Richelieu Hardware Ltd.

Good afternoon, ladies and gentlemen, and welcome to Richelieu Hardware First Quarter Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session, which will be restricted to analysts only. If at any time during this call you require immediate assistance, please press dial 0 for the operator. This call is being recorded on April 6, 2023. Bonjour mesdames et messieurs et bienvenue au résultat du premier trimestre quinquairie Richelieu. Présentement, vos lignes sont en mode d'écoute seulement. Suite à la présentation, nous allons procéder à une carrière de questions et réponses qui sera restreinte aux analystes seulement. Si vous avez besoin d'assistance au cours de l'appel, appuyez sur étoile et zéro. Veuillez prendre note que cet appel est enregistré le 6 avril 2023. J'aimerais maintenant céder la parole à M. Richard Ward, président et chef de la direction. À vous la parole.

Thank you. Good afternoon, ladies and gentlemen, and welcome to the first quarter ended February 28, 2023. With me is Antoine Leclerc, CFO. As usual, note that some of today's issues include forward-looking information, which is provided with the usual disclaimer as reported in our financial findings. We started 2023 with good results for the first quarter. and we are pleased to have seized new acquisition opportunities as we completed four transactions in Canada earlier this quarter and one in the U.S. on April the 3rd. It's important to note that the competitive numbers of 2022 were exceptionally strong, benefiting from the business context resulting from the pandemic. Just in the first quarter of last year, sales increased by 29.2% and EBITDA by 40.8%. In the first quarter of 2023, our sales increased by 4.8% or 18.5 million, including 1.8% organic growth and 3% from acquisition to 403 million. We are also proud to mention that our U.S. sales now represent 43% of our total sales. With the acquisition of Quinteri Radel, Transworld Distributing, Unigrab, and Usain in January 2023, which strengthened our presence in Eastern Canada. And after the end of the quarter, we completed the acquisition of Maverick Hardware in Eugene, Oregon, which reinforced our presence in this market, where we already operated a distribution center in Portland. With this final acquisition, we add $22 million in annual sales. New customers complementary products, and things that are experienced in the market. The expansion, modernization, and opening of centers in the U.S. have progressed well, including Atlanta, Nashville, Pompano, Seattle, and Chicago. We moved our Fort Myer operation in a brand new building, and our new location in CalSTAS, New Jersey, and Minneapolis are now open for business. In addition, by the end of the year, we will consolidate two centers in the Calgary area in which we will include a first-class showroom while increasing our service capacity in Western Canada. Following these recent developments, we are now operating 113 interconnected centers, 50 in Canada, 60 in the U.S., plus two manufacturing facilities in Canada. Antoine will now review the financial highlights of the quarter, and then I will conclude and will take your questions.

Thanks, Richard. First quarter sales reached $403 million, up 4.8%, on which 1.8% from the global and 3% from the positions. In comparable currency to the first quarter of 2022, total sales growth would have been 2.2% per quarter. Sales to manufacturers stood at $244 million, up 5.4%, of which 2% from internal growth and 3.4% from acquisitions. In hardware retailers and innovation superstores market, we achieved sales of $59 million, up $0.8 million, or 1.4%. In Canada, sales amounted to $231 million, same as last year. Our sales to manufacturers reached $185.5 million in hardware retailers and innovation superstores market, sales stood at $45.4 million, up 3.4%. In the U.S., sales grew to $127.7 million in U.S. dollars, up 5%, all from acquisitions. They reached $172 million in Canadian dollars, an increase of 11%, and represented 42.7% of total sales. Sales to manufacturers reached $118 million in U.S. dollars, up 6.2%, 0.7% from the overall growth and 5.5% from acquisitions. Hardware, retailers, and renovation superstores market sales were down 10.6% from the corresponding quarter of 2022. First quarter EBITDA reached $29.1 million, down $4.6 million or 8.6% over the first quarter of 2022. Both margins remained stable and the EBITDA margin was 1.2% compared to 14% last year. First quarter net earnings executable to shareholders, so $22.4 million, down 25.6%. In addition to the fact that 2022 first quarter was a period where our financial results were especially strong, the factors that also affected our results were mainly the return of operating expenses closer to pre-pandemic levels, as well as outside warehousing costs due to temporary and ventilated increase. Amortization and costs related to our U.S. extension project, as well as the interest rate on the line of credit. Financing net earnings per share was $0.40 compared to 53 last year. First-order cash flow from operating activities before net changes on cash flow and schedule balances was $38 million, or $0.68 per share. The net change in non-cash flow and cap used cash flow of $22 million, only reflecting the decrease in accounts payable and tax payable, while accounts receivable represented a cash inflow of 8.4 million. As a result, operating activities represented a cash inflow of 16.5 million, compared to cash outflow of 37.5 million in Q1 2022. Regarding our inventory position, as indicated last January, inventory level stabilized in February, and started to decrease their assets. We paid dividends of $8.4 million to shareholders, and we invested $22.3 million, including $15.8 million for four business acquisitions and $6.5 million in capex. At the end of the quarter, financial situation was healthy and solid with 14 capital of $564.9 million and an average return on shareholders' equity of 21%. I now turn it over to Richard.