Q2 2025 Richelieu Hardware Ltd Earnings Call

Good afternoon, ladies and gentlemen, and welcome to the everybody should you hardware second quarter results conference call. At this time all lines are in a listen only 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 immediate assistance. Please press star.

Operator: Good afternoon ladies and gentlemen and welcome to the Richelieu Hardware second quarter results conference call. At this time, all lines are in a listen-only mode.

Operator: 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 immediate assistance, please press star zero for the operator.

Zero for the operator.

Operator: Also note that this call is being recorded on July 10th, 2025.

Also note that this call is being recorded on July 10th 2025.

Operator: Bonjour Mesdames et Messieurs et bienvenue au résultat du deuxième trimestre 2025 de Quinquairie Richelieu. Présentement, notez que vos lignes sont en mode d'écoute seulement.

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Operator: After the presentation, we will proceed to a period of questions and answers that will be restricted to analysts only. If you need assistance during the call, press star and zero.

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Operator: Please note that this call was recorded on July 10, 2021.

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Casey: Is that because it might now say they like all of US you only shallow pretty without you shut the lights axiom.

Richard Lord: I would now like to give the floor to Mr. Richard Lord, President and Head of Direction. The floor is yours.

Casey: Nope.

Casey: Yes, Hey, Thank you good afternoon, ladies and gentlemen, and welcome to usual Transco for the second quarter, and especially us and doesn't need to have the first 2025 with me as a CFO.

Richard Lord: Good afternoon, ladies and gentlemen, and welcome to Richelieu's conference call for the second quarter and first half, ended May 31st, 2025. With me is Antoine Auclair, CFO and CEO. As usual, note that some of today's issues include forward-looking information, which is provided with the usual disclaimer, as reported in our financial filing. This was another quarter of good progress for Richelieu, both in terms of sales growth and new business acquisitions. And we ended the first half year with a sound financial position. We are pleased with the 6.4% increase in total sales. posted a solid performance in the US, with sales increase of 11.7% in US dollars, of 6.6 coming from Internet GO In Canada, we had a steady performance despite the more challenging economic conditions during the period, particularly in Ontario, where our sales manufacturers were down.

Casey: CFO and seal.

Casey: As usual note that some of today's issue.

Speaker Change: Forward looking information, which is provided with your usual disclaimer.

Casey: People still need in our financial filings.

Speaker Change: This was another.

Speaker Change: What's a good bogey is fully sugar both in terms of sales growth and new business acquisition.

Speaker Change: We ended the first half of year with the sound financial position.

Speaker Change: We are pleased with the 644% increase in total six we posted a solid performance in the U S, which sales increase of 11, 7%.

Speaker Change: Daughter of which $6 six coming from internal it cool.

Speaker Change: In Canada, we are.

Speaker Change: We had a steady performance at steady performance.

Speaker Change: The loss in the junior economic condition during the period, that's really you don't hear you.

Speaker Change: Well see some manufacturers whether.

Speaker Change: Well actually I think the good performance in Eastern Canada.

Richard Lord: Offsetting the good performance in Eastern Canada. It should also be noted that since May, we had to make selling price adjustments in response to U.S. tariffs. These adjustments add a minimal upward effect on the 6.6% internal growth we achieve in our US market. but with no impact on our gross margin since it's a pass-through.

Speaker Change: It should also be noted that since meat.

Speaker Change: We have to make sitting price adjustment in the restaurants to U S studies.

Speaker Change: This adjustment had a minimal effect aboard.

Speaker Change: And what effect on the six 6% internal growth, we achieve no U S markets.

Speaker Change: But with new ones back without whose margin since it's the first true.

Speaker Change: So you can think of our acquisition strategy.

Richard Lord: regarding our acquisition strategy. which we successfully pursued in the second quarter after completing four acquisitions in the first quarter.

Speaker Change: Which we successfully pursued in just one quarter after completing full like what you showed in the first quarter.

Richard Lord: In April, we acquired Rose Anoara Architectural Products. Specializing in Exclusive Architectural Panels and Related Products in Vineland, New Jersey. This acquisition also gives us the opportunity to expand our collaboration with architects, designers and high-end architectural woodworkers in the U.S.

Speaker Change: In April we acquired rose anyway.

Speaker Change: Industrial products.

Speaker Change: Specializing in this exclusive ethical downhills unrelated production in Vineland, New Jersey.

Speaker Change: This acquisition also gives us the opportunity to what's been a cola collaboration with architects designers and I am thrilled with workers in the U S.

Speaker Change: Then.

Richard Lord: Then, on May 1st, we acquire Les Industries Camco, a distributor of industrial wood finishing products in the greater Montreal area. This move strengthens our sales network for finishing products in North America that we have already established over 25 years ago.

Speaker Change: Well at least versus what Youre, essentially chemical distributor of industrial wood, finishing products in the greater Montreal area.

Speaker Change: This move strengthened Osage well, finishing production in North America that we have already established over 25 years ago.

Speaker Change: This means six.

Richard Lord: This means six acquisitions concluded in the first six months. for additional sales of 53 million.

Speaker Change: Well you shouldn't go through that in the first six months so.

Speaker Change: So I just want to say its 53 million.

Speaker Change: A stronger network, both diversification, although market segments and products, most synergies and even more low added value service.

Richard Lord: Thank you for watching. We also continue to invest in our network, adding over 50,000 square feet to our Detroit facility, which gives us the opportunity to add product lines and capture growth opportunities.

Speaker Change: We also continue to invest you know network, adding over 50000 square feet tall, Detroit facility, which gives us the opportunity to add product lines and capture that growth opportunity.

Speaker Change: I will now ask him with one to review the financial highlights for the period.

Antoine Auclair: I will now ask Antoine to review the financial highlights for the period. Thanks Richard. In the second quarter, sales reached $512.2 million, up 6.4%, representing an increase of $30.8 million, equally driven by internal growth and acquisition. In Canada, sales totaled $276 million, relatively stable compared to the same quarter of 2024. Despite the decline in sales in Ontario, where the business environment is actually more challenging. Sales to manufacturers amounted to $235 million, up 1.2%, while sales to the hardware retailers totaled $41 million, down 7.3%, mainly due to timing differences, as year-over-year sales are roughly in line with the same period last year.

Him: Thanks matured in the second quarter sales reached sorry about who it in $12 2 million up six 4%, representing an increase of $30 8 million equally driven by internal growth and acquisitions.

Him: In Canada sales totaled 276 million relatively stable compared to the same quarter of 2024.

Him: Despite the declining sales in Ontario, where the business environment is actually more challenging.

Him: Sales to manufacturers amounted to 235 million up one 2% while sales to the hardware retailers totaled 41 million down seven 3%, mainly due to timing differences as year over year sales are roughly in line with the same period last year.

Him: In the U S sales grew $268 million in U S dollar up 11, 7%.

Antoine Auclair: In the U.S., sales grew to $168 million in U.S. dollars, up 11.7%. Sales to manufacturers reached $157 million in U.S. dollars, up 9.9%, with 4.6% coming from internal growth. As of May, a portion of this internal growth reflects selling price adjustments following the introduction of new import tariffs, an increase that offsets the additional costs with no impact on gross margins. in the hardware retailers and renovations superstores market, sales reached $10.9 million, up $3.4 million. In Canadian dollars, total sales in the U.S. reached $236 million, up 15.3%, accounting for 46.2% of total Quattro D sales. For the first half, total sales reached nearly $1 billion, up 7.4%, of which 3.9% resulted from internal growth and 3.5% from acquisition.

Him: Sales to manufacturers reached $157 million in U S dollar up nine 9% with Fort Bragg at 6% coming from internal growth.

Him: As of May a portion of this internal growth reflects selling price adjustments. Following the introduction of new import tariffs and increased that to offset the additional cost with no impact on gross margin.

Him: In the hardware retailers and renovation superstores market sales reached $10 9 million up $3 4 million.

Him: In Canadian dollars total sales in the U S reached $236 million.

Him: Up 15, 3% accounting for 46, 2% of total quarterly sales.

Him: For the first half total sales reached nearly 1 billion up seven 4% of which three 9% resulted from internal growth and three 5% from acquisitions.

Him: In Canada sales reached $517 million up one 8% primarily due to acquisitions.

Antoine Auclair: Canada, sales reached 517 million, up 1.8%, primarily due to acquisition. Sales to manufacturers totaled $431 million, up $10 million or 2.4%. Sales to hardware retailers and renovation superstores were 86.8 million compared to 87.8 million down 1.1%. In the U.S., sales amounted to $208 million in U.S. dollars, up 9.8%, with 5.7% from internal growth and 4.1% from acquisition. They reached $437 million in Canadian dollars, up 14.9%, accounting for 46% of total sales. In US dollars, sales to manufacturers totaled $290 million, an increase of 26.3 million or 10%, driven by 3.8% in total growth and 6.2% from acquisition.

Him: Sales to manufacturers totaled $431 million up 10 million or two 4%.

Him: Sales to hardware retailers and renovation superstores or $86 8 million compared to $87 8 million down one point to 1%.

Him: In the U S sales amounted to 208 million in U S dollar up nine 8% with five 7% from internal growth and four 1% from acquisitions.

Him: They reached 437 million in Canadian dollar up 14, 9% accounting for 46% of total sales.

Him: Anyway as dollar sales to manufacturers totaled $290 million, an increase of $26 3 million or 10% driven by a $3 8 million.

Him: 8%, that's real growth and six 2% from acquisitions.

Him: Sales to hardware retailers and renovation superstores were up seven 1% compared to last year.

Antoine Auclair: Sales to hardware retailers and renovation superstores were up 7.1% compared to last Second quarter EBITDA reached $55.2M, up $1.4M or 2.7% over last year. Gross and EBITDA margins remained under pressure due to the contribution of recent acquisitions which carry lower margins as well as to integration costs and network expansion initiatives. Consequently, the EBITDA margin stood at 10.8% compared to 11.2% last year. First half EBITDA totaled $97.6 million up 3.6% with the EBITDA margin at 10.2% compared to 10.6% last year. Second quarter net earnings attributable to shareholders amounted to $22.5M, down 3.9%, mainly due to higher amortization expense resulting from capital investment, new leases and lease renewals related to expansion projects and business acquisitions completed during the previous fiscal year and the first semester of 2020.

Him: Okay.

Him: Second quarter, EBITDA reached $55 2 million up $1 4 million or two 7% over last year.

Him: Gross and EBITDA margins remained under pressure due to the contribution of recent acquisition, which carry a lower margins as well as to integration costs and network expansion initiatives.

Him: Quickly the EBITDA margin stood at 10, 8% compared to 11, 2% last year.

Him: First as EBITDA totaled 97, 6 million up three 6% with EBITDA margin at 10, 2% compared to 10, 6% last year.

Him: Second quarter net earnings attributable to shareholders amounted to $22 5 million down three 9%.

Him: Mainly due to higher amortization expense, resulting from capital investment new leases and lease renewals related to expansion projects and business acquisitions completed during the previous fiscal year and the first semester.

Him: Yeah.

Consequently diluted net earnings per share was 41 cents compared to 42 since last year.

Antoine Auclair: Consequently, diluted net earnings per share was $0.41 compared to $0.42 last year. For staff, net earnings attributed to shareholders reached $36.4 million, down 5.9%. diluted net earnings per share stood at $0.66 compared to $0.69 last year. Second quarter cash flow from operating activities before net change and non-cash working capital were $46.8 million compared to $45.1 million last year. The net change in non-cash working capital items represented a cash inflow of $0.5 million, reflecting a $10.2 million reduction in inventories, while other items required $9.7 million in cash. As a result, operating activities provided a cash inflow of $47.3 million in the quarter compared to a cash inflow of $55.7 million last year.

Him: First half net earnings attributable to shareholders reached $36 4 million down five 9%.

Him: Diluted net earnings per share stood at 66 cents compared to <unk> 69 cents last year.

Him: Second quarter cash flow from operating activities before net change in noncash working capital were $46 8 million compared to $45 1 million last year.

Him: The net change in noncash working capital items represented a cash inflow of <unk> 5 million, reflecting a $10 2 million reduction in inventories, while the other items required $9 7 million in cash.

Him: As a result operating activities provided a cash inflow of $47 3 million in the quarter compared to a cash inflow of $55 7 million last year.

Him: For the first half cash flow from operating activities represented a cash inflow of 51 million compared to a cash inflow of $56 2 million last year.

Antoine Auclair: For the first half, cash flow from operating activities represented a cash inflow of $51 million compared to a cash inflow of $56.2 million last year. For the second quarter, financing activities used cash flow of $23.3 million, compared to $38.6 million last year. The main variance is explained by the repurchase of common share, which amounted to $18.6 million last year. First half financing activities use cash flow of $44.7 million compared to $57.6 in 2024. In the first half, we invested $36 million, including $27.4 million for six business acquisitions and $8.6 million primarily for the purchase of warehouse equipment related to expansions and center consolidation efforts and to maintain and improve operational efficiency.

Him: For the second quarter financing activities used cash of $23 3 million compared to $38 6 million last year. The main variance is explained by the repurchase of common share, which amounted to $18 6 million last year.

Him: First as financing activities used cash flow of $44 7 million compared to 57 six in 'twenty 'twenty four.

Him: In the first half, we invested 36 million, including $27 4 million before six business acquisitions, and $8 6 million primarily for the purchase of warehouse equipment related to expansions and center consolidation efforts and to maintain and improve operational efficiency.

Him: We continue to maintain a robust financial position with working capital of $614 2 million Anika rent ratio of two nine to one while holding almost no debt.

Antoine Auclair: We continue to maintain a robust financial position with working capital of $614.2 million and a current ratio of 2.9 to 1 while holding almost no debt.

Richard: I now turn it over to Richard.

Richard Lord: I now turn it over to Richard. Thank you Antoine. In conclusion, over the coming periods, we will continue to grow by being creative and by reacting proactively to the changes, building on our sound foundations of strength and remaining firmly connected to our markets. Our business model, well adapted to our customer needs, our outstanding product offering, our solid network and our talented team are key to our success. The integration of our recent acquisitions is proceeding efficiently, while developing synergies and we remain on the lookout for further growth-generating acquisitions in the short and long term. Our strategic investment in recent years, now acquisitions are generating tangible growth and are key drivers in our long-term value creation.

Richard: In conclusion, although the coming periods, what would cause you to rule by being creative and battery I think proactively to the changes.

Richard: Do you think or when all of a sudden foundations of strengths.

Richard: Meaning firmly firmly connected to all markets our business model, what does that do to a question on the knee.

Richard: Funding for the offering a solid network and our talented team.

Richard: Key to our success.

Richard: The integration of our recent liquidation you're supposed to eating efficiently while developing synergies I mean are there.

Richard: Look out for further growth June anything acquisition in the short and long term.

Richard: Our strategic investment in it or since he is no equity issuance alginate anything tangible growth key drivers no long term value creation.

Richard Lord: Thanks, everyone. Thank you.

Richard: Thanks, everyone.

Richard: Thank you.

Richard: Ladies and gentlemen.

Operator: Ladies and gentlemen, we will now take questions from Amelie. If you wish to ask a question, please press star followed by 1 on your touchtone phone. You will hear a prompt that your hand has been raised. And should you wish to decline from the polling process, please press star followed by 2. And if you are using a speakerphone, you will need to lift the handset first before pressing any key. please go ahead and press star 1 now if you have any questions.

Richard: We will now take questions from analysts should you wish to ask a question. Please press star followed by one on your Touchtone phone you will hear a prompt that your hand has been raised.

Richard: Should you wish to decline from the polling process. Please press star followed by two.

Richard: Using a speakerphone you will need to lift the handset first before pressing any cadence. Please go ahead and press star one now if you have any questions.

Nikolai Gorbachev: The first question will be from Nikolai Gorbachev at CIBC World Market. Please go ahead. Hi there, could you provide some more color on the price adjustments you took, maybe what percent of products you raised prices for and the price impact that had on your organic growth in the U.S.? The products that were affected by those price increases in the U.S. because of the tariff are only for the Chinese products and represent what, Antoine, between 15 and 20% of our sales and the effect is minimal because it's only, it was effective only in May. So for the following quarter, though, that would be, you know, fully applied to the period.

Nicolay Garbage: The first question will be from Nicolay garbage at CIBC World markets. Please go ahead.

Nicolay Garbage: Hi, there could you provide some more color on the price adjustments you took immediate what percent of products you raised prices for and the price impact that had on.

Nicolay Garbage: Your organic growth in the U S.

Nicolay Garbage: Yes.

Nicolay Garbage: Well, Doug that the way I think to buy those price increases in the U S because of the tariffs.

Nicolay Garbage: Only for the Chinese production, they represent and what not when they're between 15 and 20% of our sales and <unk> is minimal.

Nicolay Garbage: So on the toys effective only in me so for the following quarters, though that would be you know.

Nicolay Garbage: Only apply to the periods.

Nicolay Garbage: Okay, I see and then could you perhaps discuss the price versus volume trends in Canada as well.

Nikolai Gorbachev: Okay, I see.

Nikolai Gorbachev: And then could you perhaps discuss the price versus volume trends in Canada as well? Price versus volume in Canada, price had minimal impact in Canada, so it's a pretty flat market as we speak and it's mainly due to volume. I see, I see.

Nicolay Garbage: Okay.

Nicolay Garbage: Price versus volume in Canada at price had a minimal impact in Canada. So are we.

Nicolay Garbage: A pretty flat market as we speak and it's mainly due to mainly due to volume.

Nicolay Garbage: At ICSC and how is the M&A pipeline looking are you seeing any changes in activity or multiples given the recent large deals in the distribution space.

Nikolai Gorbachev: And how is the M&A pipeline looking? Are you seeing any changes in activity or multiples given the recent large deals in the distribution space? No, no, no change in the network. The pipeline is still healthy, so we've been in a position to close this quarter. We still have others and negotiations, so we didn't see any major change in the M&A environment. So, pipeline is healthy, both in Canada and the U.S.

Nicolay Garbage: No no no change in the network and the pipeline is still there is still healthy. So we've been in a position to close to this this quarter, we still have a others and then negotiations. So we didn't see any major change in the in the M&A environment. So pipeline is LTE, both in Canada and the U S.

Nicolay Garbage: Okay perfect. Thanks, that's all I had I'll turn it over.

Nikolai Gorbachev: Okay, perfect.

Nikolai Gorbachev: Thanks.

Nikolai Gorbachev: That's all I had.

Nikolai Gorbachev: I'll turn it over.

Nicolay Garbage: Thank you.

Operator: Thank you.

Operator: Once again, ladies and gentlemen, if you do have any questions, please press star followed by one on your touchtone phone.

Speaker Change: Once again, ladies and gentlemen, if you do have any questions. Please press star followed by one on you touched on the phone.

Allison Lee: Next question will be from Allison Lee at National Bank Financial, please go ahead. Let me go ahead. Hello.

Allison Lee: Next question will be from Allison Lee at National Bank Financial. Please go ahead.

Speaker Change: Yeah.

Speaker Change: And how are you.

Speaker Change: Okay.

Speaker Change: Hello, This is zack calling in.

Zach: This is Zach calling in. Okay, Zach. Circling back on those price increases in May, is it fair to assume that they were about the exact size of the tariffs that were declared on Chinese goods? Exactly. We only charge the cost of the tariff. So we just pass through the expense to our customers. And it is 100% done regarding the Chinese product. And that's in the U.S. only. Understood. And given what we're seeing in terms of letters coming out from the U.S. administration, have you been adding any more price increases in June and July from other countries of origin?

Speaker Change: Okay.

Speaker Change: Just circling back on those price increases in May is it fair to assume that they are about the exact size of the tariffs that were declared on Chinese goods.

Speaker Change: Exactly we only tried to the question of the time, it's just passed towards the expense to our customers and it is 100% done with regard to Chinese products.

Speaker Change: Yeah definitely a U S only.

Speaker Change: Understood. Thank you.

Speaker Change: And.

Speaker Change: Given what we're seeing in terms of letters coming out from the U S administration have you been adding any more price increases in June and July from other countries of origin.

Zach: We will apply whatever the tariff that will be charged for us will be charged to our customers, no doubt about that, so we follow up very closely on that and nothing is going to stay in between. As soon as we get the chargers, we're going to charge the customers. And do you think you'll be able to cleanly pass those through going forward? Or do you expect some pushback from customers and maybe some lost volumes? We don't expect any pushback, because first of all, short term, our customers already have a lot of work, you know, I mean, a lot of work.

Speaker Change: We will look like what about the <unk>.

Speaker Change: That will add to our debt would be charge for us will be he tried for all customers no doubt about that as what we've heard what vertical was on that and you know what I think you're going to be you're going to see in between so as soon as we get to the chargers were going to charge their customers.

Speaker Change: And do you think you'll be able to cleanly pass those through going forward or do you expect some pushback from customers and maybe some lost volumes. We don't expect any pulls back because first of all the short term our customers, although they have a lot of work.

Zach: They have some orders that you have to finish in order to be paid by their own customers. So basically, they don't have any choice. They have to buy the product that they need to finish those products, those projects. And regarding the tariff, though, even though with the current tariff that we have for the Chinese product in the U.S., the Chinese product is still much more less expensive than any product, any similar product coming from any other country. So basically, we don't expect any change for that. We expect only change because, you know, people may be might be insecure and the market might slow down.

Speaker Change: They have some others that do have to do to finish in order to be paid by their own customers. So basically you don't have any choice they'll have to buy the product that they need to finish those products those projects and I think I need to tell you, though even though we would the current tariff that we have for the Chinese product in the U S. The Chinese product is still much more or less expensive than any products.

Speaker Change: Any shipment of product coming from any other country. So basically we don't expect any change with that we expect on the channel because you know people would maybe might be unsecure debt market might slow down we don't see that so far this year.

Zach: We don't see that so far in the current quarter in the U.S.

Speaker Change: Current quarter, I mean, the U S, but in Canada, we already mentioned that in Ontario, or taking them out because it's been difficult for the last six months or money resumed their price. It doesn't have a condominium inventory I'm not sold yet.

Zach: But in Canada, we already mentioned that in Ontario, the Ontario market has been difficult for the last six months for many reasons. The price, a lot of condominiums are inventory, I'm not sold yet. They're expensive, you know, the interest rate and everything else. And the tariff are making the people a little bit more nervous in Ontario than anywhere else because of the automobile industry.

Speaker Change: Expensive with the antitrust related with Yelp and tell me, if I'm, making the people little bit more nervous in ontario than anywhere else because they because of the automobile automobile industry. So far what we've seen in the current quarter, though where we are we have seen a slowdown also in BC because again, we have where we have we were within that subcontractor are leaning.

Zach: So far, what we've seen in the current quarter, though, we're seeing a slowdown also in B.C. because, again, we were reading that some contractors are laying off employees because they have a lot of unsold condominiums. So basically, hopefully those situations will be temporary. But what we as we were saying in the previous quarter, we think as we speak in the third quarter, business is still steady compared to the last quarter. But they will always have the threat in Canada that that might be a slowdown, maybe not a recession, but a slowdown in the industry.

Speaker Change: Our employees because they have a lot of unsold condominiums, so basically hopefully dose situation will be temporary but what we as we were seeing in the previous quarter. We think as we speak in the third quarter business is still steady compared to the last quarter, but well always have the true up in Canada that might be a slowdown maybe not our decision.

Speaker Change: But the slowdown in the industry why do we shouldn't use video will equip whatever happens with the economy is actually very well equipped well position, which we have no. Eventually as you know is full we have the best network, we had product diversity that nobody else can touch we were unique in the in the all of hardware.

Zach: By the way, Richelieu is very well equipped. Whatever happens to the economy, Richelieu is very well equipped, very well positioned. We have our inventory, as you know, is full. We have the best network. We have a product diversity that nobody else can touch. We are unique in the world of hardware. And we have the service, our service, 24-hour service all over Canada and in the U.S. for the small customers. That's something unique that I think if you see the first people that have problems, if the business slowdown would be hopefully a competition. But Richelieu is very well equipped to continue to be successful.

Speaker Change: And we have either service also this 24 hour service all over offered across all of our Canada and U S. With a small customer or was that something unique that I think you see it. The first people that don't have problems. If the business slow down would be hopefully all competition, but just curious if anyone equipped to continue to be successful, but if the market is.

Zach: But if the market is less, if the economy is down, our sales might be affected. We just hope that it will not happen.

Speaker Change: This is necessary as the economy is down the sales might be I think that we just opened up it will not happen.

Speaker Change: That's very good color. Thank you.

Zach: That's a very good color, thank you.

Zach: Then if we pivot specifically to retailers, there was a big uptick in the U.S.

Speaker Change: If we pivot specifically to retailers are there was a big uptick in the U S. What what drove that in particular is that going to be recurring.

Zach: What drove that in particular? Is that going to be a recurring? In the U.S., you know, we're sometimes dealing with big customers that could place seasonal orders, so that's the case for the U.S., the growth that you see there. It's a customer we're used to deal with, but we never receive the orders at the end as importers. Gotcha. And just the way that that order was placed, will it straddle Q3 as well, or is that mostly a Q2 effect? It's mostly Q2 effects, then you will have some effects in Q3 as well. but not as big as Q2.

Speaker Change: Sorry, the U S. A you know what.

Speaker Change: We're so we're sometimes sometimes dealing with with baked customer that could that could place a seasonal orders. So that's that's the case for the.

Speaker Change: For the U S. The growth that you've seen there that you see there so it says.

Speaker Change: In terms of go ahead.

Speaker Change: Some of them were used to deal with so but we never received.

Speaker Change: The orders are there in the same quarter.

Speaker Change: Got you and just the way that that order was placed straddle Q3, as well or is that mostly a Q2 effect.

Speaker Change: It's mostly Q2 effects that I know you will have some some effects in Q3 as well.

Speaker Change: But not as a big ask you too.

Speaker Change: Understood.

Zach: understood.

Zach: And then looking at the Canadian retailer sales, I was a little surprised to see that that was weaker given the Rona refresh and what we were hoping for from that.

Speaker Change: And then looking at the Canadian retailer sales.

Speaker Change: Surprised to see that that was weaker given the run a refresh and while we're hoping for from that so that's the story in Canada.

Zach: So what's the story? I think you need to look at it for the first semester. So, Ronald, refresh occurred more in Q1. So, that's why you've seen a larger increase in Q1. So, the way we look at it is first semester, the Canadian retail business is stable. So, that's more a cyclical effect in Q2. And we expect the second half to be good. At least, I think it's going to be better than flat. I think we should expect maybe a small increase in the retailer markets in Canada because we keep pushing products into the stores.

Speaker Change: I think you need to look at it for the first semester. So we'll run a refresh refresh occurred.

Speaker Change: More in Q1, so that's why you've seen a larger increase in Q1. So the way we look at it as far as the first semester at the Canadian retail business is is stays stable. So that's a that's more a.

Speaker Change: Cyclical effect in Q2.

Speaker Change: We expect.

Speaker Change: The last the second half to be to be good as good jeez I think he is going to be better than flat I think we shouldnt expect a.

Speaker Change: Maybe isn't a small increase in the retailer market in Canada, because we we keep pushing products into the store as we add products.

Zach: We add products. We see so far in the third quarter, we see Rona growing because of the work that we've done with our display in their stores. We see our sales with Home Depot growing as well. So, basically, I'm rather optimistic for the Canadian retailer market for the rest of the year.

Speaker Change: We see so far in the third quarter, we see Oh, no you know what they are growing because of the work that we've done with our display in their stores, we see I'll say with Omar on the poor growing as well, so basically I'm, rather optimistic with the Canadian retail market for the rest of the year.

Speaker Change: That's good news.

Zach: And then if we move to capital allocation, with the network expansion initiatives, where do you see your CapEx budget for the year? Take what we spent in six months and double it, so you'll end up closer to $20 million, which is more maintenance capex mode, so equalling approximately a percent of our sales. So historically, before the last three to four years, we were spending approximately one percent of our sales in maintenance capex, so you should end up around $20 million.

Speaker Change: And then if we move to capital allocation with the network expansion initiatives, where do you see your capex budget for the year.

Speaker Change: Alright, thank take what we spent six months and doubled it so you'll you'll end up closer to $20 million, which is more a.

Speaker Change: Maintenance Capex Smallwood this always equaling approximately 8% of our sales. So historically before the last three to four years. We were we were spending approximately 1% of our Oh, while we're selling maintenance capex. So that's you should end up around $20 million.

Speaker Change: Got you thanks.

Zach: and then any specific targets for working capital. Yeah, we reduced this quarter, we've reduced inventory 10 million, hopefully we'll add another 15 for the rest of the year. And for our accounts receivable, they're in pretty good shape, so we're satisfied where it is today.

Speaker Change: And then any specific targets for working capital improvements.

Speaker Change: Yeah. We re there was this this quarter, we've reduced inventory 10 million hopefully will.

Speaker Change: We'll add another <unk> 15 for the rest of the year.

Speaker Change: And for our accounts receivable there are there are in pretty good shape, so a worst satisfy where where where it is today.

Speaker Change: Understood. Thank you and just last one for me, we've been seeing homebuilders lowering their outlooks and you guys were talking about.

Zach: Zachary Evershed, Antoine Auclair, Richard Lord, Richelieu Hardware Ltd The End And just last one for me, we've been seeing homebuilders lowering their outlooks and you guys were talking about. on a market in Toronto. Are you seeing similar readthroughs for a lower Outlook from both manufacturers and retailers, or is there a split in Outlooks anywhere? Well, as I said, I think the retailer's outlook is rather positive. It might not be booming, but what we see so far is it will certainly be better than last year. And regarding the rest of the market with the contractor, Eastern Canada is still very good.

Speaker Change: The condo market in Toronto in BC.

Speaker Change: Are you seeing similar read throughs for our lower outlook from both manufacturers and retailers or is there a.

Speaker Change: Split in outlooks anyway.

Speaker Change: Well as I said I think to your theaters, all leukocyte positive it might be booming, but we what we see so far is it certainly will be better it will certainly be better than last year.

Speaker Change: And I think I think the rest of the market with the contracts are you still in Canada is still very good there are still some decent construction in Quebec, and the Maritimes are doing pretty well I'll tell you what I don't think can be worst the thing it would be maybe maybe hopefully we start to improve.

Zach: There's still some decent construction in Quebec and the Maritimes are doing pretty well. Ontario, I don't think, can be worse. I think it would be maybe, hopefully, we start to improve. And Alberta is still decently, it's a good market still. And BC is something that we have to keep an eye on for the months to come because of the, you know, I think the people, we need some construction. I think we all know that Mr. Carling has promised to make thousands and thousands of new construction that will be an apartment for the purpose of renting, but there is a lot of product, Richelieu products, in those type of apartments as well.

Speaker Change: I bet, though.

Speaker Change: So differently.

Speaker Change: It's a good market still and we see something that we have to keep an eye on for the year the months to come because of the new way of dose I think the people we need we need some based on construction I think.

Speaker Change: We all know that we still currently you guys bought a minutes to make a thousands and thousands of new construction that would be oh.

Speaker Change: Bachmann for the purpose of of renting, but but there is another product for the electrical products and those type of apartment as well. So basically we did have some positive sign but there.

Operator: So basically, there are some positive signs, but as we see, as we speak with what we know, is that we expect a flat market in Canada. And the U.S. so far is still holding, it's holding very well so far. Very good, thank you. I'll leave it there. Thank you. And at this time, Ms. Gillard, we have no other questions registered. Please proceed, sir.

Speaker Change: As we see as we speak with what we know is that we expect a flat market in Canada and the U S. So far is still holding it is holding very well.

Speaker Change: So far.

Speaker Change: Yes.

Speaker Change: Very good thank you.

Speaker Change: I'll leave it there.

Speaker Change: Thank you. Thank you.

Speaker Change: Thank you and at this time Ms. Sheila we have no other questions registered please proceed sir.

Operator: Okay, there's no more questions, so thank you very much for attending this call. It's always a pleasure to talk to you. Do not hesitate to contact us if you need more information. Thank you very much. Thank you, sir.

Speaker Change: Okay. So theres no more questions. So thank you very much for attending this call with it's always a pleasure to talk to you do does it take to contact us if you need more information. Thank you very much.

Speaker Change: Thank you, Sir ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we do ask that you. Please disconnect your lines.

Operator: Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your

Speaker Change: Yeah.

Speaker Change: [music].