Goodfellow Inc.
TSX : GDL

Goodfellow Inc.

March 27, 2006 13:00 ET

Goodfellow Reports its Results for the Second Quarter 2005-2006

DELSON, QUEBEC--(CCNMatthews - March 27, 2006) - Goodfellow Inc. (TSE:GDL) announced today its sales and net income for the second quarter ending February 28, 2006. Sales increased 4.7% to $111.2 million compared to $106.1 million a year ago. Net income increased to $1.5 million or $0.35 per share compared to $0.6 million or 0.14 per share for the same period last year. Sales activities during the second quarter were unexpectedly strong due to the unseasonably warm weather across Canada positively impacting the new housing market during January and February. The combination of productivity improvement initiatives started in fiscal 2005 and the strong Canadian dollar performance against US currency aided profitability. Gross margins remained strong throughout the second quarter of fiscal 2005-2006. General expenses, selling and administrative costs for the increased from $16.5 million to $17.4 million during the second quarter ended February 28, 2006. This was directly linked with the added labor due to higher volume of value added products. Repair and maintenance as well as higher energy and fuel costs impacted both operations and freight costs during the winter.

For the first six months ended February 28, 2006, sales slipped to $231.7 million compared to $236.2 million a year ago. Nevertheless, net income for the same period increased 20% from $3.9 million or $0.91 per share to $4.6 million or $1.09 per share.

"Our performance for the second quarter exceeded our expectations considering cost increases, the weakening of the U.S. dollar and what is clearly a slowing housing market" said Richard Goodfellow, Goodfellow's President and Chief Executive Officer. "Our outlook for the spring and summer remains positive. Our order file remains strong especially in our core value - added business."

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)
Six Months Three Months
Ended Ended
February 28 February 28
2006 2005 2006 2005
$ $ $ $
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Sales 231,692 236,242 111,150 106,118
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Expenses
Cost of goods sold, selling,
administrative and general
expenses 222,389 228,072 107,739 104,112
Depreciation and amortization 997 1,010 512 515
Financial 1,271 1,192 635 600
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224,657 230,274 108,886 105,227
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Income before income taxes 7,035 5,968 2,264 891
Income taxes 2,427 2,118 781 316
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Net income 4,608 3,850 1,483 575
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Earnings per share 1.09 0.91 0.35 0.14
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Earnings per share diluted 1.08 0.90 0.35 0.14
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GOODFELLOW INC.

CONDENSED BALANCE SHEET
(in thousands of dollars)
(Unaudited)
As at february 28
2006 2005
$ $
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Current assets 143,069 137,174
Total assets 171,211 165,752
Current liabilities 80,750 81,510
Total liabilities 82,930 83,874
Shareholder's equity 88,281 81,878
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GOODFELLOW INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands of dollars)
(unaudited)
Six Months Three Months
Ended February 28 Ended February 28
2006 2005 2006 2005
$ $ $ $
Operating activities
Net income 4,608 3,850 1,483 575
Items not affecting cash
Depreciation of
amortization 997 1,010 512 515
Pension plan expense 316 48 161 48
Gain on disposal of assets 11 (6) 4 -
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5,932 4,902 2,160 1,138
Changes in non-cash operating
working capital balances
Decrease (increase) in
accounts receivable 18,017 24,485 4,519 6,360
Decrease (increase) in
inventories (19,475) (16,934) 535 965
Decrease (increase) in
prepaid expenses (448) (604) (1,682) (849)
Increase (decrease)
in accounts payable (3,345) (6,544) (4,775) (3,644)
Increase (decrease) in
income taxes (882) (4,491) (599) (680)
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(201) 813 158 3,289
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Financing activities
Dividends (3,822) (2,320) (2,123) -
Issuance of common
shares 299 226 266 181
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(3,523) (2,095) (1,857) 181
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Investing activities
Acquisition of fixed
assets (1,392) (1,624) (488) (702)
Disposal of fixed assets 18 9 18 -
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(1,374) (1,615) (470) (702)
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Net cash inflow (outflow) (5,098) (2,897) (2,169) 2,768
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Cash and cash equivalents,
beginning of period (42,555) (51,654) (45,483) (57,319)
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Cash and cash equivalents,
end of period (47,652) (54,551) (47,652) (54,551)
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