Goodfellow Reports Its Results for Q3-2009

Goodfellow Inc. (TSX: GDL) announced today its financial results for the third quarter ended May 31, 2009. Consolidated sales reached $110.2 million compared to $131.5 million a year ago. Results from operations for the third quarter of fiscal 2009 show a net income of $2.1 million or $0.24 per share compared to $1.7 million or $0.20 per share a year ago. The third quarter of fiscal 2009 was impacted by the overall slowdown in the Canadian and US economy combined with the depressed housing market on both sides of the border. The Company's gross margin increased to an average of 19.1% compared to 18.1% last year impacted by a strong performance of our traditional value-added product mix. In addition, the Company focused on controlling its operating costs to adapt to the business conditions which remained difficult. With the weakened economy and tight credit conditions, additional bad debt provisions were taken during the third quarter. Finally, low interest rate combined with lower bank indebtedness resulted in savings which helped the Company achieve these results.

For the nine months ended May 31, 2009, consolidated sales reached $312.6 million compared to $348.8 million for the same period a year ago. The Company generated net income from operations for the nine months ended May 31, 2009 of $2.3 million or $0.27 per share. The results from operations excludes a non recurring gain of $3.1 million or $0.37 per share which represents the revaluation at fair value of fixed assets exchanged resulting from the expropriation of part of our Delson facility. Consequently net income for the first nine months of fiscal 2009 reached $5.5 million or $0.64 per share compared to $3.6 million or $0.42 per share a year ago. Finally, cash flow from operations (excluding non-cash working capital) for the first nine months ended May 31, 2009 decreased to $3.5 million from $4.8 million for the same period last year.

"Challenging times continue for us in most of our market areas but decisions taken recently helped us return to operating profitability during the third quarter" said Richard Goodfellow, President and Chief Executive Officer. "We are now poised for our key fourth quarter and it is expected sales levels will continue below expectations but we should remain at similar profit levels to last year. Our order files continue to remain relatively strong and the fourth quarter has traditionally been the best one for the company."

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.
STATEMENT OF INCOME
(in thousands of dollars except
 earnings per share)
(unaudited)                      Nine Months                 Three Months
                                Ended May 31                 Ended May 31
                         2009           2008           2009          2008
                            $              $              $             $
-------------------------------------------------------------------------
Sales                 312,612        348,760        110,177       131,506
-------------------------------------------------------------------------

Expenses
Cost of goods sold,
 selling,
 administrative and
 general expenses     302,183        339,972        106,202       127,746
Depreciation and
 amortization           1,735          1,690            655           569
Financial                 913          1,657            252           609
-------------------------------------------------------------------------
                      304,831        343,319        107,109       128,925
-------------------------------------------------------------------------

Income before
 income taxes           7,781          5,441          3,068         2,581
Income taxes            2,258          1,823            993           865
-------------------------------------------------------------------------
Net income              5,523          3,618          2,075         1,716
-------------------------------------------------------------------------

-------------------------------------------------------------------------
Earnings per share       0.64           0.42           0.24          0.20
-------------------------------------------------------------------------
Earnings per share
 diluted                 0.64           0.42           0.24          0.20
-------------------------------------------------------------------------



CONSOLIDATED BALANCE SHEETS
(in thousand of dollars)               As at          As at         As at
                                      May 31,        May 31,    August 31,
                                        2009           2008          2008
                                  (unaudited)    (unaudited)     (audited)
                                           $              $             $
-------------------------------------------------------------------------
Assets
Current assets
  Cash                                   433            734           860
  Accounts receivable                 66,553         78,667        72,843
  Income taxes recoverable             1,309          2,362         2,045
  Inventories                         59,806         65,776        47,135
  Prepaid expenses                     2,931          4,905         3,810
-------------------------------------------------------------------------
                                     131,032        152,445       126,693

Capital assets                        30,345         26,097        25,873
Deferred pension asset                 4,500          3,537         3,828
-------------------------------------------------------------------------
                                     165,877        182,080       156,394
-------------------------------------------------------------------------

Liabilities
Current liabilities
  Bank indebtedness                   28,185         46,412        21,940
  Accounts payable and
   accrued liabilities                27,875         32,670        29,471
  Income taxes payable                     -              -             -
-------------------------------------------------------------------------
                                      56,060         79,082        51,411

Future income taxes                    2,690          1,678         1,498

Shareholders' equity
  Capital stock                        9,222          9,234         9,229
  Retained earnings                   97,905         92,389        94,559
  Accumulated other
   comprehensive income                    -           (303)         (303)
-------------------------------------------------------------------------
                                     107,127        101,320       103,485
-------------------------------------------------------------------------
                                     165,877        182,080       156,394
-------------------------------------------------------------------------



CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(in thousands of dollars)
(unaudited)                                                   Nine Months
                                                             Ended May 31
                                                  2009               2008
                                                     $                  $
-------------------------------------------------------------------------
Balance at beginning                            94,559             91,801
Net income for the period                        5,523              3,618
-------------------------------------------------------------------------
                                               100,082             95,419
Redemption of shares                                33                 26
Dividends                                        2,144              3,005
-------------------------------------------------------------------------
Balance at end                                  97,905             92,389
-------------------------------------------------------------------------



CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
(unaudited)                      Nine Months                 Three Months
                                Ended May 31                 Ended May 31
                         2009           2008           2009          2008
                            $              $              $             $
-------------------------------------------------------------------------
Operating activities
  Net income            5,523          3,618          2,075         1,716
  Items not
   affecting cash
    Depreciation and
     amortization       1,735          1,690            655           569
    Excess (shortage)
     of expense over
     pension plan
     funding             (671)          (484)          (199)          (14)
    Gain on disposal
     of assets         (4,298)            (1)             -            (1)
    Deferred income
     taxes              1,192              -              -             -
-------------------------------------------------------------------------
                        3,481          4,823          2,531         2,271
Changes in non-cash
 operating working
 capital balances
  Decrease (increase)
   in accounts
   receivable           6,291          4,182        (15,288)      (21,297)
  Decrease (increase)
   in inventories     (12,671)       (13,493)         3,245         8,933
  Decrease (increase)
   in prepaid expenses    878            (72)            37           920
  Increase (decrease)
   in accounts payable (1,598)         1,319          4,079         8,819
  Increase (decrease)
   in income taxes        736         (2,554)         1,186           (12)
-------------------------------------------------------------------------
                       (2,883)        (5,794)        (4,210)         (366)
-------------------------------------------------------------------------
Financing activities
  Dividends            (2,144)        (3,005)             -             -
  Purchase of
   common shares          (33)           (26)            (3)          (26)
-------------------------------------------------------------------------
                       (2,177)        (3,031)            (3)          (26)
-------------------------------------------------------------------------
Investing activities
  Acquisition of
   fixed assets        (2,097)        (1,301)          (318)         (257)
  Disposal of
   fixed assets           181            120              -           120
-------------------------------------------------------------------------
                       (1,916)        (1,181)          (318)         (137)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Other comprehensive
 income                   303           (119)             -             -
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net cash inflow
 (outflow)             (6,673)       (10,125)        (4,531)         (529)
-------------------------------------------------------------------------
Cash and cash
 equivalents,
 beginning of period  (21,079)       (35,553)       (23,221)      (45,149)
-------------------------------------------------------------------------
Cash and cash
 equivalents, end
 of period            (27,752)       (45,678)       (27,752)      (45,678)
-------------------------------------------------------------------------



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands of dollars,
 except earnings per share)
(unaudited)                      Nine months                 Three months
                                Ended May 31                 Ended May 31
                         2009           2008           2009          2008
                            $              $              $             $
-------------------------------------------------------------------------

Net income              5,523          3,618          2,075         1,716

Other comprehensive
 income
  Net investments in
   self-sustaining
   foreign operations     303           (119)             -             -
-------------------------------------------------------------------------
Total other
 comprehensive income     303           (119)             -             -
-------------------------------------------------------------------------
Comprehensive income    5,826          3,499          2,075         1,716
-------------------------------------------------------------------------

---

   _   _