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1. Company Snapshot

1.a. Company Description

Richelieu Hardware Ltd.manufactures, imports, and distributes specialty hardware and complementary products in North America.The company's principal product categories include furniture, glass and building decorative and functional hardware, lighting systems, finishing and decorating products, ergonomic workstation components, kitchen and closet storage solutions, sliding door systems, decorative and functional panels, high-pressure laminates, railing and balusters, and floor protection products, as well as accessories for power tools.


It also manufactures veneer sheets and edge banding products; and various decorative moldings and components for the window and door industry.The company serves kitchen and bathroom cabinet, storage and closet, home furnishing, and office furniture manufacturers; door and window manufacturers; residential and commercial woodworkers; and hardware retailers, such as renovation superstores.The company was incorporated in 1968 and is headquartered in Montreal, Canada.

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1.b. Last Insights on RCH

Richelieu Hardware Ltd.'s recent performance was negatively impacted by decreased net earnings, despite a strong 8.6% sales increase driven by strategic acquisitions. The company's Q1 2025 earnings call highlighted challenges from tariff impacts, which likely contributed to the decline in net earnings. Additionally, the company's Q1 results, released on April 10, 2025, showed a decrease in net earnings, which may have weighed on the stock's performance.

1.c. Company Highlights

2. Richelieu Hardware's Q3 Results: Solid Growth and Expansion

Richelieu Hardware's third quarter results demonstrated solid growth and expansion, with total sales increasing by 6.7% to $499.2 million, driven by internal growth and acquisitions. The EBITDA margin improved slightly to 11.4%, and diluted net earnings per share rose by 4.9% to $0.43. The actual EPS came in slightly lower than estimates of $0.4517. Cash flows from operating activities before non-cash working capital reached $48.1 million, up 12.5% from last year.

Publication Date: Oct -28

📋 Highlights
  • Total Sales Growth: Q3 sales rose 6.7% to $499.2M, driven by 11.4% U.S. growth (45% of total sales) and 2.9% Canadian growth.
  • EBITDA & Earnings: EBITDA margin improved to 11.4%, with diluted net earnings per share up 4.9% to $0.43.
  • Operational Cash Flow: Operating cash flow surged to $82.7M (+12.5% YoY), reflecting $48.1M in pre-working-capital flows.
  • Strategic Acquisitions: Closed two acquisitions post-quarter: Ideal Security (door/window hardware) and Finmac Lumber (Western Canada expansion), aligning with one-stop shop strategy.
  • M&A Pipeline: Aims for $100M annual acquisitions with 15%+ EBITDA margins; recent targets integrated to boost efficiency and market consolidation.

Segment Performance

In Canada, sales grew by 2.9%, while in the U.S., sales rose by 11.4% in U.S. dollars, accounting for 45% of total sales. The manufacturer market saw sales climb 6.5%, and the retailers and renovation superstore market saw sales increase 8.6%. Antoine Auclair attributed the internal growth in the U.S. mainly to inflation and price increases, rather than tariff pass-throughs, stating that the company's customers are working to mitigate the impact of additional costs.

Cash Flow and Acquisitions

Cash flow from operating activities generated a cash inflow of $82.7 million for the quarter, reflecting higher net earnings and effective working capital management. The company invested $39 million in the first nine months, including $27.5 million for six business acquisitions. Subsequent to the quarter, Richelieu closed two acquisitions: Ideal Security and Finmac Lumber, which expand Richelieu's product offerings and presence in Western Canada.

Valuation and Outlook

With a P/E Ratio of 25.41 and an EV/EBITDA of 11.75, the market is pricing in a certain level of growth for Richelieu Hardware. Analysts estimate next year's revenue growth at 4.7%. The company's ROE stands at 8.93%, and the ROIC is 7.61%. Richelieu's commitment to consolidating and reinforcing its market position through acquisitions is expected to drive future growth, with a target of making $100 million in acquisitions each year.

Margin Expectations

If Q4 margins are comparable to Q3, Richelieu expects to end the year close to 10.8%. The company is confident in its ability to drive margin growth through self-help measures, even if the housing market doesn't improve, with potential margins in the mid-11s range.

3. NewsRoom

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Richelieu Hardware (TSE:RCH) Has Affirmed Its Dividend Of CA$0.1533

Oct -12

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GROWTH AND EXPANSION IN THE 3rd QUARTER - 8 ACQUISITIONS SINCE THE BEGINNING OF 2025, ADDING MORE THAN $75 MILLION IN ANNUAL SALES

Oct -09

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Posthaste: These two catalysts could rouse the Canadian dollar from the doldrums

Oct -09

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Richelieu to release its Q3 results on Thursday, October 9, 2025

Oct -02

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Posthaste: Why the Bank of Canada could cut more than expected — much more

Sep -30

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Richelieu Hardware Ltd. (TSE:RCH) Has Fared Decently But Fundamentals Look Uncertain: What Lies Ahead For The Stock?

Aug -26

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What Does Richelieu Hardware Ltd.'s (TSE:RCH) Share Price Indicate?

Aug -05

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Does This Valuation Of Richelieu Hardware Ltd. (TSE:RCH) Imply Investors Are Overpaying?

Jul -19

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (12.83%)

6. Segments

Manufacturing

Expected Growth: 12%

Richelieu Hardware Ltd.'s 12% growth in manufacturing is driven by increasing demand for renovation and construction projects, strategic acquisitions, and expansion into new markets. Additionally, the company's focus on innovative products, operational efficiency, and strong supplier relationships contribute to its growth momentum.

Retailers

Expected Growth: 18%

Richelieu Hardware Ltd.'s 18% growth is driven by increasing demand for home renovation and decoration, expansion into new markets, strategic acquisitions, and effective inventory management. Additionally, the company's focus on e-commerce and digital transformation has improved customer experience, leading to increased sales and market share.

7. Detailed Products

Decorative Hardware

Richelieu offers a wide range of decorative hardware products, including knobs, handles, and hinges, designed to enhance the aesthetic appeal of cabinets, furniture, and other decorative pieces.

Functional Hardware

Richelieu's functional hardware products, such as drawer slides, hinges, and soft-close systems, provide smooth operation and durability for various applications.

Specialty Hardware

Richelieu's specialty hardware products, including magnetic catches, lid stays, and soft-close systems, offer innovative solutions for unique applications.

Organizational Systems

Richelieu's organizational systems, including shelving, storage, and display solutions, help optimize space and improve functionality.

Lighting and Electrical

Richelieu's lighting and electrical products, including LED lighting, under-cabinet lighting, and electrical accessories, provide innovative solutions for various applications.

Surface Technologies

Richelieu's surface technologies, including laminate, solid surface, and quartz, offer durable and stylish solutions for countertops, worktops, and other surfaces.

8. Richelieu Hardware Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Richelieu Hardware Ltd. faces moderate threat from substitutes, as customers have limited alternatives for hardware products.

Bargaining Power Of Customers

Richelieu Hardware Ltd. has a diverse customer base, reducing the bargaining power of individual customers.

Bargaining Power Of Suppliers

Richelieu Hardware Ltd. relies on a few large suppliers, giving them significant bargaining power.

Threat Of New Entrants

Richelieu Hardware Ltd. operates in a capital-intensive industry, making it difficult for new entrants to join the market.

Intensity Of Rivalry

Richelieu Hardware Ltd. operates in a highly competitive market, with several established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 6.79%
Debt Cost 8.71%
Equity Weight 93.21%
Equity Cost 8.78%
WACC 8.78%
Leverage 7.29%

11. Quality Control: Richelieu Hardware Ltd. passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Bassett Furniture

A-Score: 5.4/10

Value: 5.9

Growth: 1.3

Quality: 4.4

Yield: 9.0

Momentum: 7.0

Volatility: 5.0

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Richelieu Hardware

A-Score: 5.2/10

Value: 4.6

Growth: 5.9

Quality: 5.5

Yield: 3.0

Momentum: 3.0

Volatility: 9.0

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Value: 9.8

Growth: 1.0

Quality: 5.0

Yield: 9.0

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Volatility: 3.3

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Virco Mfg

A-Score: 4.2/10

Value: 6.7

Growth: 8.3

Quality: 5.5

Yield: 1.0

Momentum: 0.0

Volatility: 3.7

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American Woodmark

A-Score: 4.0/10

Value: 7.0

Growth: 6.0

Quality: 4.9

Yield: 0.0

Momentum: 1.5

Volatility: 4.7

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MasterBrand

A-Score: 3.6/10

Value: 6.8

Growth: 4.7

Quality: 4.4

Yield: 0.0

Momentum: 1.5

Volatility: 4.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

38.83$

Current Price

38.83$

Potential

-0.00%

Expected Cash-Flows