Q2 2022 Richelieu Hardware Ltd Earnings Call

Speaker 2: Good afternoon, Ladies and gentlemen, and welcome to richel you hardware second quarter 2022 conference call. At this time, all lines are in liston on the mode. Following the presentation, we will conduct a question and answer session, which will be restricted to analysts only and if, at any time during this call, you require med to the assistance, please press ST zero for the operator. Also note that the call is being recorded on July seventh 2022.

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Speaker 3: Yes see, Thank you. We have only, Ladies and gentlemen, and welcome to this's conference call for the second quarter and first six months ended may thir, the first 2022, with means, our toan clients here ful, as usual, thoughte that some of today's issue include forward-looking information, which is provided with the usual disclaimer, as reported in our financial findings.

Speaker 3: We achieved strong growth in the second quarter, as reflected in our result, with a 31% increase in total sales.

Speaker 3: Including a record 55% increase in the? U's sales.

Speaker 3: A 26% increase in net earnings per share and a sound financial position with a 24.4 return on average equity.

Speaker 3: We are benefiting from our recent acquisitions and the investments that we have made in recent years in new market segment and strategic areas, both in Canada and in the U? S.

Speaker 3: Our dynamic and sustained market development and penetration efforts continueed to pay off, and each market segment made a solid contribution to the quarter's growth.

Speaker 3: In Canada, we achieved a 17% increase in sales and, as I mentioned earlier, we realiz a record 55% increase in the U's market.

Speaker 3: Overall increases in the manufacturers and the retailers market were 35% and 15% respectively.

Speaker 3: The expansion of our customer base and network, the divestigation of our market segment, coupled with our ongoing innovation strategy and our value added multi-access service of the key drivers of our worldte.

Speaker 3: I will now hand it over to R one for a review of the result and financial situation of the quarter.

Speaker 4: Thanks Richard. Second quarter sales reached four and is 87.9 million up thirty -one point 4%, of which 16% from internal growth and 15% from acquisitions.

Speaker 4: A comparable exchange rate last year, sales increase would have been 30%.

Speaker 4: In Canada, sales amounted to 292.3 million up 18%, of which 11.3 from internal growth and six point five from acquisitions.

Speaker 4: Our sales and manufacturers reached 237.3 million up 7, three seventeen point 3%, of which 20% from internal growth and 4% from acquisitions.

Speaker 4: As for the hardware retailers, sales stood at 55 million up, 20% of which 4% from internal growth and 16% from acquisition.

Speaker 5: In the? U's sales grew to hundred and 54 million in U's dollar, up 55%. 23% from internal growth and 32% from acquisitions.

Speaker 5: Sales to manufacturers reach hundred and 42 million in U's dollar, up 63%, 26% from internal growth and 37% from acquisitions.

Speaker 5: intheir hardware retailers and renovation superstores. Market sales were down 2%.

Speaker 5: In Canadian dollar. Total sales in the? U's reach 195.6 million, an increase of 59% and representing 40% of total sales.

Speaker 5: For the first, as sales reach eight hundred and seventy-two point 72.4 million up 30%, of which 16% from internal growth and 14% from acquisitions.

Speaker 4: In Canada, sales reached 521.6 million up 80.3 million or 18%, of which 12% from internal growth and 6% from acquisition.

Speaker 4: Sales to manufacturers reach 400 than 22.8 million, up 67.3 million or 19%. Sales to hardware retailers and renovation superstores reach 98.8 million, compared to 85.8 million up 16%.

Speaker 4: In the? U's sales amounted to 276.1 million in U's dollar up, 52% of which 23.1 from antonnoro and 29.2 from acquisitions.

Speaker 4: They rached 350.8 million and Canadian dollar toup 54%, accounting for 40% of total sales.

Speaker 4: Sales to manufacturers total 253 U's 2, one hundred and fifty two point six million dollars, an increase of 96.5 million, or 62%, of which 28.3 from internal growth and 34% from acquisition.

Speaker 4: Sales to hardware retailers and renovations super source were down 7% compared to last year.

Speaker 4: Second quarter, EBITDA reached 77.9 million, up 16.9 million or 28% over last year, resulting from increased sales and continued control of expenses.

Speaker 4: Gross margin declined slightly and the EBITDA margin stood at 16%, compared to 16 point four percent last year.

Speaker 4: First half, bitda reach other than to one point six million, up three 3%. As for the EBITDA margin, it stood at 15%, compared to 15% last year.

Speaker 4: Second quarter net earnings attributable- attributable to shareholders- total 47 million up 26%. Net earnings per share were 84 cents basic and 83 cents diluted, compared to 67 cents basic and 66 cents diluted last year, an increase of 25% and 26% respectively.

Speaker 4: First as net earnings attributable to shareholders reached 77.1 million up 32% value to dilute, and net earnings per shares stood at $1 and 37, compared to $1 and three cents up 33%.

Speaker 4: Second quarter cash flow from operating activities before. A net change in in the working capital amounted to 60.7 million or $1 and seven cents per share, an increase of 28% resulting primarily from the net earnings growth.

Speaker 4: Net change in noncash working capital used cash flow of 63.7 million, mainly reflecting increases in inventories of 44.1 million resulting from higher demand and cost off supply increases.

Speaker 4: Change in account receivable and other items use cash flow of 19.6 million.

Speaker 4: Consequently, operating activities used cash flow of three million.

Speaker 4: For the first half cash flow from operating activities before a net change in working capital, or up 32% to laying 103 million, or $1 and 83 cents per share.

Speaker 4: Net earnings and noncash working net. Change in noncash working capital balance.s useused cash flow of 143.8 million, primarily representing changes in inventories that use cash flow of 117.3 million, and accounts receivable and other items use cash flow of 26.5 million.

Speaker 4: Consequently, opengrning activities used cash flows of 40.5 million, compared to a cash flow of 55.9 million next year.

Speaker 4: For the second quarter financing activity is used cash flow of 21.5 million, compared to seven point four million last year. Dividends paak to shareholder of the corporation amounted to seven point three million compared to three point nine million in the same period of 2021.

Speaker 4: We also repurched common share for an amount of seven point nine million.

Speaker 4: First half, financing activities use cash flows of 29.8 million, compared to 23.9 in 2021.

Speaker 4: Dividend paid to shareholders amounted to 14.6 million, compared to 11.6 million last year.

Speaker 4: During the first half, we invested 52.4 million for the three business acquisition made in the first quarter and one million for the purchase of equipment to maintain an improved operational efficiency, as well as further it investmentswe continue to benefit from a healthy and solid financial position, with the working capital of four 81.5 million for a current ratio of two point eight to one and an average return on equity of twenty-four point 4%.

Speaker 4: I now turn it over to Richard. Also, we'd like to reinforce the fact that our sales are now above 40% in the? U's market, So which repres an important milestone for us as we are getting closer and closer to the 50% market.

Speaker 3: We continue to expand our U's network to capture market demand. As previously announced, we completed last year the expansion of Detroit olanddo, Boston and dyas locations, while opening two centers in wchester and wining. In addition, this year we started the expansion of our Atlanta footmarers's, Chicago and popanular locations, which are focusing very well and are on the schedule.

Speaker 3: The manufacturers market remains strong and our customers are still very busy, while the retail market rown has been fuel via the acquisition of a scan and test toool.

Speaker 3: While pursuing integration of our most reent acquisition. We are still watching the acquisition market closely and hope to seize new opportunities that fit our criteria by the end of the year.

Speaker 3: We remain focused on innovation, acquisition and value-added service strategy, as well as on cost control, in order to continue to vo profitability.

Speaker 3: Thanks everyone. We LL now be happy to answer your question.