Richelieu Hardware Ltd. — Annual Report 2024

Jan 16, 2025

==> picture [87 x 47] intentionally omitted <==

SALES GROWTH OF 5% IN THE FOURTH QUARTER OF 2024

7 acquisitions completed in North America for additional annual sales of $100 million

Highlights of the fourth quarter ended November 30, 2024

• Sales of $476.2 million, an increase of 5.0%.

• EBITDA of $54.3 million - EBITDA margin of 11.4%.

• Net earnings attributable to shareholders of $24.4 million, or $0.44 per diluted share. Adjusted cash flows from operating activities of $43.0 million.

2024 fiscal year

• Sales of $1.8 billion, an increase 2.5%.

• EBITDA of $201.4 million - EBITDA margin of 11.0%.

• Net earnings attributable to shareholders of $85.8 million, or $1.53 per diluted share. Adjusted cash flows from operating activities of $165.7 million.

• Sound financial position as at November 30, 2024, with a working capital of $612.9 million (ratio 3.1 : 1).

Acquisitions

• Fiscal year 2024: 4 acquisitions (U.S. and Canada), including the acquisition of Panexel (QC) in the fourth quarter.

• Subsequent to November 30, 2024: 3 acquisitions completed, including one in Canada (NS and PEI) and two in the United States (Colorado and Minnesota).

Dividend : 2.2% increase in the quarterly dividend to $0.1533 per share for the first quarter of 2025.

MONTREAL, Jan. 16, 2025 /CNW/ - "Richelieu reports good results for its fourth quarter, with sales of $476.2 million, up 5.0% compared to the same period in 2023. This increase reflects the strong performance of the manufacturers' market in Canada and the United States, where sales rose 7.2% to $421.6 million, while sales to retailer and renovation superstores market were down 9.7%. In Canada, our sales amounted to $275.4 million, up 2.9%, while in the United States, they reached US$145.9 million, up 7.1%. We are very pleased with our sales of $1.8 billion for the 12 months of 2024, even though the renovation market was marked by a significant slowdown.

Despite this environment and circumstantial factors that continued to put pressure on the EBITDA margin, we stayed on track to achieve our operating objectives, deliver good results, and maintain a solid financial position as of November 30, 2024," said M. Lord.

ACQUISITIONS AND OUTLOOK – "We are also very pleased to have completed seven new acquisitions, which will contribute to approximately $100 million in additional annual sales. These acquisitions include Olympic Forest, Panexel, and Mill Supply in Canada, and Rapid Start, Allegheny Plywood, Darant Distributing, and Midwest Specialty Products in the US.

In addition, we will use our best strengths to take advantage of the growth opportunities presented

by the current housing shortage in North America. It is also expected that the renovation market will regain momentum in 2025. The kitchen cabinets, closet, storage solutions, and commercial renovation sectors remain key to our growth. Our network of 112 strategically located centres in Canada and the United States, our customer-focused business model, and our innovation and business acquisition momentum consistently reinforce our North American leadership", added Mr. Lord.

MANAGEMENT APPOINTMENT - "I am pleased to announce that, following the Board of Directors' approval, Mr. Antoine Auclair, Chief Financial Officer of the Corporation since 2011, will now also assume the function of Chief Operating Officer in addition to his current responsibilities as Chief Financial Officer", added Richard Lord, President and Chief Executive Officer.

ANALYSIS OF OPERATING RESULTS FOR THE YEAR ENDED NOVEMBER 30, 2024, COMPARED WITH THE YEAR ENDED NOVEMBER 30, 2023

Consolidated sales

The following table provides an overview of Richelieu's sales in its two main markets for the years ended November 30, 2024 and 2023 :

(in millions of dollars except exchange rates)	Years ended November 30,	Years ended November 30,	∆ %	∆ %	∆ %
	2024	2023	**Total **	**Internal **	Acquisitions
Consolidated Manufacturers Retailers	1,832.2 1,614.5 217.7	1,787.8 1,543.6 244.2	2.5 4.6 (10.9)	0.3 2.0 (10.9)	2.2 2.6 —
Canada Manufacturers Retailers	1,048.7 872.7 176.0	1,048.4 857.3 191.1	— 1.8 (7.9)	(1.7) (0.3) (7.9)	1.7 2.1 —
United States $US Manufacturers Retailers	574.5 543.9 30.6	547.2 507.9 39.3	5.0 7.1 (22.1)	2.1 4.0 (22.1)	2.9 3.1 —
United States $CA Average exchange rates	783.5 1.364	739.4 1.351	6.0

Consolidated sales reached $1.8 billion, an increase of $44.4 million or 2.5% over last year, of which 2.2% from acquisitions and 0.3% from internal growth. In currency comparable to that of the 2023 financial year, the growth in consolidated sales for the year ended November 30, 2024, would have been 2.1%.

(in millions of dollars, except per share data)	Years ended November 30,	Years ended November 30,	Years ended November 30,
	2024	2023	∆ %
Sales Operating expenses excluding amortization	1,832.2 1,630.8	1,787.8 1,557.4	2.5 4.7
EBITDA	201.4	230.4	(12.6)
EBITDA margin (%)	11.0 %	12.9 %
Amortization of property, plant and equipment and right-of-use assets Amortization of intangible assets Net financial costs	58.1 10.8 11.7	50.1 10.9 13.3	16.1 (0.4) (12.2)
	80.6	74.2	8.6
Earnings before income taxes Income taxes	120.8 31.3	156.2 42.4	(22.7) (26.1)
Net earnings	89.5	113.8	(21.4)
Net earnings attributable to: Shareholders of the Corporation Non-controlling interests	85.8 3.7	111.5 2.4	(23.1) 58.4
Net earnings per share attributable to shareholders of the Corporation Basic Diluted	1.54 1.53	2.00 1.98	(23.0) (22.7)

Earnings before interest, income taxes, and amortization (EBITDA) totalled $201.4 million, down by $29.0 million or 12.6% over 2023. This decrease is mainly due to the reduction in gross margin, caused by the cost of inventories purchased at higher prices than current levels, as well as by the decline in the selling prices of certain products. Additionally, temporary effects related to the

ongoing consolidation and expansion projects have contributed to this decline. Therefore EBITDA margin stood at 11.0%, compared with 12.9% for 2023.

Amortization expenses amounted to $69.0 million, compared with $60.9 million for 2023, an increase of $8.1 million, caused by the rise in property, plant and equipment, and right-of-use assets, stemming mainly from recent business acquisitions and expansion and modernization projects completed in 2023 and early this year. Net financial costs were $11.7 million, compared to $13.3 million, down by $1.6 million due to the repayment of credit lines, offset by the impact of higher interest expenses resulting from the increase in lease obligations. Income taxes amounted to $31.3 million, a decrease of $11.0 million over 2023.

Net earnings were down 21.4%. Considering non-controlling interests, net earnings attributable to shareholders of the Corporation totalled $85.8 million, a decrease of 23.1% compared to 2023. Net earnings per share amounted to $1.54 basic and $1.53 diluted, compared with $2.00 basic and $1.98 diluted for 2023, a decrease of 23.0% and 22.7% respectively.

FOURTH QUARTER ENDED NOVEMBER 30, 2024

Consolidated sales

The following table provides an overview of Richelieu's sales in its two main markets for the quarters ended November 30, 2024 and 2023 :

(in millions of dollars except exchange rates) Quarters ended November 30 2024 2023	(in millions of dollars except exchange rates) Quarters ended November 30 2024 2023	(in millions of dollars except exchange rates) Quarters ended November 30 2024 2023	∆ %	∆ %	∆ %
	2024	2023	**Total **	**Internal **	Acquisitions
Consolidated Manufacturers Retailers	476.2 421.6 54.6	453.7 393.2 60.5	5.0 7.2 (9.7)	2.3 4.1 (9.7)	2.7 3.1
Canada Manufacturers Retailers	275.4 230.2 45.2	267.6 220.5 47.1	2.9 4.4 (4.0)	1.2 2.3 (4.0)	1.7 2.1
United States $US Manufacturers Retailers	145.9 139.0 6.9	136.2 126.4 9.8	7.1 10.0 (29.6)	3.1 5.7 (29.6)	4.0 4.3
United States $CA Average exchange rates	200.8 1.376	186.1 1.366	7.9

Fourth-quarter consolidated sales amounted to $476.2 million, compared with $453.7 million for the corresponding quarter of 2023, an increase of $22.5 million or 5.0%, of which 2.3% resulted from internal growth and 2.7% from acquisitions. At comparable exchange rates to the fourth quarter of 2023, the consolidated sales growth would have been 4.6% for the quarter ended November 30, 2024.

Earnings before interest, income taxes, and amortization (EBITDA) amounted to $54.3 million compared with $58.8 million in the fourth quarter of 2023, down 7.7%. The gross margin is slightly lower than in 2023, and the EBITDA margin stood at 11.4%, compared to 13.0% in the fourth quarter of 2023. This decline was primarily due to lower sales prices for certain products, higher cost of goods sold in specific categories, as well as operational expenses related to the ongoing consolidation and expansion projects.

Amortization expenses amounted to $17.7 million compared with $16.4 million for the corresponding quarter of 2023, an increase of $1.3 million. Net financial costs are up $0.8 million. Income taxes amounted to $8.2 million compared with $10.8 million for the fourth quarter of 2023.

Net earnings were $25.4 million, down by 13.7% over the corresponding quarter of 2023. Considering non-controlling interests, net earnings attributable to shareholders of the Corporation amounted to $24.4 million, down by 14.6% over the fourth quarter of 2023. Net earnings per share were $0.44 basic and diluted, compared with $0.51 basic and diluted for the

fourth quarter of 2023.

Cash flows from operating activities (before net change in non-cash working capital balances) amounted to $43.0 million or $0.77 per share, compared with $49.3 million or $0.88 per share for the fourth quarter of 2023, a decrease of 12.8% resulting primarily from net earnings decrease. The net change in non-cash working capital balances used cash flows of $15.8 million, reflecting the change in inventory and accounts receivable of $7.7 million, whereas the change in accounts payable and other items required cash flows of $8.1 million. Consequently, operating activities provided cash flows of $27.2 million, compared with $72.7 million for the fourth quarter of 2023.

Financing activities used cash flows of $41.8 million, compared with $14.3 million for the fourth quarter of 2023. This change primarily resulted from common share repurchases of $20.1 million for the fourth quarter of 2024 while no share repurchases were made in the fourth quarter of 2023.

Investing activities totaled $7.9 million in the fourth quarter including $2.7 million for business acquisitions completed during the quarter and $5.1 million for the acquisition of various capital assets, notably to increase production capacity at one centre and for leasehold improvements related to ongoing consolidation projects.

FINANCIAL POSITION as at November 30, 2024 Analysis of significant cash flows

(in millions of dollars)	Years ended November 30,	Years ended November 30,
	2024	2023
Cash flows provided by (used in) : Operating activities Financing activities Investing activities Effect of exchange rate changes on cash and cash equivalents	133.6 (117.9) (50.8) (0.8)	270.7 (72.4) (61.8) (0.8)
Net change in cash and cash equivalents (bank overdraft) Net cash and cash equivalents(net bank overdraft), beginning ofperiod	(36.0) 23.7	135.7 (112.0)
Net cash and cash equivalents(net bank overdraft), end ofperiod	(12.3)	23.7

Reconciliation of cash flow from operating activities to adjusted cash flow from operating activities :

(in millions of dollars)	Years ended November 30,	Years ended November 30,
	2024	2023
Cash flow from operating activities	133.6	270.7
Net change in non-cash working capital balances(inflow)	32.1	(80.2)
Adjusted cash flows from operating activities	165.7	190.5

Operating activities

Cash flows from operating activities (before net change in non-cash working capital balances) reached $165.7 million or $2.95 diluted per share, compared with $190.5 million or $3.39 diluted per share for 2023, a decrease of 13.0% mainly reflecting the net earnings decrease. The net change in non-cash working capital balances used cash flows of $32.1 million, mainly representing changes in inventory of $10.0 million whereas accounts receivable, payable, and other items used cash flows of $22.1 million. Consequently, operating activities generated a cash inflow of $133.6 million compared to a cash inflow of $270.7 million for 2023.

Financing activities

Financing activities used cash flows of $117.9 million, compared with $72.4 million for 2023. During the year, Richelieu repaid long-term debt of $3.2 million, paid lease obligations of $41.1 million, and issued shares for $3.4 million, compared to a long-term debt repayment of $5.3 million, lease obligations payments of $34.1 million and a $8.6 million share issue in 2023. Dividends paid to shareholders of the Corporation amounted to $33.5 million compared to the same amount in 2023. The Corporation also repurchased common shares for an amount of $38.7 million

compared with $0.8 million in 2023.

Investing activities

Investing activities used cash flows of $50.8 million, including $20.3 million mainly for four business acquisitions completed in fiscal 2024 and $30.6 million primarily for the purchase of equipment aimed at maintaining and improving operational efficiency, as well as for distribution centre expansion projects, including investments related to the consolidation of the new Calgary centre.

Analysis of financial position

(in millions of dollars, except exchange rates)	As at November 30	As at November 30	As at November 30
	2024	2023	∆ %
Current assets Non-current assets	901.8 492.3	859.5 455.5	4.9 8.1
Total	1,394.1	1,315.0	6.0
Current liabilities Non-current liabilities Equity attributable to shareholders of the Corporation Non-controlling interests	288.9 176.2 926.5 2.5	237.7 169.1 904.9 3.3	21.5 4.2 2.4 (23.7)
Total	1,394.1	1,315.0	6.0
Exchange rates on translation of subsidiaries in the United States	1.401	1.358

Assets

Total assets amounted to $1.4 billion as at November 30, 2024, an increase of 6.0 %. Current assets increased by 4.9% or $42.3 million from November 30, 2023. Non-current assets increased by 8.1%, mainly due to the addition of right-of-use assets and property, plant and equipment related to lease renewals and expansion projects.

Cash position and long-term debt

(in millions of dollars)	As at November 30	As at November 30
	2024	2023
Current portion of long-term debt Long-term debt	3.5 2.4	2.9 2.4
Total debt Net cash and cash equivalents(net bank overdraft)	5.9 (12.3)	5.3 23.7

Shareholders' equity and share capital

Equity attributable to shareholders of the Corporation totalled $926.5 million as at November 30, 2024, compared with $904.9 million as at November 30, 2023, an increase of $21.6 million. This increase is mainly due to a rise of $6.9 million in retained earnings and of $5.0 million in share capital and contributed surplus, while accumulated other comprehensive income increased by $9.7 million. As at November 30, 2024, the book value per share was $16.78, up by 4.0% over November 30, 2023, and the return on average shareholders' equity was 9.4%.

As at November 30, 2024, the Corporation's share capita l consisted of 55,218,678 common shares (56,088,365 shares as at November 30, 2023). In 2024, upon the exercise of stock options under the stock option plan, Richelieu issued 138,025 common shares at an average price of $24.96 (323,575 in 2023 at an average price of $26.43). The Corporation granted 289,000 stock options in fiscal 2024 (306,500 in 2023) and cancelled 37,375 (41,000 in 2023). Consequently, as at November 30, 2024, 1,734,525 stock options were outstanding (1,620,925 as at November 30, 2023).

DIVIDENDS

On January 16, 2025, the Board of Directors approved the payment of a quarterly dividend of $0.1533 per share to shareholders of record as at January 30, 2025, payable on February 13, 2025. The declared dividend is designated as an eligible dividend within the meaning of the Income

Tax Act (Canada).

MAIN TRADEMARKS

==> picture [241 x 51] intentionally omitted <==

MAIN TRADEMARKS (CNW Group/Richelieu Hardware Ltd.)

PROFILE AS AT NOVEMBER 30, 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 cabinet, storage and closet, home furnishing and office furniture manufacturers, residential and commercial woodworkers, door and window, and hardware retailers including renovation superstores. Richelieu offers its 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 3 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 net 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 outlined 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 outlined 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.

www.richelieu.com

CONFERENCE CALL ON JANUARY 16, 2025 AT 2:30 P.M. (EASTERN TIME)

Financial analysts and investors interested in participating in the conference call on Richelieu's results to be held at 2:30 p.m. on January 16, 2025, may dial 1-800-990-4777 a few minutes before the start of the call. For those unable to participate, a taped rebroadcast will be available as of 5:45 p.m. on January 16, 2025, until midnight on January 23, 2025, by dialing 1-888-660-6345, access code: 60055 #. Members of the media are invited to listen in.

Pictures are available on www.richelieu.com

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at November 30
[In thousands of dollars]	2024	2023
	$	$
ASSETS
Current assets
Cash and cash equivalents	41,389	46,327
Accounts receivable	240,138	219,264
Income taxes receivable	10,132	12,621
Inventories	598,674	572,351
Prepaid expenses	11,467	8,905
	901,800	859,468
Non-current assets
Property, plant and equipment	89,253	78,053
Intangible assets	64,615	67,808
Right-of-use assets	185,024	167,124
Goodwill	140,396	135,089
Deferred taxes	13,041	7,421
	1,394,129	1,314,963
LIABILITIES AND EQUITY
Current liabilities
Bank overdraft	53,673	22,617
Accounts payable and accrued liabilities	167,827	169,785
Income taxes payable	2,772	4,373
Current portion of long-term debt	3,533	2,940
Current portion of lease obligations	41,227	37,989
Other liabilities	19,844	—
	288,876	237,704
Non-current liabilities
Long-term debt	2,369	2,406
Lease obligations	163,800	143,336
Deferred taxes	10,085	11,169
Other liabilities	—	12,191
	465,130	406,806
Equity
Share capital	75,145	72,289
Contributed surplus	11,182	9,040
Retained earnings	801,879	794,971
Accumulated other comprehensive income	38,303	28,593
Equity attributable to shareholders of the Corporation	926,509	904,893
Non-controllinginterests	2,490	3,264
	928,999	908,157
	1,394,129	1,314,963

CONSOLIDATED STATEMENTS OF EARNINGS

Years ended November 30

[In thousands of dollars, except earnings per share]

	2024	2023
	$	$
Sales	1,832,218	1,787,754
Operatingexpenses excludingamortization	1,630,799	1,557,350
Earnings before amortization, financial costs and income taxes	201,419	230,404
Amortization of property, plant and equipment and right-of-use assets	58,139	50,070
Amortization of intangible assets	10,819	10,857
Net financial costs	11,656	13,280
	80,614	74,207
Earnings before income taxes	120,805	156,197
Income taxes	31,325	42,370
Net earnings	89,480	113,827

Net earnings attributable to:

Shareholders of the Corporation	85,754	111,474
Non-controllinginterests	3,726	2,353
	89,480	113,827
Net earnings per share attributable to shareholders of the Corporation
Basic	1.54	2.00
Diluted	1.53	1.98

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended November 30

[In thousands of dollars]

	2024	2023
	$	$
OPERATING ACTIVITIES
Net earnings	89,480	113,827
Items not affecting cash and cash equivalent
Amortization of property, plant and equipment and right-of-use assets	58,139	50,070
Amortization of intangible assets	10,819	10,857
Deferred taxes	(7,294)	(121)
Share-based compensation expense	2,895	2,570
Net financial costs	11,656	13,280
	165,695	190,483
Net change in non-cash workingcapital balances	(32,140)	80,174
	133,555	270,657
FINANCING ACTIVITIES
Repayment of long-term debt	(3,205)	(5,306)
Payment of lease obligations	(41,100)	(34,108)
Interest paid on bank overdraft	(2,332)	(6,387)
Dividends paid to shareholders of the Corporation	(33,503)	(33,521)
Other dividends paid	(2,465)	(817)
Common shares issued	3,445	8,552
Common shares repurchased for cancellation	(38,707)	(773)
	(117,867)	(72,360)
INVESTING ACTIVITIES
Business acquisitions	(20,290)	(19,694)
Additions toproperty, plant and equipment and intangible assets	(30,552)	(42,093)
	(50,842)	(61,787)
Effect of exchange rate changes on cash and cash equivalents	(840)	(812)
Net change in cash and cash equivalents (bank overdraft)	(35,994)	135,698
Net cash and cash equivalents(net bank overdraft),beginningofyear	23,710	(111,988)
Net cash and cash equivalents and(net bank overdraft), end ofyear	(12,284)	23,710

SOURCE Richelieu Hardware Ltd.

View original content to download multimedia: http://www.newswire.ca/en/releases/archive/January2025/16/c9933.html

%SEDAR: 00000259E

For further information: For information: Richard Lord, President and Chief Executive Officer; Antoine Auclair, Chief Financial Officer and Chief Operating Officer, Tel: (514) 336-4144

CO: Richelieu Hardware Ltd.

CNW 11:24e 16-JAN-25