Further growth and expansion for Richelieu in 2015 - A second acquisition closed in Texas - 12.9% increase in net earnings per share for 2015

• Sales for the 4^th quarter ended November 30, 2015 grew by 12.5% (11.2% from internal growth) and net earnings attributable to shareholders diluted per share amounted to $0.89, up by 11.3%.
• Sales for 2015 totalled $749.6 million, an increase of 15.9% (13.1% from internal growth), and net earnings attributable to shareholders diluted per share grew to $2.97, up by 12.9 %.
• Sound financial position, almost no debt and 17.5% return on average equity.
• Two acquisitions closed in Texas in 2015.
• Increase of 6.7% in dividend which rises from $0.15 to $0.16 for the first quarter of 2016.
• Three-for-one share split of all common shares, subject to TSX approval ⁽¹⁾.

MONTREAL, Jan. 21, 2016 /CNW Telbec/ - "Richelieu (TSX: RCH) achieved a very good performance and maintained an impeccable financial position in 2015. All our market segments performed well. In Canada, our sales increased by 9.1%, of which 8.5% came from internal growth. In the U.S., they grew by 16.8% in US$, of which 8.8% from internal growth. In our two key markets in North America – manufacturers and hardware retailers including renovation superstores – sales were up by 15.6% and 17.2% respectively. This performance is attributable to our sustained innovation, market penetration and acquisition strategies, which position Richelieu as market leader in North America. In 2015, we closed two acquisitions in the important Texas market, including one on December 14^th. These two acquisitions represent additional sales of approximately $11 million on an annualized basis. Thus, we further strengthened our bases while creating shareholder value through stock market performance, share repurchases and dividends. As at November 30, 2015, the share closed at $71, representing a 25.6% appreciation within a year, and market capitalization stood at $1.4 billion. Today the Board of Directors approved a three-for-one common share split," indicated Mr. Richard Lord, President and Chief Executive Officer of Richelieu.

⁽¹⁾ Richelieu also announces that its Board of Directors has approved a three-for-one share split of the Corporation's outstanding common shares (the "Share Split"). Subject to completion and approval of regulatory filings with the Toronto Stock Exchange (the "TSX"), Richelieu shareholders will receive two additional shares for each share held on February 29th, 2016 at the close of trading on the TSX. Following the Share Split, but subject to TSX's approval, Richelieu's additional common shares are expected to commence trading on the TSX on or about March 2nd, 2016.

ANALYSIS OF OPERATING RESULTS FOR THE YEAR ENDED NOVEMBER 30, 2015 COMPARED WITH THE YEAR ENDED NOVEMBER 30, 2014

Consolidated sales

Richelieu achieved consolidated sales of $749.6 million, an increase of 15.9% or $102.7 million over 2014, of which 13.1% from internal growth and 2.8% from acquisitions. At comparable exchange rates to 2014, the consolidated sales growth would have been 11.2% for 2015.

Thanks to the contribution of all market segments of the Corporation, sales to manufacturers amounted to $637.1 million, an increase of 15.6% or $86.2 million over 2014, of which 12.4% from internal growth and 3.2% from acquisitions. Sales to hardware retailers and renovation superstores grew by 17.2% or $16.5 million to $112.5 million for 2015. This increase is due primarily to significant market share gains and improved market conditions.

In Canada, sales totalled $513.7 million, up from $471.1 million for 2014, an increase of $42.6 million or 9.1%, of which 8.5% from internal growth and 0.6% from acquisitions. Sales to manufacturers amounted to $416.8 million, an increase of $30.0 million or 7.8%, of which 7.1% from internal growth and 0.7% from acquisitions. Sales to hardware retailers and renovation superstores grew by 14.9% to $96.9 million, up from $84.3 million for 2014.

In the United States, Richelieu recorded sales of US$186.8 million, an increase of US$26.8 million or 16.8% over 2014, of which 8.8% from internal growth and 8.0% from acquisitions. Sales to manufacturers reached US$174.6 million, an increase of $25.2 million or 16.9%, of which 8.4% from internal growth and 8.5% from acquisitions. Sales to hardware retailers and renovation superstores grew by 15.7% (in US$). In Canadian dollars, U.S. sales amounted to $235.9 million, compared with $175.8 million for 2014, an increase of 34.2%, of which 25.2% from internal growth and 9.0% from acquisitions. They accounted for 31.5% of 2015 consolidated sales, whereas in 2014, U.S. sales had represented 27.2% of the year's consolidated sales.

Consolidated EBITDA and EBITDA margin

Earnings before interest, income taxes and amortization (EBITDA) totalled $87.7 million, an increase of $10.3 million or 13.3% over 2014. The gross margin and EBITDA margin declined slightly due to the higher proportion of sales in the United States where the product mix is different, the lower margins of certain acquisitions also having a different product mix, the effect of introducing additional products, mainly in the Canadian retailers market, and the appreciation of the U.S. dollar which had an upward impact on the purchasing cost of certain products before selling price adjustments. Consequently, the EBITDA margin stood at 11.7%, compared with 12.0% for 2014.

Income taxes amounted to $20.5 million, an increase of $2.5 million over 2014.

Consolidated net earnings attributable to shareholders

Net earnings grew by 12.0% over 2014. Considering non-controlling interests, net earnings attributable to shareholders of the Corporation totalled $58.7 million, up by $6.3 million or 12.1% over 2014 – equivalent to $3.01 basic per share and $2.97 diluted, compared with $2.67 basic and $2.63 diluted for 2014, an increase of 12.7% and 12.9% respectively. The net margin attributable to shareholders stood at 7.8%, compared with 8.1% for 2014.

Comprehensive income amounted to $71.0 million, considering a positive adjustment of $12.2 million on translation of the financial statements of the subsidiary in the United States, compared with $57.3 million for 2014, considering a positive adjustment of $4.7 million on translation of the financial statements of the subsidiary in the United States.

FOURTH QUARTER ENDED NOVEMBER 30, 2015

The Corporation achieved good fourth-quarter growth in consolidated sales, which amounted to $200.1 million, an increase of $22.2 million or 12.5% over the corresponding quarter of 2014, of which 11.2% from internal growth and 1.3% from acquisitions. At comparable exchange rates to the fourth quarter of 2014, the consolidated sales growth would have been 7.1% for the quarter ended November 30, 2015.

Sales to manufacturers totalled $172.0 million, up from $152.2 million for the corresponding period of 2014, an increase of $19.8 million or 13.0%, of which 11.5% from internal growth and 1.5% from acquisitions. Sales to hardware retailers and renovation superstores grew to $28.1 million, up by $2.4 million or 9.3%.

In Canada, the Corporation recorded sales of $136.5 million, compared with $127.7 million for the fourth quarter of 2014, an increase of $8.8 million or 6.9%, entirely from internal growth. Sales to manufacturers amounted to $112.8 million, up from $105.1 million for the fourth quarter of 2014, an increase of $7.7 million or 7.3% from internal growth. Sales to hardware retailers and renovation superstores grew by 5.1% to $23.7 million.

In the United States, sales totalled US$48.1 million, an increase of 7.5%, of which 3.4% from internal growth and 4.1% from acquisitions. Sales to manufacturers amounted to US$44.9 million, an increase of 6.8%, of which 2.5% from internal growth and 4.3% from acquisitions. Sales to hardware retailers and renovation superstores rose 18.3%. In Canadian dollars, U.S. sales grew to $63.6 million, up from $50.1 million for the corresponding quarter of 2014, an increase of 26.9%, of which 22.1% from internal growth and 4.8% from acquisitions. They accounted for 31.8% of the quarter's consolidated sales, whereas for the fourth quarter of 2014, U.S. sales had represented 28.2% of the period's consolidated sales.

Earnings before interest, income taxes and amortization (EBITDA) grew by 9.5% to $25.7 million, primarily reflecting the sales growth. The gross margin and EBITDA margin declined slightly due mainly to the lower gross margins of certain acquisitions having a different product mix, the effect of introducing additional products and the appreciation of the U.S. dollar which had an upward impact on the purchasing cost of certain products before selling price adjustments. Consequently, the EBITDA margin stood at 12.8%, compared with 13.2% for the corresponding quarter of 2014.

Income taxes amounted to $5.9 million, an increase of $0.2 million over the fourth quarter of 2014.

Fourth-quarter net earnings rose 10.0%. Considering non-controlling interests, net earnings attributable to shareholders of the Corporation totalled $17.5 million, up by 9.9% over the corresponding quarter of 2014. The net margin attributable to shareholders grew to 8.8%. Net earnings per share amounted to $0.90 basic and $0.89 diluted, compared with $0.82 basic and $0.80 diluted for the fourth quarter of 2014, an increase of 9.8% and 11.3% respectively.

Comprehensive income totalled $18.9 million, considering a positive adjustment of $1.3 million on translation of the financial statements of the subsidiary in the United States, compared with $19.4 million for the corresponding quarter of 2014, considering a positive adjustment of $3.4 million on translation of the financial statements of the subsidiary in the United States.

Cash flows from operating activities (before net change in non-cash working capital balances) amounted to $19.7 million or $0.99 diluted per share, up by 9.7% and 10.0% over the fourth quarter of 2014. Net change in non-cash working capital balances used cash flows of $5.8 million, reflecting net changes in accounts receivable and other items ($3.4 million) as well as changes in inventories ($2.4 million). Consequently, operating activities provided cash flows of $13.8 million, compared with $13.1 million for the fourth quarter of 2014.

Financing activities represented a cash outflow of $1.2 million, compared with $2.5 million for the corresponding quarter of 2014. Richelieu paid shareholder dividends of $2.9 million, up by 6.6%, considering the dividend increase announced in January 2015. The Corporation issued common shares for $2.0 million upon the exercise of options under its stock option plan, compared with $0.4 million in the same quarter of 2014.

Investing activities represented a cash outflow of $4.0 million for the fourth quarter of 2015, primarily for the expansion of the Montreal distribution centre, equipment for operational efficiency and software, whereas the Corporation had invested $6.5 million during the fourth quarter of 2014, of which $4.2 million in two business acquisitions and $2.3 million in equipment needed for operations.

FINANCIAL POSITION

Analysis of principal cash flows for the year ended November 30, 2015

Operating activities

Cash flows from operating activities (before net change in non-cash working capital balances) amounted to $68.1 million or $3.44 diluted per share, compared with $60.3 million or $3.03 diluted per share for 2014, primarily reflecting the increase in net earnings. Net change in non-cash working capital balances used cash flows of $40.7 million, representing net changes in inventories ($43.0 million) as well as in accounts receivable and other items ($3.3 million), whereas accounts payable represented a cash inflow of $5.6 million. Consequently, operating activities provided cash flows of $27.3 million, compared with $40.5 million for 2014.

Financing activities

Richelieu repurchased common shares under its normal course issuer bid for $9.2 million, compared with $30.4 million in 2014. The Corporation paid shareholder dividends of $11.7 million, up by 6.3% over 2014, considering the dividend increase announced in January 2015, and issued common shares for $3.1 million upon the exercise of options under its stock option plan, compared with $4.0 million in 2014. Consequently, financing activities represented a cash outflow of $19.5 million, compared with $37.4 million for 2014.

Investing activities

In 2015, Richelieu invested a total of $11.5 million, of which $11.0 million in property, plant and equipment, primarily for the expansion of the Montreal distribution centre, building improvements, equipment for operational efficiency, software and the remodelling of certain showrooms, to which was added the acquisition of the principal net assets of Single Source in the third quarter of 2015. In 2014, Richelieu had invested a total of $15.4 million, of which $9.9 million in business acquisitions and $5.5 million in equipment needed for operations.

Sources of financing

As at November 30, 2015, cash and cash equivalents totalled $29.5 million, compared with $33.7 million a year earlier. Working capital stood at $260.6 million for a current ratio of 4.4:1, compared with $214.9 million (4.0:1 ratio) as at November 30, 2014, an increase of 21.3%.

Richelieu believes it has the capital resources to fulfill its ongoing commitments and obligations and to assume the funding requirements needed for its growth and the financing and investing activities planned for 2016. The Corporation continues to benefit from an authorized line of credit of CA$26 million as well as a line of credit of US$6 million renewable annually and bearing interest respectively at prime and base rates. In addition, the Corporation estimates it could obtain access to other outside financing if necessary.

Summary of financial position
(in thousands of $, except exchange rate)
As at November 30	2015	2014
Current assets	337,308	285,394
Non-current assets	112,484	105,327
Total	449,792	390,721
Current liabilities	76,729	70,528
Non-current liabilities	6,256	6,640
Equity attributable to shareholders of the Corporation	362,885	309,149
Non-controlling interests	3,922	4,404
Total	449,792	390,721
Exchange rate on a translation of a subsidiary in the United States	1.335	1.144

Assets

Total assets amounted to $449.8 million as at November 30, 2015, up from $390.7 million a year earlier, an increase of 15.1% or $59.1 million. Current assets grew by 18.2% or $51.9 million over November 30, 2014, due mainly to the following two factors – the appreciation of the U.S. dollar which had an upward impact on translation of the assets of the subsidiary in the United States – and the increase in inventories resulting from the addition of new products to meet demand resulting from the significant market share gains during the year and the higher purchasing costs attributable to the appreciation of the U.S. dollar.

Net cash

(in thousands of $)
As at November 30	2015	2014
Current portion of long-term debt	2,245	3,352
Long-term debt	1,335	2,002
Total	3,580	5,354
Cash and cash equivalents	29,454	33,721
Total cash net of debt	25,874	28,367

As at November 30, 2015, total debt stood at $3.6 million, including a current portion of long-term debt of $2.2 million representing balances payable on recent acquisitions. Richelieu continues to benefit from a healthy and solid financial position to pursue its growth strategy in North America.

Equity attributable to shareholders of the Corporation totalled $362.9 million as at November 30, 2015, compared with $309.1 million as at November 30, 2014, an increase of 17.4% reflecting the $38.1 million growth in retained earnings, $3.8 million in share capital, $12.2 million in accumulated other comprehensive income less $0.3 million in contributed surplus. The positive variation of $38.1 million in retained earnings reflects the effect of the year's net earnings, less share repurchases and dividends paid during the year. At the end of the first nine months of 2015, the book value per share stood at $18.56, up 17.5% over $15.80 as at November 30, 2014.

As at November 30, 2015, return on average equity stood at 17.5%.

Dividends

At its meeting on January 21, 2016, the Board of Directors declared and approved the payment of a quarterly dividend of $0.16 per share to shareholders of record as at February 4, 2016, payable on February 18, 2016. The declared dividend is designated as an eligible dividend within the meaning of the Income Tax Act (Canada).

PROFILE AS AT NOVEMBER 30 2015

Richelieu 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 over 100,000 different items targeted to a base of more than 70,000 customers who are served by 66 centres in North America – 36 distribution centres in Canada, 28 in the United States and two manufacturing plants in Canada, specifically Cedan Industries Inc. which specializes in the manufacturing of a wide variety of veneer sheets and edgebanding products and Menuiserie des Pins Ltée which manufactures components for the window and door industry and a broad selection of decorative mouldings.

Notes to readers — Richelieu uses earnings before interest, income taxes and amortization ("EBITDA") because this measure enables management to assess the Corporation's operational performance. This measure is a widely accepted financial indicator of a corporation's ability to service and incur debt. However, EBITDA should not be considered by an investor as an alternative to operating income, net earnings, cash flows or as a measure of liquidity. Because EBITDA is not a standardized measurement as prescribed by IFRS, it may not be comparable to the EBITDA of other companies. Richelieu also uses cash flows from operating activities and cash flows from operating activities per share. Cash flows from operating activities are based on net earnings plus amortization of property, plant and equipment and intangible assets, deferred tax expense (or recovery) and share-based compensation expense. These additional measures do not account for net change in non-cash working capital items to exclude seasonality effects and are used by management in its assessments of cash flows from long-term operations. Therefore, cash flows from operating activities may not be comparable to the cash flows from operating activities of other companies. Certain statements set forth in this management's report, including statements relating to the expected sufficiency of cash flows to cover contractual commitments, to maintain growth and to provide for financing and investing activities, growth outlook, Richelieu's competitive position in its industry, Richelieu's ability to weather the current economic context and access other external financing, the closing of new acquisitions, and other statements not pertaining to past events, 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 the assumption that economic conditions and exchange rates will not significantly deteriorate, changes in operating expenses will not increase significantly, the Corporation's deliveries will be sufficient to fulfill Richelieu's needs, the availability of credit  will remain stable during the fiscal year and no extraordinary events will require supplementary capital expenditures. Although management considers these assumptions and expectations reasonable based on the information available at the time they are written, they could prove 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 Corporation'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.

JANUARY 21, 2016 CONFERENCE CALL 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 21, 2016 may call 1-866-865-3087 a few minutes before the start of the call.

For those unable to participate, a taped rebroadcast will be available as of 5:15 p.m. on January 21, 2016 until midnight on January 28, 2016, by dialing 1-855-859-2056, access code: 14728893. Members of the media are invited to listen in.

Photos are available under "About Richelieu" – "Media" section at www.richelieu.com.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
[In thousands of dollars]
As at November 30
	2015	2014
	$	$
ASSETS
Current assets
Cash and cash equivalents	29,454	33,721
Accounts receivable	99,975	93,874
Inventories	206,449	156,488
Prepaid expenses	1,430	1,311
	337,308	285,394
Non-current assets
Property, plant and equipment	27,963	22,895
Intangible assets	21,325	20,987
Goodwill	58,329	57,669
Deferred taxes	4,867	3,776
	449,792	390,721
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities	71,787	64,437
Income taxes payable	2,697	2,739
Current portion of long-term debt	2,245	3,352
	76,729	70,528
Non-current liabilities
Long-term debt	1,335	2,002
Deferred taxes	3,020	2,762
Other liabilities	1,901	1,876
	82,985	77,168
Equity
Share capital	33,566	29,762
Contributed surplus	1,265	1,576
Retained earnings	308,904	270,826
Accumulated other comprehensive income	19,150	6,985
Equity attributable to shareholders of the Corporation	362,885	309,149
Non-controlling interests	3,922	4,404
	366,807	313,553
	449,792	390,721

CONSOLIDATED STATEMENTS OF EARNINGS
[In thousands of dollars, except earnings per share]
Years ended November 30
	2015	2014
	$	$
Sales	749,646	646,909
Operating expenses excluding amortization and financial costs	661,965	569,492
Earnings before amortization, financial costs and income taxes	87,681	77,417
Amortization of property, plant and equipment	5,806	5,043
Amortization of intangible assets	2,643	2,080
Financial costs, net	(149)	(294)
	8,300	6,829
Earnings before income taxes	79,381	70,588
Income taxes	20,503	18,015
Net earnings	58,878	52,573
Net earnings attributable to:
Shareholders of the Corporation	58,739	52,393
Non-controlling interests	139	180
	58,878	52,573
Net earnings per share attributable to shareholders of the Corporation
Basic	3.01	2.67
Diluted	2.97	2.63

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
[In thousands of dollars]
Years ended November 30
	2015	2014
	$	$
Net earnings	58,878	52,573
Other comprehensive income that will be reclassified to net earnings
Exchange differences on translation of foreign operations	12,165	4,749
Comprehensive income	71,043	57,322
Comprehensive income attributable to:
Shareholders of the Corporation	70,904	57,142
Non-controlling interests	139	180
	71,043	57,322

CONSOLIDATED STATEMENTS OF CASH FLOWS
[In thousands of dollars]
Years ended November 30
	2015	2014
	$	$
OPERATING ACTIVITIES
Net earnings	58,878	52,573
Items not affecting cash
Amortization of property, plant and equipment	5,806	5,043
Amortization of intangible assets	2,643	2,080
Deferred taxes	(399)	(685)
Share-based compensation expense	1,124	1,242
	68,052	60,253
Net change in non-cash working capital balances	(40,741)	(19,788)
	27,311	40,465
FINANCING ACTIVITIES
Repayment of long-term debt	(1,041)	—
Dividends paid	(11,717)	(11,023)
Other dividends paid	(596)	—
Common shares issued	3,067	3,975
Common shares repurchased for cancellation	(9,180)	(30,365)
	(19,467)	(37,413)
INVESTING ACTIVITIES
Business acquisitions	(511)	(9,897)
Additions to property, plant and equipment and intangible assets	(10,986)	(5,536)
	(11,497)	(15,433)
Effect of exchange rate changes on cash and cash equivalents	(614)	(85)
Net change in cash and cash equivalents	(4,267)	(12,466)
Cash and cash equivalents, beginning of period	33,721	46,187
Cash and cash equivalents, end of period	29,454	33,721

SOURCE Richelieu Hardware Ltd.

Richard Lord, President and Chief Executive Officer; Antoine Auclair, Vice-President and Chief Financial Officer, Tel: [phone], www.richelieu.com