GBO Inc. continues to reinforce its position in the U.S. and obtains a temporary, revolving operating line of credit

STE-MARIE DE BEAUCE, QC, Jan. 25 /CNW Telbec/ - (Note: All amounts are in Canadian dollars.) For the three months ended November 30, 2010, GBO Inc. ("GBO" or the "Company", ticker symbol GBO / TSX Venture), manufacturer of "Bonneville" windows and doors, had sales of $5.6 million compared to $6.1 million in the same period last year. Canadian sales were down $0.6 million to $3.5 million compared to $4.1 million the same quarter last year. This decline is mainly attributable to the Company's Canadian customers who suffered a drop in their sales during this quarter resulting primarily from the delayed effect of the economic crisis which affected the United States.

The sales by the Company within the United States increased from $0.1 million or 5.0% (increase of 10.0% at a constant currency exchange rate) to $2.1 million compared to $2.0 million in the third quarter of last year.

GBO recorded an operating loss (or negative EBITDA) of $0.6 million in the third quarter of fiscal 2011, compared to a positive EBITDA of $0.05 million the previous year.

The Company ended the quarter with a pre-tax loss and a net loss of $1.0 million  or $ 0.06 per share (basic and diluted), compared with net loss including unusual item of $0.3 million or $0.01 per share (basic and diluted) in the same quarter of fiscal 2010. The decline in profitability is explained in part by higher transportation costs resulting from new customers located in the South-East United States. Since the shipping volumes to these customers are of average size, the ratio of transportation costs in relation to the net sales amount does not meet the Company's usual standards. The shipping routes and frequency have been revised in order to counter this effect. Furthermore, the Company has had to absorb price increases on certain raw materials without the ability to increase prices to its customers.

For the nine month period ended November 30, 2010, GBO's sales totalled $15.1 million compared with $27.0 million for the same period last year; a decrease of $11.9 million. However, sales from Bonneville's continuing operations, those attributable to the plant in Ste-Marie de Beauce, showed an increase of about 3.4% during the first 9 months. In the United States, the Company continues to register sales to new customers despite a still-fragile U.S. market.


Particularly in the United States, the Company's sales efforts have been significant, as demonstrated by the last month's level of business activity. It is expected that December's sales volume should be on track with last year while January's may be higher. The Company is currently in final negotiations relating to a major contract for the renovation of a building in the heart of Brooklyn, just outside New York City. The contract could possibly fill up a part of February and March which are traditionally slow months for the Company.

During the last quarter, Quebec and Ontario, our traditional Canadian markets, have been affected by an economic slowdown; much later than the one which impacted the U.S. market. While no recovery is expected before the end of the fiscal year, certain residential projects in Ontario could reverse the trend.


The Company announced that Dennis Wood Holdings Inc., a company controlled by Mr. Dennis Wood, a director and insider of the Company, has agreed to extend to the Company a secured, temporary, revolving operating line of credit in an amount not to exceed $1,000,000 (the "Facility"). This Facility will be used to finance the Company's operations during the traditionally slow period of the year and until a new banking facility has been negotiated and put in place. The Facility, whose terms and conditions reflect current market conditions, will bear interest at a rate of 12% per year and will be secured by a first ranking security interest on all of the Company's assets. The closing of this Facility is subject to prior regulatory approval.


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.

Period ended November 30, 2010
(unaudited) (in thousands of dollars, except per share amounts)

  Three months   Nine months
  2010   2009   2010   2009
  $   $   $   $
Sales 5,618   6,101   15,070   27,025
Cost of sales and operating expenses 6,250   6,052   17,233   27,489
Operating income (loss) before the following items (632)   49   (2,163)   (464)
Depreciation of fixed assets 240   284   703   996
Amortization of intangible assets 82   57   218   168
Gain on disposal of fixed assets (5)   (5)   (4)   (13)
Interest on long-term debt 3   2   14   9
Other financial expenses (income), net 30   7   (77)   219
  350   345   854   1,379
Loss before unusual item and income taxes (982)   (296)   (3,017)   (1,843)
Unusual item -   (60)   -   4,655
Earnings (loss) before income taxes (982)   (356)   (3,017)   2,812
Future income taxes -   (96)   (288)   782
Net earnings (loss) and comprehensive income (982)   (260)   (2,729)   2,030
Earnings (loss) per share and diluted earnings (loss) per share (0.06)   (0.01)   (0.11)   0.06
Weighted average number of common shares outstanding 17,695,569   32,676,569   25,218,936   32,676,569

Period ended November 30, 2010
(unaudited) (in thousands of dollars)

  Three months   Nine months
  2010   2009   2010   2009
  $   $   $   $
Deficit, beginning of period (26,057)   (22,688)   (24,310)   (24,978)
Net earnings (loss) (982)   (260)   (2,729)   2,030
Deficit, end of period (27,039)   (22,948)   (27,039)   (22,948)

Period ended November 30, 2010
(unaudited) (in thousands of dollars)

  Three months   Nine months
     2010         2009         2010         2009   
  $   $   $   $
Net earnings (loss) (982)   (260)   (2,729)   2,030
  Non-cash items              
    Unusual item -   60   -   (4,655)
    Gain on disposal of fixed assets (5)   (5)   (4)   (13)
    Depreciation of fixed assets 240   284   703   996
    Amortization of intangible assets 82   57   218   168
    Stock-based compensation expense 2   3   6   10
    Future income taxes -   (96)   (288)   782
    Changes in working capital items (59)   (136)   (229)   224
Cash flows from operating activities (722)   (93)   (2,323)   (458)
  Cash proceeds on disposal of assets, net of related charges   -   (60)   -   10,443
  Fixed assets (44)   (72)   (268)   (230)
  Disposal of fixed assets 5   5   12   30
  Note receivable 30   58   94   234
  Receipt of note receivable -   -   1,000   -
  Intangible assets (29)   (164)   (226)   (140)
Cash flows from investing activities (38)   (233)   612   10,337
  Bank loan -   -   -   (3,658)
  Redemption of preferred shares -   -   (15)   -
  Redemption of common shares (30)   -   (3,134)   -
  Repayment of long-term debt (20)   (50)   (65)   (83)
Cash flows from financing activities (50)   (50)   (3,214)   (3,741)
Net increase (decrease) in cash and cash equivalents (810)   (376)   (4,925)   6,138
Cash and cash equivalents, beginning of period 982   7,064   5,097   550
Cash and cash equivalents, end of period 172   6,688   172   6,688
Cash 172   1,688   172   1,688
Term deposit -   5,000   -   5,000
      172   6,688   172   6,688

(in thousands of dollars)

  November 30, 2010   February 28, 2010
  $   $
ASSETS (unaudited)    
Current assets      
  Cash 172   97
  Term deposit -   5,000
  Accounts receivable 3,399   2,091
  Note receivable -   1,000
  Income taxes receivable -   30
  Inventories 2,250   2,436
  Prepaid expenses and other 246   288
  Current portion of note receivable    200   200
  6,267   11,142
Note receivable 1,237   1,331
Fixed assets 8,732   9,157
Intangible assets 653   643
Future income taxes 2,666   2,378
  19,555   24,651
Current liabilities      
  Accounts payable 4,646   3,825
  Instalments on long-term debt 90   85
  4,736   3,910
Long-term debt 19   69
  4,755   3,979
Capital stock 23,985   44,527
Contributed surplus 17,854   455
Deficit (27,039)   (24,310)
  14,800   20,672
  19,555   24,651


For further information:

Source :   GBO Inc.
Contact :     Christopher M. Wood, Chairman of the Board and Chief Executive Officer
(418) 387-7723

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