Twelfth consecutive year of sales and net earnings growth
-------------------------------------------------------------------------
- For the year ended November 30, 2007, consolidated sales exceeded
$400 million to reach $436.2 million, up 13.1% over 2006.
- U.S. sales increased by 72.5% (U.S. dollars) - 15.2% from internal
growth and 57.3% from acquisitions - and accounted for some 19% of
total sales.
- Earnings per share amounted to $1.47, up 6.5%.
- Two business acquisitions closed in Canada and the United States and
opening of a 30th distribution centre in Canada - Richelieu's network
now includes 45 centres in North America, plus two manufacturing
plants.
- In the fourth quarter, consolidated sales increased by 9.1% and net
earnings by 11.5%.
- The Company ended the year with an excellent financial position,
enabling it to easily pursue its growth and expansion.
- A 14% increase in quarterly dividend to 0.08 per common share
-------------------------------------------------------------------------
TSX: RCH
MONTREAL, Jan. 31 /CNW Telbec/ - Richelieu Hardware Ltd. is a leading north american importer, distributor and manufacturer of specialty hardware and complementary products. The Company will celebrate its 40th anniversary in 2008. Management today announces financial results for the year ended November 30, 2007. Richelieu's sales and net earnings increased for a twelfth consecutive year, and the three months ended November 30, 2007 represented the 49th quarter of sales growth over the corresponding quarter of the previous year.
Consolidated sales topped $400 million to reach $436.2 million, an increase of 13.1% over 2006, of which 5.1% came from internal growth and 8.0% from acquisitions. In Canada, sales grew by 5.6% to $355.0 million. Sales in the United States rose 64.4% (72.5% in U.S. dollars) to $81.1 million (US$75.1 million), thereby accounting for 18.6% of 2007 total sales.
Earnings before income taxes, interest, amortization and non-controlling interest (EBITDA) totalled $57.1 million, an increase of 7.6%. The EBITDA margin worked out to 13.1%. Net earnings amounted to $34.0 million, up 6.3%. Earnings per share grew by 6.5% to $1.47 ($1.46 diluted), whereas the number of shares did not vary significantly during the year.
"2007 was another excellent year, marked by solid results that enable us to maintain a very healthy financial position, with almost no debt and significant liquidity to pursue our growth. We continued to expand by opening our eighth distribution centre in Ontario and closing two acquisitions, bringing to 33 our total number of business acquisitions in North America over the past 20 years. We can thus underline Richelieu's consistent focus on its vision and growth strategy, driven by synergistic acquisitions, innovation, further market development and enhancement of customer service. This consistent focus attests to our commitment to create value year after year. In 2008, we intend to continue doing so through new acquisitions and internal growth," indicated Richard Lord, President and Chief Executive Officer.
Ongoing expansion in 2007: two acquisitions and one centre opening
------------------------------------------------------------------
While completing the integration of the five businesses acquired in 2006, Richelieu purchased Village Square Cabinet Supply on March 5, 2007, a Nashville, Tennessee based distributor of hardware and related products that gave it access to a new territory near markets where it is already present. Then on May 23, 2007, the Company acquired the principal net assets of Sasco Products Inc., a Dartmouth, N.S. based distributor specializing in finishing products for furniture manufacturers and cabinet makers that it integrated into its Atlantic Countertops division in order to benefit from attractive operational and customer synergies. In addition, this industrial product line is now sold in most of Richelieu's Canadian market. These two acquisitions represent additional sales of approximately $10 million, not to mention the selling synergies that will be created by leveraging the Company's organization.
Strategic developments
----------------------
Richelieu's strategic priorities have always been customer-driven. In 2007, the Company further enhanced its product mix by introducing other quality innovations, among others in decorative hardware, a niche that now accounts for more than 30% of its sales. It continued to optimize the operations of its logistical chain, by initiating the implementation of an automated warehouse management system. The first phase completed in Montreal was successful, yielding efficiency gains and lowering operating costs. The Company also carried on its centre and showroom expansion and modernization program as it completed the improvements to another six centres, specifically those in Boston, Calgary, Drummondville, Edmonton, Vancouver and Victoria. During the year, it made new programs and sales support tools available to customers, including the Office Solutions, Lighting Solutions, Sliding Doors, Decorative Hardware and Exclusive Collection brochures. Its constantly enhanced website, which features a major transactional function, has caught the interest of many more customers who use this tool to place their orders. Monthly online sales reached approximately $2.0 million in 2007.
Dividend increase and payment
-----------------------------
The Board of Directors today approved an increase in the quarterly dividend from $0.07 to $0.08 per common share. This dividend is payable on February 28, 2008, to shareholders of record as at February 14, 2008.
Growth outlook: integration and benefits of recent acquisitions, further
------------------------------------------------------------------------
internal growth and ongoing expansion
-------------------------------------
"In 2008, we will leverage our recent acquisitions and the new distribution centre opened in 2007, while creating selling synergies with them. We will also build upon the further innovations that we will make available through our network in order to develop our customer accounts and intensify our internal growth. Finally, we will benefit from the medium and long-term business agreements signed in 2007 with major renovation chains; from the expansion of the retail market as new hardware product and renovation superstores are expected to open in Canada in 2008; and from the development of new market share with kitchen and bathroom cabinet makers, residential and commercial woodworkers and home and office furniture manufacturers. As we do every year, we will remain on the lookout for any good acquisition opportunity in North America that matches our criteria of profitability and growth over the long term," added Richard Lord.
PROFILE
-------
Richelieu Hardware Ltd. is a leading north american importer, distributor and manufacturer of specialty hardware and complementary products. Its products are targeted to an extensive customer base of kitchen and bathroom cabinet, furniture, and window and door manufacturers plus the residential and commercial woodworking industry, as well as a large customer base of hardware retailers, including renovation superstores. Richelieu offers customers a broad mix of high-end products sourced from manufacturers around the world. Its product selection consists of close to 55,000 different items targeted to a base of over 38,000 customers who are served by 47 centres in North America - 30 distribution centres across Canada, 15 in the United States and two manufacturing plants in Canada, specifically Cedan Industries Inc. which specializes in the manufacture of a wide variety of veneer sheets and edgebanding products, and Menuiserie des Pins Ltee which manufactures components for the window and door industry, a broad selection of mouldings, and various types of tackboards and whiteboards.
Notes to readers - Richelieu uses earnings before income taxes, interest, amortization and non-controlling interest ("EBITDA") because this measure enables management to assess the Company's operational performance. This measure is a widely accepted financial indicator of a company's ability to service and incur debt. However, EBITDA should not be considered by an investor as an alternative to operating income or net earnings, an indicator of operating performance or cash flows, or as a measure of liquidity. Because EBITDA is not a standardized measurement as prescribed by GAAP, it may not be comparable to the EBITDA of other companies. Certain statements set forth in this press release constitute forward-looking statements. In some cases, these statements are identified by the use of terms such as "may", "could", "might", "intend" "should", "expect", "project", "plan", "believe", "estimate" or the negative form of these expressions or other comparable variants. These statements are based on the information available at the time they are written, on assumptions made by management and on the expectations of management, acting in good faith, regarding future events and relate, by their very nature, to known and unknown risks and uncertainties such as economic conditions, exchange rate fluctuations and other factors set forth in the Management's Report included in the Company's Annual Report as well as its Annual Information Form, which are available on the System for Electronic Document Analysis and Retrieval (SEDAR) website at www.sedar.com. Richelieu's actual results could differ materially from those indicated or underlying these forward-looking statements. The reader is therefore recommended not to unduly rely on these forward-looking statements. Forward-looking statements do not reflect the potential impact of special items, any business combination or any other transaction that may be announced or occur subsequent to the date hereof. Richelieu undertakes no obligation to update or revise the forward-looking statements to account for new events or new circumstances, except where provided for by applicable legislation.
CONFERENCE CALL ON JANUARY 31, 2008 AT 2:30 P.M.
------------------------------------------------
Financial analysts and investors interested in participating in the
conference call on Richelieu's results to be held at 2:30 p.m. on January 31,
2008, can dial 1-800-732-6179 a few minutes before the start of the call. For
those unable to participate, a taped rebroadcast will be available as of
4:30 p.m. on January 31, 2008, until midnight on February 7, 2008, by dialing
1-877-289-8525, access code: 21260641(number sign). Member of the media are invited
to listen in.
A detailed analysis of operating results and financial position for 2007
as well as the year's financial statements and quarterly highlights are
presented in the following pages of the press release and are also available
on www.sedar.com.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATING RESULTS AND
FINANCIAL POSITION
-------------------------------------------------------------------------
Financial highlights
(in thousands of $, except per-share amounts, number of shares and return
on average equity)
Years ended November 30 2007 2006 2005
-------------------------------------------------------------------------
Sales 436,157 385,631 350,177
EBITDA 57,101 53,059 45,785
Net earnings 33,954 31,931 27,688
- basic earnings per share ($) 1.47 1.38 1.20
- diluted earnings per share ($) 1.46 1.37 1.19
Cash dividends paid on shares 6,463 5,551 4,638
- per share ($) 0.28 0.24 0.20
Weighted average number of shares
outstanding (in thousands) 23,080 23,136 23,165
As at November 30
Total assets 258,778 245,002 202,971
Working capital 120,995 103,909 105,927
Shareholders' equity 209,096 186,584 162,300
Return on average equity (%) 17.2 18.3 18.4
Book value ($) 9.05 8.09 7.01
Total interest-bearing debt 6,971 13,635 3,499
Cash and cash equivalents 7,879 6,964 20,103
Share closing price 23.04 23.79 22.24
-------------------------------------------------------------------------
ANALYSIS OF OPERATING RESULTS FOR THE YEAR ENDED NOVEMBER 30, 2007
Consolidated sales exceeded $400 million to reach $436.2 million in 2007,
up by $50.5 million or 13.1% over 2006. This increase came from:
- 5.1% internal growth resulting from a combination of the initiatives
taken by Richelieu all year long, specifically - targeted marketing
programs backed by perfected selling tools for customers' use - new
product lines that diversified the Company's offering and enabled it to
further develop its North American markets - the optimization of its
transactional website that contributed to raise its monthly online
sales to approximately $2.0 million in 2007 - and its showroom
expansion and modernization program to integrate its innovations and to
fulfill the evolving needs of manufacturer and retailer customers and
the information sessions of architects and designers. These initiatives
allowed Richelieu to build further synergies with prior acquisitions,
to optimize its North American network's potential and to better
benefit from the prevailing favourable conditions in the renovation
market;
- and 8.0% from the acquisition of Specialty Supplies Inc. (Florida) and
L.B. Brass (New York) at the end of the previous year, specifically on
October 17 and 30, 2006 - as well as Village Square Cabinet
Supply (Tennessee) and Sasco Products Inc. (Nova Scotia) in the second
quarter of 2007, on March 5 and May 23. These last two acquisitions
thereby contributed to the year's sales for nine and six months
respectively.
Sales
(in thousands of $)
Years ended November 30 2007 2006 Variation %
-------------------------------------------------------------------------
Canada 355,012 336,260 + 5.6
United States (CA$) 81,145 49,371 + 64.4
------------- (US$) 75,137 43,546 + 72.5
-------------------------------------------------------------------------
Consolidated sales 436,157 385,631 + 13.1
-------------------------------------------------------------------------
Sales to manufacturers amounted to $364.0 million, an excellent increase
of $43.3 million or 13.5% over 2006, of which 3.1% came from internal growth
and 10.4% from the aforementioned acquisitions - such sales accounted for
83.4% of consolidated sales for 2007. Richelieu achieved most satisfactory
advances in all its market segments, posting greater increases in the kitchen
cabinet makers and commercial and residential woodworkers niches throughout
2007. Hardware retailers including renovation superstores benefited from
strong sales growth in all product categories as well as the initial impact of
the medium and long-term business agreements signed with major Canadian
renovation chains. Sales to retailers thus totalled $72.2 million in 2007, up
by $7.2 million or 11.1% over a year earlier, whereas in 2006, they had
remained relatively stable compared with 2005.
In Canada, sales totalled $355.0 million, an increase of $18.8 million or
5.6% resulting from 5.1% internal growth and Sasco's contribution for six
months. It should be noted that the business of Sasco, a Dartmouth, N.S. based
distributor of industrial finishing products, has been merged with Richelieu's
Atlantic Countertops division. Canadian sales accounted for 81.4% of
consolidated sales in 2007. All of the Company's markets contributed to this
increase, with sales growth of 4.9% in Eastern Canada, 3.4% in Ontario and
stronger growth in Western Canada where sales grew by 9.7% over 2006,
reflecting the efforts made to benefit from the particularly favourable
economy in Western provinces.
In the United States, Richelieu achieved a strong increase of 72.5% in its
sales in U.S. dollars thanks to 57.3% growth-by-acquisition (in U.S. dollars)
and an excellent internal growth of 15.2% (in U.S. dollars). U.S. sales
totalled $81.1 million (US$75.1 million), compared with $49.4 million (US$43.5
million) for 2006, an increase of 64.4% in Canadian dollars. They accounted
for 18.6% of consolidated sales in 2007, compared with 12.8% in 2006. The
acquisition of Specialty Supplies and Village Square Cabinet Supply enabled
the Company to broaden its network in the buoyant markets of Florida and
Tennessee, whereas the acquisition of L.B. Brass increased its presence in the
New York region; Richelieu now has 15 distribution centres in the United
States. During the year, the Company almost finalized the integration of its
recent acquisitions, while building greater selling synergies in its network
and further developing its markets with new product lines, backed by enhanced
marketing programs and a strengthened sales force.
The average annual growth in consolidated sales was 11.0% for the last
five years.
Consolidated EBITDA and EBITDA margin
(in thousands of $)
Years ended November 30 2007 2006
-------------------------------------------------------------------------
Sales 436,157 385,631
EBITDA 57,101 53.059
EBITDA margin 13.1% 13.8%
-------------------------------------------------------------------------
Earnings before income taxes, interest, amortization and non-controlling
interest (EBITDA) stood at $57.1 million, up by $4.0 million or 7.6% over
2006. The Company's EBITDA profit margin remained solid at 13.1%, despite a
0.7% decline from 2006 when this margin had been much higher than in previous
years. The EBITDA margin has remained above 13% over the past five years. In
2007, the gross margin and the EBITDA margin were affected primarily by the
major increase in raw material costs, the investments required to develop new
sales in the retailers market, and the effect of the exchange rate on the
profit margin on U.S. sales translated into Canadian dollars, as they
represent a growing proportion of total sales. Activities in the United States
are in intensive development mode, and although their performance is most
satisfactory, they have not yet achieved the profitability level of Canadian
operations.
Consolidated net earnings
(in thousands of $)
Years ended November 30 2007 2006
-------------------------------------------------------------------------
EBITDA 57,101 53,059
Amortization of capital and intangible assets 4,685 3,975
Interest 842 72
Income taxes 17,294 16,828
Non-controlling interest 326 253
-------------------------------------------------------------------------
Net earnings 33,954 31,931
Net profit margin 7.8% 8.3%
-------------------------------------------------------------------------
Interest was up by approximately $0.7 million as a result of the increase
in the debt consisting primarily of balances of purchase price payable for the
previous year's acquisitions. Amortization of intangible assets with limited
useful lives accounted for in 2006, more than doubled to reach $0.9 million
for 2007. Income taxes totalled $17.3 million, up by approximately $0.5
million over 2006, mainly reflecting the increase in the year's earnings.
Net earnings grew by 6.3% to $34.0 million, representing 7.8% of
consolidated sales, compared with 8.3% in 2006. Earnings per share amounted to
$1.47 basic and $1.46 diluted, up from $1.38 basic and $1.37 diluted the
previous year. The number of shares and options did not vary significantly
over the past 12 months.
The average annual growth in consolidated net earnings was 11.9% for the
last five years.
Comprehensive income totalled $27.8 million, consisting primarily of
latent foreign exchange losses of $1.9 million incurred in the fourth quarter
on translation of the financial statements of Richelieu's subsidiary in the
United States, and foreign exchange losses of $4.0 million due to the change
in the method of translating the financial statements of this same subsidiary
effective September 1, 2007. It should be pointed out that Richelieu changed
the classification of its U.S. subsidiary effective September 1, 2007. This
subsidiary was thereby changed from integrated to self-sustaining foreign
operations because of the financial and operational autonomy noted in previous
months following its growth through acquisitions and market development.
SUMMARY OF QUARTERLY FINANCIAL RESULTS (unaudited)
(in thousands of $, except per-share amounts)
Quarters 1 2 3 4
-------------------------------------------------------------------------
2007
- Sales 94,509 116,331 111,921 113,396
- EBITDA 10,470 14,784 15,514 16,333
- Net earnings 5,973 8,651 9,110 10,220
basic per share 0.26 0.37 0.39 0.44
diluted per share 0.26 0.37 0.39 0.44
2006
- Sales 82,862 102,604 96,221 103,944
- EBITDA 9,060 14,128 14,353 15,517
- Net earnings 5,360 8,627 8,779 9,165
basic per share 0.23 0.37 0.38 0.40
diluted per share 0.23 0.37 0.38 0.39
2005
- Sales 76,056 92,560 88,032 93,529
- EBITDA 8,260 12,241 11,952 13,332
- Net earnings 4,874 7,422 7,251 8,141
basic per share 0.21 0.32 0.31 0.35
diluted per share 0.21 0.32 0.31 0.35
Quarterly variations in earnings - The first quarter ending February 28 or
29 is generally the year's weakest for Richelieu in light of the smaller
number of business days due to the end-of-year holiday period and a wintertime
slowdown in renovation and construction work. The third quarter ending August
31 also includes a smaller number of business days due to the summer holidays,
which can be reflected in the period's financial results. The second and
fourth quarters ending May 31 and November 30 generally represent the most
active periods and are conducive to a sharp increase in financial results.
Note: For further information about the Company's performance in the
first, second and third quarters of 2007, the reader is referred to the
interim management's reports available on SEDAR's website
at www.sedar.com.
Fourth quarter ended November 30, 2007
Fourth-quarter results reflect a 9.1% increase in consolidated sales which
amounted to $113.4 million, compared with $103.9 million for the corresponding
period of 2006. This excellent improvement came from 4.4% internal growth and
the full-quarter contributions of Specialty Supplies, L.B. Brass, Village
Square Cabinet Supply and Sasco.
Earnings before income taxes, interest, amortization and non-controlling
interest (EBITDA) grew by 5.3% to $16.3 million, up from $15.5 million in
2006. The EBITDA profit margin worked out to a very satisfactory 14.4%,
although it was down by 0.5% from the fourth quarter of 2006. During the
fourth quarter of 2007, the gross margin and the EBITDA margin were affected
by the investments made in the sales to retailers programs in the screws and
fasteners and builders hardware categories.
Interest on interest-bearing debt and amortization of capital assets and
intangible assets remained relatively stable compared with the fourth quarter
of 2006. Net earnings increased by 11.5% to $10.2 million or $0.44 per share
(basic and diluted), compared with $9.2 million or $0.40 per share (basic) and
$0.39 $ (diluted) for the fourth quarter of 2006.
Cash flows from operating activities (before net change in non-cash
working capital balances related to operations) totalled $11.5 million, up by
$1.4 million or 13.5% over the corresponding period of 2006, reflecting
primarily the increase in net earnings. Net change in non-cash working capital
balances related to operations used cash flows of $4.0 million, whereas it had
provided cash flows of $1.7 million in the fourth quarter of 2006. This
variation can be explained by the increase in inventories following the
opening of the centre in Barrie, Ontario, the agreements signed with major
Canadian renovation chains to support the Company's growth - and the increase
in accounts receivable arising from the sales growth. Consequently, operating
activities provided cash flows of $7.6 million, compared with $11.8 million
for the equivalent period a year earlier.
Financing activities used net cash flows of $7.8 million, primarily for a
long-term debt repayment of approximately $6.3 million and the payment of
shareholder dividends for a consideration of $1.6 million.
Investing activities used cash flows of $1.8 million for the purchase of
various capital assets related primarily to the management information system.
FINANCIAL POSITION
Analysis of principal cash flows in 2007
Change in cash and cash equivalents and capital resources
Years ended November 30 2007 2006
(in thousands of $)
-------------------------------------------------------------------------
Cash flows provided by (used for):
Operating activities 23,551 29,532
Financing activities (12,892) (11,609)
Investing activities (9,688) (31,062)
Effect of exchange rate fluctuations (56) -
-------------------------------------------------------------------------
Net change in cash and cash equivalents 915 (13,139)
Cash and cash equivalents,
beginning of year 6,964 20,103
Cash and cash equivalents,
end of year 7,879 6 964
-------------------------------------------------------------------------
Working capital 120,995 103,909
Renewable line of credit 26,000 26,000
-------------------------------------------------------------------------
Operating activities
Cash flows from operating activities (before net change in non-cash
working capital balances related to operations) grew by 7.7% to $39.2 million
or $1.70 per share in 2007, compared with $36.4 million or $1.57 per share for
2006. This increase reflects primarily the year's growth in net earnings. Net
change in non-cash working capital balances related to operations used cash
flows of $15.6 million, compared with $6.9 million the previous year. This
variation can be explained by the $9.6 million or 11.0% increase in
inventories resulting from the start-up of the centre in Barrie, Ontario, the
medium and long-term business agreements signed with Canadian renovation
superstore chains to support the Company's growth - and the $3.4 million or
6.0% increase in accounts receivable arising from the sales growth.
Consequently, operating activities provided cash flows of $23.6 million,
compared with $29.5 million a year earlier.
Financing activities
Richelieu repaid $6.8 million in debt in 2007, up from $3.4 million in
2006. The Company paid a total of $6.5 million in shareholder dividends, an
increase of $0.9 million over 2006 and representing 19.0% of 2007 net
earnings; this growth mainly reflects the dividend rate increase announced on
January 26, 2007, which raised the quarterly dividend from $0.06 per share to
$0.07 per share. Considering a common share issue of $0.3 million versus
$0.2 million in 2006, and the fact that the Company did not redeem any common
shares for cancellation during the year, as opposed to 2006 when it had
redeemed shares for a consideration of $2.9 million, financing activities used
total cash flows of $12.9 million in 2007, compared with $11.6 million the
previous year.
Investing activities
The two acquisitions closed in the second quarter of 2007, specifically
Village Square Cabinet Supply and Sasco, represented an investment of
$4.6 million, to which was added a balance of purchase price payable of
$1.2 million. During the year, $5.1 million was invested in capital
expenditures, specifically for the purchase of computer equipment and
warehousing equipment and the improvement of business premises. During 2006,
Richelieu had invested $28.5 million in the acquisition of five distributors
and $2.6 million in the improvement of business premises and the purchase of
manufacturing equipment. Consequently, investing activities used total cash
flows of $9.7 million in 2007, compared with $31.1 million in 2006.
Sources of financing
Also considering the effect of exchange rate fluctuations on cash and cash
equivalents which totalled $0.1 million at year-end, Richelieu had cash and
cash equivalents of $7.9 million as at November 30, 2007, up from $7.0 million
as at November 30, 2006.
The Company had an excellent working capital of $121.0 million for a
current ratio of 3.7:1 as at November 30, 2007, compared with $103.9 million
and a 3.2:1 ratio at the end of the previous year.
Richelieu estimates that it has the capital resources needed to fulfill
its commitments and respect its ongoing obligations in 2008. Its cash flows
from operating activities should suffice for the funding requirements arising
from its growth strategy and its financing and investing activities planned
for the year ending November 30, 2008. Furthermore, Richelieu has an
authorized line of credit of $26.0 million, renewable annually and bearing
interest at the bank's prime rate, as well as easy access to other outside
financing if necessary.
The expectation set forth above constitutes forward-looking information
based on the assumption that general economic conditions and exchange rates
will not significantly deteriorate, operating expenses will not increase
materially, supplies will be sufficient to fulfill Richelieu's requirements,
and no unusual event will require increased capital expenditures, and is
subject to the risks identified in the "Risk Management" section of
Richelieu's Annual Report.
Balance sheet analysis as at November 30, 2007
Summary balance sheet
As at November 30 2007 2006
(in thousands of $)
-------------------------------------------------------------------------
Current assets 165,558 151,732
Long-term assets 93,220 93,270
-------------------------------------------------------------------------
Total 258,778 245,002
-------------------------------------------------------------------------
Current liabilities 44,563 47,823
Long-term liabilities 5,119 10,595
Shareholders' equity 209,096 186,584
-------------------------------------------------------------------------
Total 258,778 245,002
-------------------------------------------------------------------------
Assets
Total assets amounted to $258.8 million as at November 30, 2007, up from
$245.0 million a year earlier, an increase of $13.8 million or 5.6%. During
2007, the Company closed the acquisition of Village Square Cabinet Supply and
Sasco, respectively representing net assets of $5.2 million and $0.7 million.
Current assets as at November 30, 2007 were up by $13.8 million over November
30, 2006, due primarily to a $0.9 million increase in cash and cash
equivalents, a $3.5 million rise in accounts receivable reflecting the
business volume and a $9.2 million increase in inventories related to
acquisitions, the start-up of the distribution centre in Barrie, Ontario, the
innovations introduced during the year, the medium and long-term business
agreements signed with major Canadian renovation chains and to meet future
demand.
Total interest-bearing debt
As at November 30 2007 2006
(in thousands of $)
-------------------------------------------------------------------------
Current portion of long-term debt 6,111 7,064
Long-term debt 860 6,571
-------------------------------------------------------------------------
Total 6,971 13,635
-------------------------------------------------------------------------
less cash and cash equivalents 7,879 6,964
Total debt net of cash (cash-free debt) (908) 6,671
-------------------------------------------------------------------------
Richelieu reduced its total interest-bearing debt by $6.7 million during
the year, lowering it $7.0 million as at November 30, 2007. Deducting cash and
cash equivalents, the Company had a cash/total interest-bearing debt surplus
as at November 30, 2006. Richelieu remains in a healthy and solid financial
position, with low indebtedness and substantial cash flows generated every
year, enabling it to pursue its growth and expansion, particularly through the
acquisition of companies specializing in its business sector.
Shareholders' equity totalled $209.1 million as at November 30, 2007, up
from $186.6 million as at November 30, 2006, an increase of $22.5 million or
12.1% reflecting the $27.5 million rise in retained earnings which amounted to
$195.5 million as at November 30, 2007, less accumulated comprehensive income
representing $6.2 million. At the end of 2007, the book value per share was
$9.05, up from $8.09 as at November 30, 2006. The total interest-bearing
debt/equity ratio stood at 3.3%, compared with 7.3% as at November 30, 2006.
As at November 30, 2007, Richelieu's share capital consisted of 23,100,737
common shares (23,052,612 common shares as at November 30, 2006) due to the
issue of 48,125 common shares under the share option plan and 640,000 options
(536,200 options as at November 30, 2006) were outstanding.
CONTRACTUAL COMMITMENTS
Summary of contractual commitments as at November 30, 2007
(in thousands of $)
2008 2009 2010 2011 2012 2013 Total
and
there-
after
-------------------------------------------------------------------------
Long-term debt 6,111 860 - - - - 6,971
Operating leases 3,967 3,282 2,536 2,017 1,123 1,552 14,477
-------------------------------------------------------------------------
Total 10,078 4,142 2,536 2,017 1,123 1,552 21,448
-------------------------------------------------------------------------
For 2008 and the foreseeable future, the Company expects cash flows from
operating activities and other sources of financing to meet its ongoing
contractual commitments. This expectation consists of forward-looking
information based on the assumption that economic conditions and exchange rate
will not deteriorate significantly, operating expenses will not increase
considerably, deliveries will meet the Company's requirements and no unusual
events will entail additional capital expenditures. This expectation also
remains subject to the risks identified in the "Risk Management" section of
Richelieu's Annual Report.
FOREIGN CURRRENCY
The Company follows the temporal method to translate its foreign currency
balances and transactions into Canadian dollars, excluding the accounts of its
self-sustaining foreign subsidiary. Under this method, monetary assets and
liabilities are translated at the exchange rates in effect at year-end and the
other items in the balance sheet and statement of earnings are translated at
the exchange rates in effect at the transaction date. Foreign exchange gains
and losses are included in net earnings for the year.
Assets and liabilities of the U.S. subsidiary classified as
self-sustaining from a financial and operational standpoint are translated
into Canadian dollars at the exchange rate in effect at year-end. Revenues and
expenses are translated at the average rate in effect during the year. Foreign
exchange gains and losses are included in a separate component of accumulated
other comprehensive income.
RISK MANAGEMENT
The risks to which Richelieu was exposed in the normal course of business
in 2007 and will continue to be exposed in 2008 are set forth in detail in the
management's report on www.sedar.com. These risks remain unchanged from those
described in the Company's 2006 Annual Report. The reader is referred thereto
for further details on the subject.
SHARE PRICE
The share price fluctuated between $22.26 and $27.00, and the trading
volume on the Toronto Stock Exchange totalled 4.4 million shares in 2007. The
share price was $23.04 at the close of markets on November 30, 2007, compared
with $23.79 as at November 30, 2006. It should be noted that Richelieu's share
price has increased by 80% over the past five years and by 978% since its
listing on the stock market.
Alain Giasson
Vice-President and Chief Financial Officer
January 31, 2008
Consolidated statements of earnings and retained earnings
(in thousands of dollars, except per-share amounts)
Years ended November 30 12 Months 3 Months
-------------------------------------------------------------------------
2007 2006 2007 2006
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$ $ $ $
(audited) (unaudited)
Sales 436,157 385,631 113,396 103,944
Cost of sales
and warehouse,
selling and
administrative expenses 379,056 332,572 97,063 88,427
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Earnings before
the following 57,101 53,059 16,333 15,517
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Amortization of
capital assets 3,747 3,583 993 969
Amortization of
intangible assets 938 392 239 392
Interest on long-term debt 844 187 107 122
Interest on short-term
debt, net (2) (115) (32) (45)
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5,527 4,047 1,307 1,438
Earnings before
income taxes and
non-controlling interest 51,574 49,012 15,026 14,079
Income taxes 17,294 16,828 4,686 4,857
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Earnings before
non-controlling interest 34,280 32,184 10,340 9,222
Non-controlling interest 326 253 120 57
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Net earnings 33,954 31,931 10,220 9,165
Retained earnings,
beginning of year 168,020 144,430 186,907 162,315
Dividends (6,463) (5,551) (1,616) (1,383)
Premium on redemption
of common shares
for cancellation - (2,790) - (2,077)
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Retained earnings,
end of year 195,511 168,020 195,511 168,020
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Earnings per share
Basic 1.47 1.38 0.44 0.40
Diluted 1.46 1.37 0.44 0.39
Consolidated statements of comprehensive income
(in thousands of dollars)
Years ended November 30 12 Months 3 Months
-------------------------------------------------------------------------
2007 2006 2007 2006
-------------------------------------------------------------------------
$ $ $ $
(audited) (unaudited)
Net earnings 33,954 31,931 10,220 9,165
Other comprehensive income:
Change in fair value of
derivatives designated as
cash flow hedges net of
income taxes of $54 (321) - (192) -
Translation adjustment
of net investment
in a self-sustaining
foreign operation (1 923) - (1 923) -
Exchange loss due to
change in translation
method of foreign
operation reclassified
as self-sustaining (3 953) - (3 953) -
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(6,197) - (6,068) -
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Comprehensive income 27,757 31,931 4,152 9,165
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Consolidated statements of cash flows
(in thousands of dollars)
Years ended November 30 12 Months 3 Months
-------------------------------------------------------------------------
2007 2006 2007 2006
-------------------------------------------------------------------------
$ $ $ $
(audited) (unaudited)
OPERATING ACTIVITIES
Net earnings 33,954 31,931 10,220 9,165
Non-cash items
Amortization of
capital assets 3,747 3,583 993 969
Amortization of
intangible assets 938 392 239 392
Future income taxes (145) (369) (285) (594)
Foreign exchange gain
on debt in US dollars (518) - - -
Non-controlling interest 326 253 121 57
Stock-based compensation
expense 888 610 233 158
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39,190 36,400 11,521 10,147
Net change in non-cash
working capital balances
related to operations (15,639) (6,868) (3,951) 1,673
-------------------------------------------------------------------------
23,551 29,532 7,570 11,820
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FINANCING ACTIVITIES
Decrease in bank loan - (1,910) - -
Repayment of long-term debt (6,759) (1,442) (6,258) (517)
Dividends paid (6,463) (5,551) (1,616) (1,383)
Issue of common shares 330 188 75 43
Redemption of common shares
for cancellation - (2,894) - (2,153)
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(12,892) (11,609) (7,799) (4,010)
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INVESTING ACTIVITIES
Business acquisitions (4,611) (28,452) - (14,061)
Additions to capital assets (5,077) (2,610) (1,785) (683)
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(9,688) (31,062) (1,785) (14,744)
-------------------------------------------------------------------------
Effect of exchange rate
fluctuations on cash
and cash equivalents (56) - (56) -
-------------------------------------------------------------------------
Net change in cash and
cash equivalents 915 (13,139) (2,070) (6,934)
Cash and cash equivalents,
beginning of year 6,964 20,103 9,949 13,898
-------------------------------------------------------------------------
Cash and cash equivalents,
end of year 7,879 6,964 7,879 6,964
-------------------------------------------------------------------------
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Supplemental information
Income taxes paid 15,846 15,288 3,866 1,757
Interest paid 885 28 185 25
Consolidated balance sheets
(in thousands of dollars) (audited)
As at November 30 2007 2006
-------------------------------------------------------------------------
$ $
ASSETS
Current assets
Cash and cash equivalents 7,879 6,964
Accounts receivable 60,976 57,443
Inventories 95,971 86,784
Prepaid expenses 732 541
-------------------------------------------------------------------------
165,558 151,732
-------------------------------------------------------------------------
Capital assets 19,774 18,463
Intangible assets 12,974 13,227
Goodwill 60,472 61,580
258,778 245,002
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities 37,371 38,425
Income taxes payable 1,081 2,334
Current portion of long-term debt 6,111 7,064
-------------------------------------------------------------------------
44,563 47,823
-------------------------------------------------------------------------
Long-term debt 860 6,571
Future income taxes 1,751 1,842
Non-controlling interest 2,508 2,182
-------------------------------------------------------------------------
49,682 58,418
-------------------------------------------------------------------------
Shareholders' equity
Capital stock 17,800 17,470
Contributed surplus 1,982 1,094
Retained earnings 195,511 168,020
Accumulated other comprehensive income (6,197) -
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209,096 186,584
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258,778 245,002
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