Richelieu Reports 2Q Results & Announces New Acquisition
“Richelieu achieved an appreciable performance in the second quarter, in a most challenging business context. We owe this performance to our onestop shop product approach, the diversification of our market segments, our customer service, the positive impact of our acquisitions and the adjustment measures adopted in response to market conditions. The quarter started off strong in March, then our activities declined sharply in April due to the pandemic. However, a marked improvement was felt in May and continued in June, particularly in the retailers and renovation superstores market, with the exception of cyclical sales, which were higher in the second quarter of 2019. It should also be noted that this quarter had one fewer business day than the second quarter of 2019. The 6.6% growth from acquisitions partially offset the 18.3% internal decrease caused primarily by lower sales in the manufacturer market, whereas Quebec and Ontario and the U.S. Northeast and Midwest markets were the hardest hit by the pandemic. During the quarter, we continued to identify new acquisition targets that meet our value creation criteria, and on June 29 we completed the acquisition of the principal net assets of Central Wholesale Supply, a specialty hardware distributor operating a distribution centre in Richmond, Virginia. We are very pleased with this recent acquisition, which gives us access to this new strategic market. In addition, we have signed an agreement in principle for a new strategic acquisition in Canada,” commented Richard Lord, President and Chief Executive Officer of Richelieu.
“We take great pride in our ability to continue to meet our customers’ needs with the same quality of service that Richelieu has built its reputation on in its markets, and in strict compliance with appropriate measures to ensure the safety of our employees, customers and business partners. The positive trend we are seeing in certain market segments is encouraging. We nevertheless continue to monitor the situation very closely in order to adjust to changing market conditions in a timely manner. Our innovation and acquisition strategies remain our key growth and long-term value creation drivers. Finally, I would like to warmly thank our team and business partners for their support during this difficult period,” added Mr. Richard Lord.
Second-quarter consolidated sales amounted to $248.3 million, compared to $281.1 million for the corresponding quarter of 2019, a decrease of $32.8 million or 11.7%, of which 6.6% growth from acquisitions and 18.3% from an internal decrease. It should be noted that this quarter had one less business day than the second quarter of 2019. At comparable exchange rates to the second quarter of 2019, consolidated sales decrease would have been 13.1%for the quarter ended May 31, 2020.
Richelieu achieved sales of $207.0 million in the manufacturers market, compared to $238.3 million for the second quarter of 2019, a decrease of $31.3 million or 13.1%, of which 4.5% growth from acquisitions and 17.6% from an internal decrease. Sales to hardware retailers and renovation superstores stood at $41.3 million, down $1.5 million or 3.5% over the second quarter of 2019. Due to the current pandemic and the restrictions imposed by governments beginning as of mid-March 2020, many of our distribution centers have seen their operations strongly impacted, and this particularly in Quebec, Ontario, as well as in the Northeast and Midwest markets, which had a negative impact on sales in our two main markets, both in Canada and in the United States. The Corporation continued to operate in all of its centers with a reduced workforce in order to further serve its customers. Operations gradually resumed their course towards the end of the quarter, and this in accordance with deconfinement rules specific to each province and state where Richelieu operates and with the applicable physical distancing rules.
In Canada, Richelieu recorded sales of $155.2 million, a decrease of $27.9 million or 15.2% over the second quarter of 2019, of which 4.1% growth from acquisitions and 19.3% from an internal decrease. Sales to manufacturers amounted to $124.5 million, compared to $152.2 million for the second quarter of 2019, a decrease of 18.2%, of which 3.5% growth from acquisitions and 21.7% from an internal decrease. Sales to hardware retailers and renovation superstores totaled $30.8 million, down $0.2 million or 0.6% over the corresponding quarter of 2019, of which 7.2% growth from acquisitions and 7.8% from an internal decrease.
In the United States, sales totaled US$66.5 million, compared to US $73.1 million for the second quarter of 2019, down US$6.6 million or 9.0%, of which 10.7% growth from acquisitions and 19.7% from internal decrease. Sales to manufacturers amounted to US$59.0 million, compared to US$64.3 million, a decrease of 8.2% over the second quarter of 2019, of which 5.9% growth from acquisitions and 14.1% from an internal decrease. Sales in US$ to hardware retailers and renovation superstores were down 14.8%from the corresponding quarter of 2019, including 45.0% growth from acquisitions and 59.8% from internal decrease, resulting from higher cyclical sales in 2019. Excluding the cyclical sales effect, the internal increase in this market would have been 34%. Total U.S. sales in Canadian dollars stood at $93.0 million, compared to $97.9 million year over year, a decrease of 5.0%. They accounted for 37.5% of consolidated sales for the second quarter of 2020, compared to 34.8% of consolidated sales for the second quarter of 2019.
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About Richelieu Hardware Ltd.
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 82 centers in North America – 40 distribution centers in Canada, 40 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.
Antoine Auclair – Vice President & CFO – (540) 336-4144
Source: Richelieu Hardware Ltd.