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