Goodfellow Inc.
TSX : GDL

Goodfellow Inc.

March 25, 2011 16:38 ET

Goodfellow Reports Its Results for the Second Quarter Ended February 28, 2011

DELSON, QUEBEC--(Marketwire - March 25, 2011) - Goodfellow Inc. (TSX:GDL) today reported its financial results for the second quarter ended February 28, 2011. Net loss from operations was $1.7 million or $0.20 per share compared to a net income of $1.9 million or $0.22 per share a year ago. Consolidated sales for the second quarter of fiscal 2011 were $94.9 million compared to $107.8 million for the same period a year ago. Cash flow from operations (excluding non-cash working capital) for the second quarter of fiscal 2011 decreased to $(1.3) million from $2.5 million last year. Sales in Canada decreased 14% compared to last year mainly due to the absence of the Home Renovation Tax Credit which was in full force during the second quarter of fiscal 2010. Consequently, flooring sales were affected in the retail industry which continued to slow down throughout the winter. Sales in the US increased 3% due to the slow recovery in the Northeast US retail lumber and panel market. Export sales increased 9% compared to last year due mainly to strong flooring sales in the UK and increasing sales to China and the Middle East. Selling, General and Administrative expenses for the second quarter of fiscal 2011 decreased slightly at $18.2 million compared to $18.4 million for the corresponding period a year ago. The decrease is due to the reduction in selling and administrative expenses due to reduced commissions linked with the sales decrease, lower bad debt provisions and lower collection fees. On the other hand, direct labour and energy costs increased due to the value-added production build-up through the winter. Finally, leases and rental costs rose due to fleet and logistics requirements linked with our commitment to improved customer service.

For the six months ended February 28, 2011, the Company reported net loss from operations of $0.7 million or $0.09 per share compared to a net income of $4.0 million or $0.46 per share a year ago. Consolidated sales were $204.2 million compared to $217.1 million for the same period a year ago. Cash flow from operations (excluding non-cash working capital) decreased to $0.2 million from $5.0 million for the same period last year.

"The above results reflect the fact that business conditions were very tough during the winter quarter. The harsh weather everywhere, the rapid rise in fuel costs, and the sharp slump in retail demand all contributed to these disappointing results" said Richard Goodfellow, President and Chief Executive Officer. "Historically, the second quarter has been difficult but this year presented even greater challenges. We remain however cautiously optimistic that the 3rd and 4th quarter will mark a return to our usual level of profitability".

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

GOODFELLOW INC.
Consolidated statements of earnings
(in thousands of dollars, except per share amounts)
(unaudited)
  Three Months
ended February 28
Six Months
ended February 28
2011   2010 2011   2010
  $   $ $   $
             
Sales 94,853   107,832 204,231   217,078
             
Expenses            
  Cost of goods sold, selling, administrative and
general expenses
96,426   104,217 203,482   209,767
  Amortization 384   370 750   726
  Financial 296   261 667   492
  Foreign currency loss 194   159 392   306
  97,300   105,007 205,291   211,291
             
             
Earnings before income taxes (2,447 ) 2,825 (1,060 ) 5,787
             
Income taxes (759 ) 891 (329 ) 1,825
             
Net earnings (1,688 ) 1,934 (731 ) 3,962
             
Earnings per share            
             
  Basic and diluted (0.20 ) 0.22 (0.09 ) 0.46
             
             
             
             
GOODFELLOW INC.
Consolidated statements of retained earnings
(in thousands of dollars)
(unaudited)
 
  Six Months
ended February 28
 
  2011   2010  
  $   $  
         
Balance, beginning of year 106,880   101,932  
         
Net earnings (731 ) 3,962  
  106,149   105,894  
         
Dividends (2,572 ) (2,572 )
Balance, end of year 103,577   103,322  
         
         
         
         
Consolidated statements of comprehensive income
(in thousands of dollars)
(unaudited)
  Three Months
ended February 28
Six Months
ended February 28
  2011   2010 2011   2010
  $   $ $   $
             
Net Income (1,688 ) 1,934 (731 ) 3,962
             
Other comprehensive income            
             
  Foreign currency translation adjustment -   - -   -
             
Total other comprehensive income -   - -   -
             
Comprehensive income (1,688 ) 1,934 (731 ) 3,962
             
             
             
             

GOODFELLOW INC.
Consolidated balance sheets
As at February 28, 2011 and 2010
(in thousands of dollars)
(unaudited)
  2011 2010
  $ $
     
Assets    
Current assets    
  Cash 527 560
  Accounts receivable 54,477 61,805
  Income taxes recoverable 2,586 -
  Inventories 74,777 72,714
  Prepaid expenses 3,085 2,230
  135,452 137,309
     
Capital assets 31,044 30,558
Deferred pension asset 6,850 4,938
  173,346 172,805
     
Liabilities    
Current liabilities    
  Bank indebtedness 33,818 24,078
  Accounts payable and accrued liabilities 23,707 33,197
  Income taxes payable - 311
  57,525 57,586
     
Future income taxes 3,022 2,674
  60,547 60,260
     
     
Shareholders' equity    
  Capital stock 9,222 9,222
  Retained earnings 103,577 103,322
  Accumulated other comprehensive income - -
  112,799 112,545
  173,346 172,805
     
     
     
     


GOODFELLOW INC.
Consolidate statements of cash flows
(in thousands of dollars)
(unaudited)
 
  Three Months
ended February 28
  Six Months
ended February 28
 
  2011   2010   2011   2010  
  $   $   $   $  
                 
Cash flows from operating activities                
  Net earnings (1,688 ) 1,934   (731 ) 3,962  
  Adjustments for :                
    Amortization 384   370   750   726  
    Amortization included in cost of good sold 249   258   487   510  
    Gain on disposal of capital assets -   14   -   6  
    Shortage of expense over pension plan
funding
(197 ) (126 ) (329 ) (237 )
  (1,252 ) 2,450   177   4,967  
                 
  Changes in non-cash working capital items (7,741 ) (9,695 ) (2,568 ) (19,636 )
  (8,993 ) (7,245 ) (2,391 ) (14,669 )
                 
Cash flows used by financing activities                
  (Decrease) increase in bank loan 12,000   4,000   (1,000 ) 9,000  
  (Decrease) increase in banker's acceptances (10,000 ) 5,000   -   10,000  
  Dividends -   -   (2,572 ) (2,572 )
  2,000   9,000   (3,572 ) 16,428  
                 
Cash flows used by investing activities                
  Acquisition of capital assets (802 ) (470 ) (1,744 ) (1,452 )
  Proceeds on disposal of capital assets -   12   -   21  
  (802 ) (458 ) (1,744 ) (1,432 )
                 
Net cash (outflow) inflow (7,795 ) 1,297   (7,707 ) 327  
(Bank overdraft), beginning of year (26,496 ) (5,817 ) (26,584 ) (4,847 )
Bank overdraft, end of year (34,291 ) (4,520 ) (34,291 ) (4,520 )
                 
Bank overdraft is comprised of :                
  Cash 527   560   527   560  
  Bank overdraft (34,818 ) (5,080 ) (34,818 ) (5,080 )
  (34,291 ) (4,520 ) (34,291 ) (4,520 )

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