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Goodfellow Reports its Results for the Second Quarter Ended May 31, 2017

/EINPresswire.com/ -- DELSON, QUEBEC--(Marketwired - Jul 4, 2017) - Goodfellow Inc. (TSX:GDL) announced today its financial results for the second quarter ended May 31st, 2017. For the three months ended May 31st, 2017, the Company reported a net loss of $(0.5) M or $(0.07) per share. Consolidated sales for the three months ended May 31st, 2017 were $139.6 M. For the month of May 2017, the Company reported a net profit of $0.845 M or $0.10 per share. Consolidated sales for the month of May 2017 were $52.1 M. EBITDA for the month of May 2017 was $1.940 M and EBITDA for Q2 was $1.312 M. For the six months ended May 31, 2017, the Company reported a net loss of $(5.9) M or $(0.70) per share. Consolidated sales for the six months ended May 31st, 2017 were $253.1 M.

A SPECIAL STATEMENT

Q2 results

Initiatives that began in the second half of Q1 started to show positive benefits in Q2. The Costs of Goods Sold was reset in order to incorporate all freight charges and give management the necessary information to challenge Goodfellow's gross margin expectation upwards. The headcount reduction continued in the first half of Q2 to right size overhead primarily in Delson. Obsolete inventory sales action remained a priority concern through March and April. The aggressive nature of our obsolete inventory sell off, combined with heavy restrictions on inbound inventory, led to substantial losses in March and April. By May 1st the company had right sized its inventory to a reasonable level giving it the ability to replenish prime goods and move forward. Crucial margin levels are being restored to historic norms, despite the compromised pressure treated wood margin, and the cost cutting measures have taken hold. The salesforce showed great resilience in regaining market share and re-establishing customer loyalty. May's results demonstrate the company is closer to normalcy. Yet, much work is to be done. There is greater clarity within the company of where our future success lies.

Update TLGI JV

The dissolution of the pressure treated joint venture took place as expected by May 31st in common accord. The corporate guarantee of $6.5 M related to the BN line has been released and Goodfellow is secured in regaining its initial $3.0 M investment.

Outlook

The company is continuing in its focused strategy to steadily increase margin levels and address all elements of obsolete inventory. Product lines are being reviewed to attribute precious inventory dollars properly and set a positive course leading to our annual warehouse sale August 15th in Delson and August 17th in Campbellville.

Goodfellow Inc. is a distributor of lumber products, building materials, and hardwood flooring products. Goodfellow shares trade on the Toronto Stock Exchange under the symbol GDL.

GOODFELLOW INC.
Consolidated Statement of Comprehensive Income (Unaudited)
For the three and six months ended May 31, 2017
(in thousands of dollars, except per share amounts)
For the three months
Ended May 31
For the six months
Ended May 31
$ $
Sales 139,641 253,131
Expenses
Cost of goods sold 119,585 218,688
Selling, administrative and general expenses 19,701 40,719
Net financial costs 1,072 2,024
140,358 261,431
Loss before income taxes (717 ) (8,300 )
Income taxes (176 ) (2,358 )
Net loss (541 ) (5,942 )
Loss per share - Basic and diluted (0.07 ) (0.70 )
GOODFELLOW INC.
Consolidated Statement of Financial Position
(Unaudited)
(in thousands of dollars)
As at As at
May 31
2017
November 30
2016
$ $
Assets
Current Assets
Cash 1,841 703
Trade and other receivables 86,625 64,255
Income taxes receivable 9,564 6,598
Inventories 101,074 115,391
Prepaid expenses 4,490 4,863
Total Current Assets 203,594 191,810
Non-Current Assets
Property, plant and equipment 37,512 38,693
Intangible assets 5,263 5,428
Defined benefit plan asset 2,233 2,234
Investment in a joint venture 3,524 3,403
Total Non-Current Assets 48,532 49,758
Total Assets 252,126 241,568
Liabilities
Current liabilities
Bank indebtedness 86,586 94,113
Trade and other payables 54,784 30,721
Provision 929 963
Current portion of long-term debt 125 136
Total Current Liabilities 142,424 125,933
Non-Current Liabilities
Provision 500 475
Long-term debt 64 126
Deferred income taxes 3,296 3,296
Defined benefit plan obligation 1,091 1,045
Total Non-Current Liabilities 4,951 4,942
Total Liabilities 147,375 130,875
Shareholders' equity
Share capital 9,152 9,152
Retained earnings 95,599 101,541
104,751 110,693
Total Liabilities and Shareholders' Equity 252,126 241,568

GOODFELLOW INC.
Consolidated Statement of Cash Flows (Unaudited)
For the three and six months ended May 31, 2017
(in thousands of dollars)
For the three months
Ended May 31
For the six months
Ended May 31
$ $
Operating Activities
Net loss (541 ) (5,942 )
Adjustments for :
Depreciation 957 1,906
Accretion expense on provision 13 25
Decrease in provision (3 ) (33 )
Income taxes (176 ) (2,358 )
Loss on disposal of property, plant and equipment 1 13
Interest expense 782 1,474
Funding in deficit of pension plan expense 31 47
Share of the profits of the joint venture 82 (121 )
1,146 (4,989 )
Changes in non-cash working capital items 534 16,401
Interest paid (807 ) (1,492 )
Income taxes paid (52 ) (608 )
(325 ) 14,301
Net Cash Flows from Operating Activities 821 9,312
Financing Activities
Net increase in bank loans 11,000 -
Net decrease in banker's acceptances (8,000 ) (8,000 )
Reimbursement of long-term debt (30 ) (73 )
2,970 (8,073 )
Investing Activities
Acquisition of property, plant and equipment (191 ) (401 )
Increase in intangible assets (133 ) (222 )
Proceeds on disposal of property, plant and equipment 23 49
(301 ) (574 )
Net cash inflow 3,490 665
Cash position, beginning of period (4,735 ) (1,910 )
Cash position, end of period (1,245 ) (1,245 )
Cash position is comprised of :
Cash and cash equivalents 1,841 1,841
Bank overdraft (3,086 ) (3,086 )
(1,245 ) (1,245 )
GOODFELLOW INC.
Consolidated Statements of Change in Shareholders' Equity (Unaudited)
For the six months ended May 31, 2017
(in thousands of dollars)
Share Retained
Capital Earnings Total
$ $ $
Balance as at November 30, 2016 (Audited) 9,152 101,541 110,693
Net loss - (5,942 ) (5,942 )
Total comprehensive loss - (5,942 ) (5,942 )
Balance as at May 31, 2017 9,152 95,599 104,751

Goodfellow Inc.
Patrick Goodfellow
President and CEO
450 635-6511
450 635-3730
info@goodfellowinc.com