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Goodfellow Reports Its Results for the Fiscal Year Ended November 30, 2016

DELSON, QUEBEC--(Marketwired - Feb 27, 2017) - Goodfellow Inc. (GDL.TO) announced today its financial results for the twelve months ended 30 November 2016. The Company reported a net loss of $12.1 million or $1.42 per share for fiscal 2016 compared to a net profit of $8.6 million or $1.01 per share last year. For the three months ended 30 November 2016, the Company reported a net loss of $11.2 million or $1.31 per share compared to a net profit of $2.0 million or $0.23 per share a year ago. Consolidated sales during fiscal 2016 were $565.2 million compared to $539.0 million for the twelve months last year. Consolidated sales for the three months ended 30 November 2016 were $130.7 million compared to $135.2 million last year.

A SPECIAL STATEMENT

The major loss is a result of the very difficult implementation of an ERP system. Unfortunately, the system took some time to provide the hoped for quality of information available to management. Although the situation was perceived to have improved during the year, it was only in December/January 2017 that the disastrous effects were truly revealed.

On January 17th, 2017 a top management change was effected to myself and all energies and measures taken since have gone a long way to correcting the issues. The system transactionally is now working adequately in all locations and the downstream reporting has improved to a basic level. This situation during 2016 was combined with the complete upheaval of our pressure-treated business with the formation of the TLGI Joint-Venture with the Lebel Group. This structural change is now under review and specific changes will be required. Immediate measures taken post January 17th, 2017 are a complete physical review of inventories at all locations and an immediate freeze on any non-essential purchasing with the objective of reducing company-wide inventories 10 to 15%. A major sales initiative is now under way to achieve this objective.

In addition, a significant staff reduction has been initiated at all levels. All non-essential expenses are under immediate review. These initiatives have taken hold and prompt results are being seen. More cost cutting initiatives will be required in the coming months. All measures are being taken to ensure the company returns to its historic profitable operating situation by year-end 2017.

Richard Goodfellow, our President from 1988 until November 2014, has returned to work in Delson as a senior advisor to myself to assist in the re-structuring and the evaluation of the current situation. His presence has gone a long-way to re-establishing our staff's confidence in the future of the company. Clear steps are being taken to re-establish profitability short term.

Historic difficult winter conditions continue in Q1 but most parts of the business have positive expectations for the coming spring. All measures taken should be well reflected by the end of Q2 at the end of May.

Patrick Goodfellow, President and CEO

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 years ended November 30, 2016 and 2015
(in thousands of dollars, except per share amounts)
Years ended
November 30
2016
November 30
2015
$ $
Sales 565,173 538,975
Expenses
Cost of goods sold 483,885 435,960
Selling, administrative and general expenses 93,942 88,559
Net financial costs 3,640 2,582
581,467 527,101
(Loss) Earnings before income taxes (16,294 ) 11,874
Income taxes (4,189 ) 3,252
Net (loss) earnings (12,105 ) 8,622
Items that will not subsequently be reclassified to net earnings
Remeasurement of defined benefit plan obligation (asset), recovery of taxes of $1,070 (2015 - net of taxes of $1,099)
(2,750
)
2,969
Total comprehensive income (14,855 ) 11,591
Net (loss) earnings per share - Basic and diluted (1.42 ) 1.01
GOODFELLOW INC.
Consolidated Statements of Financial Position
(in thousands of dollars)
As at As at
November 30
2016
November 30
2015
$ $
Assets
Current Assets
Cash 703 965
Trade and other receivables 64,255 65,670
Income taxes receivable 6,598 -
Inventories 115,391 97,665
Prepaid expenses 4,863 4,156
Total Current Assets 191,810 168,456
Non-Current Assets
Property, plant and equipment 38,693 36,146
Intangible assets 5,428 2,667
Defined benefit plan asset 2,234 4,812
Investment in a joint venture 3,403 -
Total Non-Current Assets 49,758 43,625
Total Assets 241,568 212,081
Liabilities
Current liabilities
Bank indebtedness 94,113 46,781
Trade and other payables 30,721 29,762
Income taxes payable - 1,595
Provision 963 1,112
Current portion of long-term debt 136 113
Total Current Liabilities 125,933 79,363
Non-Current Liabilities
Provision 475 477
Long-term debt 126 -
Deferred income taxes 3,296 4,141
Defined benefit plan obligation 1,045 -
Total Non-Current Liabilities 4,942 4,618
Total Liabilities 130,875 83,981
Shareholders' equity
Share capital 9,152 9,152
Retained earnings 101,541 118,948
110,693 128,100
Total Liabilities and Shareholders' Equity 241,568 212,081
GOODFELLOW INC.
Consolidated Statements of Cash Flows
For the years ended November 30, 2016 and 2015
(in thousands of dollars)
Years ended
November 30
2016
November 30
2015
$ $
Operating Activities
Net (Loss) Earnings (12,105 ) 8,622
Adjustments for :
Depreciation 3,850 3,026
Accretion expense on provision 52 53
(Decrease) Increase in provision (202 ) 84
Income taxes (4,189 ) 3,252
Gain on disposal of property, plant and equipment - (26 )
Interest expense 2,392 1,555
Funding in excess of pension plan expense (197 ) (474 )
Share of the profits of a joint venture (403 ) -
(10,802 ) 16,092
Changes in non-cash working capital items (16,054 ) (7,859 )
Interest paid (2,482 ) (1,659 )
Income taxes paid (4,663 ) (2,146 )
(23,199 ) (11,664 )
Net Cash Flows from Operating Activities (34,001 ) 4,428
Financing Activities
Net increase in bank loans 2,000 5,500
Increase in banker's acceptances 45,500 -
Increase in long-term debt 369 51
Reimbursement of long-term debt (780 ) (858 )
Dividends paid (2,552 ) (2,977 )
44,537 1,716
Investing Activities
Acquisition of property, plant and equipment (2,970 ) (2,101 )
Increase in intangible assets (2,865 ) (2,216 )
Proceeds on disposal of property, plant and equipment - 96
Business acquisitions, net of cash acquired (4,795 ) -
(10,630 ) (4,221 )
Net cash (outflow) inflow (94 ) 1,923
Cash position, beginning of year (1,816 ) (3,739 )
Cash position, end of year (1,910 ) (1,816 )
Cash position is comprised of :
Cash 703 965
Bank overdraft (2,613 ) (2,781 )
(1,910 ) (1,816 )
GOODFELLOW INC.
Consolidated Statements of Change in Shareholders' Equity
For the years ended November 30, 2016 and 2015
(in thousands of dollars)
Share
Capital
Retained
Earnings
Total
$ $ $
Balance as at November, 2014 9,152 110,334 119,486
Net earnings - 8,622 8,622
Other comprehensive income - 2,969 2,969
Total Comprehensive income - 11,591 11,591
Transactions with owners of the Company
Dividends - (2,977 ) (2,977 )
Balance as at November 30, 2015 9,152 118,948 128,100
Net loss - (12,105 ) (12,105 )
Other comprehensive loss - (2,750 ) (2,750 )
Total Comprehensive loss - (14,855 ) (14,855 )
Transactions with owners of the Company
Dividends - (2,552 ) (2,552 )
Balance as at November 30, 2016 9,152 101,541 110,693