INCREASED SALES FOR RICHELIEU IN THE THIRD QUARTER

STRONG PERFORMANCE IN THE U.S. MANUFACTURERS MARKET

HIGHLIGHTS OF THE THIRD QUARTER ENDED AUGUST 31, 2024

• Sales of $467.7 million , up 1.9%, including $264.6 million in Canada and US$148.4 million in the United States , up 4.8% ($US).
• EBITDA of $53.0 million - EBITDA margin of 11.3%.
• Net income attributable to shareholders of $22.7 million , or $0.41 per diluted share.
• Adjusted cash flows from operating activities of $42.7 million .
• Agreements in principle signed for four new acquisitions in Canada and the U.S.

NINE-MONTH PERIOD

• Sales of $1.36 billion , up 1.6%, of which $773.0 million in Canada and US$428.8 million in the United States .
• EBITDA of 147.2M$ - EBITDA margin of 10.9%.
• Net income attributable to shareholders of $61.4 million , or $1.09 per diluted share.
• Adjusted cash flows from operating activities of $122.7 million .
• Healthy and solid financial situation as at August 31, 2024 with working capital of $632.0 million (ratio of 3.5:1).

Quarterly dividend of $0.15 per share payable on November 7, 2024, to shareholders registered as of October 24, 2024.

MONTREAL , Oct. 10, 2024 /CNW/ - (TSX: RCH) " Richelieu continued to increase its sales in the third quarter and maintained a strong financial position. The 1.9% rise in sales is all the more appreciable given the current market context and reflects the substantial increase of 7.5% ($US) to manufacturers in the United States and 0.5% in our market in Canada , while our sales to retailers and renovation superstores decreased by 16.8%," said Richard Lord , President and Chief Executive Officer. 

PERSPECTIVES  – " We believe that the housing shortage currently affecting North America will present promising opportunities for Richelieu . Furthermore, although the renovation market is currently slowing down, we expect it to regain momentum in the coming months, leading to increased demand for our products and services. Sectors such as kitchen cabinets, closets, space planning, and commercial renovations are particularly promising and will continue to be crucial for our future growth. We are well positioned with our North American network of 112 strategically located centres, a business model that is well adapted to the needs of our customers, our offer which is unique due to its great diversity and innovative aspect, and a distinctive value-added service that is effectively complemented by our trilingual website richelieu.com. Our expert team is mobilized to seize the opportunities," added Mr. Lord.

CONTINUATION OF THE ACQUISITION STRATEGY AND OPTIMIZATION OF THE NORTH AMERICAN DISTRIBUTION CENTRE NETWORK

Richelieu is continuing to integrate the three acquisitions made since the beginning of the financial year, namely Allegheny Plywood ( Pennsylvania , Ohio ) and Rapid Start ( Ohio ) as well as Olympic Forest Products ( Ontario ) and expects to close four new acquisitions in Canada and the United States for which the agreements in principle were signed in the third quarter. In addition, as part of its distribution network optimization, the Corporation consolidated two of its distribution centres in the New York City area and on the West Coast of Florida during the quarter.

OPERATING RESULTS FOR THE THIRD QUARTER AND FIRST NINE MONTHS ENDED AUGUST 31, 2024

The following table provides an overview of Richelieu's sales in its two main markets for the quarters ended August 31, 2024 and 2023 :

For the third quarter ended August 31, 2024 , consolidated sales were $467.7M , compared to $459.0M for the third quarter of 2023, an increase of $8.7M , or 1.9%, resulting from a positive contribution from the acquisitions of 3.2% and an internal decrease of 1.3%. In currency comparable to that of the third quarter of 2023, the increase in consolidated sales would have been 0.8% for the quarter ended August 31, 2024 .

Operating expenses excluding amortization totalled $414.8M , representing 88.7% of sales, compared to $398.0M , or 86.7% of sales, for the same period in 2023. The increase in monetary terms and as a percentage of sales reflects the growth in sales and higher costs of goods sold in certain product categories, primarily sourced from Asia , along with operating expenses related to consolidation and expansion projects that are still in the start-up phase.

Earnings before income taxes, interest, and amortization (EBITDA) was $53.0M , down $8.0M or 13.2% from the corresponding quarter of 2023, mainly as a result of lower gross margin caused by inventories at costs higher than current purchasing costs and the drop in selling prices of certain products, plus the temporary increase in some operating expenses resulting from consolidation and expansion projects. As a result, the EBITDA margin was 11.3%, compared with 13.3% for the corresponding quarter of 2023.

Amortization   expense for the third quarter of 2024 amounted to $17.4M , up $1.7M over the corresponding period of 2023, as a result of the increase in property, plant and equipment, and right-of-use assets stemming from expansion and modernization projects completed in 2023 and early this year. Net financial costs were $3.0M for this quarter of 2024, compared to $3.1M in 2023, a decrease of $0.1M .

Net earnings were $24.0M , a decrease of 21.8% from the corresponding quarter of 2023. Including non-controlling interests, net earnings attributable to shareholders of the Corporation were $22.7M , a decrease of 23.9% from Q3 2023. Net earnings per share were $0.41 , basic and diluted, compared to $0.53 , basic and diluted, for Q3 2023, a decrease of 22.6%.

Cash flow from operating activities , before net change in non-cash working capital balances, was $42.7M or $0.76 per diluted share compared to $49.8M or $0.88 per diluted share for the third quarter of 2023. This 13.6% decrease mainly reflects the decrease in net earnings. The net change in non-cash working capital items used cash flows of $7.5M , reflecting the changes in accounts receivable and payable of $23.7M , while inventories used cash flows of $16.2M . As a result, operating activities provided a cash inflow of $50.2M , compared to a cash inflow of $104.8M in Q3 2023.

In the first nine months  of 2024, consolidated sales reached $1.4B , up $21.9M or 1.6% over the first nine months of 2023, of which 2.4% from acquisitions and 0.8% from an internal decrease. In currency comparable to that of the corresponding period of 2023, the increase in consolidated sales would have been 1.2%.

Operating expenses excluding amortization  totalled $1.21B , representing 89.1% of sales, compared to $1.16B , or 87.1% of sales, for the same period in 2023. This variation in monetary terms and as a percentage of sales reflects the slight increase in sales, the higher costs of goods sold, as well as the costs associated with projects in the start-up phase.

EBITDA was $147.2M , down $24.4M or 14.2% from the corresponding nine-month period of 2023 and net earnings attributable to shareholders of the Corporation were $61.4M , down 26.0% from the prior year. Net earnings per share were $1.10 basic and $1.09 diluted, compared to $1.49 basic and $1.47 diluted for the same period of 2023, representing a decrease of 26.2% and 25.9% respectively.

Cash flow from operating activities , before net change in non-cash working capital balances, was $122.7M or $2.18 per diluted share compared to $141.2M or $2.51 per diluted share for the first nine months of 2023. The net change in non-cash working capital items used cash flows of $16.3M , mainly reflecting the change in accounts receivable, inventories, and other items which used cash flows of $19.9M , while accounts payable represented a cash inflow of $3.6M . As a result, operating activities generated a cash inflow of $106.4M , compared to a cash inflow of $198.0M in the first nine months of 2023.

FINANCIAL POSITION

Total assets were $1.37B as at August 31, 2024 , compared to $1.31B as at November 30, 2023 , an increase of 4.5%. Current assets increased by 3.5% or $29.8M from November 30, 2023 . Non-current assets increased by 6.5% mainly due to the addition of right-of-use assets. As at August 31, 2024 , the Corporation had a working capital of $632.0M , for a ratio of 3.5:1, compared to $621.8M (ratio of 3.6:1) as at November 30, 2023 , and an average return on shareholders' equity of 10.0%.

SHARE CAPITAL

As at August 31, 2024 , the Corporation's share capital consisted of 55,722,695 common shares [56,088,365 common shares as at November 30, 2023 ]. For the three and nine-month periods ended August 31, 2024 , the weighted average number of diluted shares outstanding was 55,971,750 and 56,260,000 [56,346,260 and 56,225,410 in 2023].

DIVIDENDS

On October 10, 2024, the Board of Directors approved the payment of a quarterly dividend of 0.15$ per share to shareholders of record as at October 24, 2024, payable on November 7, 2024. The declared dividend is designated as an eligible dividend under the Income Tax Act of Canada .

MAIN TRADEMARKS

PROFILE AS AT AUGUST 31, 2024

Richelieu is a leading North American importer, manufacturer, and distributor of specialty hardware and complementary products. Its products are targeted to an extensive customer base of kitchen and bathroom cabinets, storage and closets, home furnishing and office furniture manufacturers, residential and commercial woodworkers, doors and windows, and hardware retailers including renovation superstores. Richelieu offers customers a broad mix of high-end products sourced from manufacturers worldwide. Its product selection consists of over 145,000 different items targeted to a base of more than 120,000 customers who are served by 112 centres in North America – 48 distribution centres in Canada , 61 in the United States and three manufacturing plants in Canada , specifically, Les Industries Cedan Inc., Menuiserie des Pins Ltée and USIMM UNIGRAV Inc., which manufacture a variety of veneer sheets and edge banding products, a broad selection of decorative moldings and components for the window and door industry as well as custom products, including a 3D scanning centre.

Notes to readers — Richelieu uses earnings before interest, income taxes and amortization ("EBITDA") because this measure enables management to assess the Corporation's operational performance. This measure is a financial indicator of a corporation's ability to service its debt. However, EBITDA should not be considered by an investor as an alternative to operating income, net earnings, cash flows or as a measure of liquidity. Because EBITDA is not a standardized measurement as prescribed by IFRS, it may not be comparable to the EBITDA of other companies. Richelieu also uses adjusted cash flows from operating activities, which are based on net earnings plus the amortization of property, plant and equipment, intangible assets and right-of-use assets, deferred tax expense (or recovery), share-based compensation expense and financial costs. These additional measures do not account for net change in non-cash working capital items to exclude seasonality effects and are used by management in its assessments of cash flows from long-term operations. Therefore, adjusted cash flows from operating activities may not be comparable to those of other companies. Certain statements set forth in this report (generally identified by terms such as "may", "could", "might", "intend", "expect", "believe", "estimate" or comparable variants) constitute forward-looking statements which, by their very nature, remain subject to other risks and uncertainties as set forth in the Corporation's annual and quarterly reports. Although management considers these assumptions and expectations reasonable based on the information available at the time they are provided, such assumptions and expectations could prove inaccurate and actual results could differ materially. Richelieu is under no obligation to update or revise any forward-looking statements made herein to account for future events or circumstances, except as required by applicable legislation. The unaudited interim consolidated financial statements, accompanying notes and interim MD&A for the third quarter and first nine months ended August 31, 2024 will be available on SEDAR+ at www.sedarplus.com and on the Corporation's website at www.richelieu.com .

SOURCE Richelieu Hardware Ltd.