Richelieu Hardware (RCH) Q2 2024 earnings summary

Executive summary

• Q2 2024 sales rose 2% year-over-year to CAD 407 million (or $481.4M), driven by acquisitions and strong U.S. manufacturer performance, with U.S. sales up 6.1% in USD and manufacturers up 8.7%.

• Net earnings attributable to shareholders were CAD 23.4 million ($0.42 per diluted share), down 23.7% from Q2 2023.

• EBITDA for Q2 was CAD 53.8 million (margin 11.2%), down 12.6% year-over-year due to lower gross margin and higher operating expenses.

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

• Three U.S. acquisitions and distribution network consolidation supported growth and market presence.

Financial highlights

• First half 2024 sales totaled CAD 888 million ($888.3M), up 1.5% year-over-year; EBITDA was CAD 94.2 million (margin 10.6%), down 14.8%.

• Net earnings for the first half were $38.7M ($0.69 per diluted share), down 27.2% year-over-year.

• Operating expenses (excluding amortization) increased to 88.8% of sales in Q2, reflecting higher COGS and expansion costs.

• Q2 sales to retailers and renovation superstores declined in both Canada and the U.S. due to softer markets and price reductions.

• Cash flow from operations for the first half was $56.2M, down from $93.2M in the prior year.

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 for now.

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

• Positioned to benefit from expected demand in the renovation market and housing shortages in North America.

• Focus remains on innovation, market diversification, value-added services, and strategic acquisitions.