STE-MARIE DE BEAUCE, QC, June 22 /CNW Telbec/ - (Note: All amounts are in Canadian dollars.) For the fiscal year ended February 28, 2010 GBO INC. ("GBO" or "the Company"; ticker symbol GBO / TSX Venture Exchange), manufacturer of the "Bonneville" windows and doors, achieved annual sales of $29.8 million, compared with $54.4 million the previous year. This decline is primarily attributable to the second quarter disposal of two divisions, as sales of the Bonneville division's continuing operations ("Bonneville"), namely the Ste-Marie de Beauce plant which is exclusively focused on the manufacture and marketing of wood windows, doors and accessories, decreased by 18% only in light of the current economic context. Bonneville's Canadian sales amounted to $22.6 million compared with $42.7 million the previous year. The Ontario market remained particularly affected by the economic downturn, given its exposure to the weakened automotive industry. The Company's U.S. sales, which continued to be affected by challenging economic conditions, attained $7.2 million compared with $11.7 million 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 $1.2 million during the year ended February 28, 2010, down from $0.3 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. It should be noted that Bonneville continued to carry out 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 and the broadened sales force in the U.S. Excluding the unusual item, the Company posted a pre-tax net loss of $3.2 million and net earnings of $0.7 million or $0.02 per share (basic and diluted) for fiscal 2010, compared with a net loss of $1.4 million or ($0.04) per share (basic and diluted) for fiscal 2009.
As at February 28, 2010, GBO's working capital posted a gain of $7.2 million and a current ratio of 2.8:1, compared with a $0.1 million deficiency and a 0.99:1 ratio a year earlier which is primarily due to the sale of two divisions during the year.
Fourth-Quarter Financial Results
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For the three-month period ended February 28, 2010, sales totalled $2.8 million compared to $6.3 million in the previous year. Canadian sales were $1.5 million compared with $4.4 million last year. Exports to the United States were $1.3 million compared with $1.9 million during the same period last year. However, despite a sales decrease of 56%, GBO recorded negative EBITDA of $0.7 million in the fourth quarter of 2010, compared with negative EBITDA of $2.1 million in the same period of 2009. The quarterly net loss amounted to $1.4 million or $0.04 per share (basic and diluted) (including unusual items), compared with a net loss of $2.4 million or $0.07 per share (basic and diluted) in the same quarter of the previous year, which confirms that GBO is on the right track with its cost reductions.
Outlook
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Management is cautious as to GBO's outlook for fiscal 2011 given the current economic context although it believes that the Company benefits from certain advantages to continue to weather the uncertainty in the marketplace. Such advantages include its solid balance sheet, its lower breakeven point as a result of the initiatives taken in recent years and a more flexible cost structure, partly as a result of the changes introduced in labor management during the past fiscal year with the support of the union, in order to better align operating expenses to our seasonal sales cycle.
GBO expects the Quebec and Ontario markets will continue its turnaround. For its part these markets continue to perform well, although its relative strength is giving rise to fiercer competition. GBO is well positioned to face this competition, given its leadership, its higher end positioning and the quality of the solutions it offers, which combine a broad selection of top performing, innovative and high quality products, excellent customer service and one of the best warranty programs in the industry. Its solid financial health also represents an advantage within the market.
In the United States, GBO's management has been witnessing some positive signs in the market, and is of the opinion that the worst of the real estate crisis is behind us. In addition, although the recent rise in the Canadian dollar in relation to the US dollar can weaken Canadian exporters competitiveness when selling prices are a predominant factor, management believes this will continue to be alleviated by the fact that GBO has adopted its niche strategy to develop the Southeastern US market, where it banks on its selection of high-end wood products (all of which are certified in accordance with the highest North American Standards), and where it offers its customers the opportunity to differentiate themselves with distinctive products. Finally GBO expects the cost of its raw materials to be stable over the upcoming year.
Profile
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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.
Consolidated Earnings and Comprehensive Income
Years ended February 28, 2010 and 2009
(in thousands of dollars, except per share amounts)
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2010 2009
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$ $
Sales 29,782 54,412
Cost of sales and operating expenses 30,962 54,072
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Operating income (loss) before the following
items (1,180) 340
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Depreciation and write-down of fixed assets 1,593 1,562
Amortization of intangible assets 182 199
Gain on disposal of fixed assets (6) (5)
Interest on long-term debt 13 6
Other net financial expenses 189 (173)
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1,971 1,589
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Loss before unusual item and income taxes (3,151) (1,249)
Unusual item - gain on disposal of assets 4,591
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Earnings (loss) before income taxes 1,440 (1,249)
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Income taxes
Current 74
Future 698 187
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772 187
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Net earnings (loss) and comprehensive income 668 (1,436)
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Net earnings (loss) per share
Basic and diluted 0.02 (0.04)
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Consolidated Deficit
Years ended February 28, 2010 and 2009
(in thousands of dollars)
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2010 2009
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$ $
Balance, beginning of year (24,978) (23,542)
Net earnings (loss) 668 (1,436)
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Balance, end of year (24,310) (24,978)
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Consolidated Cash Flows
Years ended February 28, 2010 and 2009
(in thousands of dollars)
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2010 2009
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OPERATING ACTIVITIES $ $
Net earnings (loss) 668 (1,436)
Non-cash items
Unusual gain on disposal of assets (4,591)
Gain on disposal of fixed assets (6) (5)
Depreciation and write-down of fixed
assets 1,593 1,562
Amortization of intangible assets 182 199
Interest income on the note receivable (165) (208)
Future income tax 698 187
Stock-based compensation expense 10 10
Changes in working capital items (614) (326)
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Cash flows from operating activities (2,225) (17)
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INVESTING ACTIVITIES
Disposal of assets in cash, net of expenses
incurred 10,379
Proceeds on note receivable 522 562
Proceed on other receivables 22
Fixed assets (249) (623)
Disposal of fixed assets 30 5
Intangible assets (176) (139)
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Cash flows from investing activities 10,528 (195)
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FINANCING ACTIVITIES
Bank loan (3,658) 554
Repayment of long-term debt (99) (79)
Issue of common shares 1
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Cash flows from financing activities (3,756) 475
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Net change in cash and cash equivalents 4,547 263
Cash and cash equivalents, beginning of
year 550 287
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Cash and cash equivalents, end of year 5,097 550
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CASH AND CASH EQUIVALENTS
Cash 97 550
Term deposit 5,000
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5,097 550
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Consolidated Balance Sheets
February 28, 2010 and 2009
(in thousands of dollars)
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2010 2009
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ASSETS $ $
Current assets
Cash 97 550
Term deposit, 0.1%, maturing on
March 1, 2010 5,000
Accounts receivable 2,091 3,830
Note receivable 1,000
Income taxes receivable 30 103
Inventories 2,435 4,045
Prepaid expenses and other 288 517
Current portion of note receivable 200 356
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11,142 9,401
Note receivable 1,331 1,532
Fixed assets 9,157 14,769
Intangible assets 643 709
Future income taxes 2,378 3,076
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24,651 29,487
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LIABILITIES
Current liabilities
Bank loan 3,658
Accounts payable and accrued liabilities 3,825 5,806
Instalments on long-term debt 85 13
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3,910 9,477
Long-term debt 69 17
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3,979 9,494
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SHAREHOLDERS' EQUITY
Capital stock 44,527 44,526
Contributed surplus 455 445
Deficit (24,310) (24,978)
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20,672 19,993
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24,651 29,487
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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.
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For further information: Christopher M. Wood, Chairman of the Board and Chief Executive Officer, (418) 387-7723; Source: GBO Inc.
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