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
$$
Sales139,641 253,131
Expenses
Cost of goods sold119,585 218,688
Selling, administrative and general expenses19,701 40,719
Net financial costs1,072 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
Cash1,841 703
Trade and other receivables86,625 64,255
Income taxes receivable9,564 6,598
Inventories101,074 115,391
Prepaid expenses4,490 4,863
Total Current Assets203,594 191,810
Non-Current Assets
Property, plant and equipment37,512 38,693
Intangible assets5,263 5,428
Defined benefit plan asset2,233 2,234
Investment in a joint venture3,524 3,403
Total Non-Current Assets48,532 49,758
Total Assets252,126 241,568
Liabilities
Current liabilities
Bank indebtedness86,586 94,113
Trade and other payables54,784 30,721
Provision929 963
Current portion of long-term debt125 136
Total Current Liabilities142,424 125,933
Non-Current Liabilities
Provision500 475
Long-term debt64 126
Deferred income taxes3,296 3,296
Defined benefit plan obligation1,091 1,045
Total Non-Current Liabilities4,951 4,942
Total Liabilities147,375 130,875
Shareholders' equity
Share capital9,152 9,152
Retained earnings95,599 101,541
104,751 110,693
Total Liabilities and Shareholders' Equity252,126 241,568

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 :
Depreciation957 1,906
Accretion expense on provision13 25
Decrease in provision(3) (33 )
Income taxes(176) (2,358 )
Loss on disposal of property, plant and equipment1 13
Interest expense782 1,474
Funding in deficit of pension plan expense31 47
Share of the profits of the joint venture82 (121 )
1,146 (4,989 )
Changes in non-cash working capital items534 16,401
Interest paid(807) (1,492 )
Income taxes paid(52) (608 )
(325) 14,301
Net Cash Flows from Operating Activities821 9,312
Financing Activities
Net increase in bank loans11,000 -
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 equipment23 49
(301) (574 )
Net cash inflow3,490 665
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 equivalents1,841 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)
ShareRetained
CapitalEarningsTotal
$ $ $
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, 20179,15295,599104,751