During the three-month period ended August 31, 2009, GBO Inc., manufacturer of “Bonneville” windows and doors, recorded sales of $11.3 million, compared with $17.6 million in the same period of the previous year. This decline is mainly attributable to the mid-quarter disposal of two divisions, as sales from continuing operations, namely the Bonneville division, operating from the Ste-Marie de Beauce plant and specializing exclusively in wood window arrangements, doors and accessories, decreased by 6 percent.

Bonneville’s Canadian sales amounted to $8.8 million, down from $14.2 million.The company’s U.S. sales, which continued to be affected by challenging economic conditions, decreased to $2.4 million from $3.4 million in the second quarter of the previous year this despite the fact that Bonneville maintained and even expanded its customer base in its targeted territories in the United States over the past year. GBO recorded operating earnings before amortization, interest and income taxes (or EBITDA) of $0.5 million during the second quarter, down from $0.9 million a year earlier. Besides the disposal of two divisions, the decline in EBITDA is primarily attributable to the impact of the economic slowdown on Bonneville’s sales in Ontario and the United States, according to the company.

GBO says it is carrying on its continuous optimization efforts to further lower its breakeven point and better align its cost structure with the seasonal fluctuations in its industry, notably through improved flexibility of its labor force. In addition, in the weeks that followed the sale of the two divisions, GBO restructured and streamlined its organization in order to better reflect the new reality of its more focused and specialized business. GBO realized a $4.7 million unusual gain on the sale of the two divisions effective July 13, 2009. Therefore, GBO posted quarterly net earnings of $3.5 million or $0.11 per share (basic and diluted), compared with net earnings of $0.3 million or $0.01 per share in the same quarter of fiscal 2009.

The company cites the $12.5 million in proceeds it received from the sale of the two divisions as placing it in a positive financial position, with short-term available cash of $8.4 million “and virtually no debt.”

GBO expects its profit margins to benefit from the increased added value of Bonneville’s sales mix as a result of its focus on wood products, the continuing organizational restructuring and the ongoing operational optimization efforts aimed at further lowering the company’s breakeven point.


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