Richelieu reports Q3 growth
By Patrick Flannery
Highlights of comments by Richelieu president and CEO Richard Lord in the Q3 investor report:
Third quarter performance was very satisfactory for Richelieu (TSX: RCH), notably in terms of profitability and expansion. Total sales increased by 15.6%, of which 6.9% from internal growth and 8.7% from acquisitions. Third quarter sales increased by 82.3% in the hardware retailers and renovation superstores market, of which 36.0% is attributable to the Mibro acquisition completed in the first quarter and 46.3% to a strong increase in demand and higher cyclical sales. Similarly, our EBITDA margin improved significantly to 15.8% and our diluted net earnings per share increased to 56.3%. These results notably reflect our One-stop shop approach, the diversification of our market segments and our operational agility, which allows us to react quickly to current market conditions.
We acquired two new distributors of specialty hardware in the third quarter, for a total of five since the beginning of the year, thereby bringing additional annual sales of over $70 million. Central Wholesale Supply in Richmond, Virginia, which we purchased on June 29, gave us access to a new geographic market. It was followed by Lion Hardware on August 4. This distributor in Saint-Jacques, New Brunswick, serves a clientele of windows and doors manufacturers in eastern Canada. It adds to our offerings and customer base in this market segment, in which we had already acquired two distributors in 2019. This completes our Canadian coverage of this market segment.
In Canada, Richelieu recorded sales of $203.0 million, an increase of $23.1 million or 12.8% over the third quarter of 2019, of which 8.2% from internal growth and 4.6% from acquisitions. Sales to manufacturers amounted to $154.3 million, compared to $148.1 million for the third quarter of 2019, an increase of 4.2%, of which 1.1% from an internal growth and 3.1% from acquisitions. Sales to hardware retailers and renovation superstores reached $48.7 million, up $16.8 million or 52.7% over the corresponding quarter of 2019, of which 40.7% from an internal growth and 12.0% from acquisitions. This significant increase is the result of major growth in the renovation market in Canada as well as higher cyclical sales than in the corresponding quarter of 2019.