Richelieu Hardware Ltd.

Good afternoon, ladies and gentlemen, and welcome to ReShutter Hardware First Quarter Results Conference Call. At this time, note that 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 star zero for the operator. Also note that this call is being recorded on April 9, 2026. Bonjour, Mesdames et Messieurs, et bienvenue au résultat du premier trimestre 2026 de quinquennat Richelieu. Présentement, vos lignes sont en mode d'écoute seulement. Suite à la présentation, nous allons procéder à une période de questions et réponses qui sera restreinte aux analystes seulement. Si vous avez besoin d'assistance au cours de l'appel, veuillez appuyer sur étoile et zéro. Veuillez aussi prendre note que cet appel est enregistré le 9 avril 2026. I will now give the floor to Mr. Richard Lahr, President and Director-General.

The floor is yours. Thank you. Good afternoon, ladies and gentlemen, and welcome to Richard Lahr's conference call for the first quarter ended February 28, 2026. With me is Antoine Auclair, CFO and CEO. As usual, note that some of today's remarks include forward-looking information, which is provided with a usual disclaimer, as reported in our financial trainings. 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 three distribution centers of mechanical Americans in Oregon and Washington State. As previously announced, additionally, we signed two letters of intent for new acquisition in Canada. quarterly sales increased by 5% to $463.6 million. Excluding the impact of the Canadian dollar's 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 acquisitions which accounted for 3% of total sales growth. Our strategies of innovation, acquisition, distinctive service and market segment diversification have successfully offset supply sector slowdowns. In fact, the hardware, the hardware repairers market, sorry, let me, in fact, the hardware repairers and innovation superstructure market Sorry, my iPad had a problem. Decline by 1.9% compared to the same quarter of 2025. Sales total 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. and Europe. 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, Richerieu was awarded two prestigious top prices at the best of KBIT's 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 artwork collection, Atypica, received silver in the style statement category. This exclusive collection, created in collaboration with our long-term Italian partner, redefines autumn sleek design. In addition, We earned gold in the wellness trailblazer category for the RETI 440 motorized system for cabinets and closets. This unique innovative system is designed to enhance mobility, safety, and autonomous living in any environment. Antoine, we 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 total $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 in U.S. dollar, up 11.3%, reflecting 6.4% in total growth, and 4.9% from acquisitions. In Canadian dollar, sales in the US 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 non-cash working capital balances was 37.9 million or 69 cents per diluted shares. The net change in non-cash 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 one 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 offers 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 low-term value creation. Thanks, everyone. We'll now be happy to answer your questions.

Thank you, Monsieur Ra. Ladies and gentlemen, as stated, we will take questions from analysts. Should you have any questions, please press star followed by one on your touchstone phone. You will then hear a prompt that your hand has been raised. And if you would like to decline from the polling process, please press star followed by two. And if using a speakerphone, you will need to lift the handset first before pressing any keys. Please go ahead and press star 1 now if you have any questions. First, we will hear from Amir Patel at CIBC Capital Markets. Please go ahead.

Hi, good morning. 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 an idea of the market in Canada, 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. We're down by 4% in the Ontario market. Why? Western Canada is up by 3%, and in the U.S., we already mentioned, it goes 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. You know, it's a, if we, we constant communication with the retailers in Canada, and they all have negative POS sales, So, basically, I think this market is going to come back.

Okay, great. Thanks, Richard. And just looking at that, you know, T1 organic growth was 2%. What was the price and volume sort of composition that got you to 2%?

I mean, just to complete also your previous question, the month of March is pretty aligned with what you've seen in the forecast. We're still seeing growth in March and 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. Thanks, Antoine. 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 three 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 2020, 2026, it should be – around the 11% mark. One thing, Amir, 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 census of maybe how many basis points that's represented? Point two. Point two. Okay, great. That's all I have for now. I'll turn it over. Thanks.

Thank you. Next question will be from Zachary Evershed at National Bank. Please go ahead.

Hey, thanks for taking my questions. Last quarter, you were hopeful for a continuation of the year-over-year margin expansion in Q1 2020. 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 that happened in the quarter that pushed down on the year-over-year comparison versus Q1 last year?

If you exclude that, the FX impact, you would be slightly higher than last year. And the tariff impact also is impacting negatively the margin percentage. So, If you exude that, we would be higher than last year.

Gotcha. Thanks. And the pressure on retailers in Canada this quarter, you mentioned negative POS data. But last quarter, we had a large non-recurrence of a seasonal order. Anything notable this quarter?

No. This 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 contractors as well. So, and basically, the consumer will have to spend one day or the other. You know, the past year business is going to be, you know, 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.

Thanks very much. 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 two letters of intent in Canada. We have other opportunities that we're hoping to close soon, but it's very healthy as we speak.

Coming back, Zach, as well, I think we already told you that we're going to gain some business with loans in the U.S. That will represent something like $10 million per year, and that project will start in the third and the fourth quarter of this year.

Perfect. Thanks. 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 would be rich. That would be rich. Beauty. Thanks.

I'll turn it over.

Thank you. Ladies and gentlemen, a reminder to please press star 1 if you have any questions. Thank you. And at this time, Mr. Law, 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 the conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.