Richelieu Hardware Stock

Good morning, ladies and gentlemen, and welcome to the Richelieu Hardware Third Quarter Results Conference Call.

[Operator Instructions]

Also note that this call is being recorded on October 8, 2026.

[Foreign Language]

Thank you. Good morning, ladies and gentlemen, and welcome to Richelieu Conference Call for the third quarter and first 9 months ended August 31, 2026. With me is Antoine Auclair, CFO and COO as usual, note that some of today's issue include forward-looking information, which is provided with the usual disclaimer as reported in our financial filings.

Our third quarter was marked by strong growth and strategic expansion, once again, demonstrating the strength of our business model and our ability to capitalize on new opportunities. We are particularly proud of the acquisition of Panera, the largest in our history, which we completed on September 1. Following the acquisition of Sutkus and Wine in Canada during the third quarter.

So far this year, our acquisition strategy has positioned us for some future growth with a total of 5 acquisitions, adding $145 million in annual sales, expanding our market expertise diversifying our specialized customer base and providing significant additional network coverage in strategic markets. Of sustained investment in innovation, our various private label brands, our diversified market segment and our distinctive service offering, including distribute.com, provide us with competitive advantages that airports remain competitive in an uncertain economy.

During the quarter, sales reached $562 million with growth across all market segments in Canada and in the U.S., including initial shipments to a major U.S. retail customers. Our U.S. operation continued to be a key driver in our growth. In Canadian dollars, our U.S. sales accounted for 46.6% of total sales for the quarter sales to manufacturers in the U.S. now represent 49% of our total sales to manufacturers, highlighting the strength of our presence in this market.

EBITDA was up 15% to $65 million, supported by sales growth and favorable impact of a $3 million refund of U.S. tariff representing about 60 basis points to our EBITDA margin of 11.7%. Now let's take a look at our most recent acquisitions. Completed in the third quarter, Solutions based in the mortal area is renowned for its standard decorative and high-performance acoustic solutions. A growing market and Wine, which operates 3 distribution centers or specialized hardware in the Greater Toronto area.

On September 1, we completed the acquisition of the Penrod companies Adwell division, adding annual sales of USD 60 million and 7 distribution centers across the U.S. For us, this is understanding opportunity to strengthen our position with our diversified customer base of door manufacturers architects, residential and commercial contractors and specialty distributor.

I will now ask Antoine to review the financial highlights for the quarter and the first 9 months.

Thanks, Richard. In the third quarter, sales reached $562 million, up 12.6% or $62.8 million, driven by 10% internal growth and a 2.6% contribution from acquisitions. At comparable exchange rates, sales growth would have been 11.3%. In Canada, sales totaled $300 million, up 10.2%, with strong growth from all regions. Sales to manufacturers amounted to $252 million, up 11.4%, while sales to the hardware retailers totaled $48 million, up 4.6%.

In the U.S. sales reached USD 187 million, up 12.9%. Sales to manufacturers reached USD 172 million, up 9.3% with 7% from internal growth. In the hardware retailers and renovation superstores market, sales reached $14.7 million, up 86.1%, mainly reflecting initial deliveries to a major customer in the U.S. In Canadian dollars, total sales in the U.S. reached $262 million, up 15.4% over last year and accounting for 46.6% of total sales. For the first 9 months, total sales reached nearly $1.6 billion, up 7.2%, of which 4.6% resulted from internal growth and 2.6% from acquisition.

Comparable exchange rate, sales growth would have been 7.9%. In Canada, sales reached $841 million, up 6.5%, including 4.5% internal growth and 2% from acquisitions. Sales to manufacturers totaled $704 million, up $47.7 million or 7.3%. Sales to hardware retailers and renovation superstores were $136.8 million compared to $132.9 million, up 2.9%. In the U.S., sales amounted to USD 580 million, up 9.4%, with 2.3% from internal growth and 6.1% from acquisitions. They reached CAD 717 million, up 8%, accounting for 46% of total sales.

In U.S. dollars, sales to manufacturers totaled $485 million, an increase of $37.5 million or 8.4%, driven by 5.3% internal growth and 3.1% from acquisitions. Sales to hardware retailers and renovation superstores amounted to $33 million, which represents an increase of $6.9 million or 26.4% with 20.1% coming from internal growth and 6.2% from acquisitions.

Third quarter EBITDA reached $65.5 million, up $8.5 million or 14.8% from last year. EBITDA margin was 11.7% compared to 11.4% last year. The slight increase reflects the impact of the reimbursement of tariffs, which represent $3 million and was recorded as a reduction of cost of goods sold. Excluding this reimbursement, EBITDA margin would have been 11.1%. For the first 9 months, EBITDA totaled $164.8 million, up 6.5% with the EBITDA margin at 10.6%.

Third quarter net earnings attributable to shareholders reached $29.2 million, up 22.4%, while diluted net earnings per share increased 23.3% to $0.53 from $0.43 last year. Excluding the reimbursement of tariffs, EPS would have been $0.49, representing a 14.1% increase from last year. For the first 9 months, net earnings attributable to shareholders reached $66.9 million, up 11%. Diluted net earnings per share increased to $1.21 compared to $1.08 last year, up 12%. Third quarter cash flow from operating activities before net change in noncash working capital reached $54.5 million, up 13.5% from $48.1 million last year. The change in noncash working capital represented a cash inflow of $4.8 million primarily driven by a $24.7 million change in accounts payable, while accounts receivable, inventories and other items used $19.9 million in cash.

As a result, operating activities generated a cash inflow of $59.4 million for the quarter. For the first 9 months, cash flow from operating activities represented a cash inflow of $95.9 million compared to $133.6 million last year when cash flows benefited from a significant reduction in inventory levels. For the third quarter, financing activities represented a cash inflow of $36.9 million in cash compared to a cash outflow of $25.4 million last year, primarily reflecting the addition of a long-term debt of $62.4 million.

For the first 9 months, Financing activities used cash flow of $21.7 million compared to $70.1 million in 2025. In the first 9 months, we invested $45.8 million, including $31.7 million for 4 business acquisitions and $14.1 million primarily for equipment required to maintain and improve operational efficiency including IT equipment. We continue to maintain a strong balance sheet with working capital of $702 million and a working capital ratio of 3.21%. I now turn it over to Richard.

Thank you, Antoine. In conclusion, I want to highlight the $50 million strategic investment we announced in September at our Dromanville facility. This project, which is already underway, will more than cut the warehouse footprint, increasing it from 40,000 to 180,000 square feet by spring 2027. It will support our future growth in the center of Quebec region and beyond.

The economic outlook remains uncertain, but we continue to move forward with confidence. Throughout our history, we have used periods like these to strengthen retool and prepare for market recovery. We are taking the same approach today, investing in innovation, expanding our market presence and pursuing acquisition. This environment also creates opportunity for us to bring strong businesses into reshore network. We have the financial strength, the team and the experience to act on these opportunities. We intend to keep moving forward and build on the momentum we have created. Thanks, everyone. We'll now be happy to answer your questions.

[Operator Instructions]

Your first question will be from Hamir Patel at CIBC.

Congrats on the strong quarter. Richard, you pointed to in the prepared remarks, pricing driving the majority of the double-digit organic -- how much was pricing to the organic growth percentage? And would you expect that tailwind to persist for the next 3 quarters?

The pricing represent about 40% of the organic growth -- and that will be -- I don't see that for the quarters to come. I think the pricing adjustment that has to be made because of the tariff, that's already behind us. There could be more pricing in the future, but that would be because of price increases from our suppliers, which we try to control at our best. But basically, we -- in the near future, we see the pricing situation to be stable.

Okay. Great. And Richard, are you able to share how your sales comps in September fared for both manufacturers and retailers.

Yes, because -- so I think it's interesting to mention that a different market segment by product segment, let's say, the kitchen cabinet industry, our sales in Canada increased by 5.3%, and in the U.S., 4.8%. The Kitron cabinet industry. So that means that the consumers continue to do some innovation because that market is related maybe to the residential market. So -- and we know that the construction is down. So I guess the -- what we see is that the sales increase is mainly due to the people doing some renovation, which is a very good market for it.

The commercial innovation is also very strong in Canada with an increase of 11% while it is an increase of 5.5% in the U.S. Other specialized market in closing the closet industry, our sales in Canada increased by 10.5%, while it has increased by 21% in the U.S. very encouraging to see that. Again, the car set industry is mainly related to the residential innovation. The door in mid market, we increased by 5% in Canada, 8% in the U.S. It isn't as tour and interesting to mention that we see that this is a difficult market, but we see the customer of those market segment buying more from initial instead of importing their own goods from overseas because the tariff affect their sales, they buy less. So they don't import directly from Asia anymore. So that brings our business to ensure you. So -- and office furniture is also encouraging in Canada, with our sales increased by 10%, while it's flat in the U.S.

So basically, all our market segment by different industry that we serve it's very positive to realize that there is some business there. I think if you keep moving by adding salespeople in the U.S., we try to keep the market moving. We don't stand still because we -- the market is uncertain.

And Hamir, if we look at the business as we speak since the beginning -- the ending of the of the quarter, we're seeing internal growth of around 3% to 4% as we speak.

Okay. Great. just clarify, I guess, the breakdown Richard provided was for the third quarter.

Yes, yes, exactly.

Okay. And then Anton, just thinking about EBITDA margins look like if you exclude the tariff refunds that came in around 11.1% and in Q3. What are you expecting to round out the year for Q4? And given the macro backdrop, how do you see the setup for 2020?

I'm seeing pretty much the same thing as a similar quarter in Q4 regarding the EBITDA margin. So we're around 11%. And -- we're working also to maintain this 11% over the course of '27.

Okay. So to drive margin expansion next year, what did do you really need the macro backdrop to improve?

Yes. We would need a more rigorous market. So sales growth is good, but it's nothing -- real volume will definitely help to improve this EBITDA margin.

Okay. Great. And just the last question I had. With respect to the Penrod deal, I guess the closing date was in Q4. Can you speak to the valuation multiple that you paid there and how the EBITDA margins of that particular target would compare to the base business maybe relative to historical acquisitions.

Yes, the Penrod EBITDA margin is similar to Richelieu we've paid a bit more than what we usually do. But we're confident that it's a strategic acquisition for us, and we've paid around 7x EBITDA.

Okay. Great. That's all I had. I'll turn it over.

[Operator Instructions]

Next will be Nathan Po at National Bank. Please go ahead, Nathan.

My first question is about the EBITDA margins. So without the $3 million tariff refund margins compressed year-over-year. What was driving the operating expenses line because normally with strong organic growth, like what you've posted this quarter, we'd expect pricing on products and freight to be more margin accretive?

Yes, you have to consider that we're passing the tariff as as a dollar. So we're not taking any margin on those tariffs. So even though the price increase is there, we're not gaining any additional margin there. So in total, this has a dilutive impact on the margin, not in dollars, but in percentage. So -- but I think that after Q3, this should be behind us. So now the higher cost products are are in the tariffs impact are included in our average costing as well. So that should be behind us starting Q4 and moving forward.

Okay. And on the major U.S. initial shipments, how much of that rollout was completed in Q3 and perhaps how much is left for Q4?

Okay. So basically, the initial sales to this major customer, it's been -- it's around USD 7 million in the third quarter. And on a yearly basis, we're talking about approximately USD 10 million on on a yearly basis. So now the recurring sales will start in the course of the fourth quarter and after it's going to be business as usual for this major customer, and we're talking about $10 million annually. So approximately $2.5 million per quarter.

Okay. for that color. Regarding the manufacturers organic growth, notably strong. Can you break down the drivers of that, perhaps were there any nonrecurring benefits to that quarter and then perhaps yes, no, that's just manufacture the organic growth.

Yes, not necessarily nonrecurring. I think that it's been a strong quarter in all regions. And if we look at the industrial business in the different region in Canada, so growth in the -- on the East Ontario, it was plus 7.8%. So this is encouraging and Western around 8% growth in the industrial business. Like Richard said, the -- around 40% of this is price around the rest is volume. So that's -- we're encouraged by this performance.

But as I said earlier, so if we look at September and the beginning of October, we're seeing like 3% to 4% growth today.

And basically, what it is doing we create the movement in the market. We are adding salespeople or sales website is second to none. It is contributing largely to our sales increase as well. So basically, we -- all the means that we can find to reach the customers, to be close to the customer service the portion well and communicate well with the customers we're investing in those segments in order to be close to our customers and getting the orders.

And for the comment on early September, October internal growth, does that still match up with the commentary on 4% price and rest of those volumes? Or how does that break out?

Yes, pretty much.

And last one for me. With U.S. mortgage rates at a 3-year high. Can you tell us how customers and their order books are looking right now?

Well, costs are still busy because as I mentioned earlier in this meeting, I think the renovation market remains healthy, not strong, but healthy. People that need to -- a new kitchen comminate a new clause whatsoever. I think people that have money, they do not hesitate to make those projects. And what we -- if you remember during the Pandemipeople could not find a contractor to do their work. now it's easier to find the contractors to find a kitchen cabinet manufacturers and fine furniture as well.

So basically, the market is also favorable for the people that have money to spend in order to maintain their houses. That does apply to the commercial renovation market as well. When we see a growth in Canada, this is very strong. It's because of the commercial projects, the airports, restaurants and hotels outdoing renovation, they were late to it, they have to keep their place clean. And we see the tourist in Montreal and in Toronto and other area of Canada as well. So the hotel keep, I think, are doing a very good business and they keep it in waiting.

Great to hear. And sorry, one last one. I noticed that last quarter, we were talking about how the Eastern market in Canada was a bit challenging specific callout to Ontario, but you pointed out some pretty strong growth, seems like an inflection this quarter. What was driving that?

In Ontario increased by 7.8%. But we have to admit that the quarter of last year was the good -- so basically, it's a jump of something that was not very good last year, but what we are happy to see, though, is that the hotel market seems to have reached the bottom of the barrel, so thing cannot be worse than I see in the months to come that the business is going to pick up. Hopefully, this is a trend. So that's a good quarter.

We'll see if this continues. But like Richard said, we're comparing ourselves with low comparable. So -- but we'll see. Hopefully, this will continue, but we don't know yet.

We have no other questions registered. Please proceed.

There's no more question. Thanks again. It's always a pleasure for us to talk to you. You can inform us at your convenience. Thank you, and have a good day.

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we ask that you please disconnect your lines.

Good afternoon, ladies and gentlemen, and welcome to Richelieu Hardware Second Quarter Results Conference Call. [Operator Instructions] Also note that this call is being recorded on July 9, 2026. [Foreign Language]

Thank you. Good afternoon, ladies and gentlemen, and welcome to Richelieu's conference call for the second quarter and first half ended May 31, 2026. With me is Antoine Auclair, CFO and COO. As usual, note that some of today's issue include forward-looking information, which is provided with the usual disclaimer as reported in our financial filings.

We recorded good growth and positive results during the second quarter. We have remained focused on acquisition strategy, completing 1 new acquisition, followed by 2 quarter ones after the end of the quarter, 3 promising acquisitions, meeting our criteria and further strengthening our leading position in this high-growth market segment.

Thanks to steady growth in our main market segment in Canada and the U.S., our sales increased respectively by 5.5% and 4.4% in U.S. dollar for the U.S. sales for total sales of $532.1 million, up 3.9%, an increase that would have been 5% on a comparable currency to 2025.

Our sales to manufacturers accounted for 89% of our total sales, reaching $473.7 million, up 3.8%, driven equally by internal growth and acquisitions. Our sales to retailers and renovation superstores increased by 4.2% to $58.4 million. EBITDA reached $56.1 million and net income attributable to shareholders was up 3.2% to $23.2 million.

Regarding the execution of our acquisition strategy since the beginning of the year, we have completed 4 acquisitions, one in the U.S. during the first quarter, another in Quebec during the second quarter and 2 additional acquisitions after the end of the quarter in Canada.

On May 1, we acquired Finium, a distributor and manufacturer based in Frampton, Quebec, specializing in premium wall covering panels with high aesthetic decorative and acoustic value. These products stand out for the unique design, quality and installation ease for both residential and commercial applications and they fit perfectly with our decorative panel offering.

On June 26, we completed the acquisition of Solutions Acoustiques, which operates in the Greater Montreal and as a specialized distributor in acoustic solution known for their performance and architectural design.

Then on July 8, we completed the acquisition of Winnec, a distributor of specialized hardware operating in the GT area with 3 distribution centers. This reinforces our position in the key market of Ontario. These 4 acquisitions completed since the beginning of the year add approximately $45 million in annual sales, bring new value expertise, new products, new customers and further enhance the value we provided to our customers. In fact, the addition of Finium and Solutions Acoustiques Acoustic strengthens our leadership in decorative and acoustic solutions to high-growth market segments while further expanding our presence among architects and designers.

This strategy builds on the recognition we received earlier this year with our Best of KBIS awards in 2 different product categories and reflects our commitment to differentiate ourselves and remain a leader in innovation.

I will now ask Antoine to review the financial highlights for the quarter and the first 6 months.

Thanks, Richard. In the second quarter, sales reached $532.1 million, up 3.9% or $19.9 million, driven by 1.8% internal growth and 2.1% from acquisitions. At comparable exchange rates, sales growth would have been 5%.

In Canada, sales totaled $291 million, up 5.5% despite flat sales in Ontario, where the market conditions remain more challenging. Sales to manufacturers amounted to $246 million, up 4.5%, while sales to the hardware retailers totaled $45 million, up 11.6%.

In the U.S., sales grew to USD 175 million, up 4.4%. Sales to manufacturers reached USD 166 million, up 5.6% with 3.1% coming from internal growth. In the hardware retailers and renovation superstores market, sales reached $9.6 million, down 12.7%. In Canadian dollars, total sales in the U.S. reached CAD 241 million, up 1.9% over last year and accounting for 45% of total sales. Sales to our U.S. manufacturers market now represent 48% of total sales to manufacturers, further reflecting the growing importance of our U.S. operations.

For the first half, total sales reached nearly $1 billion, up 4.4%, of which 1.9% resulted from internal growth and 2.5% from acquisitions. In comparable exchange rate, sales growth would have been 5.9%. In Canada, sales reached $541 million, up 4.5%, including 2.9% from internal growth and 1.6% from acquisitions. Sales to manufacturers totaled $452 million, up $21.6 million or 5%.

Sales to hardware retailers and renovation superstores were $88.7 million compared to $86.8 million, up 2.2%. In the U.S., sales amounted to USD 331 million, up 7.5%, with 3.7% from internal growth and 3.8% from acquisitions. They reached CAD 455 million, up 4.2%, accounting for 46% of total sales. In U.S. dollars, sales to manufacturers totaled USD 313 million, an increase of USD 23.2 million or 8%, driven by 4.5% internal growth and 3.5% from acquisitions.

Sales to hardware retailers and renovation superstores stayed the same compared to last year. Second quarter EBITDA reached $56.1 million, up $1 million or 1.7% from last year. EBITDA margin was 10.6% compared to 10.8% last year. Slight decrease in percentage reflects the impact of tariffs, which proportionately increased both sales and cost of sales.

First half EBITDA totaled $99.4 million, up 1.8% with the EBITDA margin at 10%. Second quarter net earnings attributable to shareholders amounted to $23.2 million, up 3.2%, while diluted net earnings per share increased 2.4% to $0.42 from $0.41 last year. First half net earnings attributable to shareholders reached $37.6 million, up 3.5%. Diluted net earnings per share stood at $0.68 compared to $0.66 last year.

Second quarter cash flow from operating activities before net change in noncash working capital reached $47.9 million, up 2.4% from $46.8 million last year. Change in noncash working capital used cash flow of $28.5 million, primarily driven by a $14.8 million increase in accounts receivable and a $9.4 million increase in inventories. As a result, operating activities generated a cash inflow of $19.4 million for the quarter.

For the first half, cash flows from operating activities represented a cash inflow of $36.6 million compared to a cash inflow of $51 million last year. For the second quarter, financing activities used $33.5 million in cash compared to $23.3 million last year, primarily reflecting higher cash return to shareholders through $7.6 million of common share repurchase in addition to quarterly dividend payment of $8.6 million.

First half financing activities used cash flow of $58.6 million compared to $44.7 million in 2025. In the first half, we invested $26 million, including $15.3 million for 2 business acquisitions and $10.7 million primarily for equipment required to maintain and improve operational efficiency, including IT equipment. We continue to maintain an outstanding balance sheet with working capital of $629.5 million.

I now turn it over to Richard.

Thank you, Antoine. In conclusion, we are integrating our acquisitions while the current economic environment is creating attractive acquisition opportunities in our target markets. We are evaluating several opportunities and remain well positioned to pursue those that meet our strategic criteria and support our long-term growth. We continue to differentiate ourselves by constantly expanding our product offering and bringing innovative solutions and emerging global design trend to the American market.

By introducing products that are first to the market and maintain of them exclusive with our own brand names and many of them being exclusive with our own brand name. We have become a trusted partner for architects, designers, good working professionals and retailers. This relentless focus on innovation, product leadership and value-added service, combined with the strongest team and a strategically located distribution network is what defines this revenue, reinforcing our competitive advantage and help our customers being more successful in their own business.

Thanks, everyone. We'll now be happy to answer your question.

[Operator Instructions] First, we will hear from Hamir Patel at CIBC.

Richard, can you share how sales fared in the month of June? And any differences there across categories or geographies? And I know I think last time you kind of highlighted Ontario as being particularly weak. So any signs of turnaround there?

I think the sales performance is the same performance that we had until -- in the last quarter. So what we see -- Canada is doing well as a whole, except Ontario, I think Quebec is doing very well with a sales increase by more than 10%. Western Canada is also very healthy. I think over 5% increase. So basically, except Ontario, Canada is pretty good. Ontario, I would say, in U.S., it's about the same everywhere, but we have different market segments like the specialized market, like the closet market, for example, we continue to experience sales between 15% and 20% increase. For the rest, we have basically a performance of 2% to 3% per market segment.

So basically, we're satisfied with that. But I think we have -- what we have decided in this company is that maybe to invest a little bit more in salespeople, mainly in the U.S. in order to gain more customers and to move the market. We think the market is in a kind of lethargy as we speak. So I think we have to be more aggressive in visiting more customers and acquiring new customers and as a result, new sales as well. So basically, we don't think that the months to come in the near future will help us. So we have to help ourselves by making -- removing the sites.

Fair enough. And Richard, how much is Ontario as a percent of your Canadian business? Is that 40%, 50%...

44%

Hamir, it's 17% of total sales.

Total sales including U.S. everything.

Right. Okay. And then I know -- I think, Richard, in the past, you highlighted some U.S. box business that was going to resume. I think it was supposed to start in Q2. Did that -- is that only playing out here in Q3?

It has started. So we're in the process of delivering our first order. So basically, that's going to create more sales for a couple of quarters, that is going to be flat for a couple -- for the next quarters because once we fill up the stores, it takes a while before the order. But after that, it's going to be -- you can imagine $10 million to $12 million sales, yearly sales.

Hamir, it started in June.

Perfect. Okay. And just last question, Antoine, your EBITDA margins averaged 10% in the first half. On the last conference call in April, you're pointing to an 11% average for the year. Is that 11% still looking achievable? And what type of demand backdrop would you need to get margins to that sort of longer-term 12%, 13% objective?

Yes. We would need a bit more rigor in the market to bump up those margins. But keep in mind, Hamir, that the second half is always stronger than the first half. And you understand as well that the very slight decrease, 0.2% is basically due to tariff because when we're passing through the tariff, we're passing the dollar. So it has, for sure, a slight dilution on the percentage. We should be able to be close to the 11% but we will need a bit more rigor in the margin.

Next question will be from Zachary Evershed at National Bank Capital Markets.

This is Nate calling in for Zach. I want to ask first on the margins. So was there anything else to call out on the margin compression year-over-year other than tariffs? Because we noticed that your gross margins fell around 200 basis points year-over-year, but your EBITDA margins only fell 20 basis points.

No, there's nothing else than that. So structurally, it's the same. So really, the tariffs is definitely the -- what has impacted the margin.

I see. Okay. And with the aforementioned 11% EBITDA margin goal, how are you feeling about that on top with recent acquisitions now in the mix and the few, I believe, several you have currently evaluating in your pipeline?

Yes. The one -- some of the one we closed last year were businesses that we acquired that needed some more -- some restructuring. The one that we announced this year in the second quarter are businesses that are generating EBITDA already. So we're confident about these acquisitions. So the one we just did will not dilute the EBITDA margin.

And we did notice also that capital expenditures ticked up to $7.5 million this quarter. Are there any plans you can tell us about?

Yes. No, basically, there's a $2 million of IT equipment that we have to make every 3 to 4 years. So except that, it's pretty much back to maintenance CapEx. So we should be -- at the end of the year, we should be between $18 million and $20 million like we told you guys earlier. So we should be around that.

We're looking at a few projects. So we're looking at increasing our footprint in our Drummondville location. So as you know, we have a building there. We have a land available. So we're going to be -- we're going to have some lease coming expiring, and we're going to be building in Drummondville, Quebec. So that should occur at the end of the year and the beginning of next year. But other than that, there's nothing else to mention.

Great color. And one last one for me. How are you guys feeling about your working capital position? And do you have any targets you'd like to call out for this year or next year?

I think working capital is pretty simple. It's accounts receivable and inventory. So I think on the AR side, we're in good shape. It's -- we have a days sales outstanding around 45, 46 days, which is pretty aligned with historical levels. On the inventory side, you've seen increases in the first 2 quarters. We've also captured some opportunistic acquisition in terms of inventory. So before price increase, we've closed some deals to bring in the inventory at a lower price. So we've done that. So we should see a reduction in the second half. I'm hoping to see a reduction between $5 million to $10 million in the second half.

And at this time, Mr. Lord, it appears we have no other questions. Please proceed.

Thank you very much -- talking to you again. If you have any further questions, do not hesitate to call us. Thank you.

Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we ask that you please disconnect your lines.

Good afternoon, ladies and gentlemen, and welcome to Richelieu Hardware First Quarter Results Conference Call.

[Operator Instructions]

Also note that this call is being recorded on April 9, 2026. [Foreign Language].

Thank you. Good afternoon, ladies and gentlemen, and welcome to Richelieu's conference call for the first quarter ended February 28, 2026. With me is Antoine Auclair, CFO and COO. As usual, note that some of today's remarks include forward-looking information, which is provided with the usual disclaimer as reported in our financial filings.

During the quarter, we maintained our growth momentum with good results. After a strong year of acquisition in 2025, we completed our first acquisition of 2026 in December, adding 2 distribution centers of McKillican American in Oregon and Washington state as previously announced. Additionally, we signed 2 letters of intent for new acquisition in Canada.

Quarterly sales increased by 5% to $463.6 million. Excluding the impact of the Canadian dollar appreciation against the U.S. dollar, the increase in sales would have been 7%. This growth reflects both the solid contribution of our manufacturers market in Canada and in the U.S., where sales rose 6% to $408.2 million and the contribution from acquisition, which accounted for 3% of total sales growth.

Our strategies of innovation, acquisition, distinctive service and market segment diversification have successfully offset certain sector slowdowns. In fact, the hardware retailers market -- sorry, let me -- in fact, the hardware retailers and renovation superstores market -- sorry, my iPad had a problem, declined by 1.9% compared to the same quarter of 2025. Sales totaled $55.4 million reflecting a slowdown in Canada, where sales decreased by 6%, while in the U.S., they rose by 21% in U.S. dollar. Our EBITDA increased by 1.9%, but would have been up 5.6% if we exclude the FX impact with also an EBITDA margin slightly higher than last year.

Net income rose 4% to $0.26 per share. I am pleased and proud to note that during the quarter, Richelieu has awarded -- was awarded 2 prestigious top prizes at the Best of KBIS 2026 Trade Show in Orlando, Florida. An annual industry-wide global event that recognizes the most innovative kitchen and bathroom solutions. These awards demonstrate our commitment to always being first to bring innovative products to market, thereby helping to drive the market forward.

Our decorative hardware collection Atipica received silver in the Style Statement category. This exclusive collection created in collaboration with our long-term Italian partner redefines modern sleek design. In addition, we earned gold in the Wellness Trailblazer category for VERTI 440 motorized system for cabinets and closet. This unique innovative system is designed to enhance mobility, safety and autonomous living in any environment. Antoine will now review the financial highlights of the first quarter.

Thanks, Richard. First quarter sales reached $463.6 million, up 5%, driven by 2% internal growth and 3% contribution from acquisitions. Sales to manufacturers stood at $408 million, up 6%, including 3.1% from internal growth and 2.9% from acquisitions. In the hardware, retailers and renovation superstores market, sales totaled $55.4 million, down 1.9%. In Canada, sales amounted to $249.8 million, up 3.4%. Our sales to manufacturers reached $206.3 million and hardware retailers and renovation superstores market, sales stood at $43.5 million, down 6%. In the U.S., sales grew to $155.6 million, up 11.3% and reflecting 6.4% in total growth and 4.9% from acquisitions. In Canadian dollar, sales in the U.S. reached $214 million, an increase of 6.8%, representing 46% of the total sales.

First quarter EBITDA reached $43.2 million, up $0.8 million or 1.9% despite a negative foreign exchange impact of $1.6 million due to currency fluctuations. The EBITDA margin stood at 9.3% compared to 9.6% last year. First quarter net earnings attributable to shareholders totaled $14.4 million, an increase of 3.6% from the first quarter of 2025. Diluted net earnings per share was $0.26 compared to $0.25 last year, an increase of 4%.

First quarter cash flow from operating activities before net change in noncash working capital balances was $37.9 million or $0.69 per diluted shares. The net change in noncash working capital used cash flow of $21 million, mainly reflecting the increase in inventories, which is a normal seasonal fluctuation for this period of the year.

As a result, operating activities provided a cash inflow of $17.1 million compared to a cash inflow of $3.7 million in the first quarter of 2025. We paid dividends of $8.6 million to shareholders, and we invested $13.2 million, including $10 million for 1 business acquisition and $3.2 million in CapEx. At the end of the quarter, financial situation was healthy and solid with working capital of $625.7 million and almost no debt. I now turn it over to Richard.

Thank you, Antoine. In conclusion, we are integrating our recent acquisitions efficiently while continuing to actively pursue opportunities. The highly fragmented market in which we operate, particularly in the U.S., still offer many acquisition opportunities, and we are well positioned to capitalize on those that meet our disciplined acquisition criteria. We believe we are well positioned with a strong offering and deep expertise to meet the evolving needs of the specialized market we serve. We are confident that we will continue to strengthen our foundation by creating and seizing opportunity for long-term value creation. Thanks, everyone. We'll now be happy to answer your questions.

[Operator Instructions]

First, we will hear from Hamir Patel at CIBC Capital Markets.

Richard, are you able to comment on how sales have fared in Q2 so far for both the manufacturers and retailers?

The market is still very good. Just to give you some -- an idea of the market in Canada, as we -- the last quarter was a total increase for the industrial customers by 4%, but the Eastern Canada sales were up by 12%, and this is continuing in the current month as well. So Eastern Canada, we see a regain in the construction industry for multiple buildings that are being built. So basically, it's positive.

The only market in Canada that is going not very well is the Ontario market, was down by 4% in the Ontario market. While Western Canada is up by 3% and in the U.S., as we have already mentioned the growth in the U.S. So basically, it's doing well in the circumstances, even though we have the retailers market, which is very -- which is flat. It's -- if we -- constant communication with the retailers in Canada, and they all have a negative POS sales. So basically, we -- I think this market is going to come back...

Okay. Great. And just looking at Q1 organic growth was 2%. What was the price and volume sort of composition that got you to 2%?

I mean, just to complete also the -- your previous question. The month of March is pretty aligned with what you've seen in the first [indiscernible]. We're still seeing growth in March in the beginning of April as well. And regarding the price increase versus the volume. It's pretty much -- the increase you're seeing in the U.S. is pretty much price increase driven. In Canada, it's a 50-50 price increase in volume.

Great. That's helpful. And just the last question I have before I jump back in the queue. EBITDA margins 9.3% in the quarter. What are you expecting for full year 2026? And how do you think about where longer-term margins might stabilize?

First of all, you understand that the first quarter is always the softer quarter of the year. So you'll see the EBITDA increase in the next 3 periods for sure. The EBITDA margin should be similar or slightly higher than last year if you look at Q2, Q3 and Q4. So we've delivered 10.9% last year. We should be slightly over that as we already communicated to you guys. What we're looking for is for EBITDA between 12% and 13%. So that's -- at the end of the day, that's what we are heading for.

But for 2026, it should be around the 11% mark. One thing, Hamir, that you guys need to understand is that, yes, the foreign exchange had an impact in Q1, but the tariffs also are impacting the EBITDA margin in percentage. So we've always said that we would pass the tariff dollar, so no impact on the EBITDA dollar, but has an impact on the EBITDA margin.

Antoine, do you have a sense as to maybe how many basis points that's represented?

0.2.

Next question will be from Zachary Evershed at National Bank.

Last quarter, you were hopeful for a continuation of the year-over-year margin expansion in Q1. We heard about the FX impact, which is about 30 to 40 basis points and the tariff pass-through impact, which is about 20 basis points. Anything else happened in the quarter that pushed down on the year-over-year comparison versus Q1 last year?

If you exclude, Zach, the FX impact, you would be slightly higher than last year, and the tariff impact also has -- is impacting negatively the margin percentage. So if you exclude that, we would be higher than last year.

Got you. And the pressure on retailers in Canada this quarter, you mentioned negative POS data, but last quarter, we had a large nonrecurring sort of seasonal order. Anything notable this quarter?

So the business is still flat as we speak, but we hope that the months to come -- I think the construction is going to improve because many of the retailers sell to contractor as well. So -- and basically, the consumer will have to spend one day or the other. The past due business is going to -- that's a project that the consumers will do soon as well for which we have many products. So basically, we hope that the market should not be that bad with the hardware retailers.

And given the resurgence in mortgage rates in the U.S., are you seeing any changes in the willingness to transact from sellers in your M&A pipeline? Maybe they're throwing in the towel?

No, the M&A pipeline is healthy in the U.S. as well. So we've signed 2 letters of intent in Canada. We have other opportunities that we're hoping to close soon, but it's very healthy as we speak.

And coming back, Zach, to [indiscernible] letter as well. I think we already told you that we're going to gain some business we closed in the U.S. that will represent something between something like $10 million per year. And that project should start in the third and the fourth quarter of this year.

And despite the turmoil we're seeing in global markets, no change to your expectations for roughly plus or minus $100 million in added revenue through M&A?

Yes, sir. No problem at all. That will be -- that should be reached.

[Operator Instructions]

And at this time, Mr. Lord, it appears we have no other questions. Please proceed.

Thank you very much, all of you. So we're always happy to answer your questions if you call us. Bye-bye.

Thank you. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.

Good afternoon, ladies and gentlemen, and welcome to Richelieu Hardware Fourth Quarter Results Conference Call. [Operator Instructions]

Note that this call is being recorded on January 15, 2026. [Foreign Language]

Thank you. Good afternoon, ladies and gentlemen, and welcome to Richelieu's conference call for the fourth quarter and the year ended November 30, 2025.

With me is Antoine Auclair, CFO and COO. As usual, note that some of today's issue include forward-looking information, which is provided with the usual disclaimer as reported in our financial filings.

Overall, we delivered a strong fourth quarter with good progress in our main market segments. We also closed 3 new acquisitions during the year, building on the 6 acquisitions completed earlier in the fiscal, 2 in Canada and 4 in the U.S. For the quarter, sales increased by 7.3% to $511 million. EBITDA increased by 9.1%, diluted earnings per share increased by 4.5% and cash flow from operations reached $68.7 million, including a $30 million reduction in inventory. These results highlight the strength of our model and our operating discipline.

The fourth quarter was active on the acquisition front. We closed Ideal Security in September, Finmac Lumber and Klassen Bronze in October. Ideal Security located in the Greater Montreal area, distribute specialized hardware products for doors and window market and serves hardware retailers and renovation superstores market as well as online retail platform.

Finmac Lumber is a specialized wood product distributor based in Winnipeg serving Western Canada. Klassen Bronze based in Ontario, strengthens our offering with a wide range of letter, number, sign and mailboxes, key blanks and key cutting machines for the hardware retailers and renovation superstores market. We are very pleased with this acquisition, particularly with Ideal and Klassen, which expand our Richelieu portfolio of private brands for the retailers and renovation superstores market to 10.

These acquisitions reinforce our position in this key market segment and support our one-stop shop strategy, supported by our distribution centers in Calgary for Western Canada customers, Kitchener for Eastern Canada and Chicago for the U.S. market. Private brands and exclusive products remain an important differentiator for Richelieu. A significant proportion of our sales is generated through these offerings. Which support customer satisfaction and loyalty, while reinforcing our competitive positioning and margin profile.

The strong fourth quarter drove total sales for the year to $1.96 billion, up 7.2%. EBITDA for the year increased by 6.2% and cash flow from operations reached $202 million. We closed the year with a positive cash position almost no debt and a working capital of $622 million, which means a solid and healthy financial position and an outstanding balance sheet.

I will now ask Antoine to review the financial highlights for the quarter and the year ended November 30, 2025.

Thanks, Richard. Our fourth quarter sales reached $511 million, up 7.3%. Sales to manufacturers stood at $459.9 million, up 9.1% with 5.9% from internal growth and 3.2% from acquisitions. In the hardware retailers and renovation superstores market, sales were down 6.4%. In Canada, sales amounted to $282 million, up $6.8 million or 2.5%. Sales to manufacturers reached $241 million, an increase of 4.6%.

In the retailers market, total sales totaled $41 million, down 10.7% this quarter, mainly due to timing differences. On a year-to-date basis, sales are in line with last year. In the U.S. sales totaled USD 164 million, up 12.3%. Sales to manufacturers reached USD 157 million, up 12.9%, including 8.8% internal growth, mainly driven by price increases. In the retailers market, sales were up 1.4%. Total sales in the U.S. reached CAD 229 million, an increase of 13.9%, representing 45% of total sales.

Total sales for 2025 reached $1.96 billion, an increase of 7.2%, of which 3.2% from acquisition and 4% from internal growth. Sales to manufacturers reached $1.7 billion, up 8%, of which 4.4% from internal growth and 3.6% from acquisitions. Sales to hardware retailers grew by 1.6%. In Canada, sales totaled $1.1 billion, up 2.2%, primarily driven by acquisitions. Sales to manufacturers amounted to $897 million, up 2.8%. Sales to hardware retailers and renovation superstores were $175 million, essentially flat compared with last year.

In the U.S., sales amounted to USD 638 million up 10.9%, of which 5% from internal growth and 5.9% from acquisitions. They reached CAD 892 million, up 13.9%, accounting for 45% of total sales. Sales to manufacturers reached USD 604 million, an increase of 11.1% and sales to hardware retailers were up by 7.8%. Fourth quarter EBITDA amounted to $59.2 million compared to $54.3 million in the fourth quarter of 2024, up 9.1%.

Our gross margin remained stable, and the EBITDA margin stood at 11.6% compared to 11.4% in the same period last year. Fourth quarter net earnings attributable to shareholders totaled $25.6 million compared with $24.4 million last year. Diluted net earnings per share were $0.46 compared with $0.44 last year, an increase of 4.5%. For the year, net earnings reached $86 million or $1.55 per diluted share compared with $1.53 last year, an increase of 1.3%.

Fourth quarter adjusted cash flow from operating activities were $48.3 million or $0.87 per share. Net change in noncash working capital balances represented a cash inflow of $20.4 million driven by a $30.1 million reduction in inventories. Consequently, we generated $68.7 million in cash flow from operating activities compared with $27.2 million in the fourth quarter of 2024. For the year, operating activities generated a cash inflow of $202.4 million compared with $133.6 million last year.

Over the year, we paid $34 million in dividend, representing a payout ratio of 37.5%. We also repurchased common share for $16 million, including $13 million in the fourth quarter. In total, we returned $50 million to shareholders this year. Investing activities used cash flow of $62 million, including $47.1 million for 9 business acquisition completed this fiscal year. And $15.2 million primarily for the purchase of equipment aimed at maintaining and improving operational efficiency.

I now turn it over to Richard.

Thank you, Antoine. I am proud to note that over the past 13 months, we completed 10 acquisitions in Canada and in the U.S., representing approximately $100 million in additional sales. And our most recent acquisition completed after the year-end, would bring the total to 100 acquisitions so far that Richelieu has made in its complete history. Especially, this most recent acquisition includes 3 McKillican American distribution centers located in Portland, Oregon, Seattle and Spokane, Washington.

These centers are already integrated into our IT system and the Seattle operations have already been moved to our current Seattle distribution center. This transaction reinforces our distribution network enhances local expertise and expands our product and service offering to better serve our customers. As a result, we now operate 5 locations across the Pacific Northwest region.

In the current environment, our business model continues to demonstrate its resilience and flexibility enabling us to respond with agility to our customer needs and protect our margins. Looking ahead, our 2 primary growth drivers, innovation and acquisition position us well for continued profitable growth and further consolidate our leadership in North America. We are committed to ongoing investment in innovation to strengthen our offering and value-added services and we actively pursue acquisition opportunities.

Thanks, everyone. We'll now be happy to answer your questions.

[Operator Instructions] The first question will be from Hamir Patel at CIBC Capital Markets.

Richard, could you comment on the sort of organic growth rates you've seen in Q1 so far? And any notable differences between Canada and the U.S.?

Yes. What we're seeing in Q1 so far is a flat sales for the hardware to -- sales of hardware to retailers market. And we -- in the mid, I would say, something around 5% regarding the growth for the manufacturers market. So basically, we're satisfied with the start of the year. We don't know what's going to happen in the months to come, but so far, so good.

And then when you think about how the U.S. versus Canadian business is going, any differences there? I know last quarter, you were pointing to Ontario being softer?

We see a bit more growth in the U.S. a couple of percent growth, additional.

Antoine, I wanted to ask about the EBITDA margins. It looks like they ticked up to 11.6% in Q4. How should we think about the margin trajectory for Q1 and full year '26?

Yes. The last 2 quarters were positive versus the previous year. So that trend should continue. But keep in mind that usually the first quarter of the year is the lowest of the fiscal year due to seasonality.

So -- but we should continue to see improvement in the EBITDA margin. Of course, it all depends on the type of acquisition that we'll be able to land. But same-store sales, we should be able to generate more EBITDA. And having a bit more rigor in the market will definitely help as well.

And then thinking on a full year basis, I mean, for the last 2 years, it looks like you've kind of averaged close to 11%. I know you've been quite acquisitive. So that's kind of a short-term drag. But do you think you can drive further margin growth in '26?

Yes, we should be slightly north of 11%.

Next question will be from Zachary Evershed of National Bank.

Congrats on the quarter. Could you go into a little bit more detail on the pullback that we saw in sales to retailers during the quarter, please?

I think the flat sales for the retailer, I think it's -- what we see with -- if you read the Home Depot and Lowe's in the U.S., whatever they're forecasting, they're forecasting of flat sales. And in Canada, we see that the market is more to get -- we speak to our customers and the -- their sales are down for the first quarter.

So Richelieu is doing well because we keep reducing -- introducing products into the stores. We have new products coming with RONA that are getting into their stores. So that's going to generate sales in the months to come. We have the same thing with the home hardware and Home Depot in Canada. And in the U.S., fortunately, we have regained the business that we had lost with Lowe's. So basically, that's going to -- the delivery will stop or in the end of the second quarter and third quarter.

So -- but basically, that will bring another $10 million to $12 million sales in the U.S. So I think we have the only good news for the retailers. It's only a matter of the market being as we speak, flat. But eventually, I think the market is going to start to move again .

And Zach, the main -- the main reason for the Canadian retail sales down in the fourth quarter. And that's why we said that overall, the year is flat, but in the fourth quarter, it's because of one customer that didn't place orders for seasonal sales. So it's not a big deal, so it's only a timing issue.

So we remain positive for the retail market.

Got you. And do you think there's a catch-up in Q1 for those seasonal sales or that's just foregone?

No, I would say on a yearly basis, there's a catch-up, but just a question of timing.

Understood. And your inventory reduction this quarter was pretty far ahead of the schedule you'd outlined last quarter. What's driving the improvement in working capital there?

It's pretty much aligned with what we said at the beginning of the year, Zach. So, of course, it's difficult to be perfectly timed during the quarters, but that's what we were expecting. I think I mentioned a year ago that we would be expecting between $20 million and $30 million reduction in inventories, that's what we achieved. We achieved $33 million this year. So that was positive. .

Hopefully, we will still -- we will be able to generate a bit more reduction in 2026, not as big as that, but we'll continue to be actively working and improving and optimizing our inventory situation. And also, I I'm glad to see the CapEx that is now down -- come down to a more maintenance level phase of CapEx. So we've had a few big years in terms of CapEx investment. So now we spent $15 million. It's 0.08% of our sales. So that's more in line with the historical data prior to COVID. So we're glad that it's back to normal.

And as a result, I think in 2026, the cash flow generation is going to be stronger.

Excellent color. What are your customers saying about the pause on the additional tariffs on furniture and cabinets?

They're very happy, but they already have to live with that first 25% that is already imposed. So basically, I think the -- our Canadian customers that are selling in the U.S. are losing sales as we speak. They're reducing the number of employees and everything else. They still continue to buy from Richelieu, but some buy less, but some buy more because they used to buy from overseas certain products now that they buy from Richelieu.

So basically, we should see an clean of the sales to that type of customers. And the second phase, I think safe, I would say, I don't know how to say it, but you really saved the 2026 year, even though they're already negatively affected by the first 25%. But if that second 25% apply next year, I think it's -- it could be very, very basically disasters for the customers that export to the U.S., but we don't have that many customers that export in the U.S., but it's still a substantial business. But we -- as a result of that, we should really capture some business on the U.S. side because the customers that are capturing this market are also your customers in the U.S.

Got you. And then how are you feeling about the M&A pipeline for 2026. You just came off of a year of almost $100 million in 2025, starting off with an acquisition subsequent to the quarter, where do you think you'll end this year?

We'll continue with what we've told you guys 1.5 years ago. So we're still on a $100 million a year. So that's what we're working on. The pipeline is healthy. Both side of the border. So no change there.

Thank you. And at this time, Mr. Lord, we have no other questions registered. Please proceed.

Thanks to everyone, for listening. And so if you have any more questions, do not hesitate to call myself or Antoine. We're here in the office. So thank you very much, and have a good afternoon.

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we ask that you please disconnect your lines.

Good afternoon, ladies and gentlemen, and welcome to the Richelieu Hardware Third Quarter Results Conference Call. [Operator Instructions]

Also note that this call is being recorded on October 9, 2025. [Foreign Language].

Thank you. Good afternoon, ladies and gentlemen, and welcome to Richelieu's conference call for the third quarter and first 9 months ended August 31, 2025. With me is Antoine Auclair, CFO and COO. As usual, note that some of today's issue include forward-looking information, which is provided with the usual disclaimer, as reported in our financial filings.

We had a good third quarter with solid growth and expansion. All our results are on the rise, and we successfully pursued our acquisition strategy, closing 2 additional acquisitions following the quarter.

Except for Ontario, all our market segments in Canada and the U.S. performed well, driving our total sales up 6.7%. Our sales in Canada increased by 2.9%, while in the U.S., they rose by 11.4% in U.S. dollar, accounting for 45% of total sales for the quarter. Sales climbed 6.5% in the manufacturer market and 8.6% in the retailers and renovation superstore market. Our margins improved slightly with EBITDA margin of 11.4% and diluted net earnings per share increased by 4.9% to $0.43.

I would also point out that our operations generated cash flows of $82.7 million in the third quarter. This includes a $16.2 million reduction in inventories. We ended the period with a positive cash position of $12 million and a working capital of $632.7 million, which reflects a solid and healthy financial position and an outstanding balance sheet.

I will now ask Antoine to review the financial highlights for the quarter and the first 9 months.

Thanks, Richard. In the third quarter, sales reached $499.2 million, up 6.7%, representing an increase of $31.5 million, equally driven by internal growth and acquisitions. In Canada, sales totaled $272 million, up 2.9% compared to last year, despite the decline in sales in Ontario, where the business environment is actually more challenging.

Sales from manufacturers amounted to $226 million, up 1.9%, while sales to the hardware retailers totaled $46 million, up 8.5%, mainly due to timing differences, as year-over-year sales show a slight increase with the same period last year.

In the U.S., sales grew to USD 165 million, up 11.4%. Sales to manufacturers reached USD 158 million, up 11.6% with 7.3% coming from internal growth. This internal growth is mainly driven by price increases, partly due to new import tariffs, an increase that offsets the additional cost of the tariff with no impact on gross margin dollar.

In hardware, retailers and renovation superstores market, sales reached $7.7 million, up 6.9%. In Canadian dollars, total sales in the U.S. reached $227 million, up 11.7% and accounting for 45% of total quarterly sales. For the first 9 months, total sales reached nearly $1.5 billion, up 7.2%, of which 4% resulted from internal growth and 3.2% from acquisitions.

In Canada, sales reached $790 million, up 2.2%, primarily due to acquisitions. Sales to manufacturers totaled $657 million, up $14.2 million or 2.2%. Sales to hardware retailers and renovation superstores were $132.9 million compared to $130.3 million, up 2%.

In the U.S., sales amounted to USD 473 million, up 10.4% with half from internal growth and half from acquisitions. They reached CAD 66 million, up 13.8%, accounting for 46% of total sales. In U.S. dollars, sales to manufacturers totaled $447 million, an increase of $42.6 million or 10.5%, driven by 5% internal growth and 5.5% from acquisitions. Sales to hardware retailers and renovation superstores were up 7.9% compared to last year.

Third quarter EBITDA reached $57 million, up $4.1 million or 7.7% over last year. This increase reflects higher sales and effective cost management. Growth and EBITDA margins slightly improved with an EBITDA of 11.4%. For the first 9 months, EBITDA totaled $154.7 million, up 5.1% with EBITDA margins at 10.6%.

Third quarter net earnings attributable to shareholders amounted to $23.9 million, up 5.2%. This increase mainly reflects higher EBITDA, partly offset by higher amortization and interest expenses resulting from new leases and lease renewals. Consequently, diluted net earnings per share was $0.43 compared to $0.41 last year, an increase of 4.9%, consistent with the improvement in overall profitability.

For the first 9 months, net earnings attributable to shareholders reached $60.3 million, down 1.8%. Diluted net earnings per share stood at $1.08 compared to $1.09 last year. Third quarter cash flow from operating activities before net change in noncash working capital reached $48.1 million, up 12.5% from $42.7 million last year. Change in noncash working capital contributed a cash inflow of $34.6 million, driven by a $16.2 million reduction in inventories.

As a result, operating activities generated a cash inflow of $82.7 million for the quarter, reflecting higher net earnings and effective working capital management. For the first 9 months, cash flow from operating activities represented a cash inflow of $133.6 million compared to a cash inflow of $106.4 million last year.

The increase highlights the business' ability to generate consistent cash supporting ongoing investments and shareholder returns. For the third quarter, financing activities used $25.4 million in cash, up from $18.4 million last year, mainly due to the repurchase of common share totaling $3.7 million.

For the first 9 months, financing activities used cash flow of $70.1 million compared to $76.1 million in 2024. In the first 9 months, we invested $39 million, including $27.5 million for 6 business acquisitions, and $11.5 million primarily for equipment required to maintain and improve operational efficiency. We continue to maintain an outstanding balance sheet with working capital of $632.7 million and a positive cash balance.

I'll now turn it over to Richard.

Thank you, Antoine. Subsequent to the quarter, we are pleased to have closed 2 acquisitions, namely Ideal Security on September 2 and Finmac Lumber on October 1. Specializing in hardware products for doors and windows, Ideal Security is located in the Greater Montreal area and mainly serves Canadian and U.S. retailer market.

This adds up to our existing offering of 8 different brand names, already present in all retailers and renovation superstores by Richelieu. It also reinforced our one-stop shop strategy for this market.

Finmac Lumber is a distributor of specialized wood products operating in the Winnipeg area and covering Western Canada, where it serves a customer base consisting mainly of woodworkers, cabinet makers and building materials retailers as well as innovation centers.

These 2 acquisitions add additional annual sales of $22 million and will, therefore, expand and diversify our offering in markets, where we are already present, while creating new sales synergies. Together, with the 6 acquisitions made in the first half, this represents $75 million in additional annual sales.

To conclude, I would say that, particularly, in the current context of uncertainty related to market conditions, our business model is proving its robustness and flexibility. It also enables us to respond with agility to our customers' needs with our one-stop shop Canadian and U.S. network, protect our margin and maintain our leadership position.

In these circumstances, our customers will need to protect their cash flows and rely on a trusted supplier like Richelieu. We are continuing on this path with confidence and discipline and expect the end of the financial year with very solid results.

Thanks, everyone. We'll now be happy to answer your questions.

First, we will hear from Hamir Patel at CIBC Capital Markets.

Richard, are you able to share how your sales fared year-over-year in the month of October? And if there's any notable differences there, Canada versus U.S., manufacturers versus retailers?

We're feeling very well comparable to last year. I think we -- the market is not really strong, but we -- with all the actions that we have taken in the last few months, we see very good results, and we keep capturing more market share, and increasing our sales to the same customers that we already have. So basically, I would say it's positive as we speak.

Okay. So maybe in line with the sort of 4% that you delivered in Q3 organic.

Yes. Pretty much in line with what you've seen in the third quarter so far.

Okay. Great. And Antoine, are you able to share how much is Ontario as a share of your total sales? Because I know it seems like you called that out as maybe the only region that was negative comps.

Yes, Ontario, just a second. Ontario represents 18% of our total sales.

And then, Richard, I know, I think it was Q2 of 2024, you had lost some business with a major U.S. retailer customer. Can you speak to maybe any ongoing efforts you have to either replace that business with other customers or potentially even regain share with that customer?

First of all, we're still working with these customers in order to recapture that business. So far, the news are positive. I don't want to feel like we depend on one customer. We have other projects in the U.S. Many projects, it takes -- it's long though to get conclusion on many of these projects. But we're working on many, many customers with many projects that could bring some good opportunity for us. And those is, just would be -- if it's working, okay, that's going to be a nice comeback of that business, but we don't only count on that.

[Operator Instructions] Next question will be from Zachary Evershed at National Bank Capital Markets.

Congrats on the quarter. Could you describe how much of your internal growth in the U.S. was the pricing pass-throughs related to the country-specific tariffs?

Yes. Pretty much all of it is price increase, not necessarily most of it due to tariffs, but from -- most of it is inflation.

Got you. And when you say that the tariff pass-throughs have no impact on gross margin, are we talking about the gross margin percentage or that you're keeping gross profit dollars stable? Do you get operating leverage off of this?

Yes, dollars.

Dollars. Got you. And then so far this year, how do you think customer backlogs are translating to volumes for RCH? Do you think that they're doing worse than you guys are or that they're picking up, and that you will see those orders translate to your own sales soon?

I think, our customers, they have a nice backlog. They have -- the book of orders is reasonable, but nothing is booming. So our customers are busy for 2 or 3 months, and they don't know after. But we think that the renovation market will remain strong. And basically, we don't see any negative impact regarding the book of the orders that our customers have on hands.

Perfect. And then if we look historically, Q4 is seasonally stronger than Q3 on the margin front. Is there anything that would stop that from being the case this year? Or do you see Q4 rising versus the 11.4% you got in Q3?

No. I think that the trend that you're seeing in Q3 should be pretty much similar in Q4.

Understood. And then if we dial out to the macro, we did see the conclusion of the Section 232 investigation, and that resulted in tariffs on kitchen cabinets and bathroom vanities. In your view, what's the impact on, Richard, your customers and the overall market?

I like very much that question. I think, we have a few information that we can share with you if you have a couple of minutes. First of all, it's important to mention, as you know, that Richelieu is on both sides of the border. So we see if some business is switched from other country and from Canada to the U.S., fortunately, we are very well established with the customer base that we have in the U.S. that could recapture that business. So -- and regarding the sales to residential furniture, it's only 2.8% of our sales.

So the kitchen cabinet, it's higher, but for the residential furniture, it's only 2.8% of our business. So we don't expect any negative impact regarding those sales. It might be even a positive impact. I will explain a little bit later on. The kitchen cabinet only represent -- the kitchen cabinet exported to the U.S. It's only 12% of the kitchen cabinet being made in Canada, representing USD 400 million.

So it's not a huge business. But it's substantial for Richelieu. It could represent, let's say, something like $35 million, $40 million of sales. But what we see is that our customers are working to mitigate the impact of these -- of -- the impact of those additional costs in order to keep up with their sales. So these guys are very smart. They have a way of reducing their costs. And also, they still benefit from the current exchange rate, which is good.

And Richelieu is very well positioned to support them in their effort to reduce their cost because we have many product category at Richelieu, we have product that could reduce their costs. And some of them, the bigger ones -- sometimes they buy some product from overseas. They might have an advantage now as we speak to transfer some of those purchasing to Richelieu instead of buying overseas because then they protect their cash. They have a just-in-time inventory system with Richelieu, and that could reduce their operating costs. So basically, there's not much negative. We just have to be careful and make sure that we manage well with our customers.

In total, what we see is that U.S. imports for a value of $2 billion of kitchen cabinet, of which only $400 million come from Canada. So there is $1.6 billion left that come from other countries. So if some business is recaptured by our U.S. customer, it could be quite material.

Regarding the furniture market, we've learned from the web reporting, what's the name of the report that one.

It's called IBISWorld.

IBISWorld, which is the reference in the industry. U.S. imports for $26 billion of furniture of only $650 million come from Canada. So that means there is $24 billion at least, $25 billion coming from other country. So basically, we don't expect the U.S. market to switch to U.S. manufacturer. It will take time. But it might be some improvement in the U.S. manufacturing market because of that. So Richelieu is well positioned to benefit of that as well.

So our strength is really to be on both sides of the corner -- of the border with extended product range that is unique in North America in order to support our customers and to make sure that we make the right move and benefit whatever is going to be benefited from both sides of the border.

Excellent color. Moving on to your inventory. There was a step-up in obsolescence. Could you speak to what's driving that?

Right, you've seen the reduction in inventory, Zach, during the quarter. So we've been able to reduce inventory by $16 million in the quarter and still expecting a reduction. I would say that I'm hoping around $10 more million in terms of inventory reduction over the next few periods, helping us to generate $82 million from operations during the quarter.

Got you. And does that come paired necessarily with additional inventory obsolescence?

No, it's basically excess. So we've been talking about it since over a year. So we've been reducing last year inventory significantly. I've told you guys at the beginning of the year that we're expecting a reduction this year. It took 2 quarters to happen. So now it's happening. So it should continue towards the next few periods.

Got you. And just the last 2 CapEx plans for next year and your M&A pipeline, how is it looking?

M&A pipeline is still strong. So we've closed 8 acquisitions this year, as you've seen, and it's still very healthy in both sides of the border, so Canada and the U.S.

Regarding CapEx, the main investments are behind us. So the last 3 years, you've seen the CapEx higher than expected because we were more in an investment mode than in maintenance mode. We're back to a normal level of CapEx. So we've spent $11 million so far. We should end the year around, I would say, $15 million, $16 million. So regular maintenance CapEx.

We always said that maintenance CapEx is around 1% of sales. So we're going to be slightly below that this year, and you should expect the same next year. So we don't have major projects that -- and if we do, we'll tell you guys.

Beautiful. And then I'll actually just sneak one last one in. I've noticed that you showed, you're completing more panel and hardwood acquisitions recently, like the one in Winnipeg that you guys just announced. Are there any larger targets in that space, that could be interesting?

No, we are interested in that type of lumber. So don't forget that we don't sell 2x4 and 2x3. So we sell only the sophisticated wood for the purpose of woodworkers that do a fine job -- fine working jobs. So basically, these products are higher-margin products. And basically, they bring constant sales because there is mainly in Ontario and Western Canada, more than Quebec, we see people -- the wood workers using more woods as well as the -- what we call the lumber yards over there.

So basically, it's a good market. And I like the market like Manitoba, for example, there's not many competitors there. I'm going to show you, we've bought something that is really well positioned in this market. So basically, I'm very happy with that acquisition. So we're going to continue on to answer your question, to buy such company when they meet our criteria of EBITDA margin. I would say that the one that we acquired and we pay something, it's a 15% EBITDA margin. So basically -- which is sustainable. So basically, I like that type of deal.

Next question is a follow-up from Hamir Patel.

Richard, I just wanted to follow up on the M&A side. When you think about the pipeline, and I know it can be lumpy, but is there a sort of annual revenue contribution that you'd expect going forward from acquisitions?

We try to make $100 million worth of acquisition every year. I don't know if we're going to reach that this year. We're going to be very close to. So basically, the contribution is positive. We usually buy companies sometimes that make little profit, but that we -- when integrated to Richelieu, have a huge benefit.

Like Ideal, for example, is a perfect example. We buy something that is already in the stores where we are already with our displays and everything else. They share a base of the product that we already have, so we can merge those product lines. We acquire very talented people that are very good at selling -- they sell in the U.S. and they sell to Amazon. They have a substantial amount of sales to Amazon, and they have specialists in those type of sales.

So we like that very much. So that acquisition within the course after integration is going to take 18 months probably because we have to transfer the warehouses where they have a lease where they are? And the purpose is to have a one-stop shop in Kitchen, Ontario for all the retailers in Eastern Canada. So basically, the products are going to be transferred there as soon as we can to make sure that the customer might benefit of the -- not only the one-stop shop, but the one delivery for 8 different brand name of products. So basically, these moves are very, very positive, even though sometimes, the amount of contribution is little in the year of the acquisition, but the potential for that type of business is great for the future of Richelieu. And it does reinforce our market position, and it does prevent our competitors some time to get into the store that we are already servicing. So basically, the 2 purpose of the acquisition is to make sure that we consolidate Richelieu, reinforce Richelieu and we bring EBITDA margin as well as much as we can.

Okay. Fair enough. I appreciate the color there. And Richard, when you think about the retailer business in Canada, I know RONA has got some ongoing investments. Maybe you could speak to the opportunity you see to drive further growth there.

With all the retailers in Canada, we keep gaining market share because we have an excellent product offering that do answer the need of the consumer as we speak, because, let's say, managing space is a top priority for the retailers. Decorative otherwise is a top priority, but we keep adding products in each of the store. Rod is an excellent customer that is a customer that buys something like, it's less than 5% of our sales, but it's substantial, and we work very well.

They are very good partners and we work very well with them as well as Home Depot. We keep adding product at Home Depot and other hardware stores as well. So basically, the retailers market is excellent for Richelieu, because we have so many products to sell to the Pro business. There is a lot of products that are suitable for the consumers. These products suitable for the consumers are the product that we introduce to the retailers.

With the right prices and the right instruction, so the product can be easily installed for consumers. But I'm very positive for the long term that sales to hardware retailers remain substantially important for our future in terms of generating profit as well because we don't have 2 CFO and 5 more accountants because we sell to retailers. The only variable cost applies to commission to salespeople and people that work in the warehouse. So basically, this is very beneficial.

Okay. Great. And just a final question I had. Antoine, looks like with -- if Q4 margins end up being comparable to Q3, you probably end the year close to 10.8% EBITDA margins. I think, 2024, you were at 11% EBITDA margins. Can you drive further margin growth in '26 if the housing market does not improve? If it's the same housing outlook, is there enough levers to drive some additional margin expansion? And maybe you could -- I don't know if you're able to quantify that sort of self-help that is within reach.

I think, the trend that you saw in the third quarter could continue in 2026 with the current market. Of course, to drive a significant increase in EBITDA, we would need a more vigorous market. But let's say that it remains like where we are today. I think, the trend that you've seen in Q3 could continue next year.

Okay. So sort of in the mid-11s sort of range.

And at this time, Mr. Lord, we have no other questions registered.

So thank you very much to all of you for attending. We all are willing to receive your call if you want to contact us. Thank you very much.

Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we ask that you please disconnect your lines.