-------------------------------------------------------------------------
- Total sales increase by 9.4% and earnings per share by 6.2%.
- Operations in the United States show a strong 54% improvement in sales
as a result of the efficient integration of business acquisitions and
solid internal growth - they now account for 12% of total sales.
- Richelieu shows an excellent financial position, with almost no debt,
and has record liquidity of over $20 million to pursue its expansion
and growth in 2006.
- The dividend rises from $0,05 to $0,06 per share.
- Two acquisitions close at the beginnig of 2006, one in Canada and one
on the U.S. East Cost.
-------------------------------------------------------------------------
TSX: RCH
MONTREAL, Jan. 25 /CNW Telbec/ - Richelieu achieved consolidated sales
of $350.2 million for the year ended November 30, 2005, up 9.4% over 2004. Of
this increase, 6.4% was internal growth and 3.0% came from the two U.S.
acquisitions made in 2004. Sales from distribution operations totalled
$332.3 million, accounting for 94.9% of consolidated sales, whereas sales from
manufacturing operations amounted to $17.9 million, accounting for 5.1% of
consolidated sales. Richelieu recorded total sales of $309.2 million in
Canada, or 88.2% of its consolidated revenues, up 6.4% over 2004. Distribution
sales in the United States grew by 42.8% (50.2% in U.S. dollars) to
$40.9 million (US$34 million). In 2005, Richelieu opened one new distribution
centre on the U.S. East Coast (Charlotte, North Carolina) and another in
Longueuil (Quebec). Subsequent to year-end, the Company closed two
acquisitions in Canada and the United States and signed an agreement in
principle for a third acquisition that is scheduled to close in the coming
weeks.
Earnings before interest, taxes, depreciation, amortization and non-
controlling interest (EBITDA) totalled $45.8 million, up 5.6% over 2004. The
EBITDA profit margin stood at 13.1%. EBITDA from distribution operations grew
by 2.1% to $40.7 million and EBITDA from manufacturing operations posted
strong growth of 45.1%, rising to $5.1 million. Net earnings amounted to
$27.7 million or $1.20 per share ($1.19 diluted), up 6.2% over the previous
year.
"2005 was a year of investments, primarily in sales and marketing. In
view of future growth and to cover the innovations introduced in our different
product categories, we completed, renewed and deployed our marketing programs
as well as several selling tools. We also strengthened our marketing team,
especially in our U.S. network, in order to support the development of its
great potential. These initiatives temporarily affected our EBITDA margin. We
are very pleased with our results in the United States, in terms of both sales
growth and profitability. We expect the marketing initiatives taken in 2005
and our new products to contribute to our market development in North America.
We will also carry on our expansion strategy; two acquisitions already closed
in early 2006 and other projects are planned," indicated Richard Lord,
President and Chief Executive Officer.
Dividend payment
----------------
Richelieu's Board of Directors today approved the payment of a quarterly
dividend of $0.05 per common share, payable on February 22, 2006 to
shareholders of record as at February 8, 2006.
Growth outlook: further acquisitions and synergies and internal growth in
-------------------------------------------------------------------------
2006
----
"We will remain focused on our sales and earnings growth by taking
further advantage of our organization's strengths in North America. We will
build synergies while finalizing the integration of our acquisitions,
specifically Atlantic Countertops Limited, closed at the beginning of 2006, a
distributor of decorative and functional hardware and kitchen accessories
which operates two distribution centres in Nova Scotia and New Brunswick, and
that of the distributor Kiika International, LLC, (Pennsylvania), which has
just closed. This last transaction enables us to penetrate a new niche in the
United States with its ergonomic office product line which we will complete
with ours. These two acquisitions add sales of approximately $14 million on an
annualized basis and make an immediate contribution to our earnings. In
December 2005, we also signed an agreement in principle to acquire a
distributor of decorative hardware products for an extensive customer base of
primarily Canadian retail chains, and we remain on the lookout for
opportunities matching our criteria. Backed by our strengthened teams and
marketing programs, we will continue expanding and developing our markets,
with the synergies from our acquisitions and our new products. Our primary
growth drivers remain residential and commercial renovation, the growing
market segments of kitchen and bathroom cabinets, major renovation chains, the
residential and commercial furniture market and innovations," added Mr. Lord.
Profile
-------
Richelieu Hardware Ltd. is Canada's leading distributor, importer and
manufacturer of specialty hardware and complementary products. The Company
also ranks among the top players in its specialty in North America. 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 more than 43,000 different items targeted to
a base of over 36,000 customers who are served by 37 distribution centres in
North America - nine in the United States and 28 in Canada including two
manufacturing plants. The Company also specializes in the manufacture of a
wide variety of veneer sheets and edgebanding products through its subsidiary
Cedan Industries Inc., of components for the window and door industry and of
mouldings through Menuiserie des Pins LtDee, and of various types of panels,
tackboards and whiteboards.
The statements set forth in this press release, which describe
Richelieu's objectives, projections, estimates, expectations or
forecasts, may constitute forward-looking statements within the meaning
of securities legislation. Positive or negative verbs such as "plan",
"evaluate", "estimate", "believe" and other related expressions are used
to identify such statements. Richelieu would like to point out that, by
their very nature, forward-looking statements involve risks and
uncertainties such that its results, or the measures it adopts, could
differ materially from those indicated or underlying these statements, or
could have an impact on the degree of realization of a particular
projection. We assume no obligation as to the updating or revision of the
forward-looking statements as a result of new information, future events
or other changes.
CONFERENCE CALL ON JANUARY 25, 2006 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 25,
2006, can dial 1-800-814-4860 a few minutes before the start of the call. For
those unable to participate, a taped re-broadcast will be available as of
4:30 p.m. on January 25, 2006, until midnight on February 1, 2006, by dialing
1-877-289-8525, access code: 21172658(pound key). Members of the media are
invited to listen in.
Management's Discussion and Analysis of Operating Results and Financial
Position
-------------------------------------------------------------------------
Financial Highlights
<<
Years ended November 30, 2005 2004 2003
(in thousands of $, except per-share amounts
and le number of shares)
$ $ $
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Sales 350,177 320,199 285,375
EBITDA 45,785 43,367 38,902
Net earnings 27,688 26,150 22,556
- basic earnings per share 1.20 1.13 0.99
- diluted earnings per share 1.19 1.12 0.98
Return on average equity (%) 18.4 20.5 21.2
Cash dividends paid on shares 4,638 3,688 4,124
Per share 0.20 0.16 0.18
Weighted average number
of shares outstanding (in thousands) 23,165 23,049 22,866
Total assets 202,971 183,260 157,220
Shareholders' equity 162,300 139,164 116,355
Interest-bearing debt 3,499 7,019 10,745
Operating Results
Consolidated sales
Consolidated sales totalled $350.2 million for the year ended November
30, 2005, up by $30.0 million or 9.4% over 2004. Of this increase, 6.4% was
internal growth and 3.0% came from the two U.S. acquisitions made in May and
June 2004, specifically Allied Hardware and Allied Casework Supply. On an
overall basis, this growth reflects the expansion of the product mix and the
results of the further market development efforts during the year.
Distribution operations continue to account for most of the Company's
business and remain its primary growth driver. Such operations yielded sales
of $332.3 million in 2005, up from $301.4 million the previous year, an
increase of $30.9 million or 10.2%. Distribution operations accounted for
94.9% of consolidated sales in 2005, compared with 94.1% in 2004. Cedan and
Menuiserie des Pins, the two manufacturing subsidiaries, recorded total sales
of $17.9 million in 2005, down 4.6% from the previous year, thereby accounting
for 5.1% of consolidated sales in 2005, versus 5.9% in 2004. Whereas
Menuiserie des Pins continued to increase its business volume, Cedan saw its
sales decline subsequent to a revision of its strategy entailing a focus on
its most profitable products.
Like the previous year, the Company made 81% of its sales to
manufacturers and 19% to retailers.
Canadian operations generated revenues of $309.2 million or 88.2% of
consolidated sales for the year, compared with $291.5 million or 90.7% of
consolidated sales the previous year. This 6.4% increase was due entirely to
internal growth. Overall, Canadian markets achieved solid performances, thanks
to Richelieu's continuously enhanced and increasingly diversified product mix
and targeted marketing programs which enable it to benefit from the steady
growth in renovation spending in Canada. Sales thus grew by 6.8% in Eastern
Canada, 6% in Ontario and 6% in Western Canada.
In the United States, 2005 yielded excellent growth in distribution
revenues as sales rose to $40.9 million (US$34 million), compared with
$28.7 million (US$22.0 million) for 2004, an increase of 54.3% in U.S. dollars
and 42.8% in Canadian dollars (considering the appreciation of the Canadian
dollar in relation to the U.S. dollar). Excluding the decline in the Cedan
manufacturing subsidiary's sales in the United States, this growth would have
reached 61.3% in U.S. dollars, 18.9% of which from internal growth and 42.4%
from the two acquisitions made in 2004.
The average annual consolidated sales growth was 12.2% for the past five
years and 16.5% for the last decade.
Earnings before income taxes, interest, depreciation, amortization and
non-controlling interest (EBITDA)
Earnings before income taxes, interest, depreciation, amortization and
non-controlling interest (EBITDA) totalled $45.8 million, up by $2.4 million
or 5.6% over 2004. EBITDA from distribution operations grew by 2.1% to
$40.7 million from $39.9 million in 2004. EBITDA from manufacturing operations
posted strong growth of 45.1%, rising from $3.5 million in 2004 to
$5.1 million in 2005. The gross profit margin continued to improve during the
year, whereas the EBITDA profit margin slipped to 13.1% from 13.5% in 2004.
The primary factors behind this 0.4% decline were: - the marketing initiatives
taken by the sales to retailers division to increase its sales to renovation
centres, especially in the ceramics category - the greater proportion of the
Company's U.S. operations which had not yet achieved the profitability level
of its Canadian markets as Richelieu is intensifying its market development
efforts in the United States - the production of marketing tools, including
major line catalogues and brochures such as Collection, Legs and Casters and
Office Solution, designed to maximize the benefits of the market expansion and
development efforts - and the recognition as an expense of the stock-based
compensation and other stock-based payments granted to officers and employees,
in accordance with the changes in accounting policies adopted during the
previous year. The first three factors resulted in an increase in operating
expenses from distribution operations, lowering the EBITDA profit margin on
distribution operations to 12.2% from 13.2% in 2004. Conversely, the EBITDA
profit margin on manufacturing operations improved considerably to 28.4% from
18.7% in 2004, reflecting notably the Cedan plant's enhanced productivity, the
benefits of its focus on the most profitable products and this subsidiary's
overall performance. Richelieu continues to exercise tight control over the
operating and supply costs of the entire organization.
Note: Richelieu uses earnings before income taxes, interest, depreciation
and amortization ("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.
Amortization and interest
Amortization of capital assets increased by 1.2% or $41,000 over the
previous year, due to the capital expenditures and acquisitions made in 2005
and 2004.
Interest on interest-bearing debt declined to $246,000 in 2005 from
$545,000 in 2004. This $299,000 reduction reflects the repayments of interest-
bearing debt totalling $3.7 million for 2005.
Income taxes
Income taxes amounted to $14.2 million for 2005, compared with
$13.1 million the previous year. This 8.5% increase mainly reflects the
increase in earnings and in various non-deductible expenses such as stock-
based compensation.
Net earnings
Given the previous items, net earnings grew by 5.9% or $1.5 million to
$27.7 million in 2005, up from $26.2 million in 2004. Net earnings as a
percentage of consolidated sales worked out to 7.9%, versus 8.2% for 2004.
Earnings per share amounted to $1.20 ($1.19 diluted), up 6.2% over $1.13
($1.12 diluted) the previous year, whereas the number of shares and options
did not vary significantly during the year.
The average annual growth in net earnings was 16.1% for the past five
years and 20.1% for the last decade.
Summary of quarterly results (unaudited)
(in thousands of dollars, except per-share amounts)
Quarters 1 2 3 4
-------------------------------------------------------------------------
-------------------------------------------------------------------------
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
Per share 0.21 0.32 0.31 0.35
Per share (diluted) 0.21 0.32 0.31 0.35
2004
- Sales 64,693 81,332 85,961 88,213
- EBITDA 7,127 11,279 11,798 13,163
- Net earnings 4,114 6,797 7,109 8,130
Per share 0.18 0.29 0.31 0.35
Per share (diluted) 0.18 0.29 0.31 0.34
2003
- Sales 63,240 73,450 71,263 77,422
- EBITDA 6,924 10,112 10,263 11,602
- Net earnings 3,866 5,934 5,944 6,812
Per share 0.17 0.26 0.26 0.30
Per share (diluted) 0.17 0.26 0.26 0.29
Richelieu continued to grow quarter after quarter, as reflected by the
increases in sales and earnings over the corresponding periods of the previous
years. Although the first quarter is generally the slowest due to the end-of-
year holidays and seasonal factors, the first three months of 2005 yielded a
significant 17.6% increase in sales (10.7% from internal growth and 6.9% from
acquisitions) and strong 18.4% growth in net earnings over the first quarter
of 2004. In the second quarter, sales grew by 13.8% (7.1% from internal growth
and 6.7% from expansion-by-acquisition) and net earnings by 9.2% over the
comparable periods of 2004. Sales growth was entirely organic for the last two
quarters of the year, at 2.4% and 6.0% respectively, while net earnings
increased by 2.0% and by 0.1%. The fourth quarter of 2005 marked the 41st
quarter of sales growth over the corresponding quarter a year earlier.
Note: For further information about the Company's performance in the
first, second and third quarters of 2005, the reader is referred to the
interim management's reports available on SEDAR's website at www.sedar.com .
Fourth quarter of 2005
Consolidated sales rose to $93.5 million from $88.2 million, this
$5.3 million or 6.0% increase being due entirely to internal growth. The gross
margin continued to improve, fuelled by the significant gains in distribution
profitability in the United States and the excellent manufacturing
profitability during the fourth quarter. Earnings before income taxes,
interest, depreciation, amortization and non-controlling interest (EBITDA)
grew by 1.3% to $13.3 million from $13.2 million for the fourth quarter of
2004. The EBITDA profit margin remained satisfactory, although it slipped 0.6%
to 14.3% from 14.9% for the comparable period the previous year. This decline
is attributable primarily to the increase in operating expenses incurred to
design and roll out new selling and marketing tools in order to support market
development in the coming periods, to which were added the stock-based
compensation and other stock-based payments granted to officers and employees.
Income taxes amounted to $4.2 million for the fourth quarter, compared
with $3.9 million for the comparable quarter of 2004. This 8.3% increase
reflects primarily the increase in earnings and the impact of the conversion
of the U.S. subsidiary's results. Net earnings remained stable at $8.1 million
or $0.35 per share ($0.35 diluted), compared with $0.35 per share ($0.34
diluted) for the fourth quarter of 2004. Cash flows from operating activities
(before net change in non-cash working capital balances related to operations)
totalled $9.1 million, at the same level as in 2004. Financing activities used
net cash flows of $2.1 million, primarily for repayments of $0.9 million in
bank loans and long-term debt, a share purchase totalling $0.1 million, and
the payment of $1.2 million in dividends to shareholders. During the fourth
quarter, the Company was less active in regard to investments, which used cash
flows of $0.4 million for the purchase of capital assets. Net change in cash
and cash equivalents reached $9.5 million for the fourth quarter of 2005.
Liquidity and Financial Resources for 2005
Operating activities
Cash flows from operating activities (before net change in non-cash
working capital balances related to operations) grew by 7% to $31.9 million
from $29.8 million the previous year, reflecting primarily the increase in net
earnings. Net change in non-cash working capital balances related to
operations used cash flows of $10.4 million, compared with $2.5 million for
the equivalent period of 2004, due especially to the increase in inventories
and accounts receivable. Inventories were up by 10.7% or $6.9 million over
November 30, 2004, mainly to support the marketing strategy of the sales to
retailers division; meet the growth in demand and broaden the offering of
distribution centres in the United States; and enhance the product mix with
new innovations. Accounts receivable increased by 6.5% or $3.0 million,
whereas sales grew by 9.4%.
Financing activities
In 2005, Richelieu repaid $3.7 million in interest-bearing debt and paid
a total of $4.6 million in dividends to shareholders, up $950,000 over 2004,
subsequent notably to the 25% increase in the quarterly dividend rate
announced in January 2005. The Company also proceeded to purchase shares for a
consideration of $1.4 million for cancellation purposes, thereby returning a
total of $6.0 million to its shareholders in 2005. Finally, Richelieu issued
157,700 common shares at an average price of $6.59 per share for a total of
$1.0 million under its share option plan. Financing activities therefore used
cash flows of $8.5 million in 2005, compared with $8.9 million in 2004.
Investing activities
The Company invested $2.7 million during 2005. This amount was allocated
to manufacturing equipment, the fitting out of business premises, rolling
stock and computer equipment. In 2004, investments had totalled $8.7 million,
given the two acquisitions made at a cost of $6.9 million in the United
States.
Sources of financing
In addition to covering financing and investing activities in 2005, cash
flows from operating activities generated significant cash and cash
equivalents, which totalled $20.1 million as at November 30, 2005, compared
with $9.7 million at the beginning of the year. The Company estimates that it
has the capital resources and liquidity needed to fulfill its commitments and
respect its current obligations. It believes that its operating cash flows
should be sufficient to provide for its financing and investing activities in
2006. 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.
Changes in Cash and Cash Equivalents and Capital Resources
2005 2004 2003
(in thousands of $) $ $ $
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash flows provided by (used for):
Operating activities 21,563 27,326 19,218
Investing activities (2,714) (8,677) (9,223)
Financing activities (8,493) (8,902) (9,995)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net change in cash and cash equivalents 10,356 9,747 -
Cash and cash equivalents, beginning of year 9,747 - -
Cash and cash equivalents, end of year 20,103 9,747 -
Working capital 105,927 82,364 64,665
Renewable line of credit 26,000 26,000 26,500
Financial instruments
Richelieu periodically enters into forward exchange contracts to fully or
partially hedge the effects of foreign currency fluctuations relation to
foreign-currency denominated payables or to hedge forecasted purchase
transactions. The Company has a policy of not entering into derivatives for
speculative or negotiation purposes and to enter into these contracts only
with major financial institutions.
Contractual commitments
Summary of contractual financial commitments as at November 30, 2005
(in thousands of $)
2006 2007 2008 2009 2010 Thereafter Total
----- ----- ----- ----- ----- ---------- -------
Long-term debt 740 645 204 - - - 1,589
Operating leases 2,797 2,340 1,931 1,298 366 - 8,732
----- ----- ----- ----- ----- ---------- -------
Total 3,537 2,985 2,135 1,298 366 - 10,321
Financial Position as at November 30, 2005
Richelieu continues to show a solid financial position, with a low
indebtedness level and substantial cash flows generated every year to pursue
its expansion and growth, especially through acquisitions.
Normal course issuer bid
Richelieu purchased 59,000 common shares under its normal course issuer
bid for cancellation purposes in 2005, for a cash consideration of
$1.4 million.
Dividends
Richelieu has paid dividends to its shareholders since 2002. On January
26, 2005, a new increase was approved by the Board of Directors, raising the
quarterly dividend to $0.05 per share. The Company paid a total of
$4.6 million in dividends in 2005, equivalent to 16.8% of net earnings for the
year.
Assets
Total assets amounted to $203.0 million as at November 30, 2005, up by
10.8% or $19.7 million over $183.3 million a year earlier. This variation is
due mainly to increases of $10.4 million in cash and cash equivalents, of
$3.0 million in accounts receivable related to the growth in business during
the year, and of $6.9 million in inventories over November 30, 2004, as
explained in the operating activities section.
Working capital
Richelieu had working capital of $105.9 million for a current ratio of
3.9:1 as at November 30, 2005, compared with $82.4 million and a ratio of
3.1:1 as at November 30, 2004.
Interest-bearing debt
Interest-bearing debt amounted to $3.5 million at year-end, down from
$7.0 million as at November 30, 2004, a net reduction of $3.5 million or 50%.
This debt included a demand bank loan of $1.9 million bearing interest at the
bank's prime rate and long-term debt of $1.6 million (including a current
portion of $0.7 million).
Shareholders' equity
Shareholders' equity grew by 16.6% or $23.1 million to $162.3 million as
at November 30, 2005, up from $139.2 million a year earlier. This variation is
due to the $21.7 million or 17.7% increase in retained earnings, which rose to
$144.4 million from $122.7 million in 2004. Given the issue of 157,700 common
shares following the exercise of options under the share option plan, capital
stock totalled $17.4 million, compared with $16.4 million as at November 30,
2004.
Thus, the Company further improved its interest-bearing debt/equity ratio
to 2.2% for 2005, versus 5.0% the previous year.
Return on average equity reached 18.4%, compared with 20.5% in 2004.
Share Price Appreciation
The share price fluctuated between $26.12 and $19.50, and the trading
volume on the Toronto Stock Exchange totalled 4.0 million shares in 2005. The
share price was $22.24 at the close of markets on November 30, 2005, up from
$20.19 as at November 30, 2004, an appreciation of 10.2%. It should be noted
that Richelieu's share price has increased by 223% over the past five years
and by 941% since its listing on the stock market, far outperforming the
growth of the S&P/TSX Index.
Subsequent Events
In December 2005 and January 2006, Richelieu closed two acquisitions that
added sales of approximately $14 million on an annualized basis to its
revenues and made an immediate contribution to its earnings. The first
transaction was the acquisition of the principal net assets of Atlantic
Countertops Limited (Nova Scotia), a company specializing in the distribution
of decorative hardware and functional as well as kitchen accessories that
operates two distribution centres, the main one being in Dartmouth and the
other in Moncton, New Brunswick. The second acquisition of 2006 was that of
Kiika International, LLC, (Pennsylvania, U.S.) a distributor specializing in
ergonomic office products.
Richelieu has also signed an agreement in principle to acquire another
distributor specializing in decorative hardware products for an extensive
customer base of primarily Canadian retail chains.
Growth Outlook
In 2006, Richelieu plans to pursue its growth by building on its
leadership and its operational and financial strengths in order to intensify
its market development and further expand in North America. Its primary growth
drivers remain:
- residential and commercial renovation spending;
- the growing market segments of kitchen and bathroom cabinets and
hardware superstores, and the residential and commercial furniture
markets;
- evolving market trends such as new designs and technologies,
decoration, ongoing innovation by world suppliers, ready-to-assemble
and ergonomics;
- new construction; and
- acquisitions in North America, as long as they match its criteria
and its short and long-term growth objectives.
Alain Giasson
Vice-President and Chief Financial Officer
January 25, 2006
Consolidated statements of earnings and retained earnings (unaudited)
(in thousands of dollars, except per-share amounts)
Years ended November 30 12 Months 3 Months
-------------------------------------------------------------------------
2005 2004 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
$ $ $ $
Sales 350,177 320,199 93,529 88,213
Cost of sales, warehouse, selling
and administrative expenses 304,392 276,832 80,197 75,050
-------------------------------------------------------------------------
Earnings before the following 45,785 43,367 13,332 13,163
Interest on short-term debt 140 390 43 73
Interest on long-term debt 106 155 23 29
Amortization of capital assets 3,340 3,299 841 951
-------------------------------------------------------------------------
Earnings before income taxes and
non-controlling interest 42,199 39,523 12,425 12,110
Income taxes 14,177 13,061 4,203 3,878
-------------------------------------------------------------------------
Earnings before non-controlling
interest 28,022 26,462 8,222 8,232
Non-controlling interest 334 312 81 102
-------------------------------------------------------------------------
Net earnings 27,688 26,150 8,141 8,130
------------------
------------------
Retained earnings, beginning of
period 122,710 100,248
Premium on purchase of shares
for cancellation (1,330) --
Dividends (4,638) (3,688)
-----------------------------------------------------
Retained earnings, end of period 144,430 122,710
-----------------------------------------------------
-----------------------------------------------------
Earnings per share
Basic 1.20 1.13 0.35 0.35
Diluted 1.19 1.12 0.35 0.34
See accompanying note to consolidated statements (segmented information).
Consolidated statements of cash flows (unaudited)
(in thousands of dollars)
Years ended November 30 12 Months 3 Months
-------------------------------------------------------------------------
2005 2004 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
$ $ $ $
Operating activities
Net earnings 27,688 26,150 8,141 8,130
Items not affecting cash
Amortization of capital assets 3,340 3,299 841 951
Non-controlling interest 334 312 81 102
Future income taxes 140 (1) (43) (226)
Stock-based compensation expense 421 63 121 24
Other -- -- -- 111
-------------------------------------------------------------------------
31,923 29,823 9,141 9,092
Net change in non-cash working
capital balances related to
operations (10,360) (2,497) 2,796 (1,220)
-------------------------------------------------------------------------
21,563 27,326 11,937 7,872
-------------------------------------------------------------------------
Financing activities
Issue of common shares 1,039 284 92 102
Dividends paid (4,638) (3,688) (1,159) (922)
Purchase of common shares
for cancellation (1,374) -- (83) --
Increase in long-term debt 183 211 (18) --
Repayment of long-term debt (3,010) (2,930) (712) (1,880)
Increase (decrease) of bank loans (693) (2,779) (173) 2,603
-------------------------------------------------------------------------
(8,493) (8,902) (2,053) (97)
-------------------------------------------------------------------------
Investing activities
Business acquisitions -- (6,910) -- 184
Additions to capital assets (2,714) (1,767) (424) (211)
-------------------------------------------------------------------------
(2,714) (8,677) (424) (27)
-------------------------------------------------------------------------
Net change in cash and cash
equivalents 10,356 9,747 9,460 7,748
Cash and cash equivalents at
beginning 9,747 -- 10,643 1,999
-------------------------------------------------------------------------
Cash and cash equivalents at
the end 20,103 9,747 20,103 9,747
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Supplemental information
Income taxes paid 14,359 13,887 1,039 2,577
Interest paid 258 557 79 103
Consolidated balance sheets (unaudited)
(in thousands of dollars)
As at November 30 2005 2004
-------------------------------------------------------------------------
$ $
ASSETS
Current assets
Cash and cash equivalents 20,103 9,747
Accounts receivable 49,837 46,805
Inventories 71,636 64,690
Prepaid expenses 470 467
-------------------------------------------------------------------------
142,046 121,709
Capital assets 18,974 19,600
Goodwill 41,951 41,951
-------------------------------------------------------------------------
202,971 183,260
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LIABILITIES
Current liabilities
Bank loans 1,910 2,603
Accounts payable and accrued liabilities 32,718 32,775
Income taxes payable 751 1,073
Long-term debt due within one year 740 2,894
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36,119 39,345
Long-term debt 849 1,522
Future income taxes 1,774 1,634
Non-controlling interest 1,929 1,595
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40,671 44,096
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SHAREHOLDERS' EQUITY
Capital stock 17,386 16,391
Contributed surplus 484 63
Retained earnings 144,430 122,710
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162,300 139,164
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202,971 183,260
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NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
November 30, 2005 and 2004
(Amounts are in thousands of dollars, except per-share amounts)
SEGMENTED INFORMATION
Management has determined that the Company acts as a distributor and
manufacturer of specialized hardware. These reportable segments offer
different products and services and require different technology and marketing
strategies. The accounting policies of each operating sector are the same as
those described in the summary of significant accounting policies.
Segmented information is summarized as follows:
Manufac-
Distribution turing Total
$ $ $
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2005
External sales 332,266 17,911 350,177
Inter-segment sales - 4,578 4,578
Earnings before taxes, interest and
amortization 40,691 5,094 45,785
Amortization of capital assets 2,497 843 3,340
Goodwill 39,951 2,000 41,951
Total assets 187,118 15,853 202,971
Additions to capital assets and goodwill 1,978 736 2,714
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2004
External sales 301,418 18,781 320,199
Inter-segment sales - 4,881 4,881
Earnings before taxes, interest and
amortization 39,855 3,512 43,367
Amortization of capital assets 2,476 823 3,299
Goodwill 39,951 2,000 41,951
Total assets 39,951 15,107 183,260
Additions to capital assets and goodwill 168,153 406 7,003
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>>
During 2005, the Company's sales to foreign countries, primarily directed
to the United States, amounted to $40,941 (2004 - $28,674) in Canadian dollars
and to $33,971 (2004 - $22,023) in US dollars.
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