42nd consecutive quarter of sales and net earnings growth
---------------------------------------------------------
- Increase of 16.2% in net earnings
- Increase of 10.9% in sales which exceed $100 million for the quarter
- Excellent financial position: almost no debt, working capital of
$107.7 million and cash of $4.7 million
- Launch of the "Closet Solutions" program and the new kitchen
"Solutions" program; reaching of two exclusive distribution agreements
(Canada and North America)
- Payment of next dividend ($0.06 per share) on August 2, 2006 to
shareholders of record as at July 19, 2006
TSX: RCH
MONTREAL, July 5 /CNW Telbec/ - Richelieu announces its results for the
second quarter and first six months ended May 31, 2006. "We are pleased with
our results in regard to sales growth in Canada and the United States as well
as net earnings. We focused on integrating our recent acquisitions, which
brought a good contribution to the increase in our distribution sales, arising
almost equally from acquisitions and internal growth. We benefited not only
from our acquisitions, but also from the marketing initiatives taken in 2005-
2006 to optimize our customers' sales. Moreover, our transactional website,
which has featured new functions since April 1, 2006, is posting steady growth
in online sales. The second quarter also gave rise to product mix developments
with two exclusive distribution agreements that will yield tangible benefits
in the coming periods," indicated Richard Lord, President and Chief Executive
Officer.
Operating results for the second quarter ended May 31, 2006
-----------------------------------------------------------
Consolidated sales exceeded $100 million to total $102.6 million in the
second quarter, up 10.9% over the corresponding period of 2005. Of this
increase, 5.8% was internal growth and 5.1% came from the acquisitions made in
the first quarter, specifically Atlantic Countertops (Nova Scotia), acquired
in December 2005 (a distributor of hardware products and materials for
furniture and kitchen cabinet manufacturers), Nystrom Group (Ontario),
acquired in February 2006 (a distributor of decorative products and bathroom
accessories for the retailers market, including renovation superstores), and
Kiika International (Pennsylvania, U.S.), acquired in January 2006 (a
distributor of ergonomic office products).
Sales from distribution operations amounted to $98.1 million, up 12.0%
over $87.6 million in the equivalent period the previous year. These
operations accounted for 95.6% of consolidated sales, compared with 94.6% for
the comparable quarter last year. Cedan and Menuiserie des Pins, the two
manufacturing subsidiaries, generated total sales of $4.5 million, down 9.9%
from the second quarter of 2005, thereby accounting for 4.4% of the period's
consolidated sales, compared with 5.4% for the second quarter of 2005. Cedan
continued to be affected by the loss of some customers that strategically
refocused their operations. This subsidiary is continuing to develop new
products and customer accounts.
The manufacturers market accounted for 81.8% of second-quarter
consolidated sales, while sales to hardware retailers including renovation
superstores accounted for 18.2%, compared with 81.7% for manufacturers and
18.3% for retailers in the second quarter of 2005. Sales to manufacturers rose
11.0% while sales to retailers also posted a substantial 10.2% increase over
the equivalent period of 2005, reflecting internal growth and the contribution
of recent acquisitions.
Canadian operations generated revenues of $91.0 million or 88.7% of the
period's consolidated sales, compared with $81.8 million or 88.4% of
consolidated sales for the second quarter of 2005. This 11.2% increase is
attributable to 6.1% internal growth and 5.1% expansion-by-acquisition.
Canadian markets generally achieved solid performances, especially the kitchen
cabinet and commercial and residential woodworking segments. The Company thus
recorded sales increases of 11.4% in Eastern Canada, 9.9% in Ontario and 12.3%
in Western Canada.
In the United States, where revenues come almost entirely from sales to
manufacturers, sales amounted to $11.6 million (US$10.2 million), compared
with $11.0 million (US$8.7 million) for the second quarter of 2005, an
increase of 5.9% in Canadian dollars and 17.0% in U.S. dollars, consisting of
11.3% internal growth and 5.7% expansion-by-acquisition (considering the
depreciation of the U.S. dollar in relation to the Canadian dollar).
Earnings before income taxes, interest, amortization and non-controlling
interest (EBITDA) totalled $14.1 million, an increase of 15.4% over the
corresponding quarter of 2005. EBITDA from distribution operations jumped
23.3% to $13.2 million, up from $10.7 million for the second quarter of 2005,
while EBITDA from manufacturing operations declined to $1.0 million, down by
$0.6 million due to the decrease in Cedan's sales.
Richelieu continues to post most satisfactory profit margins. The gross
profit margin was up over the corresponding quarter of 2005 as was the EBITDA
profit margin, at 13.8% compared with 13.2% for the same quarter of 2005. The
EBITDA profit margin from distribution operations improved significantly over
the second quarter of 2005, rising from 12.2% to 13.4%. It should be noted
that in the second quarter a year earlier, the EBITDA profit margin from
distribution operations had been affected by intensive marketing initiatives
taken by the sales to retailers division. Conversely, the EBITDA profit margin
from manufacturing operations fell to 16.7% as a result of the decline in such
sales, compared with 25.5% for the second quarter the previous year.
Income taxes totalled $4.6 million, up 20.8% over the second quarter of
2005. The higher taxes are due to the increase in earnings and the rise in the
effective tax rate in Quebec.
Considering the aforementioned factors, net earnings rose to a record
high of $8.6 million in the second quarter, up 16.2% over $7.4 million in the
comparable quarter of 2005. Net earnings as a percentage of consolidated sales
worked out to 8.4%, up from 8.0% for the second quarter of 2005. Earnings per
share amounted to $0.37 ($0.37 diluted), an increase of 15.6%, whereas the
number of outstanding shares and options did not vary significantly over the
past 12 months.
Second-quarter liquidity and financial resources
------------------------------------------------
Operating activities
Cash flows from operating activities (before net change in non-cash
working capital balances related to operations) grew by 14.5% to $9.8 million
or $0.42 per share, compared with $8.6 million or $0.37 per share for the
second quarter last year, reflecting primarily the increase in net earnings.
After the net change in non-cash working capital balances related to
operations, cash flows amounted to $3.3 million, up 87.3% over $1.8 million
for the second quarter ended May 31, 2005.
Financing activities
Richelieu paid a total of $1.4 million in dividends to shareholders
during the second quarter, compared with $1.2 million for the same quarter of
2005, an increase of $0.2 million that reflects the 20% rise in the dividend
rate announced on January 25, 2006. During the period, the Company purchased
shares for a consideration of $0.4 million for cancellation purposes, compared
with a nil amount in the second quarter of 2005. Richelieu thereby returned an
aggregate amount of $1.8 million to its shareholders in the second quarter of
2006, in addition to repaying almost $0.8 million in interest-bearing debt.
Financing activities thus used cash flows of $2.6 million, compared with
nearly $1.0 million for the same quarter of 2005.
Investing activities
Richelieu pursued its expenditures in the normal course of business and
invested $0.7 million, mainly to acquire equipment, compared with $1.3 million
in the second quarter of 2005.
Significant second-quarter developments
---------------------------------------
Richelieu's major 2005-2006 investments in marketing and e-commerce are
starting to pay off. The Company is continuing them with the new Solutions
program, an exceptional selection of kitchen accessories that stands out as
the most innovative and complete in North America. Richelieu will also benefit
from the Closet Solutions program which features streamlined, ergonomic and
esthetic solutions for residential and commercial needs. Launched in the
spring of 2006 and welcomed by customers, this program represents a new source
of growth for them and Richelieu.
During the quarter, Richelieu also became the exclusive distributor for
the Canadian market of a broad range of utility and safety products mainly
targeted to cabinetmakers' customers. In addition, Richelieu concluded a major
exclusive North American distribution agreement with an Italian manufacturer
of slides and hinges.
Operating results for the first six months ended May 31, 2006
-------------------------------------------------------------
Consolidated sales totalled $185.5 million, up 10.0% over the first six
months of 2005. Of this increase, 5.6% was internal growth and 4.4% came from
the three acquisitions made early in the current fiscal year.
Sales from distribution operations amounted to $177.3 million, up 11.0%
over $159.7 million in the corresponding period of 2005. These activities
accounted for 95.6% of consolidated sales, compared with 94.7% for the
equivalent period of 2005. The two manufacturing subsidiaries, Cedan and
Menuiserie des Pins, generated total sales of $8.1 million, down 8.8% from the
corresponding period of 2005, or 4.4% of the period's consolidated sales,
compared with 5.3% for the first six months of 2005. As indicated in the
results for previous periods, this decline is attributable to Cedan, some of
whose customer accounts have not been renewed because those customers have
strategically refocused their operations. It should be noted that the
subsidiary is actively pursuing its efforts to develop new products and
markets in order to return to growth.
For the first half of fiscal 2006, Richelieu made 81.7% of its sales to
manufacturers and 18.3% to hardware retailers including renovation
superstores, compared with 80.7% to manufacturers and 19.3% to retailers for
the first six months of fiscal 2005. Sales to manufacturers increased by
11.4%, while sales to retailers rose 4.2% over the corresponding period of
2005, reflecting internal growth and expansion-by-acquisition.
Canadian operations generated revenues of $163.9 million or 88.4% of the
period's consolidated sales, compared with $148.5 million and 88.1% of
consolidated sales for the first half of 2005. This 10.4% increase reflects
6.0% internal growth and 4.4% expansion-by-acquisition. Canadian markets
achieved solid performances over the first six months of 2006, especially in
the kitchen cabinet and commercial and residential woodworking segments. The
Company recorded sales increases of 11.1% in Eastern Canada, 7.8% in Ontario
and 11.7% in Western Canada.
In the United States, sales amounted to $21.9 million (US$19.1 million),
compared with $19.7 million (US$16.0 million) for the first six months of
fiscal 2005, an increase of 11.2% in Canadian dollars and 19.7% in U.S.
dollars, including 15.5% internal growth and 4.2% expansion-by-acquisition
(considering the depreciation of the U.S. dollar in relation to the Canadian
dollar).
Earnings before income taxes, interest, amortization and non-controlling
interest (EBITDA) totalled $23.2 million, up 13.1% over the first half of
2005. EBITDA from distribution operations jumped 19.1% to $21.6 million,
compared with $18.1 million for the first six months of fiscal 2005, whereas
EBITDA from manufacturing operations decreased by $0.8 million to
$1.6 million, reflecting the decline in Cedan's sales.
The gross profit margin grew and the EBITDA profit margin improved to
12.5% from 12.2% for the comparable six months of 2005. The EBITDA profit
margin from distribution operations rose sharply from 11.4% for the first half
of 2005 to 12.2%. This improvement is due notably to the fact that the
marketing initiatives of the sales to retailers division have returned to
normal since the beginning of the current fiscal year. However, the EBITDA
profit margin from manufacturing operations declined to 15.5% because of their
lower sales, as previously indicated, compared with 21.3% for the first half
of the previous year.
Considering the increase in earnings and the rise in the Quebec tax rate,
income taxes amounted to $7.3 million, up 16.5% over the first half of 2005.
Net earnings amounted to $14.0 million, up 13.8%. The net profit margin
as a percentage of consolidated sales improved to 7.5%, compared with 7.3% for
the corresponding six months of 2005. Earnings per share rose to $0.60 ($0.60
diluted), up 13.2%, whereas the number of outstanding shares and options did
not vary significantly over the past 12 months.
First-half liquidity and financial resources
--------------------------------------------
Operating activities
Cash flows from operating activities (before net change in non-cash
working capital balances related to operations) grew by 13.2% to $16.3 million
or $0.70 per share, compared with $14.4 million or $0.62 per share for the
first half of last year, reflecting primarily the increase in net earnings.
The net change in non-cash working capital balances related to operations
declined slightly to $6.5 million since inventories did not rise
significantly, as opposed to the same period of 2005. Consequently, cash flows
for the first half of 2006 were up almost four-fold over the first six months
of the previous year, at $5.8 million versus $1.2 million.
Financing activities
Richelieu paid a total of $2.8 million in dividends to shareholders
during the first half of 2006, compared with $2.3 million for the comparable
six months of 2005, an increase of $0.5 million that reflects the 20% rise in
the dividend rate announced on January 25, 2006. During the period, the
Company purchased shares for a consideration of $0.7 million for cancellation
purposes, compared with a nil amount in the first half of 2005. Richelieu
thereby returned an aggregate amount of $3.5 million to its shareholders in
the first half of 2006, in addition to repaying almost $2.3 million in
interest-bearing debt. Financing activities thus used cash flows of
$5.7 million, compared with $2.9 million for the same period of 2005.
Investing activities
Considering the three acquisitions made in the first quarter, Richelieu
invested $15.5 million during the first six months ended May 31, 2006,
compared with $2.0 million for the comparable period of 2005. Of this amount,
$14.3 million was allocated to acquisitions and the balance to equipment in
the normal course of business.
Cash and cash equivalents totalled $4.7 million as at May 31, 2006.
Financial position as at May 31, 2006
-------------------------------------
The Company's financial position remains excellent, with a low debt level
and substantial regularly generated operating cash flows, enabling it to
continue to meet its financial obligations and to pursue its expansion and
growth. The main changes in the balance sheet as at May 31, 2006 primarily
reflect the period's growth and the three acquisitions made in the first
quarter. Total assets amounted to $212.6 million, up 4.7% over $203.0 million
as at November 30, 2005.
As at May 31, 2006, Richelieu had excellent working capital of
$107.7 million for a current ratio of 4.1:1, compared with $105.9 million and
a ratio of 3.9:1 as at November 30, 2005, the end of the last fiscal year.
Interest-bearing debt was reduced to $2.3 million as at May 31, 2006,
including the current portion of $1.3 million, compared with total debt of
$3.5 million as at November 30, 2005, a reduction of 33.7%.
Shareholders' equity totalled $173.2 million, compared with
$162.3 million as at November 30, 2005, up 6.7%. This growth is attributable
to the $10.6 million increase in retained earnings, which amounted to
$155.0 million as at May 31, 2006. The book value worked out to $7.48 per
share, compared with $7.00 per share six months earlier. The Company further
improved its interest-bearing debt/equity ratio to 1.3% as at May 31, 2006,
compared with 2.2% as at November 30, 2005.
As at May 31, 2006, 23,159,162 common shares were outstanding, versus
23,170,362 common shares as at November 30, 2005.
Next dividend payment
---------------------
The payment of a quarterly dividend of $0.06 per share was approved by
the Board of Directors at its July 5, 2006 meeting. This dividend is payable
on August 2, 2006 to shareholders of record as at July 19, 2006.
Growth outlook
--------------
"Our priorities for the next six months remain internal growth and the
ongoing integration of the three acquisitions made early in the year. We
expect to continue achieving satisfactory sales and earnings growth, as we are
building further synergies with the businesses acquired in the first quarter
and reaping the initial benefits of our recent agreements and other
developments. Furthermore, our market development and expansion efforts are
being reinforced by the new marketing programs gradually rolled out in our
North American markets," added Richard Lord.
Profile as at May 31, 2006
--------------------------
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 40 centres in North America -
29 distribution centres across Canada and nine in the United States plus two
manufacturing plants, specifically Cedan Industries Inc. which specializes in
the manufacture of a wide variety of veneer sheets and edgebanding products,
and Menuiserie des Pins LtDee which manufactures components for the window and
door industry, a broad selection of mouldings, and various types of 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 JULY 5, 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 July 5,
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
5:30 p.m. on July 5, 2006, until midnight on July 12, 2006, by dialing
1-877-289-8525, access code: 21193947 (pound key). Members of the media are
invited to listen in.
<<
Consolidated statements of earnings and retained earnings (unaudited)
(in thousands of dollars, except per-share amounts)
For the six months For the three months
ended May 31, ended May 31,
-------------------------------------------------------------------------
2006 2005 2006 2005
-------------------------------------------------------------------------
$ $ $ $
Sales 185,466 168,616 102,604 92,560
Cost of sales, warehouse,
selling and administrative
expenses 162,277 148,115 88,476 80,319
-------------------------------------------------------------------------
Earnings before the
following 23,189 20,501 14,128 12,241
Interest on short-term
debt, net 2 79 (67) 41
Interest on long-term debt 44 55 21 27
Amortization of capital
assets 1,740 1,658 879 840
-------------------------------------------------------------------------
Earnings before income taxes
and non-controlling
interest 21,403 18,709 13,295 11,333
Income taxes 7,303 6,267 4,587 3,796
-------------------------------------------------------------------------
Earnings before
non-controlling interest 14,100 12,442 8,708 7,537
Non-controlling interest 113 146 81 115
-------------------------------------------------------------------------
Net earnings 13,987 12,296 8,627 7,422
---------------------
---------------------
Retained earnings,
beginning of period 144,430 122,710
Premium on redemption of
common shares for
cancellation (653) --
Dividends (2,779) (2,319)
----------------------------------------------------
Retained earnings, end
of period 154,985 132,687
----------------------------------------------------
----------------------------------------------------
Earnings per share (note 4)
Basic 0.60 0.53 0.37 0.32
Diluted 0.60 0.53 0.37 0.32
See accompanying notes.
Consolidated statements of cash flows (unaudited)
(in thousands of dollars)
For the six months For the three months
ended May 31, ended May 31,
-------------------------------------------------------------------------
2006 2005 2006 2005
-------------------------------------------------------------------------
$ $ $ $
OPERATING ACTIVITIES
Net earnings 13,987 12,296 8,627 7,422
Items not affecting cash
Amortization of capital
assets 1,740 1,658 879 840
Non-controlling interest 113 146 81 115
Future income taxes 150 108 75 75
Stock-based compensation
expense 291 179 157 121
-------------------------------------------------------------------------
16,281 14,387 9,819 8,573
Net change in non-cash
working capital balances
related to operations (10,516) (13,152) (6,523) (6,813)
-------------------------------------------------------------------------
5,765 1,235 3,296 1,760
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Issue of common shares
(note 3) 81 932 46 210
Dividends paid (2,779) (2,319) (1,389) (1,160)
Purchase of shares for
cancellation (677) -- (373) --
Increase in long-term debt -- 141 -- 141
Repayment of long-term debt (379) (1,846) (200) (309)
Increase (decrease) of bank
loans (1,910) 171 (648) 157
-------------------------------------------------------------------------
(5,665) (2,921) (2,564) (961)
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Business acquisitions
(note 2) (14,275) -- (24) --
Additions to capital assets (1,268) (2,026) (633) (1,252)
-------------------------------------------------------------------------
(15,543) (2,026) (657) (1,252)
-------------------------------------------------------------------------
Net change in cash and
cash equivalents (15,443) (3,712) 75 (453)
Cash and cash equivalents
at beginning 20,103 9,747 4,585 6,488
-------------------------------------------------------------------------
Cash and cash equivalents
at the end 4,660 6,035 4,660 6,035
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Supplemental information
Income taxes paid 7,820 9,911 4,214 5,713
Interest paid 45 134 28 68
See accompanying notes.
Consolidated balance sheets
(in thousands of dollars)
As at As at As at
May 31, May 31, November
2006 2005 30,2005
-------------------------------------------------------------------------
$ $ $
(unaudited) (unaudited) (audited)
ASSETS
Current assets
Cash and cash equivalents 4,660 6,035 20,103
Accounts receivable 59,469 49,692 49,837
Income taxes receivable 569 480 --
Inventories 76,272 69,906 71,636
Prepaid expenses 1,208 968 470
-------------------------------------------------------------------------
142,178 127,081 142,046
Capital assets 18,826 19,968 18,974
Goodwill 51,602 41,951 41,951
-------------------------------------------------------------------------
212,606 189,000 202,971
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank loans -- 2,774 1,910
Accounts payable and accrued liabilities 33,117 29,780 32,718
Income taxes payable -- -- 751
Current portion of long term debt 1,318 1,489 740
-------------------------------------------------------------------------
34,435 34,043 36,119
-------------------------------------------------------------------------
Long-term debt 1,002 1,222 849
Future income taxes 1,924 1,742 1,774
Non-controlling interest 2,042 1,741 1,929
-------------------------------------------------------------------------
39,403 38,748 40,671
-------------------------------------------------------------------------
Shareholders' equity
Capital stock (note 3) 17,443 17,323 17,386
Contributed surplus (note 3) 775 242 484
Retained earnings 154,985 132,687 144,430
-------------------------------------------------------------------------
173,203 150,252 162,300
-------------------------------------------------------------------------
212,606 189,000 202,971
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2006 and 2005 (in thousands of dollars, except per-share amounts)
(unaudited)
1) ACCOUNTING POLICIES
The unaudited interim consolidated financial statements have been
prepared by management in accordance with accounting principles generally
accepted in Canada and follow the same accounting principles and methods of
application as the recent annual consolidated financial. In the management
opinion, these interim financial statements reflect all the adjustments
required to fair presentation. These adjustments consist only of normal
recurring adjustments. Operating results for the period are not necessarily
indicative of the results that may be expected for the full year as the
operating level of the Company is subject to seasonal fluctuations. These
interim financial statements should be read in conjunction with the audited
consolidated annual financial statements and the accompanying notes included
in Company's annual report for the fiscal year 2005.
2) BUSINESS ACQUISITIONS
On December 5, 2005, the Company acquired the principal net assets items
of Atlantic Countertops Limited, for a cash consideration of $10,016. This
business based in Dartmouth, Nova Scotia, specializes in the distribution of
specialty hardware products and materials for furniture and kitchen
manufacturers and operates two distribution centres, the main one located in
Dartmouth and the other in Moncton, New Brunswick.
On January 16, 2006, the Company acquired the principal net assets items
of Kiika International LLC in Pennsylvania, USA, a distributor specialized in
ergonomic office products, for a cash consideration of $486 and a balance of
sale of $257.
Finally, on February 8, 2006, the Company acquired all the outstanding
shares of Nystrom Group Inc., an Ontario distributor of decorative hooks and
bathroom hanging accessories for the retailers, for a cash consideration of
$3,750 and a balance of sale of $855.
The purchase price allocation process is not completed as yet, and the
amounts assigned to the assets and liabilities may be adjusted at a later
date, mainly the identification of intangible assets, their evaluation and
consequently the determination of final amount to allocate to goodwill. The
allocation of the purchase price will be completed upon availability of this
information.
These transactions were accounted for by the purchase method and the
results of operations are included in the financial statements from the
purchase date.
Summary of acquisitions
-------------------------------------------------------------------------
2006 2005
$ $
-------------------------------------------------------------------------
Net assets acquired
Current assets 6,708 --
Capital assets 326 --
Provisional intangible assets -- --
Provisional goodwill 9,651 --
-------------------------------------------------------------------------
16,685 --
Current liabilities assumed 1,299 --
-------------------------------------------------------------------------
Net assets acquired 15,386 --
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Consideration
Cash 14,275 --
Balances of sale payable 1,111 --
-------------------------------------------------------------------------
-------------------------------------------------------------------------
3) CAPITAL STOCK
Issued
As at May 31, 2006, capital stock outstanding amounted to
23,150,62 common shares (23,170,362 common shares as at November 30, 2005).
During the period ended May 31, 2006, the Company issued 12,100 common
shares (2005 - 135,300) at a weighted average price of $6.72 per share (2005 -
$6.88) under the share option plan. In addition, the Company, through a normal
course issuer bid, purchased for cancellation 32,300 common shares for a cash
consideration of $677.
Stock option plan
During the last quarter, to the contrary to the first quarter, no options
were granted by the Company so that the six-month period ended May 31 2006
ended with a total of 80,000 options granted (2005 - 215,000) with an exercise
price of $22.43 per share (2005 - $22.13) and a fair value of $7.70 per option
(2005 - $8.00) as determined using Black & Scholes option pricing model using
an expected dividend yield of 1% (2005 - 0.83%), a volatility of 25% (2005 -
25%), a risk free interest rate of 4.15% (2005 - 4.40%) and an expected life
of 8 years (2005 - 8 years). As at May 31, 2006, 543,550 options were
outstanding (2005 - 504,550) with exercise prices varying from $4.26 to $22.43
(2005 - $4.26 to $22.13) for a weighted average price of $17.04 (2005 -
$15.46).
For the three month and six month periods ended May 31, 2006, the stock-
based compensation expense amounted to $157 (2005 - $121) and $291 (2005 -
$179) respectively.
4) EARNINGS PER SHARE
3-MONTH PERIOD ENDED MAY 31
2006 2005
------------------------------- -------------------------------
------------------------------- -------------------------------
Weighted Weighted
average average
number Earnings number Earnings
Earnings of shares per share Earnings of shares per share
(in (in
$ thousands) $ $ thousands) $
Basic net
earnings 8,627 23,148 0.37 7,422 23,196 0.32
Dilutive
effect
of stock
options -- 124 (0.00) -- 153 (0.00)
------------------------------- -------------------------------
Diluted net
earnings 8,627 23,272 0.37 7,422 23,349 0.32
------------------------------- -------------------------------
------------------------------- -------------------------------
6-MONTH PERIOD ENDED MAY 31
2006 2005
------------------------------- -------------------------------
------------------------------- -------------------------------
Weighted Weighted
average average
number Earnings number Earnings
Earnings of shares per share Earnings of shares per share
(in (in
$ thousands) $ $ thousands) $
Basic net
earnings 13,987 23,158 0.60 12,296 23,149 0.53
Dilutive
effect
of stock
options -- 130 (0.00) -- 153 (0.00)
------------------------------- -------------------------------
Diluted net
earnings 13,987 23,288 0.60 12,296 23,302 0.53
------------------------------- -------------------------------
------------------------------- -------------------------------
5) SEGMENTED INFORMATION
3-MONTH PERIODS ENDED MAY 31
Distri- Manu-
bution facturing Total
$ $ $
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2006
External sales 98,102 4,502 102,604
Inter-segment sales -- 1,268 1,268
Earnings before taxes, interest
and amortization 13,167 961 14,128
Amortization of capital assets 657 222 879
Goodwill 49,602 2,000 51,602
Total assets 196,103 16,503 212,606
Additions to capital assets and goodwill 608 48 656
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2005
External sales 87,563 4,997 92,560
Inter-segment sales -- 1,146 1,146
Earnings before taxes, interest
and amortization 10,677 1,564 12,241
Amortization of capital assets 629 211 840
Goodwill (November 30, 2005) 39,951 2,000 41,951
Total assets (November 30, 2005) 187,118 15,853 202,971
Additions to capital assets and goodwill 926 326 1,252
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6-MONTH PERIODS ENDED MAY 31
Distri- Manu-
bution facturing Total
$ $ $
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2006
External sales 177,327 8,139 185,466
Inter-segment sales -- 2,137 2,137
Earnings before taxes, interest
and amortization 21,596 1,593 23,189
Amortization of capital assets 1,288 452 1,740
Goodwill 49,602 2,000 51,602
Total assets 196,103 16,503 212,606
Additions to capital assets and goodwill 10,778 468 11,246
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2005
External sales 159,688 8,928 168,616
Inter-segment sales -- 2,155 2,155
Earnings before taxes, interest
and amortization 18,137 2,364 20,501
Amortization of capital assets 1,242 416 1,658
Goodwill (November 30, 2005) 39,951 2,000 41,951
Total assets (November 30, 2005) 187,118 15,853 202,971
Additions to capital assets and goodwill 1,493 533 2,026
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>>
During the three-month and six-month periods ended May 31, 2006, the
Company's sales to foreign countries, primarily directed to the United States,
amounted to $11,604 (2005 - $10,953) and $21,911 (2005 - $19,703) respectively
in Canadian dollars and to $10,216 (2005 - $8,730) and $19,134 (2005 -
$15,988) respectively in U.S. dollars.
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