Richelieu Hardware Q2 Earnings Call Highlights

Key Points

• Richelieu Hardware posted modest second-quarter growth, with sales up 3.9% to CAD 532.1 million and net earnings rising 3.2% to CAD 23.2 million. Growth came from both internal momentum and acquisitions, though EBITDA margin edged down to 10.6% due to tariffs.
• Canada and the U.S. both grew, but Ontario remained a weak spot. Management said Quebec and Western Canada were strong, while Ontario lagged; in the U.S., sales rose 4.4% in local currency, with especially strong performance in closet-related products.
• Acquisitions remain a major part of Richelieu’s strategy, with four deals completed since the start of the fiscal year adding about CAD 45 million in annual sales. Recent purchases include Finium, Solutions Acoustiques, and Winnec, and management said these deals should support growth without pressuring margins.

Richelieu Hardware TSE: RCH reported higher sales and earnings for its fiscal second quarter as acquisitions and modest internal growth helped offset uneven market conditions, including continued softness in Ontario and tariff-related pressure on margins.

For the quarter ended May 31, 2026, the hardware distributor posted sales of CAD 532.1 million, up 3.9% from a year earlier. Antoine Auclair, Richelieu’s CFO and COO, said growth reflected 1.8% internal growth and a 2.1% contribution from acquisitions. At comparable exchange rates, sales would have risen 5%.

Net earnings attributable to shareholders increased 3.2% to CAD 23.2 million, while diluted earnings per share rose to CAD 0.42 from CAD 0.41 a year earlier. EBITDA was CAD 56.1 million, up 1.7%, with the EBITDA margin slipping to 10.6% from 10.8%.

Auclair said the slight margin decline was tied to tariffs, which increased both sales and cost of sales as the company passed tariff costs through in dollar terms. In response to an analyst question, he said there was “nothing else” structurally affecting margins besides tariffs.

Canada Leads Growth, While Ontario Remains Challenging

In Canada, second-quarter sales rose 5.5% to CAD 291 million. Sales to manufacturers were CAD 246 million, up 4.5%, while sales to hardware retailers increased 11.6% to CAD 45 million.

However, management said Ontario remained a weak spot. During the question-and-answer portion of the call, Richard Lord said Canada was performing well overall “except for Ontario,” noting that Quebec sales increased by more than 10% and Western Canada rose by more than 5%. Ontario represents 44% of Richelieu’s Canadian business and 17% of total sales, Auclair said.

In the U.S., sales reached $175 million in U.S. dollars, up 4.4%. Sales to manufacturers rose 5.6% to $166 million, including 3.1% internal growth. In Canadian dollars, U.S. sales totaled CAD 241 million, up 1.9%, and accounted for 45% of total company sales.

Lord said June sales followed a similar pattern to the second quarter. He described the U.S. market as broadly consistent across regions, with certain specialized segments outperforming. The closet market, for example, continued to generate sales growth between 15% and 20%, while other market segments were generally growing 2% to 3%.

“We think the market is in a kind of lethargy as we speak,” Lord said, adding that Richelieu plans to invest more in salespeople, particularly in the U.S., to visit more customers and pursue new business.

First-Half Sales Near CAD 1 Billion

For the first six months of the fiscal year, Richelieu reported total sales of nearly CAD 1 billion, up 4.4%. Internal growth accounted for 1.9 percentage points of the increase, while acquisitions contributed 2.5 percentage points. At comparable exchange rates, sales would have been up 5.9%.

First-half Canadian sales rose 4.5% to CAD 541 million, including 2.9% internal growth. Sales to manufacturers increased 5% to CAD 452 million, while sales to hardware retailers and renovation superstores rose 2.2% to CAD 88.7 million.

U.S. first-half sales were $331 million in U.S. dollars, up 7.5%, with 3.7% from internal growth and 3.8% from acquisitions. In Canadian dollars, U.S. sales were CAD 455 million, or 46% of total sales.

First-half EBITDA was CAD 99.4 million, up 1.8%, with an EBITDA margin of 10%. Net earnings attributable to shareholders were CAD 37.6 million, up 2.5%, and diluted earnings per share were CAD 0.68, compared with CAD 0.66 a year earlier.

Acquisition Activity Continues

Richelieu completed four acquisitions since the beginning of the fiscal year, including one in the U.S. in the first quarter, one in Quebec during the second quarter and two in Canada after quarter-end. Management said the deals add approximately CAD 45 million in annual sales.

• Finium: Acquired May 1, the Frampton, Quebec-based distributor and manufacturer specializes in premium wall covering panels with decorative and acoustic applications.
• Solutions Acoustiques: Acquired June 26, the company operates in Greater Montreal as a specialized distributor of acoustic solutions.
• Winnec: Acquired July 8, the specialized hardware distributor operates in the Greater Toronto Area with three distribution centers.

Lord said Finium and Solutions Acoustiques strengthen Richelieu’s position in decorative and acoustic solutions, which he described as high-growth segments, while expanding the company’s presence with architects and designers.

Auclair said recent acquisitions should not dilute EBITDA margins. He noted that some businesses acquired last year required restructuring, while the acquisitions announced in the second quarter are already generating EBITDA.

Cash Flow, Capital Spending and Inventory

Second-quarter cash flow from operating activities before changes in non-cash working capital was CAD 47.9 million, up from CAD 46.8 million a year earlier. Changes in working capital used CAD 28.5 million, driven mainly by a CAD 14.8 million increase in accounts receivable and a CAD 9.4 million increase in inventories. Operating activities generated CAD 19.4 million in cash during the quarter.

For the first half, operating activities generated CAD 36.6 million, compared with CAD 51 million in the prior year. Richelieu ended the period with working capital of CAD 629.5 million.

Auclair said accounts receivable levels were in line with historical trends, with days sales outstanding around 45 to 46 days. He said inventory rose partly because the company made opportunistic purchases ahead of price increases, and he expects inventory to decline by CAD 5 million to CAD 10 million in the second half.

Capital expenditures were CAD 7.5 million in the quarter. Auclair said about CAD 2 million related to IT equipment, with the rest largely maintenance capital spending. He reiterated an annual capital expenditure expectation of CAD 18 million to CAD 20 million and said Richelieu is evaluating an expansion of its Drummondville, Quebec, location around the end of the year or early next year.

Outlook: Margin Target Depends on Market Momentum

Asked whether Richelieu could still reach an average EBITDA margin near 11% for the year, Auclair said the company “should be able to be close,” but would need more “rigor in the market.” He also noted that Richelieu’s second half is typically stronger than its first half.

Management also said a U.S. big-box retail program that had been expected to resume has started, with initial deliveries beginning in June. Lord said the program could generate CAD 10 million to CAD 12 million in annual sales, though sales may be stronger initially as stores are filled before reorders normalize.

Lord said Richelieu continues to evaluate acquisition opportunities and remains focused on expanding its product offering with innovative and exclusive solutions for architects, designers, woodworking professionals and retailers.

About Richelieu Hardware TSE: RCH

Richelieu Hardware Ltd is a Canada-based company that imports, manufactures, and distributes specialty hardware and complementary products. Headquartered in Montreal, the company operates across Canada and the eastern and midwestern regions of the United States. The majority of the company's sales are derived from its operations in Canada. Richelieu's products include furniture, glass, decorative, window, and door hardware, lighting systems, and kitchen and closet storage. The firm primarily serves home furnishing manufacturers, residential and commercial woodworkers, hardware retailers, and renovation superstores.

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