the first-quarter, and to the reinforcement of its sales and
marketing organization. These initiatives have notably enabled the Company to
recruit new customers. Geographically, Canadian sales rose by 1.9% to stand at
$12.8 million during the second quarter. Exports to the United States amounted
to $4.9 million, posting a slight 0.7% decrease over last year due to currency
fluctuations. At a constant exchange rate, U.S. sales would have grown by
close to 4% despite the difficult conditions currently prevailing in this
market.
    GBO generated EBITDA(1) of $1.1 million, compared with $0.3 million in
the same quarter a year earlier, as the overall operational optimization
program implemented within the past two years has contributed to substantially
lower the Company's breakeven point. GBO therefore closed the second quarter
with net earnings of $0.3 million or $0.01 per share (basic and diluted), as
opposed to a net loss of $0.3 million or $0.01 per share in the same period
last year, which represents a net improvement of $0.6 million or $0.02 per
share.
    During the first six months of fiscal 2008, GBO's sales declined by
$3.3 million or 9.9% (9.2% decrease at a constant exchange rate) to
$30.0 million. This decrease is attributable to the particularly unfavourable
market conditions experienced in Eastern Canada and the Northeastern United
States during the first quarter when, besides a slowdown in housing starts,
extreme weather conditions virtually shut down building activity in March.
Year-to-date Canadian sales amounted to $21.7 million, down $1.2 million or
5.3% over the same period last year, whereas exports to the United States
decreased by $2.1 million or 20.2% (17.7% decline at constant exchange rates).
Despite lower sales, EBITDA rose from $0.1 million in the first half of the
previous year to $0.7 million for the first six months of fiscal 2008, again
reflecting a general improvement in the Company's operational efficiency.
Furthermore, total depreciation, amortization and financial expenses decreased
by $0.3 million or 18.9%, due primarily to more efficient cash flow management
and enhanced borrowing conditions due GBO's solid financial position.
    The first six months of fiscal 2008 therefore closed with a net loss of
$0.4 million or $0.01 per share (basic and diluted), compared with a net loss
of $1.0 million or $0.03 in the first half of fiscal 2007, excluding the
unusual gain (net of related taxes) of $4.4 million resulting from the sale of
Multiver. Thus, despite the sales decrease, greater operational efficiency
coupled with lower financial, depreciation and amortization expenses
translated into a $0.6 million or $0.02 per share improvement in GBO's bottom
line for the first six months of fiscal 2008.

    Outlook
    -------

    "GBO's second-quarter results are consistent with the upward trend in
operating profitability shown over the past two years. We are also pleased to
see that the efforts we have recently invested to enhance our product offering
and renew our business strategies are yielding the expected benefits, which
should contribute to the achievement of our primary objective for the near
term: increase the Company's sales," said Dennis Wood, Interim President and
Chief Executive Officer. "However, we remain cautious regarding GBO's outlook
for fiscal 2008. The first quarter was slower than expected, although the
revenue shortfall recorded in the first three months of the year was partially
made up for in the second quarter. Furthermore, market conditions have
improved since the beginning of the year in Canada, but remain difficult in
the United States in light of the current crisis in the mortgage loans market.
We therefore anticipate moderate sales growth for fiscal 2008, while aiming to
further improve our profitability."

    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. 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 Northeastern
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.

    
    --------------
    (1) EBITDA is not a measure of results that is consistent with Canadian
        GAAP. This measure is not intended to be regarded as an alternative
        to other financial accounting performance measures or to the
        statement of cash flows as a measure of liquidity. It is not intended
        to represent funds available for debt service, dividends,
        reinvestment or other discretionary uses, and should not be
        considered in isolation or as a substitute for performance measures
        prepared in accordance with generally accepted accounting principles.
        This measure is used by the Company because management believes it is
        a meaningful indicator of performance, which is commonly used by the
        investment community to analyze and compare the performance of
        companies in the industry in which the Company is engaged. The
        Company's definition of this measure may differ from a similarly
        titled measure reported by other companies. In the Company's
        statement of earnings, EBITDA corresponds to "Operating income (loss)
        before the following items".

    (2) 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.



    GBO INC.
    CONSOLIDATED EARNINGS
    Period ended August 31,
    (unaudited)(in thousands of dollars, except per share amounts)

                                     Three months             Six months
                              ----------------------  ----------------------
                                    2007        2006        2007        2006
                              ----------  ----------  ----------  ----------
                                       $           $           $           $

    Sales                         17,716      17,510      30,043      33,360

    Cost of sales and
     operating expenses           16,632      17,247      29,386      33,236

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

    Operating income before
     the following items           1,084         263         657         124

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

    Depreciation of fixed
     assets                          384         368         772         721
    Amortization of
     intangible assets                28          73          46         146
    Amortization of deferred
     charges                           -          16          16          31
    Loss on disposal of
     fixed assets                      -           1           -           -
    Interest on long-term
     debt                              2           3           5         118
    Other financial expenses         176         237         412         526
                              ----------  ----------  ----------  ----------

                                     590         698       1,251       1,542

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


    Earnings (loss) before
     unusual item and income
     taxes                           494        (435)       (594)     (1,418)

    Unusual item                       -           -           -       5,686
                              ----------  ----------  ----------  ----------

    Earnings (loss) before
     income taxes                    494        (435)       (594)      4,268

    Future income taxes              158        (139)       (190)        785
                              ----------  ----------  ----------  ----------

    Net earnings (net loss)          336        (296)       (404)      3,483
                              ----------  ----------  ----------  ----------
                              ----------  ----------  ----------  ----------

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

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



    GBO INC.
    CONSOLIDATED BALANCE SHEET

    (in thousands of dollars)
                                          August 31, 2007  February 28, 2007
                                        -----------------  -----------------
                                                        $                  $
    ASSETS                                    (unaudited)
    Current assets
      Cash                                          1,341              1,120
      Accounts receivable                           8,033              4,515
      Income taxes receivable                         103                102
      Inventories                                   5,727              4,455
      Prepaid expenses and other                      207                418
      Current portion of note
       receivable                                     533                600
                                        -----------------  -----------------
                                                   15,944             11,210

    Note receivable                                 1,868              2,812
    Fixed assets                                   15,811             15,620
    Fixed assets held for sale                        890                910
    Intangible assets                                 282                328
    Future income taxes                             3,044              2,578
    Deferred charges                                    -                 16
                                        -----------------  -----------------
                                                   37,839             33,474
                                        -----------------  -----------------
                                        -----------------  -----------------

    LIABILITIES
    Current liabilities
      Bank loans                                    6,993              3,260
      Accounts payable                              7,972              6,322
      Instalments on long-term debt                    48                 69
                                        -----------------  -----------------
                                                   15,013              9,651

    Long-term debt                                     63                 81
                                        -----------------  -----------------

                                                   15,076              9,732
                                        -----------------  -----------------
                                        -----------------  -----------------

    SHAREHOLDER'S EQUITY
    Capital stock                                  44,526             44,526
    Contributed surplus                               423                411
    Deficit                                       (22,186)           (21,195)
                                        -----------------  -----------------

                                                   22,763             23,742
                                        -----------------  -----------------

                                                   37,839             33,474
                                        -----------------  -----------------
                                        -----------------  -----------------
    




For further information:

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

Organization Profile

GBO INC.

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