DELSON, QUEBEC–(Marketwired – July 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 | |||
