Goodfellow Reports its Results for the Second Quarter Ended May 31, 2016 and Declares an Eligible Dividend

DELSON, QUEBEC--(Marketwired - July 8, 2016) - Goodfellow Inc. (TSX:GDL) announced today its financial results for the second quarter ended May 31, 2016. For the three months ended May 31, 2016, the Company reported net income of $3.4 million or $0.40 per share compared to $3.2 million or $0.38 per share a year ago. Consolidated sales for the three months ended May 31, 2016 were $166.7 million compared to $154.0 million last year. For the six months ended May 31, 2016, the Company reported a net income of $2.5 million or $0.29 per share compared to $2.9 million or $0.34 per share a year ago.

Consolidated sales for the six months ended May 31, 2016 were $275.3 million compared to $252.1 million last year. Sales in Canada during the first six months of fiscal 2016 increased 14% compared to the same period a year ago mainly due to a strong second quarter in Ontario and the Atlantic provinces. Sales in the United States for the first six months ended May 31, 2016 decreased 5% on a Canadian dollar basis compared to the same period last year due to reduced demand for lumber products. On a non-converted basis, US denominated sales decreased 14% compared to last year. Finally, Export sales decreased 26% during the first six months of fiscal 2016 compared to the same period a year ago mainly due to decreasing demand for value added products in the UK and Asia. On the operating side, Selling, Administrative and General Expenses increased 6.8% compared to the corresponding period last year due to increased variables costs for the added volume and the acquisition of Quality Hardwoods Ltd. As a result, direct, selling, and administrative expenses increased to $45.2 million ($42.4 million last year).

"We are happy with our sales growth during the second quarter as we continue to leverage our recent transactions." said Denis Fraser, President and Chief Executive Officer. "Nevertheless, our profitability remains less than expected mainly due to the implementation cost of our ERP system. Our results are expected to improve in the coming months as we continue to make progress with our efficiency."

The Board of directors of Goodfellow Inc. declared an eligible dividend of $0.15 per share payable August 12, 2016, to all shareholders of record as of July 29, 2016.

Goodfellow Inc. is one of eastern 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 Comprehensive Income
For the three months and six months ended May 31, 2016 and 2015
(in thousands of dollars, except per share amounts)
Unaudited
		For the three months ended		For the six months ended
		May 31 2016	May 31 2015	May 31 2016	May 31 2015
		$	$	$	$
Sales		166,669	153,975	275,328	252,072
Expenses
	Cost of goods sold	137,237	126,325	225,216	204,402
	Selling, administrative and general expenses	23,927	22,362	45,230	42,351
	Net financial costs	824	713	1,459	1,247
		161,988	149,400	271,905	248,000
Earnings before income taxes		4,681	4,575	3,423	4,072
Income taxes		1,307	1,327	955	1,181
Net earnings		3,374	3,248	2,468	2,891
Net earnings per share - Basic and diluted		0.40	0.38	0.29	0.34

GOODFELLOW INC.
Consolidated Statements of Financial Position
(in thousands of dollars)
		As at	As at	As at
		May 31 2016 (Unaudited)	November 30 2015 (Audited)	May 31 2015 (Unaudited)
		$	$	$
Assets
Current Assets
	Cash	1,396	965	494
	Trade and other receivables	121,800	65,670	98,708
	Income taxes receivable	18	-	-
	Inventories	141,162	97,665	107,384
	Prepaid expenses	4,820	4,156	2,852
Total Current Assets		269,196	168,456	209,438
Non-Current Assets
	Property, plant and equipment	39,430	36,146	36,626
	Intangible assets	3,629	2,667	-
	Defined benefit plan asset	4,991	4,812	1,832
	Investment in a joint venture	3,444	-	-
Total Non-Current Assets		51,494	43,625	38,458
Total Assets		320,690	212,081	247,896
Liabilities
Current liabilities
	Bank indebtedness	102,107	46,781	66,227
	Trade and other payables	82,588	29,762	52,876
	Income taxes payable	-	1,595	679
	Provision	1,111	1,112	941
	Current portion of long-term debt	183	113	50
Total Current Liabilities		185,989	79,363	120,773
Non-Current Liabilities
	Provision	503	477	499
	Long-term debt	188	-	37
	Deferred income taxes	4,718	4,141	2,535
	Defined benefit plan obligation	-	-	1,675
Total Non-Current Liabilities		5,409	4,618	4,746
Total Liabilities		191,398	83,981	125,519
Shareholders' equity
	Share capital	9,152	9,152	9,152
	Retained earnings	120,140	118,948	113,225
		129,292	128,100	122,377
Total Liabilities and Shareholders' Equity		320,690	212,081	247,896

GOODFELLOW INC.
Consolidated Statements of Cash Flows
For the three months and six months ended May 31, 2016 and 2015
(in thousands of dollars)
(Unaudited)
			For the three months ended				For the six months ended
			May 31		May 31		May 31		May 31
			2016		2015		2016		2015
			$		$		$		$
Operating Activities
	Net Earnings		3,374		3,248		2,468		2,891
	Adjustments for :
		Depreciation	838		746		1,636		1,477
		Accretion expense on provision	13		3		26		(11	)
		Income taxes	1,307		1,327		955		1,181
		(Gain) Loss on disposal of property, plant and equipment	-		(21	)	-		16
		Interest expense	529		463		963		807
		Funding in (excess) deficit of pension plan expense	(54	)	56		(179	)	113
			6,007		5,822		5,869		6,474
	Changes in non-cash working capital items		(12,711	)	4,134		(48,225	)	(25,771	)
	Interest paid		(508	)	(401	)	(1,164	)	(765	)
	Income taxes paid		(2,322	)	(284	)	(2,875	)	(1,499	)
			(15,541	)	3,449		(52,264	)	(28,035	)
Net Cash Flows from Operating Activities			(9,534	)	9,271		(46,395	)	(21,561	)
Financing Activities
	Net increase (decrease) in bank loans		2,500		(6,000	)	15,500		(1,500	)
	Increase in banker's acceptances		2,500		2,000		30,500		22,000
	Increase in long-term debt		560		-		1,050		-
	Reimbursement of long-term debt		(56	)	(847	)	(792	)	(833	)
	Dividends paid		(1,276	)	-		(1,276	)	-
			4,228		(4,847	)	44,982		19,667
Investing Activities
	Acquisition of property, plant and equipment		(572	)	(611	)	(938	)	(1,117	)
	Increase in intangible assets		(622	)	-		(1,305	)	-
	Proceeds on disposal of property, plant and equipment		-		3		-		17
	Business acquisitions, net of cash acquired		(587	)	-		(4,795	)	-
	Investment in a joint venture		(444	)	-		(444	)	-
			(2,225	)	(608	)	(7,482	)	(1,100	)
Net cash (outflow) inflow			(7,531	)	3,816		(8,895	)	(2,994	)
Cash position, beginning of period			(3,180	)	(10,549	)	(1,816	)	(3,739	)
Cash position, end of period			(10,711	)	(6,733	)	(10,711	)	(6,733	)
Cash position is comprised of :
	Cash and cash equivalents		1,396		494		1,396		494
	Bank overdraft		(12,107	)	(7,227	)	(12,107	)	(7,227	)
			(10,711	)	(6,733	)	(10,711	)	(6,733	)

GOODFELLOW INC.
Consolidated Statements of Change in Shareholders' Equity
For the six months ended May 31, 2016 and 2015
(in thousands of dollars)
		Share	Retained
		Capital	Earnings		Total
		$	$		$
Balance as at November 30, 2014 (Audited)		9,152	110,334		119,486
	Net earnings	-	2,891		2,891
Total comprehensive income		-	2,891		2,891
Balance as at May 31, 2015 (Unaudited)		9,152	113,225		122,377
Balance as at November 30, 2015 (Audited)		9,152	118,948		128,100
	Net earnings	-	2,468		2,468
Total comprehensive income		-	2,468		2,468
Transactions with owners of the Company
	Dividends	-	(1,276	)	(1,276	)
Balance as at May 31, 2016 (Unaudited)		9,152	120,140		129,292