Strong increase in results for Richelieu in first quarter 2021

New acquisition in Canada closed after quarter ended

Agreements in principle for two new acquisitions in Canada

• Total sales were $297.6 million , up 19.3%–including 17.1% in internal growth – for the first quarter ended February 28, 2021 . Sales in Canada and the U.S. increased by 23.3% and 16.4% (USD), respectively.
• EBITDA was up 53.4% to $38.2 million , and the EBITDA margin rose to 12.8% compared to 10% in the same quarter of 2020.
• Net earnings attributable to shareholders was up 78.3% to $21 million , or $0.37 per diluted share, an increase of 76.2%.
• A new acquisition in Canada closed after the end of the quarter, and signing of two agreements in principle for two acquisitions in Canada . These transactions combined would represent additional sales of approximately $36 million on an annual basis.
• Healthy and solid financial position – cash of $62.4 million and total debt of $4.4 million for a debt/equity ratio of 0.8%, and working capital of $386.9 million (3.8:1 ratio) at February 28, 2021 .

MONTREAL , April 8, 2021 /CNW/ - " Richelieu (TSX: RCH) began 2021 with strong growth in the first quarter. We closed a new acquisition after the quarter ended and we signed two agreements in principle for two new acquisitions in Canada . As a customer-oriented company and an essential supplier - with the support of our innovation and value-added service strategies, our one-stop shop approach, the efficiency of richelieu.com, as well as our highly diversified customer base - we have seized the opportunities of the favourable conditions in the Canadian and U.S. renovation market. We are satisfied with the quarter's overall growth and the 19.3% increase in sales, which includes internal growth of 17.1% and reflects the 16.3% increase in the manufacturers market and 34.3% rise in the retailers and renovation superstore markets. Increased sales and continued cost-cutting pushed EBITDA and net earnings per diluted share up 53.4% and 76.2%, respectively. More than ever, in the current context, we are making every effort to ensure that our value-added service meets the needs of our clients as efficiently as possible," said Richelieu president and CEO Richard Lord .

"We are also pursuing our acquisition strategy, and we acquired the shares of Task Tools, which distributes power tool accessories and related products to retailers in Canada and the U.S. from two centers in British Columbia and Ontario – with the acquisition of Mibro in 2020, it strengthens our presence in these product lines. We also signed two agreements in principle to acquire two Canadian distributors. These acquisitions combined would bring additional annual sales of approximately $36 million . In addition, we added a distribution center in Rochester, New York , our fifth center in this strategic market," Added M. Lord.

ANALYSIS OF OPERATING RESULTS FOR THE FIRST QUARTER ENDED FEBRUARY 28, 2021, COMPARED WITH THE FIRST QUARTER ENDED FEBRUARY 29, 2020

For the quarter ended February 28, 2021 , consolidated sales reached $297 .6 million, compared with $249 .4 million for the corresponding quarter of 2020, an increase of 19.3%, of which 17.1% from internal growth and 2.2% from acquisitions. At comparable exchange rates to the first quarter of 2020, the consolidated sales growth would have been 20.8% for the quarter ended February 28, 2021 .

Richelieu achieved sales of $241 .8 million in the manufacturers market, compared with $207 .9 million for the first quarter of 2020, an increase of $33 .9 million or 16.3% increase, of which 13.6% resulted from internal growth and 2.7% from acquisitions. Sales to hardware retailers and renovation superstores stood at $55 .8 million, up $14 .3 million or 34.5% resulting from internal growth. This increase in sales is attributable to the favourable fallout from strong demand in the renovation market.

In Canada , Richelieu recorded sales of $193 .2 million, an increase of $36 .5 million or 23.3% over the first quarter of 2020, of which 22.5% from internal growth and 0.8% from acquisitions. Sales to manufacturers amounted to $153 .2 million compared with $127 .5 million in the first quarter of 2020, an increase of 20.2% of which 19.1% from internal growth and 1.1% from acquisitions. Sales to hardware retailers and renovation superstores grew to $40 .0 million, up $10 .8 million or 37.0%, entirely form internal growth, over the corresponding quarter of 2020.

In the United States , sales totalled US$81 .9 million, compared with US$70 .3 million for the first quarter of 2020, an increase of US$11 .6 million or 16.4%, of which 11.8% from internal growth and 4.6% from acquisitions. Sales to manufacturers amounted to US$69 .5 million compared with US$60.9 million in the first quarter of 2020, an increase of 14.1%, of which 8.6% from internal growth and 5.5% from acquisitions. Sales to hardware retailers and renovation superstores were up 31.9% (in US dollars) from the corresponding quarter of 2020, entirely from internal growth. Considering applicable exchange rates, total U.S. sales expressed in Canadian dollars stood at $104 .3 million, compared with $92.7 million for the first quarter of 2020, an increase of 12.6%. They accounted for 35.0% of consolidated sales for the first quarter of 2021, whereas they represented 37.0% of the period's consolidated sales for the first quarter of 2020.

First-quarter earnings before income taxes, interest and amortization (EBITDA) amounted to $38 .2 million, up $13 .3 million or 53.4% over the first quarter of 2020. The gross margin remained relatively stable and the EBITDA margin improved due to the increase in sales and tight control of expenses. EBITDA margin stood at 12.8%, compared to 10.0% for the corresponding quarter of 2020.

Amortization expenses for the first quarter of 2021 amounted to $8.5 million compared with $7.8 million for the corresponding quarter of 2020, up $0 .7 million, mainly due to the increase in amortization of right-of-use asset resulting from lease renewals.

First-quarter net earnings grew by 78.4%. Considering non-controlling interests, net earnings attributable to shareholders of the Corporation amounted to $21 .0 million, up by 78.3% over the first quarter of 2020. Net earnings per share rose to $0.38 basic and $0.37 diluted, compared with $0.21 basic and diluted for the first quarter of 2020, an increase of 81.0% and 76.2 % respectively.

Comprehensive income amounted to $18 .0 million, considering a negative adjustment of $3 .1 million on translation of the financial statements of the subsidiary in the United States , compared with $13 .3 million for the first quarter of 2020, considering a positive adjustment of $1 .5 million on translation of the financial statements of the subsidiary in the United States .

FINANCIAL POSITION

Operating activities

First-quarter cash flows from operating activities (before net change in working capital balances) amounted to $30 .0 million or $0.53 diluted per share, compared with $20 .1 million or $0.36 diluted per share for the first quarter of 2020, an increase of 48.9% stemming primarily from the net earnings growth. Net change in non-cash working capital balances used cash flows of $23 .0 million, reflecting the change in inventories ( $20 .5 million), and the change in accounts receivable, accounts payable and other items which used cash flows of $2 .5 million. Consequently, operating activities represented a cash inflow of $7 .0 million, whereas they had represented a cash inflow of $8 .8 million for the first quarter of 2020.

Financing activities

First-quarter cash flows from financing activities used cash flows of $15 .7 million, compared with $6 .9 million for the first quarter of 2020. The Corporation repaid long-term debt of $1 .3 million and issued shares for $0 .8 million, compared with a long-term debt repayment of $0 .2 million and a $0.8 million share issue in the first quarter of 2020. Dividends paid to shareholders of the Corporation amounted to $7.6 million , compared to $3.8 million in the corresponding quarter of 2020. The Company paid a special dividend of $0.0667 per share in addition to a dividend of $0.07 per share, up 4.9% over the corresponding quarter of 2020. The Company also repurchased common shares for an amount of $3.3 million , whereas it had not made any share repurchases during the corresponding period of 2020.

Investing activities

First-quarter cash flows from investing activities represented a cash outflow of $2 .9 million, primarily for the purchase of new equipment to maintain and improve operational efficiency.

Sources of financing

As at February 28, 2021 , the cash and cash equivalent amounted to $62.4 million , compared with $73 .9 million as at November 30, 2020. This change mainly results from the financing activities made during the first quarter of 2021. The Corporation posted a working capital of $386 .9 million for a current ratio of 3.8:1, compared with $377 .4 million (current ratio of 3.6:1 ) as at November 30, 2020.

Richelieu believes it has the capital resources to fulfill its ongoing commitments and obligations and to assume the funding requirements needed for its growth and the expected financing and investing activities between now and the end of 2021. The Corporation continues to benefit from an authorized line of credit of $65 million as well as a line of credit of US$6 million renewable annually and bearing interest at prime and base rates respectively. In addition, Richelieu considers it could access to other outside financing if necessary.

Assets

Total assets amounted to $768 .6 million as at February 28, 2021 , compared with $771 .1 million as at November 30, 2020, a decrease of 0.3 %. Current assets grew by 0.5% or $2.7 million over November 30, 2020.

The Corporation continues to benefit from a healthy and solid financial position. As at February 28, 2021 , total debt was $4 .4 million, of which $1 .1 million in long-term debt and $3 .3 million in short-term debt representing balances payable on acquisitions.

Equity attributable to shareholders of the Corporation totalled $559 .4 million as at February 28, 2021 , compared with $551 .1 million as at November 30, 2020, an increase of $8 .3 million stemming primarily from a growth of $10 .2 million in retained earnings which amounted to $491 .0 million, and of $1 .2 million in share capital and contributed surplus, whereas accumulated other comprehensive income was down by $3 .1 million. As at February 28, 2021 , the book value per share was $10.02 , up by 1.6% over November 30, 2020.

As at February 28, 2021 , at the close of markets, the Corporation's share capital consisted of 55,847,031 common shares (55,893,568 shares as at November 30, 2020). During the first quarter ended February 28, 2021 , the Corporation issued 36,025 common shares at an average price of $23.54 (331,900 in 2020 at an average price of $16.92 ) upon the exercise of stock options under its stock option plan. In addition, the Corporation repurchased for cancellation 82,562 common shares in the normal course of operations for a cash consideration of $3 .3 million (678,362 common shares for a cash consideration of $25.0 million in fiscal 2020). During the quarter ended February 28, 2021 , the Corporation granted 289,000 stock options (300,500 in fiscal 2020) and cancelled 5,500 stock options. As a result, as at February 28, 2021 , 1,945,400 stock options were outstanding (1,697,925 as at November 30, 2020).

Dividends

On April 8, 2021, the Board of Directors approved the payment of a quarterly dividend of 0.07$ per share to shareholders of record as at April 22, 2021, payable on May 6, 2021. The declared dividend is designated as an eligible dividend within the meaning of the Income Tax Act ( Canada ).

PROFILE AS AT FEBRUARY 28, 2021

Richelieu is a leading North American distributor, importer and manufacturer 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, door and window, residential and commercial woodworkers, 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 130,000 different items targeted to a base of more than 90,000 customers who are served by 84 centers in North America – 41 distribution centers in Canada , 41 in the United States and two manufacturing plants in Canada , specifically Cedan Industries Inc. which specializes in the manufacturing of a wide variety of veneer sheets and edgebanding products and Menuiserie des Pins Ltée which manufactures components for the window and door industry and a broad selection of decorative mouldings.

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 amortization, deferred tax expense (or recovery) and share-based compensation expense. 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.

APRIL 8, 2021 , 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 April 8, 2021, may dial 1-888-390-0546 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 April 8, 2021, until midnight on April 15, 2020 by dialling 1-888-390-0541, access code: 005161 #. Members of the media are invited to listen in.

Photos are available at www.richelieu.com

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

CONSOLIDATED STATEMENTS OF EARNINGS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF CASH FLOWS

[In thousands of dollars]
[Unaudited]

SOURCE Richelieu Hardware Ltd.

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