-------------------------------------------------------------------------
- Earnings per share rise 15.0% to $1.38 and total sales grow by 10.1% to
$385.6 million.
- U.S. sales account for about 13% of total sales. They increase by 28.2%
(U.S. dollars) - 12.8% from internal growth and 15.4% from
acquisitions.
- Richelieu closes five business acquisitions - two in Canada and three
in the U.S. - that strengthen its position in its Canadian regional
markets and open up new markets in the U.S.
- Sales on Richelieu's transactional website increase tenfold.
- The Company closes 2006 with an excellent financial position, that will
favour its expansion and growth.
- The dividend is raised by $0.06 to $0.07 per share.
-------------------------------------------------------------------------
TSX: RCH
MONTREAL, Jan. 26 /CNW Telbec/ - In 2006, Richelieu posted one of its best
performances ever as well as a record expansion by acquiring five businesses
in its field in North America. Richelieu raised its sales and earnings for an
eleventh consecutive year, and the three months ended November 30, 2006
represent the 45th quarter of sales growth over the corresponding quarter the
previous year. Consolidated sales grew to $385.6 million for 2006, an increase
of 10.1% over 2005, of which 4.3% came from internal growth and 5.8% from
acquisitions. Distribution operations generated sales of $368.8 million,
whereas manufacturing sales amounted to $16.9 million. Richelieu recorded
sales of $336.3 million in its Canadian markets, up 8.7% over 2005. Sales in
the United States, which came primarily from its distribution operations in
2006, increased by 20.6% (28.2% in US$) to $49.4 million (US$43.5 million),
representing 12.8% of 2006 total sales.
Earnings before income taxes, interest, amortization and non-controlling
interest (EBITDA) totalled $53.1 million, up 15.9% over 2005. The EBITDA
profit margin improved to 13.8% from 13.1% in 2005. EBITDA from distribution
operations jumped by 22.3% to $49.8 million, whereas EBITDA from manufacturing
operations decline by $1.8 million to $3.3 million. Net earnings reached $31.9
million, an increase of 15.3% over the previous year. Earnings per share rose
15.0% to $1.38 ($1.37 diluted), whereas the number of shares declined during
the year.
Five business acquisitions in 2006, representing additional sales of
---------------------------------------------------------------------
about $50 million on an annualized basis and strong growth potential
--------------------------------------------------------------------
with the leverage of Richelieu's organization
---------------------------------------------
Richelieu acquired three companies in the first quarter, specifically
Atlantic Countertops Limited on December 5, 2005, a distributor of hardware
products and materials that strengthened its position with furniture and
kitchen cabinet manufacturers in Nova Scotia and New Brunswick; Kiika
International LLC on January 16, 2006, a Pennsylvania-based distributor
specializing in ergonomic office products; and Nystrom Group Inc., an Ontario
distributor of decorative products and bathroom accessories that strengthened
Richelieu's position in the retailers market, including renovation superstore
chains.
In the fourth quarter, Richelieu closed two other acquisitions: on October
17, 2006, that of Specialty Supplies Inc., which operates four distribution
centres of decorative and functional hardware, kitchen accessories and related
products for an extensive base of cabinet makers in southern Florida; and on
October 30, 2006, that of L.B. Brass Ltd., a distributor of decorative
hardware products in the New York City region.
"The year 2006 was most satisfactory not only in terms of growth and
expansion but also in various improvements to our network which now includes
45 centres in North America. We expanded several distribution centres and
renovated showrooms, enabling us notably to meet growth requirements and
create further conveniences and attractions for our customers and for
architects and designers. We also re-engineered our transactional website,
integrating new functional capabilities for rapid and reliable order
processing, which makes www.richelieu.com a most efficient procurement tool
for manufacturing and retailing customers. Since the completion of the
re-engineering in April 2006, monthly sales have increased tenfold. With the
further improvements planned for 2007, we will continue to enhance this
performance," indicated Richard Lord, President and Chief Executive Officer.
Dividend payment - Increase of 17%
----------------------------------
Richelieu's Board of Directors today approved the payment of a quarterly
dividend of $0.07 per common share, payable on February 23, 2007, to
shareholders of record as at February 9, 2007.
Partial retirement of Georges Albert, Vice-President, Development
-----------------------------------------------------------------
Georges Albert, who held the position of Vice-President, Development, has
decided to go into semi-retirement. However, Mr. Albert will continue to
provide Richelieu with the benefit of his counsel by pursuing his
collaboration on a part-time basis.
Growth outlook: integration and benefits of 2006 acquisitions, further
----------------------------------------------------------------------
internal growth and ongoing expansion
-------------------------------------
"We will remain focused on sales and earnings growth and on further
innovations to our product mix. The integration of the five acquisitions is
also a priority, by building synergies with the leverage of our organization
in North America, as we have done with our previous acquisitions. We have the
support of excellent teams and strengthened marketing programs to continue
developing and deepening our markets in Canada and the U.S. Our primary growth
streams remain residential and commercial renovation, kitchen and bathroom
cabinet manufacturers, hardware retailers including superstore chains, home
and office furniture manufacturers and the innovations we introduce every
year. In 2006, considering our acquisitions and innovations, our offering
increased by several thousands of products, to include about 50,000 different
items," 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 close to 50,000 different items targeted to
a base of over 37,000 customers who are served by 45 centres in North America
- 29 distribution centres across Canada, 14 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.
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 26, 2007 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 26,
2007, can dial 1-800-796-7558 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 26, 2007, until midnight on February 1st, 2007, by dialing
1-877-289-8525, access code: 21215968 (number sign). Members of the media are invited to
listen in.
A detailed analysis of operating results and financial position for 2006
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
Years ended November 30, 2006 2005 2004
(in thousands of $, except per-share
amounts and number of shares)
$ $ $
-------------------------------------------------------------------------
Sales 385,631 350,177 320,199
EBITDA 53,059 45,785 43,367
Net earnings 31,931 27,688 26,150
- basic earnings per share ($) 1.38 1.20 1.13
- diluted earnings per share ($) 1.37 1.19 1.12
Return on average equity (%) 18.3 18.4 20.5
Cash dividends paid on shares 5,551 4,638 3,688
- per share ($) 0.24 0.20 0.16
Weighted average number of
shares outstanding (in thousands) 23,136 23,165 23,049
Total assets 245,002 202,971 183,260
Shareholders' equity 186,584 162,300 139,164
Book value ($) 8.09 7.01 6.03
Interest-bearing debt 13,635 3,499 7,019
Operating results
Consolidated sales
Consolidated sales grew to $385.6 million for the year ended November 30,
2006, up by $35.5 million or 10.1% over 2005. Of this increase, 4.3% came from
internal growth that reflects the broadening of the product mix and further
market development efforts in 2006, and 5.8% from the year's acquisitions. As
indicated in the introduction to this management's report, Richelieu acquired
five businesses during the year: three in the first quarter and two in the
fourth. The acquisition of Atlantic Countertops Limited contributed to sales
for the full year, Nystrom Group Inc. and Kiika International LLC yielded a
contribution over about 10 months, whereas Specialty Supplies Inc. and L.B.
Brass Ltd. contributed to 2006 consolidated sales for six and four weeks
respectively.
Richelieu remains primarily a distribution company. Distribution
operations continue to be its primary growth driver, generating sales of
$368.8 million in 2006 (95.6% of consolidated sales), an increase of
$36.5 million or 11.0% over $332.3 million in 2005 (94.9% of consolidated
sales). Manufacturing operations, provided by its two subsidiaries Cedan and
Menuiserie des Pins, yielded total sales of $16.9 million in 2006 (4.4% of
consolidated sales), down by approximately $1.0 million from the previous year
because of the ongoing refocus of Cedan's operations.
In 2006, Richelieu made 83.1% of its sales to manufacturers (81.2% in
2005) and 16.9% to retailers (18.8% in 2005). It should be pointed out that
sales to retailers remained relatively stable in 2006, considering primarily a
change in product strategy in the ceramic division, which caused a slight
decline in sales, offset by Nystrom Group Inc.'s contribution.
The Company recorded revenues of $336.3 million in its Canadian markets in
2006 (87.2% of consolidated sales), compared with $309.2 million in 2005
(88.3% of consolidated sales). Of this 8.7% increase, 4.1% was due to internal
growth and 4.6% to acquisitions, reflecting the contribution of Atlantic
Countertops Limited over the full year and of Nystrom Group Inc. for about 10
months. Richelieu achieved most appreciable advances in all of its Canadian
markets during 2006. In addition to its new acquisitions, the Company's growth
was also driven by several initiatives that enabled it to build upon
favourable conditions in the renovation market, specifically - the rollout of
new high-quality targeted marketing programs focused on top-performing selling
tools for Richelieu customers - ongoing innovations in its product mix - a
major increase in visits to its transactional website, notably subsequent to
its restructuring - and the renovation of several of the network's showrooms.
These various marketing initiatives and product innovations clearly reflect
new renovation and interior design trends, in anticipation of demand and
meeting the needs of manufacturers and retailers. Thus, sales grew by 8.9% in
Eastern Canada, 8.2% in Ontario and 9.1% in Western Canada.
In the United States, Richelieu actively pursued its internal growth and
further expanded by acquiring Specialty Supplies Inc., Kiika International LLC
and L.B. Brass Ltd. These acquisitions enabled it to secure a foothold in the
important Florida market, with four distribution centres, as well as in
Pennsylvania, while increasing its presence in the New York City area where it
now operates two distribution centres. The Company's U.S. network today
consists of 14 distribution centres, all located in buoyant markets. U.S.
sales jumped by 20.6% (28.2% in US$) to $49.4 million (US$43.5 million) in
2006, compared with $40.9 million (US$34 million) the previous year. These
sales accounted for 12.8% of 2006 consolidated sales, of which 4.8% was due to
internal growth (12.8% in US$) and 15.8% to acquisitions (15.4% in US$)
reflecting the contribution of Kiika International LLC for about 10 months and
of Specialty Supplies Inc. for six weeks.
The average consolidated sales annual growth was 11.2% for the last five
years.
Earnings before income taxes, interest, amortization and non-controlling
interest (EBITDA)
Earnings before income taxes, interest, amortization and non-controlling
interest (EBITDA) totalled $53.1 million, up by $7.3 million or 15.9% over the
previous year. EBITDA from distribution operations jumped by $9.1 million or
22.3% to $49.8 million, compared with $40.7 million in 2005. Conversely,
EBITDA from manufacturing operations decreased to $3.3 million for 2006, down
by $1.8 million due to the decline in sales.
Richelieu continued to exercise tight control over all its operating and
supply costs during 2006. The gross profit margin further increased and the
EBITDA profit margin improved to 13.8% from 13.1% in 2005. This 0.7% increase
reflects the change in product mix, including higher-margin products, the U.S.
operations' improved profitability and the acquisitions' contribution. The
EBITDA profit margin from distribution operations rose to 13.5% in 2006, up
from 12.2% the previous year when major investments were made in new marketing
tools and programs. Conversely, the EBITDA profit margin from manufacturing
operations decreased to 19.5%, down significantly from 28.4% in 2005 due to
the ongoing refocus of Cedan's operations and the increase in raw material
costs.
Amortization and interest
Amortization of capital assets was up by 7.3% or $0.2 million over 2005.
This increase came primarily from acquisitions as well as the capital
expenditures made in 2005 and 2006.
In accordance with the accounting policy titled "Intangible assets",
intangible assets with limited useful lives, specifically non-competition
agreements and customer lists, are recorded at cost and amortized on a
straight-line basis over their useful lives. Intangible assets with indefinite
useful lives, such as trademarks, are recorded at cost and are not amortized.
Amortization of intangible assets totalled $0.4 million for 2006.
Interest on interest-bearing debt decreased by $174,000 to $72,000 for
2006. This reduction reflects the repayments of interest-bearing debt, which
totalled $3.4 million for the year.
Income taxes
Income taxes amounted to $16.8 million for 2006, compared with
$14.2 million the previous year, up 18.7% primarily due to the increase in
earnings and the rise in the Quebec tax rate.
Net earnings
Net earnings jumped by 15.3% or $4.2 million to $31.9 million in 2006, up
from $27.7 million the previous year. Net earnings as a percentage of
consolidated sales grew to 8.3% from 7.9% in 2005. Earnings per share amounted
to $1.38 ($1.37 diluted), up 15.0% over $1.20 ($1.19 diluted) the previous
year, whereas the number of shares declined during the year.
The average annual growth in net earnings was 15.3% for the last five
years.
Summary of quarterly results (unaudited)
(in thousands of $, except per-share amounts)
Quarters 1 2 3 4
-------------------------------------------------------------------------
-------------------------------------------------------------------------
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
Per share 0.23 0.37 0.38 0.40
Per share (diluted) 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
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
In 2006, Richelieu achieved solid quarterly increases over comparable
periods the previous year. The first quarter is generally the weakest because
of the end-of-year holiday period and seasonal factors; that of 2006 yielded
an 8.9% increase in sales (5.7% from internal growth and 3.2% from
acquisitions) and a 10.0% improvement in net earnings over the same period in
2005. Second-quarter sales exceeded $100 million for the first time ever in
Richelieu's quarterly track record, increasing by 10.9% (5.8% from internal
growth and 5.1% from acquisitions), whereas net earnings posted strong growth
of 16.2% over the same period in 2005. Third-quarter sales rose 9.3% (4.2%
from internal growth and 5.1% from acquisitions), whereas net earnings jumped
21.1%. In the last quarter ended November 30, 2006, sales again topped
$100 million, increasing by 11.1%, and net earnings grew by 12.6%. The fourth
quarter of 2006 marked the 45th 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 2006, the reader is referred to the
interim management's reports available on SEDAR's website at www.sedar.com.
Fourth quarter of 2006
Consolidated sales reached $103.9 million, compared with $93.5 million for
the same quarter the previous year, an increase of $10.4 million or 11.1%, of
which 2.2% was due to internal growth and 8.9% to acquisitions. Earnings
before income taxes, interest, amortization and non-controlling interest
(EBITDA) amounted to $15.5 million, up 16.4% over $13.3 million in the fourth
quarter of 2005. The EBITDA profit margin further improved to 14.9%, compared
with 14.3% in the same period a year earlier, under the positive impact of
tighter cost controls, a more profitable product mix, the U.S. distribution
operations' significant improvement in profitability and the new acquisitions'
contribution.
Amortization of capital assets amounted to approximately $1 million due
primarily to the period's acquisitions. Amortization of intangible assets, an
amount of $0.4 million, was first recorded in the fourth quarter as allocation
of the acquisition cost was finalized.
Income taxes stood at $4.9 million, compared with $4.2 million for the
equivalent quarter of 2005, up 15.6% primarily due to the increase in earnings
and the rise in the Quebec tax rate.
Net earnings rose 12.6% to $9.2 million or $0.40 per share ($0.39
diluted), up from $0.35 per share ($0.35 diluted) for the fourth quarter of
2005.
Cash flows from operating activities (before net change in non-cash
working capital balances related to operations) totalled $10.1 million, up
11.0% over the comparable period in 2005, reflecting notably the increase in
net earnings. Financing activities used net cash flows of $4.0 million,
primarily for the purchase of common shares for cancellation for about
$2.2 million, the payment of dividends to shareholders totalling approximately
$1.4 million and a $0.5 million repayment of long-term debt. Investing
activities used cash flows of $14.7 million, including $14.1 million for the
acquisition of Specialty Supplies Inc. and B.L. Brass Ltd. and $0.7 million
for the purchase of various capital assets.
Liquidity and financial resources for 2006
Operating activities
Cash flows from operating activities (before net change in non-cash
working capital balances related to operations) grew to $36.4 million or $1.57
per share, up from $31.9 million or $1.38 per share in 2005, an increase of
14.0% reflecting primarily the growth in net earnings. Net change in non-cash
working capital balances related to operations used cash flows of
$6.9 million, compared with $10.4 million in 2005. Cash flows therefore grew
by $8.0 million or 37.0 % to $29.5 million in 2006, up from $21.6 million in
2005.
Financing activities
Richelieu repaid $3.4 million in interest-bearing debt in 2006 and paid
dividends totalling $5.6 million to shareholders, up by $913,000 over 2005,
subsequent notably to the 20% increase in the quarterly dividend rate
announced on January 25, 2006. The Company also purchased shares for
cancellation for a consideration of $2.9 million, compared with $1.4 million
in 2005. Furthermore, under its share option plan, Richelieu issued 19,950
common shares at an average price of $9.41 per share for a total of
approximately $0.2 million. Thus, financing activities used cash flows of
$11.6 million in 2006, compared with $8.5 million the previous year.
Investing activities
The Company invested $31.1 million in 2006, including a consideration of
$28.5 million for the five acquisitions made during the year and $2.6 million
for the purchase of manufacturing equipment, rolling stock and computer
equipment as well as for the fitting-out of business premises. In 2005,
investments of $2.7 million were allocated to various capital expenditures.
Sources of financing
While pursuing its financing activities and investing in business
acquisitions and the purchase of other capital assets, Richelieu maintains a
balance of cash and cash equivalents of $7.0 million as at November 30, 2006.
The Company estimates that it has the capital resources and liquidity needed
to fulfill its commitments and respect its current obligations in 2007. It
believes that its cash flows from operating activities should be sufficient to
provide for the 2006-2007 funding requirements arising from its growth
strategy and its upcoming financing and investing activities. 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 foregoing assumes that general economic conditions and exchange rates
will not significantly deteriorate, that operating expenses will not increase
materially, that supplies will be sufficient to fulfill Richelieu's
requirements and that no extraordinary event will require increased capital
expenditures and are subject to the risks identified under "Risk Factors".
Change in cash and cash equivalents and capital resources
2006 2005 2004
(in thousands of $) $ $ $
-------------------------------------------------------------------------
Cash flows provided by (used for):
Operating activities 29,532 21,563 27,326
Investing activities (31,062) (2,714) (8,677)
Financing activities (11,609) (8,493) (8,902)
-------------------------------------------------------------------------
Net change in cash and
cash equivalents (13,139) 10,356 9,747
Cash and cash equivalents,
beginning of year 20,103 9,747 -
Cash and cash equivalents,
end of year 6,964 20,103 9,747
Working capital 103,909 105,927 82,364
Renewable line of credit 26,000 26,000 26,000
Financial instruments
Richelieu periodically enters into forward exchange contracts to fully or
partially hedge the effects of foreign currency fluctuations related 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 commitments as at November 30, 2006
(in thousands of $)
2007 2008 2009 2010 2011 2012 and thereafter Total
------------------------------------------------------------------------
Long-
term
debt 7,064 6,571 - - - - 13,635
Operating
lease
con-
tracts 3,879 3,340 2,699 1,770 1,105 1,902 14,694
-------------------------------------------------------------------------
Total 10,943 9,911 2,699 1,770 1,105 1,902 28,329
Financial position as at November 30, 2006
Richelieu continues to show a solid and healthy financial position, with
low indebtedness and substantial cash flows generated every year to pursue its
growth and expansion, especially through the acquisition of companies
specializing in its business sector. Changes in principal balance sheet items
as at November 30, 2006 reflect notably the impact of the five business
acquisitions closed during 2006.
Normal course issuer bid
In 2006, Richelieu purchased 137,700 common shares for cancellation under
its normal course issuer bid, for a cash consideration of $2.9 million.
Dividends
Richelieu has paid dividends to its shareholders since 2002. On
January 25, 2006, a new increase was approved by the Board of Directors,
raising the quarterly dividend from $0.05 to $0.06 per share. The Company paid
a total of $5.6 million in dividends in 2006, equivalent to 17.4% of net
earnings for the year.
Assets
Total assets amounted to $245.0 million as at November 30, 2006, up by
20.7% or $42.0 million over $203.0 million a year earlier. This growth is due
primarily to - a 21.1% or $15.1 million increase in inventories related mainly
to the five acquisitions made during the year, the growth in demand, the
broadening of the U.S. distribution centres' offering and the new products
launched to enhance the mix - a 15.3% or $7.6 million increase in accounts
receivable relating to the growth in business volume and the year's
acquisitions - a $19.6 million increase in goodwill as a result of the
acquisitions made in 2006 - and the recognition of the net value of intangible
assets of $13.2 million, in accordance with the accounting policy in this
regard.
Working capital
As in previous years, Richelieu's working capital remained excellent as at
November 30, 2006, amounting to $103.9 million for a current ratio of 3.2:1,
compared with $105.9 million and a ratio of 3.9:1 as at November 30, 2005.
Interest-bearing debt
Interest-bearing debt totalled $13.6 million at the close of 2006,
compared with $3.5 million as at November 30, 2005, a net increase of
$10.1 million. This debt includes a current portion of $7.1 million and
long-term debt of $6.6 million bearing interest at rates of up to 7.25% and
maturing on various dates until 2008. Interest-bearing debt consists primarily
of balances payable on four acquisitions closed in 2006.
Shareholders' equity
Shareholders' equity grew by 15.0% or $24.3 million to $186.6 million as
at November 30, 2006, up from $162.3 million a year earlier. This increase is
due primarily to the $23.6 million or 16.3% increase in retained earnings,
which rose to $168.0 million from $144.4 million in 2005.
The interest-bearing debt/equity ratio remained most satisfactory,
standing at 7.3% for 2006 versus 2.2% the previous year.
Return on average equity worked out to 18.3%, compared with 18.4% in 2005.
Risk management
The risks to which Richelieu was exposed in the normal course of business
in 2006 and will continue to be exposed in 2007 are set forth in detail in the
management's report presented on www.sedar.com. These risks remained unchanged
from those described in the Company's 2005 Annual Report. The reader is
referred thereto for further details on the subject.
Share price appreciation
The share price fluctuated between $20.25 and $25.25, and the trading
volume on the Toronto Stock Exchange totalled 42,000,000 shares in 2006. The
share price was $23.79 at the close of markets on November 30, 2006, up from
$22.24 as at November 30, 2005, an appreciation of 7.0%. It should be noted
that Richelieu's share price has increased by 119% over the past five years
and by 1,013% since its listing on the stock market.
Alain Giasson
Vice-President and Chief Financial Officer
January 26, 2007
Consolidated statements of earnings and retained earnings
(in thousands of dollars, except earnings per share)
Years ended November 30 12 Months 3 Months
-------------------------------------------------------------------------
2006 2005 2006 2005
-------------------------------------------------------------------------
$ $ $ $
Sales 385,631 350,177 103,944 93,530
Cost of sales, warehouse,
selling and administrative
expenses 332,572 304,392 88,447 80,198
-------------------------------------------------------------------------
Earnings before the
following 53,059 45,785 15,517 13,332
-------------------------------------------------------------------------
Amortization of capital
assets 3,583 3,340 969 841
Amortization of intangible
assets 392 - 392 -
Interest on long-term debt 187 106 122 23
Interest on short-term deb,
net (115) 140 (45) 43
-------------------------------------------------------------------------
4,047 3,586 1,438 907
-------------------------------------------------------------------------
Earnings before income
taxes and non-controlling
interest 49,012 42,199 14,079 12,425
Income taxes 16,828 14,177 4,857 4,203
-------------------------------------------------------------------------
Earnings before
non-controlling interest 32,184 28,022 9,222 8,222
Non-controlling interest 253 334 57 80
-------------------------------------------------------------------------
Net earnings 31,931 27,688 9,165 8,142
Retained earnings,
beginning of year 144,430 122,710 162,315 137,527
Dividends (5,551) (4,638) (1,383) (1,159)
Premium on redemption of
common shares for
cancellation (2,790) (1,330) (2,077) (80)
-------------------------------------------------------------------------
Retained earnings, end of
year 168,020 144,430 168,020 144,430
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings per share
Basic 1.38 1.20 0.40 0.35
Diluted 1.37 1.19 0.39 0.35
Consolidated statements of cash flows
(in thousands of dollars)
Years ended November 30 12 Months 3 Months
-------------------------------------------------------------------------
2006 2005 2006 2005
-------------------------------------------------------------------------
$ $ $ $
Operating activities
Net earnings 31,931 27,688 9,165 8,142
Non-cash items
Amortization of capital
assets 3,583 3,340 969 841
Amortization of intangible
assets 392 - 392 -
Future income taxes (369) 140 (594) (43)
Non-controlling interest 253 334 57 80
Stock-based compensation
expense 610 421 158 121
-------------------------------------------------------------------------
36,400 31,923 10,147 9,141
Net change in non-cash
working capital balances
related to operations (6,868) (10,360) 1,673 2,796
-------------------------------------------------------------------------
29,532 21,563 11,820 11,937
-------------------------------------------------------------------------
Financing activities
Decrease in bank loan (1,910) (693) - (173)
Repayment of long-term debt (1,442) (3,010) (517) (712)
Increase in long-term debt - 183 - (18)
Dividends paid (5,551) (4,638) (1,383) (1,159)
Issue of common shares 188 1,039 43 92
Redemption of common shares
for cancellation (2,894) (1,374) (2,153) (83)
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(11,609) (8,493) (4,010) (2,053)
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Investing activities
Business acquisitions (28,452) - (14,061) -
Additions to capital assets (2,610) (2,714) (683) (424)
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(31,062) (2,714) (14,744) (424)
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Net change in cash and cash
equivalents (13,139) 10,356 (6,934) 9,460
Cash and cash equivalents,
beginning of year 20,103 9,747 13,898 10,643
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Cash and cash equivalents,
end of year 6,964 20,103 6,964 20,103
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Supplemental information
Income taxes paid 15,288 14,359 1,757 1,039
Interest paid 28 258 25 79
Consolidated balance sheets
(in thousands of dollars)
As at November 30 2006 2005
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$ $
ASSETS
Current assets
Cash and cash equivalents 6,964 20,103
Accounts receivable 57,443 49,837
Inventories 86,784 71,636
Prepaid expenses 541 470
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151,732 142,046
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Capital assets 18,463 18,974
Intangibles assets 13,227 -
Goodwill 61,580 41,951
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245,002 202,971
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank loan - 1,910
Accounts payable and accrued
liabilities 38,425 32,718
Income taxes payable 2,334 751
Current portion of long-term debt 7,064 740
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47,823 36,119
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Long-term debt 6,571 849
Future income taxes 1,842 1,774
Non-controlling interest 2,182 1,929
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58,418 40,671
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SHAREHOLDERS' EQUITY
Capital stock 17,470 17,386
Contributed surplus 1,094 484
Retained earnings 168,020 144,430
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186,584 162,300
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245,002 202,971
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
November 30, 2006 and 2005
(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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2006
External sales 368,764 16,867 385,631
Inter-segment sales - 4,443 4,443
Earnings before taxes, interest
and amortization 49,778 3,281 53,059
Amortization of capital assets and
intangible assets 3,124 851 3,975
Goodwill 59,580 2,000 61,580
Total assets 228,932 16,070 245,002
Additions to capital assets,
intangibles assets and goodwill 35,803 517 36,320
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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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During 2006, the Company's sales to foreign countries, primarily directed
to the United States, amounted to $49,371 (2005 - $40,941) in Canadian dollars
and to $43,546 (2005 - $33,971) in US dollars.
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