Highlights for Q3 ended August 31,
2023
- Sales of $459.0M.
- EBITDA of $61.0M - EBITDA
margin of 13.3%.
- Net earnings attributable to shareholders of
$29.8M, or $0.53 per diluted share.
- Cash flows from operating activities of $103.5M.
Nine-month period of 2023
- Sales of $1.3B.
- EBITDA of $171.6M - EBITDA
margin of 12.9%.
- Net earnings attributable to shareholders of
$82.9M, or $1.47 per diluted share.
- Cash flows from operating activities of $192.0M.
- Sound financial position as at August 31, 2023, with a working capital of
$606.1M (ratio 3.4:1) and an
average return on equity of 15.5%.
Quarterly dividend of $0.15
per share payable on November 2, 2023, to shareholders of
record as at October 19, 2023.
MONTREAL, Oct. 5, 2023
/CNW/ - (TSX: RCH) "Richelieu
delivered a solid performance in the third quarter. The efficiency
of our business model in our diversified markets enabled us to
achieve a good level of sales, slightly lower than the
corresponding quarter of 2022, which was favorably impacted by the
market context resulting from the pandemic. In both Canada and the
United States, our main market segments contributed to this
performance, bringing sales for the first nine months to
$1.3B. In addition, our operating
activities generated significant cash flow of $103.5M in the third quarter, for a year-to-date
total of $192.0M. We expect to close
the financial year on November 30
with good results and a healthy and solid financial position. Our
strategies of innovation and service, market penetration and
business acquisition remain our key drivers for future growth,"
mentioned Richard Lord, President
and Chief Executive Officer.
NORTH AMERICAN NETWORK EXPANSION AND CONSOLIDATION
PROJECTS
While integrating the six acquisitions closed since the
beginning of the year including four in Canada and two in the United States - the Corporation completed
the expansion and modernization of its Seattle center, which is now fully
operational, and continued the expansion project at its Pompano
center during the quarter. Centers in the Atlanta and Nashville area are now consolidated, and those
in the Calgary area are scheduled
for completion in early 2024. Richelieu's North American network currently
has 113 interconnected centres.
OPERATING RESULTS FOR THE THIRD QUARTER AND FIRST NINE MONTHS
ENDED AUGUST 31, 2023
The following table provides an overview of Richelieu's sales in its two main markets for
the quarters ended August 31, 2023
and 2022 :
(in millions of
dollars)
|
Quarters ended
August 31
|
∆ %
|
2023
|
2022
|
Total
|
Internal
|
Acquisitions
|
Consolidated
|
459.0
|
472.9
|
(2.9)
|
(4.6)
|
1.7
|
Manufacturers
|
394.7
|
409.1
|
(3.5)
|
(5.5)
|
2.0
|
Retailers
|
64.3
|
63.8
|
0.8
|
0.9
|
(0.1)
|
Canada
|
270.1
|
279.6
|
(3.4)
|
(5.5)
|
2.1
|
Manufacturers
|
219.9
|
228.0
|
(3.6)
|
(6.1)
|
2.5
|
Retailers
|
50.2
|
51.6
|
(2.7)
|
(2.7)
|
—
|
United
States
|
188.9
|
193.3
|
(2.3)
|
|
|
In
$US
|
141.6
|
150.0
|
(5.6)
|
(6.6)
|
1.0
|
Manufacturers
|
131.0
|
140.6
|
(6.8)
|
(7.9)
|
1.1
|
Retailers
|
10.6
|
9.4
|
12.8
|
12.8
|
—
|
For the third quarter ended August
31, 2023, consolidated sales were $459.0M, compared to $472.9M for the third quarter of 2022, a decrease
of $13.9M, or 2.9%, resulting from an
internal decrease of 4.6%, while the acquisitions made a positive
contribution of 1.7%. It should be noted that in the third quarter
of 2022, the Corporation had achieved a strong internal growth of
16%.
Operating expenses excluding amortization totalled
$398.0M, or 86.7% of sales, compared
to $393.7M, or 83.3% of sales, for
the corresponding period in fiscal 2022. In monetary terms, the
level of operating expenses increased slightly. This is explained
by the increase of operating costs including costs related to
external warehousing resulting from the temporary inventory
increase, as well as the effect of the rise in the value of the
U.S. currency in relation to the Canadian currency on the
conversion of the operating expenses of the subsidiary located in
the United States, offset by a
slight decrease in inventories expensed as a result of lower sales.
In addition, the results for the third quarter of 2022 included a
foreign exchange gain of $2.5M on the
translation of monetary assets and liabilities, compared to a gain
of $51K for the quarter ended
August 31, 2023.
Earnings before income taxes, interest and amortization
(EBITDA) was $61.0M, down
$18.2M or 23.0% from the
corresponding quarter of 2022, mainly as a result of lower sales
and higher operating expenses. Gross margin reduced slightly. As a
result, the EBITDA margin was 13.3%, compared with 16.7% for the
corresponding quarter of 2022.
Amortization expense for the third quarter of 2023
amounted to $15.7M, up $3.1M over the corresponding period of 2022, as a
result of the increase in property, plant and equipment and
right-of-use assets stemming mainly from recent business
acquisitions and expansion and modernization projects. Net
financial costs and other were $3.1M for the quarter, compared to $2.1M in 2022, a variation of $1.1M due to higher lease obligations resulting
from acquisitions, expansion projects and lease renewals.
Net earnings were $30.7M, down 34.4% from the prior year. Including
non-controlling interests, net earnings attributable to
shareholders of the Corporation were $29.8M, down 35.7% from Q3 2022. Net earnings
per share were $0.53 basic and
diluted, compared to $0.83 basic and
$0.82 diluted for Q3 2022, down 36.1%
and 35.4% respectively.
Cash flow from operating activities, before net change in
non-cash working capital balances, was $48.5M or $0.86 per
diluted share compared to $60.9M or
$1.08 per diluted share for the third
quarter of 2022. This 20.4% decrease mainly reflects the decrease
in net earnings. The net change in non-cash working capital items
represented a cash inflow of $55.1M,
mainly reflecting decrease in inventories of $24.5M, while accounts receivable, payables and
other items represented cash inflows of $30.6M. As a result, operating activities
represented a cash inflow of $103.5M,
compared to a cash inflow of $2.7M in Q3 2022.
In the first nine months of 2023, consolidated
sales reached $1.3B$, down $11.2M or
0.8% over the first nine months of 2022, of which 2.0% from
acquisitions and 2.8% from internal decrease.
Operating expenses excluding amortization totalled
$1.2B, or 87.1% of sales, compared to
$1.1B, or 84.3% of sales for the
corresponding period in fiscal 2022. The variation is explained by
operating expenses now approaching pre-pandemic levels, in addition
to the elements mentioned above.
EBITDA was $171.6M, down
$39.2M or 18.6% from the
corresponding period of 2022 and net earnings attributable to
shareholders of the Corporation were $82.9M, down 32.8% from the prior year. Net
earnings per share were $1.49
basic and $1.47 diluted, compared to
$2.21 basic and $2.19 diluted for the same period of 2022, down
32.6% and 32.9% respectively.
Cash flow from operating activities, before net change in
non-cash working capital balances, was $135.1M or $2.40
per diluted share compared to $164.1M
or $2.91 per diluted share for the
first nine months of 2022. The net change in non-cash working
capital items represented a cash inflow of $56.8M, mainly reflecting the decrease in
inventories which generated a cash inflow of $74.4M, while accounts payable, income tax
payable and other items used cash of $17.6M. As a result, operating activities
represented a cash inflow of $192.0M,
compared to a cash outflow of $37.9M
in the first nine months of 2022.
Financial position
Total assets were $1.30B as
at August 31, 2023, compared to
$1.28B as at November 30, 2022, an increase of 1.5%. Current
assets were down 5.7% or $52.1M from
November 30, 2022 resulting mainly
from the inventory reduction. Non-current assets increased by 19.0%
mainly due to the addition of right-of-use assets, intangible
assets and goodwill related to business acquisitions and expansion
projects. As at August 31, 2023, the
Corporation had a working capital of $606.1M, for a ratio of 3.4:1, compared to
$562.5M (ratio of 2.6:1) as at
November 30, 2022 and an average
return on shareholders' equity of 15.5%.
Share capital
As at August 31, 2023, the
Corporation's share capital consisted of 55,925,490 common shares
[55,784,790 shares as at November 30,
2022]. For the three and nine-month periods ended
August 31, 2023, the weighted average
number of diluted shares outstanding was 56,346,260 and 56,225,410
[56,240,120 and 56,386,990 in 2022].
DIVIDENDS
On October 5, 2023, the Board of Directors approved the
payment of a quarterly dividend of 0.15$ per share to shareholders
of record as at October 19, 2023, payable on November 2,
2023. The declared dividend is designated as an eligible dividend
within the meaning of the Income Tax Act (Canada).
MAIN TRADEMARKS
PROFILE AS AT AUGUST 31, 2023
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 130,000 different items targeted to a
base of more than 110,000 customers who are served by 113 centres
in North America – 50 distribution
centres in Canada, 60 in
the United States and 3
manufacturing plants in Canada,
specifically, Les Industries Cedan Inc., Menuiserie des Pins Ltée
and USIMM/UNIGRAV, which manufacture a variety of veneer sheets and
edge banding products, a broad selection of decorative mouldings
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 asset, 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 of 2023 will be available shortly on
the website of the System for Electronic Document Analysis and
Retrieval ("SEDAR") at www.sedar.com and on the Corporation's
website at www.richelieu.com.
OCTOBER 5,
2023, CONFERENCE CALL 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
October 5, 2023, may dial 1-888-390-0620 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 October 5, 2023, until midnight
on October 12, 2023, by dialing
1-888-259-6562, access code: 357265 #. Members of the media
are invited to listen in.
Photos are available
on www.richelieu.com
|
SOURCE Richelieu Hardware Ltd.