Goodfellow Inc.
TSX : GDL

Goodfellow Inc.

November 02, 2006 17:43 ET

Goodfellow Reports its Results for Fiscal Year 2005-2006

DELSON, QUEBEC--(CCNMatthews - Nov. 2, 2006) - Goodfellow Inc. (TSX:GDL) announced today its net income for fiscal year ended August 31, 2006 of $13.1 million or $3.06 per share compared to $11.2 million or $2.66 per share for the same period a year ago. Total consolidated sales for fiscal 2006 remained practically unchanged at $517.6 million compared to $517.8 million for the same period a year ago. Cash flows generated from operations for fiscal 2006 were $15.0 million or $3.53 per share compared to $13.2 million or $3.12 per share last year. Gross margins increased 6.45% during fiscal 2006 compared to last year benefiting from our product mix shifting toward our core traditional value-added products. Gross profits for fiscal 2006 increased $5.8 million compared to the same period a year ago. This positive outcome is a result of productivity and quality control improvement measures which generated a greater competitive advantage for the company.

For the three months ended August 31, 2006, consolidated sales increased 0.9% to $143.1 million compared to $141.8 million for the same period a year ago. Net income increased to $4.1 million or $0.96 per share compared to $4.2 million or $0.99 per share for the same period last year. Cash flows generated from operations for the three months ended August 31, 2006 were $4.1 million or $0.94 per share compared to $4.5 million or $1.08 per share for the same period last year. Remanufacturing sales activities were stable during the fourth quarter of fiscal 2006 due to increased hardwood market penetration in the US and export areas while New home construction across Canada continued to show signs of weakening during the fourth quarter ended August 31, 2006.

"Our core wood-based business continued to produce outstanding results. Despite the continued CVD duties on the U.S. side, our Douglas fir, Cedar, and Pine sectors contributed strongly. Our Hardwood Lumber business expanded dynamically and contributed over 35% more in gross profits. Building Materials again grew while holding margin levels." said Richard Goodfellow, President and Chief Executive Officer of Goodfellow Inc. "There is no doubt now that we have seen the best of the building boom. Housing starts are off decidedly everywhere except Alberta and we are putting more emphasis on our key renovation markets and products. Our order files this fall remain relatively strong and in many product areas material costs have declined to historic low levels."

Goodfellow Inc. is eastern Canada's largest independent re-manufacturer and distributor of lumber products and Canada's largest distributor of hardwood flooring products. Goodfellow shares trade on the Toronto Stock Exchange under the symbol GDL.



GOODFELLOW INC.
STATEMENT OF INCOME
(in thousands of dollars except earnings per share)
(Unaudited)
Twelve Months Three Months
Ended August 31 Ended August 31
2006 2005 2006 2005
$ $ $ $
------------------------------------------------------------------------
Sales 517,573 517,797 143,115 141,829
------------------------------------------------------------------------

Expenses
Cost of goods sold, selling,
administrative and general expenses 493,136 495,844 135,822 134,247
Depreciation and amortization 2,076 2,076 547 527
Financial 2,775 2,643 765 750
------------------------------------------------------------------------
497,987 500,563 137,134 135,524
------------------------------------------------------------------------

Income before income taxes 19,586 17,234 5,981 6,305
Income taxes 6,529 6,000 1,835 2,120
------------------------------------------------------------------------
Net income 13,057 11,234 4,146 4,185
------------------------------------------------------------------------

Earnings per share 3.06 2.66 0.96 0.99
------------------------------------------------------------------------
Earnings per share diluted 3.05 2.64 0.96 0.98
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GOODFELLOW INC.
CONDENSED BALANCE SHEET
(in thousands of dollars)
(Unaudited)
As at August 31
2006 2005
$ $
------------------------------------------------------------------------
Current assets 133,513 137,142
Total assets 161,370 165,236
Current liabilities 65,929 75,859
Total liabilities 67,736 78,039
Shareholder's equity 93,634 87,197
------------------------------------------------------------------------



GOODFELLOW INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars) Twelve Months Three Months
(Unaudited) Ended August 31 Ended August 31
2006 2005 2006 2005
$ $ $ $
--------------------------------------------------------------------------
Operating activities
Net income 13,057 11,234 4,146 4,185
Items not affecting cash
Depreciation and amortization 2,076 2,076 548 527
Excess of expense over pension plan
funding 273 18 (261) (62)
Loss disposal of assets - 21 - 34
Future income taxes (373) (184) (373) (184)
--------------------------------------------------------------------------
15,033 13,165 4,060 4,500

Changes in non-cash operating
working capital balances
Decrease (increase) in
accounts receivable 4,582 10,039 3,813 3,511
Decrease (increase) in inventories (90) (2,129) 18,278 21,605
Decrease (increase) in
prepaid expenses (1,985) (1,958) (165) (720)
Increase (decrease) in
accounts payable (4,136) 2,315 (6,928) 1,744
Increase (decrease) in income taxes 3,025 (5,977) 827 196
--------------------------------------------------------------------------
16,429 15,455 19,885 30,836
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Financing activities
Dividends (6,812) (4,442) (2,990) (2,122)
Issuance of common shares 299 281 - 11
--------------------------------------------------------------------------
(6,513) (4,161) (2,990) (2,111)
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Investing activities
Acquisition of fixed assets (2,142) (2,231) (195) (265)
Disposal of fixed assets 30 36 - 9
--------------------------------------------------------------------------
(2,112) (2,195) (195) (256)
--------------------------------------------------------------------------
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Foreign currency translation
adjustment (107) - (107) -
--------------------------------------------------------------------------

Net cash inflow (outflow) 7,697 9,099 16,593 28,469
--------------------------------------------------------------------------
Cash and cash equivalents,
beginning of period (42,555) (51,654) (51,451) (71,024)
--------------------------------------------------------------------------
Cash and cash equivalents,
end of period (34,858) (42,555) (34,858) (42,555)
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