Richelieu Hardware (RCH) Q2 2024 earnings summary

Executive summary

• Q2 2024 sales rose 2% year-over-year, reaching CAD 407 million, driven by acquisitions and strong U.S. manufacturer growth, while Canadian sales declined slightly.

• Net earnings attributable to shareholders fell 23.7% to CAD 23.4 million, or CAD 0.42 per diluted share.

• Growth was supported by three acquisitions in the first half, adding approximately CAD 60 million in annual sales and expanding the U.S. presence.

• Sales to retailers and renovation superstores declined in both Canada and the U.S. due to softer markets and price reductions.

Financial highlights

• Q2 EBITDA was CAD 53.8 million (margin 11.2%), down 12.6% from last year; net earnings per share dropped 23.6%.

• First half 2024 sales reached CAD 888 million, up 1.5% year-over-year; EBITDA was CAD 94.2 million (margin 10.6%).

• Cash flow from operating activities in Q2 was CAD 55.7 million, down from CAD 74.4 million last year.

• Operating expenses increased due to higher costs of goods sold and expansion-related costs.

Outlook and guidance

• Q3 to date shows flat sales in the kitchen cabinet market and growth in commercial renovation and closet markets; retail sales remain down but are expected to improve with new projects.

• Price increases are anticipated for North American and European products in 2025 due to rising operating costs; Asian product prices remain stable.

• Positioned to capitalize on expected demand for specialized products amid North American housing shortages.

• EBITDA margin is expected to improve in the second half of 2024 and further in 2025 if market conditions strengthen.