Richelieu increases its earnings in the second quarter



    
    -------------------------------------------------------------------------

           Second quarter and first six months ended May 31, 2008
           ------------------------------------------------------

    - Net earnings amounted to $9.1 million, up 5.2%, or $0.40 per share for
      the second quarter. They totalled $15.7 million, up 7.5%, or $0.68 per
      share for the first six months of 2008.
    - Excellent financial position - the interest-bearing debt/equity ratio
      stood at 3.2% and working capital at $125.9 million, for a current
      ratio of 3.7:1.
    - Purchase of 324,800 common shares under the normal course issuer bid,
      for a cash consideration of $6.1 million.
    - Acquisition of a distributor in North Carolina closed on April 7, 2008.
    -------------------------------------------------------------------------
    

    TSX: RCH

    MONTREAL, July 9 /CNW Telbec/ - Richelieu achieved a solid performance in
the first six months of 2008, as its net earnings grew by 7.5% to
$15.7 million or $0.68 per share, of which $9.1 million and $0.40 per share in
the second quarter. During the three months ended May 31, 2008, profit margins
improved over the corresponding quarter of 2007 and free cash flows continued
to increase. The Company ended the period with working capital of
$125.9 million and a strong financial position with an almost debt-free
balance sheet.
    In the second quarter, Richelieu recorded appreciable internal growth in
its Canadian markets, especially in the residential and commercial woodworking
segment and the retailers and renovation superstores market, mostly in Eastern
and Western Canada. In the United States, although the overall business
remained satisfactory despite the economic slowdown prevailing for several
months, the negative effect of the exchange rate on U.S. sales converted into
Canadian dollars could not be entirely offset. The Florida market was the most
affected during the quarter and the Company is redoubling its development
efforts with a more comprehensive product offering in this region.
Consequently, U.S. sales declined in the second quarter, lowering total sales
by 1.3% to $114.8 million for the second quarter. For the first six months,
they amounted to $210.9 million, remaining at the same level as in the first
half of 2007.
    "We plan to increase our market share and cross-selling in the coming
periods. While they hold further challenges, current economic conditions could
also bring various opportunities that we should be able to seize thanks to our
leadership and financial position. We continue to analyze acquisition
projects, some of which could be completed as long as they match our criteria
of earnings and potential synergies with our existing operations, and to put
every effort into achieving the objectives set for the year ending
November 30, 2008," indicated Richard Lord, President and Chief Executive
Officer of Richelieu.

    OPERATING RESULTS FOR THE SECOND QUARTER AND FIRST SIX MONTHS ENDED
    MAY 31, 2008 COMPARED WITH THE SECOND QUARTER AND FIRST SIX MONTHS ENDED
    MAY 31, 2007

    Second-quarter consolidated sales totalled $114.8 million, compared with
$116.3 million for the second quarter of 2007. This 1.3% decrease mainly
reflects the erosion of the exchange rate on U.S. sales converted into
Canadian dollars, resulting in a sales decline of approximately $2.4 million;
this factor was combined with a certain slowdown in sales in the United States
stemming from the economic conditions prevailing for several months. Excluding
the impact of the increase in the Canadian dollar in relation to the U.S.
dollar, second-quarter consolidated sales would have increased by about 0.8%.
    Sales to manufacturers amounted to $95.0 million, down 2.5% from the
corresponding quarter of 2007. This decline is due to the aforementioned
factors, namely the impact of the conversion of U.S. sales into Canadian
dollars and the slowdown in the American economy. Sales to hardware retailers
and renovation superstores, recorded mostly in Canada, grew by 5.2% to
$19.8 million.
    In Canada, sales amounted to $95.7 million, up 1.8%, of which 1.3% came
from internal growth and 0.5% from the acquisition of Sasco (Nova Scotia)
closed in May 2007. This growth was primarily achieved in the residential and
commercial woodworking and hardware retailers markets including renovation
superstores. Sales in Canada accounted for 83.3% of the quarter's consolidated
sales. As previously indicated, sales in the United States slightly declined,
to US$19.0 million, down 3.7% (in U.S. dollars) from the corresponding quarter
of 2007. This change stems from a 5.5% negative internal growth and a
1.8% growth-by-acquisition due to the contribution of Village Square Cabinet
Supply (Tennessee) acquired in the second quarter of 2007 and of Top Supplies
(North Carolina) for about seven weeks since this distributor was acquired on
April 7, 2008. Considering the exchange rate, sales in the United States
amounted to CA$19.1 million, compared with CA$22.3 million for the second
quarter of 2007. They accounted for 16.7% of the quarter's consolidated sales.

    
    Sales
    (in thousands of $)

    Periods ended        3 months                      6 months
    May 31                              Change                        Change
                      2008      2007      (%)       2008      2007     (%)
    -------------------------------------------------------------------------
    Canada          95,718    94,024     + 1.8   174,569   169,891     + 2.8
    United States
     (CA$)          19,127    22,307    - 14.3    36,358    40,949    - 11.2
     (US$)          19,031    19,761     - 3.7    36,181    35,841     + 0.9
    Average
     exchange rate  1.0051    1.1288              1.0049    1.1425
    -------------------------------------------------------------------------
    Consolidated
     sales         114,845   116,331     - 1.3   210,927   210,840       0.0
    -------------------------------------------------------------------------

    First-half consolidated sales totalled $210.9 million, remaining
relatively stable compared with the corresponding period of 2007. Excluding
the impact of the rise in the Canadian dollar in relation to the U.S. dollar,
consolidated sales for the first six months of the year would have increased
by 2.5%.
    Sales to manufacturers amounted to $173.5 million, a slight decline of
0.4% from the same period of 2007, due to the aforementioned factors, namely
the impact of the conversion of U.S. sales into Canadian dollars and the
slowdown in the American economy. Sales to hardware retailers including
renovation superstores grew by 2.1% to $37.5 million.
    During the first six months of the year, Richelieu achieved satisfactory
sales growth in Canada, where its sales totalled $174.6 million, an increase
of 2.8%, including 2.3% from internal growth and 0.5% from the acquisition of
Sasco. This growth was achieved in both the manufacturers and the hardware
retailers and renovation superstores market. Canadian sales accounted for
82.8% of first-half consolidated sales. In the United States, sales amounted
to US$36.2 million for the first six months of the year, up 0.9% (in
U.S. dollars) thanks to a 4.4% growth-by-acquisition and a 3.5% negative
internal growth due to the second-quarter slowdown. Considering the exchange
rate, sales totalled CA$36.4 million, compared with CA$41.0 million for the
first six months of the previous year. They accounted for 17.2% of the
period's consolidated sales.

    Consolidated EBITDA and EBITDA margin
    (in thousands of $)

    Periods ended        3 months                      6 months
    May 31                              Change                        Change
                      2008      2007      (%)       2008      2007     (%)
    -------------------------------------------------------------------------
    Sales          114,845   116,331     - 1.3   210,927   210,840       0.0
    EBITDA          14,980    14,784     + 1.3    25,548    25,255     + 1.2
    EBITDA margin
     (%)              13.0      12.7                12.1      12.0
    -------------------------------------------------------------------------

    Second-quarter earnings before income taxes, interest, amortization and
non-controlling interest (EBITDA) stood at $15.0 million, up 1.3% over the
corresponding quarter of 2007. The gross profit and EBITDA margins improved
over the second quarter of the previous year, when they had been affected by
an increase in raw material costs and the sudden devaluation of the Canadian
dollar in relation to the U.S. dollar and the Euro in late 2006 and early
2007. For the second quarter of 2008, the EBITDA margin improved to 13.0% from
12.7% in the same period of 2007; however, it did not reach its historic level
due to the expenses related to the introduction of new product lines to the
retailers and renovation superstores market.
    Interest decreased by approximately $0.3 million, as interest-bearing debt
was reduced by more than half from the second quarter of 2007, whereas
amortization of capital and intangible assets increased by about $0.2 million
and $41,000 respectively.
    Income taxes decreased by $0.2 million to $4.4 million, due to the
reduction in the Canadian tax rate effective January 1, 2008.
    First-half earnings before income taxes, interest, amortization and
non-controlling interest (EBITDA) grew by 1.2% to $25.5 million, and the
EBITDA margin improved to 12.1%.
    Interest decreased by approximately $0.5 million, reflecting the major
reduction in interest-bearing debt. Amortization of capital and intangible
assets increased by about $0.3 million and $81,000 respectively.
    Income taxes amounted to $7.1 million, down by some $0.7 million due to
the aforementioned reduction in the Canadian tax rate.

    Consolidated net earnings
    (in thousands of $)

    Periods ended        3 months                      6 months
    May 31                              Change                        Change
                      2008      2007      (%)       2008      2007     (%)
    -------------------------------------------------------------------------
    EBITDA          14,980    14,784     + 1.3    25,548    25,255     + 1.2
    Amortization
     of capital
     and intangible
     assets          1,288     1,093               2,540     2,197
    Interest            99       350                 125       583
    Income taxes     4,434     4,603               7,093     7,754
    Non-controlling
     interest           59        87                  62        97

    -------------------------------------------------------------------------

    Net earnings     9,100     8,651     + 5.2    15,728    14,624     + 7.5
    Net profit
     margin (%)        7.9       7.4                 7.5       6.9

    -------------------------------------------------------------------------

    Comprehensive
     income          9,404     8,398    + 12.0    15,493    14,361     + 7.9

    -------------------------------------------------------------------------

    Second-quarter net earnings grew by 5.2% to $9.1 million. The net profit
margin improved to 7.9% of consolidated sales, compared with 7.4% for the
second quarter of 2007. This increase is due to the improvement in gross
profit and EBITDA margins and the reduction in interest and income taxes.
Earnings per share amounted to $0.40 (basic and diluted), up 8.1%, whereas the
number of shares and options outstanding did not decrease significantly over
the past 12 months.
    Comprehensive income totalled $9.4 million, on account of a latent foreign
exchange gain of $0.3 million on translation of the financial statements of
the subsidiary in the United States (changed from integrated to
self-sustaining foreign operations effective September 1, 2007).
    First-half net earnings grew by 7.5% to $15.7 million. The net profit
margin improved to 7.5% of consolidated sales, compared with 6.9% for the
first six months of 2007. As previously indicated, this increase is due to the
improvement in gross profit and EBITDA margins and the reduction in interest
and income taxes. Earnings per share amounted to $0.68 (basic and diluted),
up 7.9%, whereas the number of shares and options outstanding did not decrease
significantly over the past 12 months.
    Comprehensive income totalled $15.5 million, on account of latent foreign
exchange losses of $0.3 million on translation of the financial statements of
the subsidiary in the United States.


    FINANCIAL POSITION

    Analysis of principal cash flows for the second quarter and first
    six months ended May 31, 2008

    Change in cash and cash equivalents and capital resources
    (in thousands of $)

                                             3 months            6 months
    Periods ended May 31                  2008      2007      2008      2007
    -------------------------------------------------------------------------
    Cash flows provided by
     (used for):
      Operating activities              10,964     9,017    12,066     6,496
      Financing activities              (7,092)   (1,710)   (9,838)   (3,386)
      Investing activities              (2,984)   (5,598)   (3,491)   (7,030)
      Effect of exchange rate
       fluctuations                       (149)     (452)     (207)     (452)

    -------------------------------------------------------------------------
    Net change in cash and cash
     equivalents                           739     1,257    (1,470)   (4,372)
    Cash and cash equivalents,
     beginning of period                 5,670     1,335     7,879     6,964
    Cash and cash equivalents, end of
     period                              6,409     2,592     6,409     2,592

    -------------------------------------------------------------------------
    Working capital                    125,876   111,411   125,876   111,411
    Renewable line of credit            26,000    26,000    26,000    26,000

    -------------------------------------------------------------------------

    Second-quarter operating activities provided cash flows (before net change
in non-cash working capital balances related to operations) of $10.8 million
or $0.47 per share, up from $10.2 million or $0.44 per share for the second
quarter of 2007, mainly reflecting the growth in net earnings. Net change in
non-cash working capital balances related to operations provided cash flows of
$0.1 million, whereas it had used cash flows of $1.2 million for the second
quarter of 2007. Consequently, operating activities provided cash flows of
$11.0 million, compared with $9.0 million for the second quarter of 2007.
    Financing activities used cash flows of $7.1 million, compared with
$1.7 million for the second quarter of 2007. Richelieu paid a total of
$1.8 million in shareholder dividends, up from $1.6 million for the second
quarter of 2007; this rise reflects the dividend rate increases announced on
January 31 and March 27, 2008. In addition, on March 12, 2008, 286,500 common
shares were purchased for a consideration of $5.3 million under the normal
course issuer bid, whereas no shares were purchased in the second quarter of
2007.
    Investing activities used cash flows of $3.0 million, compared with
$5.6 million in the second quarter of the previous year when Richelieu had
acquired two distributors. In the second quarter of 2008, the Company invested
more than $2.7 million in the design and manufacture of displays for the
retailers market, the purchase of manufacturing equipment and various capital
assets including the improvement of business premises, and more than
$0.2 million to acquire the principal net assets of Top Supplies (the balance
of purchase price amounts to US$400).
    First-half cash flows from operating activities (before net change in
non-cash working capital balances related to operations) increased by 8.3% to
$18.8 million or $0.82 per share, up from $17.4 million or $0.75 per share for
the first six months of 2007, mainly reflecting the growth in net earnings.
Net change in non-cash working capital balances related to operations used
cash flows of $6.8 million, compared with $10.9 million for the first six
months of 2007. Consequently, operating activities provided cash flows of
$12.1 million, up from $6.5 million for the first half of 2007.
    Financing activities used cash flows of $9.8 million, compared with
$3.4 million for the same period of 2007. The Company paid $3.7 million in
shareholder dividends, up from $3.2 million in the first half of 2007; this
rise reflects the dividend rate increases announced on January 31 and
March 27, 2008. In addition, common shares were purchased for a consideration
of $6.1 million under the normal course issuer bid, whereas no shares were
purchased in the first six months of 2007.
    Investing activities used cash flows of $3.5 million, compared with
$7.0 million in the first half of the previous year. In the first six months
of the year, the Company invested more than $3.2 million in the design and
manufacture of displays for the retailers market, the purchase of
manufacturing equipment and various capital assets including the improvement
of business premises, and more than $0.2 million to acquire the principal net
assets of Top Supplies.

    Sources of financing

    As at May 31, 2008, cash and cash equivalents totalled $6.4 million, up
from $2.6 million at the end of the corresponding period of 2007. The Company
posted an excellent working capital of $125.9 million for a current ratio of
3.7:1, compared with $111.5 million and a 3.4:1 ratio as at May 31, 2007.
    Richelieu estimates that it has the capital resources needed to fulfill
its commitments and respect its ongoing obligations in the second half of
2008. Its cash flows from operating activities should suffice for the funding
requirements arising from its growth strategy and its financing and investing
activities planned for the year. Furthermore, the Company has an authorized
line of credit of $26.0 million, renewable annually and bearing interest at
the bank's prime rate, as well as easy access to other outside financing if
necessary.

    The expectation set forth above consists of forward-looking information
based on the assumption that economic conditions and exchange rate will not
deteriorate significantly, operating expenses will not increase considerably,
deliveries will be sufficient to fulfill Richelieu's requirements and no
unusual events will entail additional capital expenditures. This expectation
also remains subject to the risks identified under "Risk Management" on
page 38 of the Company's 2007 Annual Report.

    Balance sheet analysis

    Summary balance sheet

    As at May 31                                              2008      2007
    (in thousands of $)
    -------------------------------------------------------------------------

    Current assets                                         172,494   157,342
    Long-term assets                                        94,216    98,147

    -------------------------------------------------------------------------
    Total                                                  266,710   255,489
    -------------------------------------------------------------------------
    Current liabilities                                     46,618    45,831
    Long-term liabilities                                    4,610    11,377
    Shareholders' equity                                   215,482   198,281

    -------------------------------------------------------------------------
    Total                                                  266,710   255,489
    -------------------------------------------------------------------------

    Assets

    As at May 31, 2008, total assets amounted to $266.7 million, up from
$255.5 million a year earlier, an increase of 4.4%. Current assets grew by
9.6% or $15.2 million, due primarily to a $3.8 million growth in cash and cash
equivalents, a $11.4 million rise in inventories related to acquisitions, the
new distribution centre located in Barrie, Ontario, the innovations introduced
over the past 12 months, the medium and long-term agreements signed with major
Canadian renovation chains and to meet future demand.

    Total interest-bearing debt

    As at May 31                                              2008      2007
    (in thousands of $)
    -------------------------------------------------------------------------
    Current portion of long-term debt                        6,555     6,685
    Long-term debt                                             298     7,196

    -------------------------------------------------------------------------
    Total                                                    6,853    13,881
    -------------------------------------------------------------------------
    less cash and cash equivalents                           6,409     2,592
    Total debt net of cash                                     444    11,289

    -------------------------------------------------------------------------

    Richelieu has reduced its total interest-bearing debt by more than half
over the past 12 months, bringing it to $6.9 million as at May 31, 2008. After
deducting cash and cash equivalents, the Company had a total net debt of
$0.4 million as at May 31, 2008. Richelieu remains in a healthy and solid
financial position, with low indebtedness and substantial cash flows generated
every year, enabling it to pursue its growth and expansion, particularly
through the acquisition of companies specializing in its business sector.
    Shareholders' equity totalled $215.5 million as at May 31, 2008, up from
$198.3 million a year earlier, a growth of 8.7% reflecting the increases of
$22.3 million in retained earnings which amounted to $201.7 million as at
May 31, 2008, and of $1.0 million in contributed surplus, less accumulated
comprehensive income of $6.4 million. As at May 31, 2008, the book value
per share was $9.45, up from $8.60 as at May 31, 2007.
    The total interest-bearing debt/equity ratio stood at 3.2%, compared with
7.0% as at May 31, 2007.
    As at May 31, 2008, Richelieu's share capital consisted of
22,802,937 common shares (23,100,737 common shares as at November 30, 2007)
due to the issue of 27,000 common shares under the share option plan and the
purchase of 324,800 common shares for cancellation purposes, and 766,000
options (640,000 options as at November 30, 2007) were outstanding.

    GROWTH OUTLOOK

    "During the next two quarters, we will remain focused on our two-tiered
development strategy: increasing our market share to drive internal growth in
the United States and Canada, and completing profitable acquisitions," added
Mr. Lord.

    The expectation set forth above consists of forward-looking information
based on the assumption that economic conditions and exchange rates will not
deteriorate significantly, operating expenses will not increase considerably,
deliveries will be sufficient to fulfill Richelieu's requirements and no
unusual events will entail additional capital expenditures. This expectation
also remains subject to the risks identified under "Risk Management" on
page 38 of the Company's 2007 Annual Report.

    NEXT DIVIDEND PAYMENT

    At its meeting on July 9, 2008, the Board of Directors approved the
payment of a quarterly dividend of $0.08 per share. This dividend is payable
on August 6, 2008 to shareholders of record as at July 23, 2008.

    PROFILE as at May 31, 2008

    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 55,000 different items targeted to
a base of over 38,000 customers who are served by 48 centres in North America
- 30 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.

    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 JULY 9, 2008 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 July 9,
2008, can dial 1-800-733-7560 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 July 9, 2008, until midnight on July 17, 2008, by dialing
1-877-289-8525, access code: 21276412#. Members of the media are invited to
listen in.


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

                                                For                  For
                                          the six months     the three months
                                            ended May 31,       ended May 31,
    -------------------------------------------------------------------------
                                          2008      2007      2008      2007
    -------------------------------------------------------------------------
                                             $         $         $         $

    Sales                              210,927   210,840   114,845   116,331
    Cost of sales, warehouse,
     selling and
     administrative expenses           185,379   185,585    99,865   101,547
    -------------------------------------------------------------------------
    Earnings before the following       25,548    25,255    14,980    14,784
    Interest on short-term debt, net       (44)       84        25        96
    Interest on long-term debt             169       499        74       254
    Amortization of capital assets       2,058     1,796     1,047       893
    Amortization of intangible assets      482       401       241       200
    -------------------------------------------------------------------------
    Earnings before income taxes and
     non-controlling interest           22,883    22,475    13,593    13,341
    Income taxes                         7,093     7,754     4,434     4,603
    -------------------------------------------------------------------------
    Earnings before non-controlling
     interest                           15,790    14,721     9,159     8,738
    Non-controlling interest                62        97        59        87
    -------------------------------------------------------------------------
    Net earnings                        15,728    14,624     9,100     8,651
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share
      Basic                               0.68      0.63      0.40      0.37
      Diluted                             0.68      0.63      0.40      0.37


    Consolidated statements retained earnings (unaudited)
    (in thousands of dollars)

                                                For                  For
                                          the six months     the three months
                                            ended May 31,       ended May 31,
    -------------------------------------------------------------------------
                                          2008      2007      2008      2007
    -------------------------------------------------------------------------
                                             $         $         $         $

    Balance, beginning of period       195,511   168,020   199,520   172,378
    Net earnings                        15,728    14,624     9,100     8,651
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                       211,239   182,644   208,620   181,029

    Dividends                           (3,672)   (3,232)   (1,823)   (1,617)
    Premium on redemption of common
     shares for cancellation            (5,885)        -    (5,115)        -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Balance, end of period             201,682   179,412   201,682   179,412
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Consolidated statements of comprehensive income
    (in thousands of dollars)

                                                 For                 For
                                           the six months    the three months
                                            ended May 31,       ended May 31,
    -------------------------------------------------------------------------
                                          2008      2007      2008      2007
    -------------------------------------------------------------------------
                                             $         $         $         $

    Net earnings                        15,728    14,624     9,100     8,651

    Other comprehensive income:
    Change in fair value of
     derivatives designated as cash
     flow hedges net of income taxes        30      (263)       12      (253)
    Exchange loss due to translation
     adjustment of net investment in
     self-sustaining foreign operation    (265)        -       292         -
    -------------------------------------------------------------------------
                                          (235)     (263)      304      (253)
    -------------------------------------------------------------------------
    Comprehensive income                15 493    14 361     9 404     8 398
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Consolidated statements of cash flows (unaudited)
    (in thousands of dollars)
                                                     For                 For
                                          the six months    the three months
                                            ended May 31,       ended May 31,
    -------------------------------------------------------------------------
                                          2008      2007      2008      2007
    -------------------------------------------------------------------------
                                             $         $         $         $

    OPERATING ACTIVITIES
    Net earnings                        15,728    14,624     9,100     8,651
    Non-cash items
      Amortization of capital assets     2,058     1,796     1,047       893
      Amortization of intangible assets    482       401       241       200
      Future income taxes                   (9)       61       122       137
      Non-controlling interest              62        97        59        87
      Stock-based compensation expense     525       419       274       235
    -------------------------------------------------------------------------
                                        18,846    17,398    10,843    10,203
    Net change in non-cash working
     capital balances related to
     operations                         (6,780)  (10,902)      121    (1,186)
    -------------------------------------------------------------------------
                                        12,066     6,496    10,964     9,017
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Increase of bank loans                   -         -         -      (138)
    Repayment of long-term debt           (206)     (303)        -       (26)
    Dividends paid                      (3,672)   (3,232)   (1,823)   (1,617)
    Issue of common shares                 177       149        68        71
    Redemption of common shares for
     cancellation                       (6,137)        -    (5,337)        -
    -------------------------------------------------------------------------
                                        (9,838)   (3,386)   (7,092)   (1,710)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Business acquisitions                 (242)   (4,599)     (242)   (4,599)
    Additions to capital assets         (3,249)   (2,431)   (2,742)     (999)
    -------------------------------------------------------------------------
                                        (3,491)   (7,030)   (2,984)   (5,598)
    -------------------------------------------------------------------------
    Effect of exchange rate
     fluctuations on cash and cash
     equivalents                          (207)     (452)     (149)     (452)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net change in cash and cash
     equivalents                        (1,470)   (4,372)      739     1,257
    Cash and cash equivalents,
     beginning of period                 7,879     6,964     5,670     1,335
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of
     period                              6,409     2,592     6,409     2,592
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental information:
    Income taxes paid                    9,201    10,959     4,415     4,504
    Interest paid                          143       752       151       597


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

                                                   As at     As at     As at
                                                     May       May  November
                                                      31,       31,       30,
                                                    2008      2007      2007
    -------------------------------------------------------------------------
                                                       $         $         $
    ASSETS
    Current assets
    Cash and cash equivalents                      6,409     2,592     7,879
    Accounts receivable                           61,411    61,811    60,976
    Income taxes receivable                        1,028       871         -
    Inventories                                  102,178    90,789    95,971
    Prepaid expenses                               1,468     1,279       732
    -------------------------------------------------------------------------
                                                 172,494   157,342   165,558
    -------------------------------------------------------------------------

    Capital assets                                20,986    19,183    19,774
    Intangible assets                             12,572    14,802    12,974

    Goodwill                                      60,658    64,162    60,472
    -------------------------------------------------------------------------
                                                 266,710   255,489   258,778
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
    Accounts payable and accrued liabilities      40,063    39,146    37,371
    Income taxes payable                               -         -     1,081
    Current portion of long term debt              6,555     6,685     6,111
    -------------------------------------------------------------------------
                                                  46,618    45,831    44,563
    -------------------------------------------------------------------------

    Long-term debt                                   298     7,196       860
    Future income taxes                            1,742     1,903     1,751
    Non-controlling interest                       2,570     2,278     2,508
    -------------------------------------------------------------------------
                                                  51,228    57,208    49,862
    -------------------------------------------------------------------------

    Shareholders' equity
    Capital stock                                 17,725    17,618    17,800
    Contributed surplus                            2,507     1,514     1,982
    Retained earnings                            201,682   179,412   195,511
    Accumulated other comprehensive income        (6,432)     (263)   (6,197)
    -------------------------------------------------------------------------
                                                 215,482   192,281   209,096
    -------------------------------------------------------------------------
                                                 266,710   255,489   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


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