GBO Inc. is intensifying its sales efforts despite a late recovery

STE-MARIE DE BEAUCE, QC, Oct. 28 /CNW Telbec/ - (Note: All amounts are in Canadian dollars.) For the three months ended August 31, 2010, GBO Inc. ("GBO" or "the Company", ticker symbol GBO / TSX Venture), a manufacturer of windows and doors "Bonneville" had sales of $ 4.8 million compared to $11.3 million in the same period last year. Canadian sales were down $ 5.8 million to $ 3.0 million compared to $ 8.8 million the same quarter last year. This decline is attributable to the divestiture of two divisions in the middle of the second quarter of last year.

The sales by the Company within the United States decreased from $ 0.6 million or 24.5% (down 19.5% at constant currency) to $ 1.8 million compared to $ 2.4 million in the second quarter of last year.

GBO recorded an operating loss (or negative EBITDA) of $ 0.7 million in the second quarter of fiscal 2011, compared to a positive EBITDA of $ 0.5 million the previous year.

The Company ended the quarter with a loss before taxes of $ 1.0 million and a net loss of $ 1.0 million or $ 0.04 per share (basic and diluted), compared with net income including unusual item of $ 3.5 million or $ 0.11 per share (basic and diluted) in the same quarter of fiscal 2010. The decline in profitability is due in part to the high level of after sales services for discontinued operations (PVC and steel door) which are important because the company must continue to support the product's warranty coverage.

For the six months ended August 31, 2010, sales of GBO totalled $ 9.5 million compared to $ 20.9 million for the same period last year, down from $ 11.4 million. However, sales from continuing operations by Bonneville, those attributable to the plant in Ste-Marie de Beauce, showed an increase of about 10% during the first 6 months. For this period, Ontario was particularly strong with an increase of more than 30% over last year. U.S. revenue has increased by over 15% through agreements with more than 30 new customers and distributors.

Outlook

We continue to receive positive signals from the US market and from our sales force (which is more widely deployed), yet we are forced to note a general slowdown of the industry. The major construction projects in the United States are analyzed in great detail and our major competitors are very aggressive in sales strategies. However, the company recently recorded its first sales with distributors following major efforts of the sales team, which bodes well for the coming months. These new customers represent a significant potential for GBO since they are willing to redirect a portion of their purchase currently dedicated to some of our major competitors.

For our traditional Canadian markets, primarily in Quebec and Ontario our highly targeted promotional campaign to consumers, retailers and especially among architects is starting to bear fruit. The architects' response was excellent and our products seem to stand out.

The organization continues to reduce its breakeven point in order to cope with the upcoming winter period and corresponding slowdown. However, the addition of new customers in the Southeast U.S. could significantly mitigate this effect.

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 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 (asthat 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 August 31, 2010
(unaudited)(in thousands of dollars, except per share amounts)
	Three months				Six months
	2010		2009		2010		2009
	$		$		$		$
Sales	4,826		11,251		9,452		20,924
Cost of sales and operating expenses	5,512		10,724		10,983		21,437
Operating income (loss) before the following items	(686)		527		(1,531)		(513)
Depreciation of fixed assets	237		317		463		712
Amortization of intangible assets	79		58		136		111
Loss (gain) on disposal of fixed assets	-		(5)		1		(8)
Interest on long-term debt	5		1		11		2
Other financial expenses (income), net	(20)		4		(107)		217
	301		375		504		1,034
Earnings (loss) before unusual item and income taxes	(987)		152		(2,035)		(1,547)
Unusual item ( Note 8 )	-		4,715		-		4,715
Earnings (loss) before income taxes	(987)		4,867		(2,035)		3,168
Future income taxes	-		1,337		(288)		878
Net earnings (loss) and comprehensive income	(987)		3,530		(1,747)		2,290
Earnings (loss) per share and diluted earnings (loss) per share	(0.04)		0.11		(0.06)		0.07
Weighted average number of common shares outstanding	25,192,895		32,676,569		28,939,732		32,676,569
GBO INC.
CONSOLIDATED DEFICIT
Period ended August 31, 2010
(unaudited)(in thousands of dollars)
	Three months				Six months
	2010		2009		2010		2009
	$		$		$		$
Deficit, beginning of period	(25,070)		(26,218)		(24,310)		(24,978)
Net earnings (loss)	(987)		3,530		(1,747)		2,290
Deficit, end of period	(26,057)		(22,688)		(26,057)		(22,688)

GBO INC.
CONSOLIDATED CASH FLOWS
Period ended August 31, 2010
(unaudited)(in thousands of dollars)
			Three months				Six months
			2010		2009		2010		2009
			$		$		$		$
OPERATING ACTIVITIES
Net earnings (loss)			(987)		3,530		(1,747)		2,290
	Non-cash items
		Unusual item	-		(4,715)		-		(4,715)
		Loss (gain) on disposal of fixed assets	-		(5)		1		(8)
		Depreciation of fixed assets	237		317		463		712
		Amortization of intangible assets	79		58		136		111
		Stock-based compensation expense	3		4		4		7
		Future income taxes	-		1,337		(288)		878
		Changes in working capital items	740		985		(170)		360
Cash flows from operating activities			72		1,511		(1,601)		(365)
INVESTING ACTIVITIES
	Cash proceeds on disposal of assets, net of related charges		-		10,503		-		10,503
	Fixed assets		(72)		(52)		(224)		(158)
	Disposal of fixed assets		-		20		7		25
	Note receivable		28		100		64		176
	Receipt of note receivable (note 8)		1,000		-		1,000		-
	Intangible assets		(33)		-		(197)		24
Cash flows from investing activities			923		10,571		650		10,570
FINANCING ACTIVITIES
	Bank loan		-		(6,211)		-		(3,658)
	Redemption of preferred shares		-		-		(15)		-
	Redemption of common shares		(3,104)		-		(3,104)		-
	Repayment of long-term debt		(23)		(7)		(45)		(33)
Cash flows from financing activities			(3,127)		(6,218)		(3,164)		(3,691)
Net increase (decrease) in cash and cash equivalents			(2,132)		5,864		(4,115)		6,514
Cash and cash equivalents, beginning of period			3,114		1,200		5,097		550
Cash and cash equivalents, end of period			982		7,064		982		7,064
CASH AND CASH EQUIVALENTS			382		2,064		382		2,064
Cash			600		5,000		600		5,000
Term deposit			982		7,064		982		7,064

GBO INC.
CONSOLIDATED BALANCE SHEET
(in thousands of dollars)
			August 31, 2010		February 28, 2010
			$		$
ASSETS			(unaudited)
Current assets
	Cash		382		97
	Term deposit		600		5,000
	Accounts receivable		3,120		2,091
	Note receivable		-		1,000
	Income taxes receivable		-		30
	Inventories		2,493		2,436
	Prepaid expenses and other		388		288
	Current portion of note receivable		200		200
			7,183		11,142
Note receivable			1,267		1,331
Fixed assets			8,930		9,157
Intangible assets			704		643
Future income taxes			2,666		2,378
			20,750		24,651
LIABILITIES
Current liabilities
	Accounts payable		4,811		3,825
	Instalments on long-term debt		92		85
			4,903		3,910
Long-term debt			37		69
			4,940		3,979
SHAREHOLDER'S EQUITY
Capital stock			23,985		44,527
Contributed surplus			17,882		455
Deficit			(26,057)		(24,310)
			15,810		20,672
			20,750		24,651

%SEDAR: 00002757EF

For further information:

Source :	GBO Inc.
Contact :	Christopher M. Wood, Chairman of the Board and Chief Executive Officer [phone]