- Second Quarter Sales: $407 million, up 2%.
- Sales in Canada: EUR276 million, down 1.1%.
- Sales to Manufacturers in Canada: EUR132 million, up 0.9%.
- Sales to Hardware Retailers in Canada: EUR44 million, down 10.6%.
- Sales in the US: $150 million USD, up 6.1%.
- Sales to Manufacturers in the US: $143 million USD, up 8.7%.
- Sales to Hardware Retailers in the US: $7.4 million USD, down 2.9 million CAD.
- Total Sales in the US: EUR205 million, up 6.5%.
- First Half Sales: EUR888 million, up 1.5%.
- First Half Sales in Canada: $508 million, down 0.4%.
- First Half Sales to Manufacturers in Canada: EUR420 million, up 1%.
- First Half Sales to Hardware Retailers in Canada: EUR88.2 million, down 6.8%.
- First Half Sales in the US: $280 million USD, up 4%.
- Total First Half Sales in the US: EUR380 million, up 4.2%.
- Second Quarter EBITDA: $53.8 million, down 12.6%.
- Second Quarter EBITDA Margin: 11.2%, down from 13% last year.
- First Half EBITDA: EUR94.2 million, down 14.8%.
- First Half EBITDA Margin: 10.6%, down from 12.6% last year.
- Second Quarter Net Earnings: $23.4 million, down 23.7%.
- Second Quarter Net Earnings Per Share: $0.42, down 23.6%.
- First Half Net Earnings: $28.7 million, down 27.2%.
- First Half Diluted Net Earnings Per Share: $0.69, down from $0.95 last year.
- Second Quarter Cash Flow from Operating Activities: $55.7 million, down from $74.4 million last year.
- First Half Cash Flow from Operating Activities: $56.2 million, down from $93.2 million last year.
- Second Quarter Financing Activities Cash Flow: Used $38.6 million, up from $17.8 million last year.
- First Half Financing Activities Cash Flow: Used $57.6 million, up from $29.8 million last year.
- Repurchased Shares: 481,000 common shares for EUR18.6 million.
- First Half Investments: $36.2 million, including $17 million for acquisitions and $19.2 million for operational improvements.
- Working Capital: $660 million, current ratio of 3.3 to 1.
Release Date: July 11, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Richelieu Hardware Ltd (RHUHF, Financial) achieved a 2% increase in second-quarter sales, driven by a 2.7% positive contribution from acquisitions.
- Sales in the U.S. grew by 6.1%, with a notable 8.7% increase in sales to manufacturers.
- The company is working on several projects with retail customers that are expected to generate additional sales in the future.
- Richelieu Hardware Ltd (RHUHF) continues to benefit from a healthy and solid financial position with a working capital of $660 million and almost no debt.
- The company is focusing on the development of expanded and modernized distribution centers in the U.S. and a new Calgary location to support growth.
Negative Points
- Sales to retailers and renovation superstores were down in both Canada and the U.S., with a 10.6% decrease in Canada.
- Second-quarter EBITDA decreased by 12.6%, and the EBITDA margin dropped to 11.2% from 13% last year.
- Net earnings attributable to shareholders fell by 23.7%, primarily due to amortization from new business acquisitions and expansion projects.
- The company experienced a 0.7% internal sales decrease in the second quarter, partially offsetting the positive impact of acquisitions.
- Gross and EBITDA margins were under pressure due to temporary factors, including higher inventory costs and lower selling prices for certain products from Asia.
Q & A Highlights
Highlights from Richelieu Hardware Ltd (RHUHF) Q2 2024 Earnings Call
Q: How are year-over-year sales tracking in Q3 to date for both manufacturers and retailers?
A: Sales in the manufacturers' market are flat compared to last year, which is positive. The kitchen cabinet manufacturers represent about 40% of our sales. Commercial innovation projects are increasing by 4.3%, including 6% in the U.S. However, sales to retailers remain down, but we expect improvement due to new projects with retail customers.
Q: The customer you mentioned losing in the U.S., was that a retailer customer?
A: Yes, it was a retailer customer. They decided to buy their own products overseas. We are working on compensating for the lost sales with new customers.
Q: In Q2, you had a 0.7% organic decline. How much of that was due to weaker volumes versus price deflation?
A: The reduction in the retail business in Canada is primarily due to price reductions, especially for products imported from Asia. Volumes have remained stable year-over-year.
Q: Are you seeing any signs of upward price momentum for products from Asia over the next 18 months?
A: We expect prices for North American and European products to start increasing early next year. However, prices for products from Asia remain stable for now.
Q: Can you provide a breakdown of the cost savings expected from the rationalization of the cost base in Eastern Canada and Ontario?
A: We expect close to $1.5 million in cost reductions and another $1.5 million when we exit our current location, totaling around $3 million annually.
Q: Would you be able to quantify the dollar impact of the strike in Montreal?
A: We do not expect the strike to have a material impact on our sales. Our contingency plan is effective, and non-unionized employees have been managing the workload efficiently.
Q: Have your expectations for margin levels for 2024 changed?
A: The second quarter margin is aligned with the first quarter. We expect the second half of the year to be better than the first half. If the market improves, we should see an improvement in margins next year.
Q: Are the figures you mentioned organic or do they include acquisitions?
A: The figures mentioned are organic only and do not include any acquisitions.
Q: Are you getting any indications from suppliers about the scale of potential price increases?
A: We have received indications from some suppliers about potential price increases, but no specific numbers have been provided yet.
Q: How are you managing the impact of price reductions on products imported from Asia?
A: We are focusing on maintaining stable volumes and managing costs effectively to mitigate the impact of price reductions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
