Goodfellow Inc. · TSX:GDL
Goodfellow — Shareholder Meeting (July 2020)
32 slides from Goodfellow's shareholder meeting presentation, Jul 16, 2020
Slide 1: Annual Meeting of Shareholders July 16th, 2020
Annual Meeting of Shareholders July 16th, 2020 Forward-Looking Financial Information This presentation contains forward looking statements on the objectives, strategies, financial position, operating results and activities of Goodfellow Inc. These statements are forward looking to the extent that th
Slide 2: Annual Meeting of Shareholders
Annual Meeting of Shareholders July 16th, 2020
Slide 3: Meeting agenda
▪ Opening of the Meeting ▪ Chair, Secretary, Directors, Officers and Scrutineers ▪ Notice of Meeting ▪ Scrutineer’s Report ▪ Minutes of Previous Meeting ▪ Financial Statements & Independent Auditor’s Report ▪ Election of the Directors ▪ Appointment of Auditors ▪ Termination of the Meeting ▪ Manageme
Slide 4: Patrick Goodfellow, President & CEO
Patrick Goodfellow Président & Chef de la direction | President & CEO 4
Slide 5: Aggressive Plan to Restore Critical Volume Sales
▪ Agressive Plan to Restore Critical Volume Sales ▪ Investment in Core Value Added Asset (Timbersizer $850K) ▪ Strong Focus on Gross Margin Gains & Price Discipline ▪ Operational Process Efficiencies Implemented ▪ Cost Control Measures & Right Sizing Initiative ▪ Return 1% Net of Sales 5
Slide 6: Conservative by Nature, Diversified to Succeed
CONSERVATIVE BY NATURE DIVERSIFIED TO SUCCEED ▪ Softening Canadian Demand Q4 (especially Ontario) ▪ Difficulties Overseas Arising Q3/Q4 ▪ Manufacturing Demand Down Q3/Q4 Canada ▪ China Tariffs Playing Havoc Hardwood Demand ▪ US Signals of Protectionism ▪ Challenging Labour Shortage 6
Slide 7: National Distribution Strength
NATIONAL DISTRIBUTION STRENGTH & GOODFELLOW ile-du-Prince-Edoverd ie? Nouvelle-Ecosse
Slide 8: Pillars of Diversification
PILLARS OF DIVERSIFICATION ▪ Custom Fabrication ▪ Engineering Services ▪ Value Added Wood Structures 8
Slide 9: Gymnase Ecole Gerin-Lajoie, Chateauguay QC
GYMNASE ECOLE GERIN-LAJOIE CHATEAUGUAY, QC GoopreLLow
Slide 10: Gymnase Ecole, St-Samuel-de-Horton QC
GYMNASE ECOLE Sy ST-SAMUEL-DE-HORTON, QC cooprEuiew
Slide 11: Ecole Vauquelin, Longueuil QC
ECOLE VAUQUELIN, = LONGUEUIL, QC ccoprsuew
Slide 12: Duchesnay Creek Bridge, North Bay ON
DUCHESNAY CREEK BRIDGE NORTH BAY, ON GooprELLow
Slide 13: Dairy Barns Framework, Ingersoll ON
DAIRY BARNS FRAMEWORK Ss ce INGERSOLL, ON GooprELLow
Slide 14: Nunavut Housing Corporation Partnership
NUNAVUT HOUSING Ss ce CORPORATION PARTNERSHIP GooprEiLow
Slide 15: Rideau Canal Crossing Bridge, Jones Falls ON
RIDEAU CANAL CROSSING BRIDGE . JONES FALLS, ON cooprriow 15
Slide 16: Charles B. Brisebois, Chief Financial Officer
Charles B. Brisebois, CPA, CMA Chief Financial Officer | Chef des Finances 16
Slide 17: Overall Sales
Canada USA Export Total OVERALL SALES 0% DECREASED 5.4% -3% ($475M to $450M) ▪ QC ↓ 1% (Panels) -5% -5% ▪ ON ↓ 7% (Flooring, Panels & -10% Hardwood) ▪ West ↑ 3% (Flooring) -15% -14% ▪ Atlantic Canada ↓ 4% (Siding & Lumber) -20% ▪ Export/USA ↓ (Hardwood & -20% Flooring) -25% 17
Slide 18: Net Earnings
$3.1M ▪ 2019 ↑ 19% Modest Increase ▪ Net Return on Sales of 0.7% for $2.6M 2019 and 0.5% for 2018 2018 2019 18
Slide 19: Gross Margin
$88M Overall Margin Increased From $85M 18.5% to 18.9% ▪ Price Discipline ▪ Focus on Custom Job Lots ▪ Accurate Inventory Count 2018 2019 19
Slide 20: Expenses
$82M $81M ▪ Reduction in Office Staff ▪ IT Expenses ↓ ▪ Bad Debt Provision ↓ ▪ Flooring Samples $78M Expense ↓ 2017 2018 2019 20
Slide 21: EBITDA
$10.9M $10.4M ▪ 3-year consecutive $5M increase of the EBITDA 2017 2018 2019 21
Slide 22: Inventory
$13.4M ▪ Decreased Inventory Level $11.6M ▪ Seasonal Purge Q4 ▪ Decrease in Receivables (Efficient Collection) 2018 2019 22
Slide 23: Adoption of IFRS 16, Leases
ADOPTION OF IFRS 16, LEASES (“IFRS 16”) ▪ On December 1, 2019, the Company adopted IFRS 16 using the modified retrospective approach ▪ Comparatives for the 2019 reporting periods have not been restated as permitted ▪ The application of this new standard resulted in: ▪ The addition of right-of-use as
Slide 24: Q2-2020 Sales
▪ Q2-2020 ↓ 16% $212M ▪ 6M-2020 ↓ 9% $193M 6 MONTHS ▪ QC ↓ 12% (Panels & Lumber) ▪ ON ↓ 7% (Flooring & $124M Lumber) $104M ▪ West ↓ 9% (Flooring, Panels & Building Materials) ▪ Atlantic Canada ↑ 1% (Panels & Building Materials) ▪ Export/USA ↓ 17% Q2-2019 Q2-2020 6M-2019 6M-2020 (Hardwood & Flooring)
Slide 25: Q2-2020 Earnings
$3.4M ▪ Q2-2020 ↑ $1.5M ▪ 6M-2020 ↑ $1.0M $1.9M $1,3M $0,3M Q2-2019 Q2-2020 6M-2019 6M-2020 25
Slide 26: Gross Margin Q2-2020
$41M $37M Margin Stability First 6 Months $24M 19,2%. $20M Same as 2019. Q2-2019 Q2-2020 6M-2019 6M-2020 26
Slide 27: Q2-2020 Expenses
$39M ▪ Q2-2020 ↓ 31% ▪ 6M-2020 ↓ 13% $34M ▪ Non Essential Travel ↓ $20M ▪ Furloughed up to 29% of $14M Workforce ▪ CEWS $2.5M Q2-2019 Q2-2020 6M-2019 6M-2020 27
Slide 28: Q2-2020 EBITDA
$7.4M $7.2M ▪ Q2-2020 ↑ $3.1M $4.3M ▪ 6M-2020 ↑ $3.5M $3,7M Q2-2019 Q2-2020 6M-2019 6M-2020 28
Slide 29: Financial Flexibility and Debt-to-Capitalization
$68M ▪ Debt-to-Capitalization $56M $48M Ratio ↓ from 37% to $44M 27% $31M ▪ $46M in Financial Flexibility (May 31st, 2020) Q1-2019 Q2-2019 Q4-2019 Q1-2020 Q2-2020 29
Slide 30: Patrick Goodfellow, President & CEO
Patrick Goodfellow Président & Chef de la direction | President & CEO 30
Slide 31: Outlook and Priorities
▪ Increase Inventory Turnover All Product Categories ▪ Raise Margins Through Price Discipline ▪ Identify Acquisition Opportunities to Strengthen Distribution Presence in Western Canada ▪ Invest in Operational Upgrades Glulam Fabrication ▪ Successful Launch of Several Complementary Lines in Flooring
Slide 32: COVID-19 Response
▪ Decisive Action Mid March Lockdown ▪ Implemented Rigorous Hygiene Practices and Physical Distancing Policies Throughout Organization ▪ Essential Service Status Strongly Justified During Pandemic ▪ Staff Body Temperatures Monitored Daily ▪ Quarantine Measures Adopted to Protect Employees 32