Richelieu announces an increase in results and an excellent financial position for 2008



    
      The fourth quarter represents its 52nd consecutive quarter of net
        earnings growth over the comparable periods of previous years

    -------------------------------------------------------------------------
    - Sales amounted to $441.4 million in 2008 and net earnings to
      $35.6 million ($1.56 per share), up 4.9% over 2007.

    - Cash flows from operating activities reached a record high of
      $42.9.million.

    - Excellent financial position - almost no debt, total interest-bearing
      debt was lowered to $0.6 million. The interest-bearing debt/equity
      ratio improved to 0.3% and working capital to $130.9 million for a
      current ratio of 4.3:1.

    - This solid financial position enabled Richelieu to return a total of
      $27.4 million to its shareholders in 2008 (dividends paid of
      $7.3 million and share purchase under the normal course issuer bid of
      $20.1 million).

    - Two acquisitions in 2008: a distributor of decorative and functional
      hardware in North Carolina and a distributor of wood finishing products
      in British Columbia.
    -------------------------------------------------------------------------
    

    TSX: RCH

    MONTREAL, Jan. 22 /CNW Telbec/ - "In 2008, which marked Richelieu's 40th
anniversary, we continued to improve our sales in our Canadian markets and
achieved a good performance overall while further increasing our financial
resources for our future growth and posting an excellent balance sheet. Our
solid financial health is due to profitable growth, rigorous control of
expenses and prudent financial management. Our 2008 results are all the more
satisfactory considering that we were faced with difficult economic conditions
in the United States," said Richard Lord, President and Chief Executive
Officer of Richelieu.
    Consolidated sales totalled $441.4 million, compared with $436.2 million
for 2007, an increase of $5.3 million or 1.2% from 0.2% internal growth and
1.0% growth-by-acquisition reflecting the contribution of the acquisitions
closed in 2007 and of the distributors Top Supplies (North Carolina) and
Acroma (B.C.) acquired on April 7 and July 28, 2008 respectively. The average
annual growth in consolidated sales was 9.1% for the last five years.
    Sales to manufacturers amounted to $363.2 million in 2008, compared with
approximately $364.0 million in 2007. This slight decline of 0.2% is due
primarily to the prevailing economy in the United States and less favourable
export conditions for Canadian manufacturers, especially in the second and
third quarters of the year. Conversely, sales to hardware retailers and
renovation superstores, recorded mostly in Canada, grew by $6.0 million or
8.3% to $78.2 million in 2008. All three Canadian geographic markets
contributed to this growth, with more significant increases in Eastern and
Western Canada.
    In Canada, sales totalled $365.0 million for 2008, compared with $355.0
million for 2007, an increase of 2.8%, of which 2.3% from internal growth in
the residential and commercial woodworking segment and the hardware retailers
including renovation superstores market and 0.5% from the contribution of
Sasco (acquired on May 23, 2007) and Acroma for its first four months within
Richelieu. Sales in Canada accounted for 82.7% of the year's consolidated
sales, compared with 81.4% in 2007.
    In the United States, sales amounted to US$73.1 million, down by 2.7%
from the previous year. This decline is attributable to a 6.0% internal
decrease, whereas the growth-by-acquisition was 3.3%, stemming from the
contribution of Village Square (acquired on March 5, 2007) and Top Supplies
for about eight months. Taking into account the exchange rate, sales in the
United States totalled CA$76.4 million, compared with CA$81.1 million for
2007, thereby representing 17.3% of the year's consolidated sales, versus
18.6% in 2007.
    Earnings before income taxes, interest, amortization and non-controlling
interest (EBITDA) stood at $58.2 million, an increase of 2.0% over 2007. The
Company slightly improved its gross profit margin in 2008 due to rigorous
management of selling prices and the positive impact on purchases of the
strong Canadian dollar during the first three quarters of 2008. It continued
to post a solid EBITDA profit margin of 13.2%, up slightly over 2007. The
EBITDA profit margin has remained above 13% over the past seven years.
However, note that in 2008, profit margins were affected by the exchange rate
on U.S. sales, the expenses related to introducing new product lines to the
retailers and renovation superstores market and the costs of merging two major
distribution centres and relocating another centre to enhance operational
efficiency and to lower operating costs. The average annual EBITDA growth was
8.4% for the last five years.
    Amortization of capital and intangible assets increased by $0.7 million
and $0.1 million respectively in 2008 due mainly to the expansion completed
during the year. Interest decreased by more than $0.7 million to $0.1 million
thanks to a significant reduction in debt. Income taxes amounted to $16.7
million, down by approximately $0.6 million from 2007, primarily reflecting
the 1.6% reduction in the combined tax rates.
    Net earnings grew by $1.7 million or 4.9% to $35.6 million, representing
8.1% of consolidated sales, compared with 7.8% in 2007. Earnings per share
amounted to $1.56 basic and diluted, compared with $1.47 basic and $1.46
diluted for the previous year, whereas the average number of shares
outstanding decreased by approximately 5% over the past 12 months. The average
annual growth in consolidated net earnings was 9.6% for the last five years.
    Comprehensive income totalled $45.3 million, on account of a latent
foreign exchange gain of $9.7 million on translation of the financial
statements of the subsidiary in the United States (changed to self-sustaining
foreign operations on September 1, 2007), as opposed to 2007, which reflected
latent foreign exchanges losses of $1.9 million on translation of the
financial statements of this subsidiary and exchange losses of $4.0 million
attributable to the changeover effective September 1, 2007 in the method of
translating the financial statements of this same subsidiary.

    Analysis of principal cash flows for 2008
    -----------------------------------------

    Operating activities - Cash flows from operating activities (before net
change in non-cash working capital balances related to operations) grew by
9.5% to $42.9 million or $1.88 per share in 2008. This growth mainly reflects
the increases in net earnings ($1.7 million), amortization of capital assets
($0.7 million), future income taxes ($0.6 million) and stock-based
compensation expense (approximately $0.2 million). Net change in non-cash
working capital balances related to operations used cash flows of $1.7 million
in 2008, compared with $15.6 million in 2007. This variation can be explained
by the fact that in 2008, inventories increased by $3.7 million (net of a $3.3
million increase attributable to the U.S. dollar) while accounts receivable
decreased slightly - whereas in 2007, inventories and accounts receivable had
further increased, by $9.6 million and $3.4 million respectively. Operating
activities therefore provided cash flows of $41.2 million in 2008, compared
with $23.6 million a year earlier.
    Financing activities - Richelieu repaid $7.4 million in debt in 2008,
compared with $6.8 million in 2007. The Company paid a total of $7.3 million
in shareholder dividends, representing 20.5% of 2008 net earnings; this $0.8
million growth over the dividends paid in 2007 mainly reflects the increase in
the dividend rate from $0.07 to $0.08 per share. Subsequent to a common share
issue of $0.2 million ($0.3 million in 2007) and the purchase of common shares
for cancellation for a total of $20.1 million in 2008 (as opposed to no share
purchase in 2007), financing activities used total cash flows of $34.6 million
in 2008, compared with $12.9 million the previous year.
    Investing activities - During the year, Richelieu invested $7.3 million
in capital expenditures, specifically for the improvement of business
premises, the manufacture of displays for the retailers market, the purchase
of computer equipment and the relocation and merger of two major distribution
centres and the relocation of another centre. In addition, the two
acquisitions closed in 2008 (Top Supplies and Acroma) represented an
investment of $1.1 million, to which was added a balance of purchase price of
$0.5 million. Investing activities thus used cash flows of $8.4 million in
2008, compared with $9.7 million in 2007 when the Company had invested $4.6
million in business acquisitions and $5.1 million in various capital
expenditures.
    Financial resources - As at November 30, 2008, Richelieu had cash and
cash equivalents of $6.1 million, compared with $7.9 million as at November
30, 2007. The Company also posted an excellent working capital of $130.9
million for a current ratio of 4.3:1, compared with $121.0 million and a 3.7:1
ratio at the end of the previous year.
    Richelieu estimates that it has the capital resources needed to fulfill
its commitments and respect its ongoing obligations in 2009. Its cash flows
from operating activities should suffice for the funding requirements arising
from its growth strategy and its financing and investing activities planned
for the year ending November 30, 2009. 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.

    Fourth quarter ended November 30, 2008
    --------------------------------------

    Fourth-quarter results reflect a 4.7% increase in consolidated sales
which amounted to $118.7 million, up from $113.4 million for the corresponding
quarter of 2007. This improvement came from 3.5% internal growth and the
contribution of Top Supplies and Acroma for the full quarter.
    EBITDA grew by 3.4% to $16.9 million. The gross profit margin improved
over the corresponding period of 2007. It should be pointed out that the gross
margin for the last three months of the previous year had been affected by the
investments made in the sales to retailers programs in the screws and
fasteners and builders hardware categories. The EBITDA profit margin was very
satisfactory at 14.2%, although it was down by 0.2% from the fourth quarter of
2007 due to the impact of the decrease in the Canadian dollar during the
quarter on the operating expenses in the United States.
    Net earnings amounted to $10.2 million, remaining stable compared with
the same quarter of 2007, and the net profit margin stood at 8.6%. Earnings
per share grew to $0.46 basic and diluted, up from $0.44 per share (basic and
diluted) for the fourth quarter of 2007, an increase of 4.5% resulting from
the reduction in the number of shares outstanding.
    Cash flows from operating activities (before net change in non-cash
working capital balances related to operations) totalled $12.6 million, up
9.6% over the corresponding quarter of 2007, primarily reflecting the
variation in future income taxes. Net change in non-cash working capital
balances related to operations represented a cash inflow of $1.9 million, as
opposed to a cash outflow of $4.0 million for the fourth quarter of 2007. This
variation is due mainly to a lesser increase in inventories than in the same
period of 2007. Consequently, operating activities provided cash flows of
$14.6 million, compared with $7.6 million for the corresponding period of the
previous year.
    Financing activities used net cash flows of $19.8 million, primarily for
a long-term debt repayment of $7.2 million, the payment of shareholder
dividends for a total of $1.8 million and the purchase of common shares under
the normal course issuer bid for $10.8 million.
    Investing activities used cash flows of $2.0 million for the purchase of
various capital assets, primarily displays and warehousing equipment.
    Balance sheet - Total assets amounted to $273.5 million as at November
30, 2008, an increase of 5.7%. The acquisition of Top Supplies and Acroma
represented net assets of $1.6 million. Current assets as at November 30, 2008
were up by $5.0 million over a year earlier, reflecting first, a $7.0 million
increase in inventories due to acquisitions, the innovations introduced during
the year, the medium and long-term business agreements with major Canadian
renovation chains and to meet future demand, as well as an increase in
inventories attributable to the U.S. dollar - and secondly, a decrease of some
$1.8 million and $0.7 million respectively in cash and cash equivalents and
accounts receivable.
    Richelieu greatly reduced its total interest-bearing debt in 2008,
lowering it from $7.0 million to $0.6 million as at November 30, 2008.
Deducting cash and cash equivalents, the Company therefore had a cash surplus
of $5.5 million at the end of 2008. With an almost debt-free balance sheet and
substantial cash flows generated every year, Richelieu's financial position is
among the most healthy and solid, enabling it to pursue its growth and
expansion, particularly through the acquisition of companies specializing in
its business sector.
    Shareholders' equity totalled $228.2 million as at November 30, 2008,
compared with $209.1 million as at November 30, 2007, a growth of $19.1
million or 9.2% reflecting the $9.1 million increase in retained earnings
which amounted to $204.6 million as at November 30, 2008, accumulated
comprehensive income of $3.5 million and a contributed surplus of $3.0
million. At the end of 2008, the book value per share was $10.39, up from
$9.05 as at November 30, 2007.
    The total interest-bearing debt/equity ratio stood at 0.3%, compared with
3.3% as at November 30, 2007.

    Next dividend payment
    ---------------------

    At its meeting on January 22, 2009, the Board of Directors approved the
payment of a quarterly dividend of $0.08 per share. This dividend is payable
on February 19, 2009 to shareholders of record as at February 5, 2009.

    Growth outlook
    --------------

    Richelieu enjoys a solid leadership positioning in its business sector
thanks to acquisitions closed almost annually while respecting strict criteria
of compatibility and profitability - as well as internal growth driven by the
synergies developed with its acquisitions and the marketing of innovations
through its network of 49 centres in North America. In 2009, Richelieu intends
to continue expanding through acquisitions and further market development. Its
primary growth drivers remain:

    
    - the residential and commercial renovation market, especially the
      kitchen and bathroom cabinet makers and residential and commercial
      woodworking segments;
    - hardware superstore chains;
    - the constantly evolving trends in design, technology, ergonomics,
      closet solutions and decoration worldwide, which represent a
      significant and sustained source of growth;
    - the home and office furniture manufacturers segment, where Richelieu
      could still win major market share; and
    - acquisitions in North America matching Richelieu's criteria of
      complementarity, profitability and synergies as well as its objective
      of creating shareholder value.
    

    PROFILE as at January 22, 2009

    Richelieu Hardware Ltd. is a leading North American distributor, importer
and manufacturer of specialty hardware and complementary products. Its
products are targeted to an extensive customer base of kitchen and bathroom
cabinet, furniture, and window and door manufacturers plus the residential and
commercial woodworking industry, as well as a large customer base of hardware
retailers, including renovation superstores. Richelieu offers customers a
broad mix of high-end products sourced from manufacturers around the world.
Its product selection consists of close to 58,000 different items targeted to
a base of over 40,000 customers who are served by 49 centres in North America
- 31 distribution centres across Canada, 16 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 Ltée which manufactures
components for the window and door industry, a broad selection of mouldings,
and various types of tackboards and whiteboards.

    -------------------------------------------------------------------------
    The management's report for the year ended November 30, 2008, along with
    the audited consolidated financial statements and accompanying notes,
    will be filed today on SEDAR at www.sedar.com.
    -------------------------------------------------------------------------

    Notes to readers - Richelieu uses earnings before income taxes, interest,
amortization and non-controlling interest ("EBITDA") because this measure
enables management to assess the Company's operational performance. This
measure is a widely accepted financial indicator of a company's ability to
service and incur debt. However, EBITDA should not be considered by an
investor as an alternative to operating income or net earnings, an indicator
of operating performance or cash flows, or as a measure of liquidity. Because
EBITDA is not a standardized measurement as prescribed by GAAP, it may not be
comparable to the EBITDA of other companies. Certain statements set forth in
this press release, such as statements about the growth outlook, constitute
forward-looking statements. In some cases, these statements are identified by
the use of terms such as "may", "could", "might", "intend", "should",
"expect", "project", "plan", "believe", "estimate" or the negative form of
these expressions or other comparable variants. These statements are based on
the information available at the time they are written, on assumptions made by
management and on the expectations of management, acting in good faith,
regarding future events, including those relating to economic conditions,
fluctuations in exchange rates and operating expenses, and the absence of
unusual events entailing supplementary expenditures. Although management
considers these assumptions and expectations reasonable based on the
information available at the time they are written, they could proved
inaccurate. Forward-looking statements are also subject, by their very nature,
to known and unknown risks and uncertainties such as those related to the
industry, acquisitions, labour relations, credit, key officers, supply,
product liability, and other factors set forth in the Management's Report
included in the Company's Annual Report as well as its Annual Information
Form, which are available on the System for Electronic Document Analysis and
Retrieval (SEDAR) website at www.sedar.com. Richelieu's actual results could
differ materially from those indicated or underlying these forward-looking
statements. The reader is therefore recommended not to unduly rely on these
forward-looking statements. Forward-looking statements do not reflect the
potential impact of special items, any business combination or any other
transaction that may be announced or occur subsequent to the date hereof.
Richelieu undertakes no obligation to update or revise the forward-looking
statements to account for new events or new circumstances, except where
provided for by applicable legislation.

    
       CONFERENCE CALL ON JANUARY 22, 2009 AT 2:30 P.M. (EASTERN TIME)
       ---------------------------------------------------------------

    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 22,
2009 can dial 1-800-733-7571 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 22, 2009 until midnight on January 29, 2009, by dialing
1-877-289-8525, access code: 21294776#. Members of the media are invited to
listen in.


    Consolidated statements of earnings and retained earnings
    (in thousands of dollars, except per-share amounts)

    Years ended November 30                 12 Months           3 Months
    -------------------------------------------------------------------------
                                          2008      2007      2008      2007
    -------------------------------------------------------------------------
                                           $         $         $         $
                                            (audited)          (unaudited)

    Sales                              441,428   436,157   118,702   113,396
    Cost of sales and warehouse,
     selling and administrative
     expenses                          383,180   379,056   101,813    97,063
    -------------------------------------------------------------------------
    Earnings before the following       58,248    57,101    16,889    16,333
    -------------------------------------------------------------------------
    Amortization of capital assets       4,468     3,747     1,286       993
    Amortization of intangible assets      990       938       264       239
    Interest on long-term debt             261       844        24       107
    Interest on short-term debt, net      (157)       (2)      (26)      (32)
    -------------------------------------------------------------------------
                                         5,562     5,527     1,548     1,307
    Earnings before income taxes and
     non-controlling interest           52,686    51,574    15,341    15,026
    Income taxes                        16,749    17,294     4,928     4,685
    -------------------------------------------------------------------------
    Earnings before non-controlling
     interest                           35,937    34,280    10,413    10,341
    Non-controlling interest               330       326       173       121
    -------------------------------------------------------------------------
    Net earnings                        35,607    33,954    10,240    10,220

    Retained earnings, beginning of
     year                              195,511   168,020   206,473   186,907
    Dividends                           (7,301)   (6,463)   (1,805)   (1,616)
    Premium on redemption of common
     shares for cancellation           (19,226)        -   (10,317)        -
    -------------------------------------------------------------------------
    Retained earnings, end of year     204,591   195,511   204,591   195,511
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share
      Basic                               1.56      1.47      0.46      0.44
      Diluted                             1.56      1.46      0.46      0.44


    Consolidated statements of comprehensive income
    (in thousands of dollars)

    Years ended November 30                 12 Months           3 Months
    -------------------------------------------------------------------------
                                          2008      2007      2008      2007
    -------------------------------------------------------------------------
                                           $         $         $         $
                                            (audited)          (unaudited)

    Net earnings                        35,607    33,954    10,240    10,220

    Other comprehensive income:
    Change in fair value of
     derivatives designated as cash
     flow hedges net of income taxes         -      (321)     (192)     (192)
    Translation adjustment of net
     investment in a self-sustaining
     foreign operation                   9,698    (1,923)    7,665    (1,923)
    Foreign exchange loss due to the
     change in the translation method
     of a foreign operation
     reclassified as self-sustaining         -    (3,953)        -    (3,953)
    -------------------------------------------------------------------------
                                         9,698    (6,197)    7,473    (6,068)
    -------------------------------------------------------------------------
    Comprehensive income                45,305    27,757    17,713     4,152
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated statements of cash flows
    (in thousands of dollars)

    Years ended November 30                 12 Months           3 Months
    -------------------------------------------------------------------------
                                          2008      2007      2008      2007
    -------------------------------------------------------------------------
                                           $         $         $         $
                                            (audited)          (unaudited)
    OPERATING ACTIVITIES
    Net earnings                        35,607    33,954    10,240    10,220
    Non-cash items
      Amortization of capital assets     4,468     3,747     1,286       993
      Amortization of intangible
       assets                              990       938       264       239
      Future income taxes                  457      (140)      407      (280)
      Foreign exchange gain on debt
       in US dollars                         -      (518)        -         -
      Non-controlling interest             330       326       173       121
      Stock-based compensation
       expense                           1,055       888       264       233
    -------------------------------------------------------------------------
                                        42,907    39,195    12,634    11,526
    Net change in non-cash working
     capital balances related to
     operations                         (1,686)  (15,644)    1,934    (3,956)
    -------------------------------------------------------------------------
                                        41,221    23,551    14,568     7,570
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Repayment of long-term debt         (7,401)   (6,759)   (7,195)   (6,258)
    Dividends paid                      (7,301)   (6,463)   (1,805)   (1,616)
    Issue of common shares                 203       330        14        75
    Redemption of common shares for
     cancellation                      (20,124)        -   (10,835)        -
    -------------------------------------------------------------------------
                                       (34,623)  (12,892)  (19,821)   (7,799)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Business acquisitions               (1,094)   (4,611)      (44)        -
    Additions to capital assets         (7,277)   (5,077)   (2,002)   (1,785)
    -------------------------------------------------------------------------
                                        (8,371)   (9,688)   (2,046)   (1,785)
    -------------------------------------------------------------------------

    Effect of exchange rate
     fluctuations on cash and cash
     equivalents                            20       (56)      126       (56)
    -------------------------------------------------------------------------
    Net change in cash and cash
     equivalents                        (1,753)      915    (7,173)   (2,070)
    Cash and cash equivalents,
     beginning of year                   7,879     6,964    13,299     9,949
    -------------------------------------------------------------------------
    Cash and cash equivalents, end
     of year                             6,126     7,879     6,126     7,879
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental information
    Income taxes paid                   17,149    15,846     3,878     1,166
    Interest paid                          458       885       314      (477)


    Consolidated balance sheets
    (in thousands of dollars) (audited)

    As at November 30                                         2008      2007
    -------------------------------------------------------------------------
                                                                 $         $
    ASSETS
    Current assets
    Cash and cash equivalents                                6,126     7,879
    Accounts receivable                                     60,236    60,976
    Inventories                                            102,963    95,971
    Prepaid expenses                                         1,273       732
    -------------------------------------------------------------------------
                                                           170,598   165,558
    -------------------------------------------------------------------------

    Capital assets                                          22,801    19,774
    Intangible assets                                       14,313    12,974
    Goodwill                                                65,772    60,472
    -------------------------------------------------------------------------
                                                           273,484   258,778
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
    Accounts payable and accrued liabilities                38,774    37,371
    Income taxes payable                                       681     1,081
    Current portion of long-term debt                          278     6,111
    -------------------------------------------------------------------------
                                                            39,733    44,563
    -------------------------------------------------------------------------

    Long-term debt                                             371       860
    Future income taxes                                      2,308     1,751
    Non-controlling interest                                 2,838     2,508
    -------------------------------------------------------------------------
                                                            45,250    49,682
    -------------------------------------------------------------------------

    Shareholders' equity
    Capital stock                                           17,105    17,800
    Contributed surplus                                      3,037     1,982
    Retained earnings                                      204,591   195,511
    Accumulated other comprehensive income                   3,501    (6,197)
    -------------------------------------------------------------------------
                                                           228,234   209,096
    -------------------------------------------------------------------------
                                                           273,484   258,778
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

For further information: Richard Lord, President and Chief Executive
Officer; Alain Giasson, Vice-President and Chief Financial Officer, (514)
336-4144; www.richelieu.com


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890