Second-Quarter Results of GBO Inc.



    
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    - GBO delivers quarterly net earnings of $0.3 million or $0.01 per share,
      equivalent to those recorded during the same quarter last year.

    - Strong growth in Canadian sales compensates for the weakness of the
      U.S. real estate market.

    - GBO is implementing a distribution network in the Southern United
      States to market its window and door selection, more particularly its
      new "Impact" line of hurricane-resistant products.
    -------------------------------------------------------------------------
    

    MONTREAL, Oct. 8 /CNW Telbec/ - (Note: All amounts are in Canadian
dollars.) For the three-month period ended August 31, 2008, GBO INC. ("GBO" or
"the Company"; ticker symbol GBO/TSX Venture Exchange) recorded sales of
$17.6 million, compared with $17.7 million in the same quarter of the previous
fiscal year, reflecting an unfavourable impact of approximately $0.2 million
attributable to fluctuations in the Canadian dollar in relation to the
U.S. dollar. Canadian sales grew by 11.1% to $14.2 million. Management
attributes this solid growth to an increase in GBO's market share in Eastern
Canada, especially in Quebec, driven notably by the launch of several new
products during the previous quarters, the strengthening of the Company's
sales and marketing organization and a general improvement in customer
service. Conversely, exports to the United States decreased by $1.6 million or
31.9% (28.4% at constant exchange rates) to stand at $3.4 million, due to the
crisis that has been affecting the U.S. real estate market since mid 2006.
Management believes that the reduction in the Company's U.S. sales mostly
reflects the business environment, as GBO has in recent quarters maintained
and even increased its customer base in its targeted territories in the United
States.
    GBO recorded second-quarter operating earnings before depreciation,
amortization, financial expenses and income taxes (or "EBITDA") of
$0.9 million, compared with $1.1 million the previous year. This decline is
mostly attributable to the recognition of non-recurring costs of close to
$0.2 million related to organizational changes made in connection with the
Company's ongoing operational optimization program. It should also be pointed
out that window and door manufacturers are sustaining an upward pressure in
their transportation expenses and the cost of certain raw materials as a
result of the sharp rise in oil and natural gas prices over the past year. GBO
and a number of other North American manufacturers have implemented selling
price increases in order to offset the inflation in their costs.
    Second-quarter financial expenses were down by $0.2 million from the
previous year. Consequently, GBO posted pre-tax earnings of $0.5 million,
equivalent to those for the second quarter a year earlier. Net earnings were
also the same for the two comparative periods, that is $0.3 million or
$0.01 per share (basic and diluted).
    For the six-month period ended August 31, 2008, GBO recorded year-to-date
sales of $29.8 million, compared with $30.0 million in the first half of last
year, considering the unfavourable impact of $0.5 million related to currency
fluctuations. Canadian sales grew by 9.3% to total $23.8 million, while
exports to the United States decreased by 27.1% (21.2% at constant exchange
rates) to $6.0 million. GBO posted EBITDA of $0.6 million compared with
$0.7 million in the same period last year, whereas financial expenses declined
by close to $0.4 million. GBO thus closed the first half of fiscal 2009 with a
net loss of $0.2 million or $0.01 per share, compared with a net loss of
$0.4 million or $0.01 per share in the same period last year.

    Ongoing Market Development and Operational Optimization Efforts
    ---------------------------------------------------------------

    "Although the current weakness of the U.S. market is hindering the growth
of our business, we are pleased with the progress made by GBO to restore and
strengthen its leadership in Eastern Canada as an integrated provider of
high-end fenestration solutions, and to expand and diversify its geographic
markets in order to increase its business and reduce its seasonality,"
indicated Dennis Wood, Interim President and Chief Executive Officer. For
instance, the development of the new "Impact" line of hurricane-resistant
products aims primarily to extend GBO's presence into the southern states of
the U.S. East Coast. A first "Impact" casement window was introduced early in
the year and a new hung window model is currently at the certification stage
in the United States. The "Impact" line has been integrated into the new
"Bonquote" electronic specification and product configuration system, which
will facilitate its marketing. In addition, GBO has undertaken to set up a
distribution network in the Southern United States. These initiatives will
contribute to the Company's future development once the current real estate
crisis abates.
    In upcoming quarters, while further developing its markets, GBO will
carry on its efforts to continuously improve its product offering, 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
    Period ended August 31
    (unaudited)(in thousands of dollars, except per share amounts)

                                     Three months             Six months
                             ------------------------ -----------------------
                                    2008        2007        2008        2007
                             ------------ ----------- ----------- -----------
                                       $           $           $           $

    Sales                         17,571      17,716      29,805      30,043

    Cost of sales and
     operating expenses           16,651      16,632      29,195      29,386

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

    Operating income before
     the following items             920       1 084         610         657

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

    Depreciation of fixed assets     387         384         769         772
    Amortization of intangible
     assets                           37          28          69          46
    Amortization of deferred
     charges                          13           -          13          16
    Interest on long-term debt         3           2           5           5
    Other financial expenses         (16)        176          58         412

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

                                     424         590         914       1,251

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


    Earnings (loss) before
     income taxes                    496         494        (304)       (594)

    Future income taxes              160         158         (97)       (190)
                             ------------ ----------- ----------- -----------


    Net earnings (net loss)
     and comprehensive income        336         336        (207)       (404)
                             ------------ ----------- ----------- -----------
                             ------------ ----------- ----------- -----------

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


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



    GBO INC.
    CONSOLIDATED CASH FLOWS
    Period ended August 31
    (unaudited)(in thousands of dollars)

                                     Three months             Six months
                             ------------------------ -----------------------
                                    2008        2007        2008        2007
                             ------------ ----------- ----------- -----------
                                       $           $           $           $

    OPERATING ACTIVITIES
    Net earnings (net loss)          336         336        (207)       (404)
      Non-cash items
        Depreciation of fixed
         assets                      387         384         769         772
        Amortization of
         intangible assets and
         deferred charges             50          27          82          61
        Stock-based compensation
         expense                       4           7           6          13
        Future income taxes          160         158         (97)       (190)
        Changes in working
         capital items            (1,151)     (1,252)     (3,847)     (2,929)
                             ------------ ----------- ----------- -----------

    Cash flows from operating
     activities                     (214)       (340)     (3,294)     (2,677)
                             - - - - - -  - - - - - -  - - - - - -  - - - - -

    INVESTING ACTIVITIES
      Fixed assets                  (165)       (293)       (395)       (944)
      Note receivable                118         103         168         148
      Intangible assets &
       deferred charges               (6)          -         (11)          -
                             ------------ ----------- ----------- -----------

    Cash flows from investing
     activities                      (53)       (190)       (238)       (796)

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

    FINANCING ACTIVITIES
      Bank loan                    1,444       1,272       4,866       3,733
      Repayment of long-term
       debt                            3         (12)        (10)        (39)
                             ------------ ----------- ----------- -----------

    Cash flows from financing
     activities                    1,447       1,260       4,856       3,694

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

    Net change in cash             1,180         730       1,324         221
    Cash at the beginning of
     period                          431         611         287       1,120
                             ------------ ----------- ----------- -----------
    Cash at the end of period      1,611       1,341       1,611       1,341
                             ------------ ----------- ----------- -----------
                             ------------ ----------- ----------- -----------



    GBO INC.
    CONSOLIDATED BALANCE SHEET
    (in thousands of dollars)

                                         August 31, 2008   February 29, 2008
                                                 $                 $
    ASSETS                                  (unaudited)

    Current assets
      Cash                                         1,611                 287
      Accounts receivable                          8,579               3,456
      Income taxes receivable                        103                 103
      Inventories                                  5,415               3,665
      Prepaid expenses and other                     430                 405
      Current portion of note receivable             356                 356
                                         ----------------  ------------------
                                                  16,494               8,272

    Note receivable                                1,718               1,886
    Fixed assets                                  14,468              14,817
    Fixed assets held for sale                       851                 870
    Intangible assets                                542                 611
    Deferred charges                                 150                 158
    Future income taxes                            3,360               3,263
                                         ----------------  ------------------
                                                  37,583              29,877
                                         ----------------  ------------------
                                         ----------------  ------------------
    LIABILITIES

    Current liabilities
      Bank loans                                   7,970               3,104
      Accounts payable                             8,317               5,266
      Instalments on long-term debt                   63                  77
                                         ----------------  ------------------
                                                  16,350               8,447

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

                                                  16,365               8,458
                                         - - - - - - - -    - - - - - - - - -

    SHAREHOLDER'S EQUITY

    Capital stock                                 44,526              44,526
    Contributed surplus                              441                 435
    Deficit                                      (23,749)            (23,542)
                                         ----------------  ------------------

                                                  21,218              21,419
                                         ----------------  ------------------

                                                  37,583              29,877
                                         ----------------  ------------------
                                         ----------------  ------------------
    




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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