et messieurs, et bienvenue aux résultats du troisième trimestre 2026 de Quincaillerie 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 l'étoile et zéro.

Veuillez aussi prendre note que cet appel est enregistré le 8 octobre 2026. J'aimerais maintenant céder la parole à Monsieur Richard Lord, président et chef de la direction.

La parole est à vous. Merci.

Thank you. Good morning, ladies and gentlemen, and welcome to Richelieu's conference call for the third quarter and first nine months ended August 31st, 2026.

With me is Antoine Auclair, CFO and COO. 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 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 Penrod, the largest in our history, which we completed on September the 1st, following the acquisition of Solutions Acoustiques and Winneke in Canada during the third quarter.

Far this year, our acquisition strategy has positioned us for sound future growth, with a total of five 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. Our sustained investments in innovation, our various private-label brands, our diversified market segments, and our distinctive service offering, including richelieu.com, provide us with competitive advantages that help us 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 customer.

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 Acoustiques, based in the Montreal area, is renowned for its standard, decorative, and high-performance acoustic solutions, a growing market; and Winneke, which operates three distribution centers for specialized hardware in the Greater Toronto Area.

On September the 1st, we completed the acquisition of the Penrod Company's hardware division, adding annual sales of $60 million in U.S. dollar and seven distribution centers across the U.S.

For us, this is an outstanding opportunity to strengthen our position with a 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 nine 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 rate, 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 $187 million in U.S.

dollar, up 12.9%. Sales to manufacturers reached $172 million in U.S.

dollar, 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 nine months, total sales reached nearly $1.6 billion, up 7.2%, of which 4.6% resulted from internal growth and 2.6% 2.6% from acquisition. In 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% 2% from acquisition. 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 $518 million in U.S.

dollar, up 9.4%, with 3.3% from internal growth and 6.1% from acquisitions. They reached $717 million in Canadian dollar, 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 6.3% 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. This 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 nine 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 53 cents from 43 cents last year. Excluding the reimbursement of tariff, EPS would have been 49 cents, representing a 14.1% increase from last year.

For the first nine 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 non-cash working capital reached $54.5 million, up 13.5% from $48.1 million last year. The change in non-cash 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 nine 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 nine months, financing activities used cash flow of $21.7 million compared to $70.1 million in 2025.

In the first nine months, we invested $45.8 million, including $31.7 million for four 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 3.2 to 1.

I now turn it over to Richard.

Thank you, Antoine. In conclusion, I want to highlight the $15 million strategic investment we announced in September at our Drummondville facility.

This project, which is already underway, will more than quadruple 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 period like this to strengthen Richelieu 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 Richelieu 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 now be happy to answer your questions.

Hi, good morning. Congrats on the strong quarter.

Richard, you pointed to in the prepared remarks pricing driving the majority of the double-digit organic comps. How much was pricing to the organic growth percentage, and would you expect that tailwind to persist for the next three quarters?

I think the pricing represents about 40% of the organic growth, and 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. Basically, in the near future, we see the pricing situation to be stable.

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

Oh, yes, because I think it's interesting to mention the different market segment by product segment. Let's say, the kitchen cabinet industry, our sales in Canada increased by 5.2% and in the U.S.

4.8%, that kitchen cabinet industry. That means that the consumers continue to do some renovation because that market is related mainly to the residential market.

We know that the construction is down, I guess what we see is that the sales increase is mainly due to the people doing some renovation, which is a very good market for Richelieu. The commercial renovation 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, including the closet industry, our sales in Canada increased by 10.5%, while it had increased by 21% in the U.S. It's very encouraging to see that.

Again, the closet industry is mainly related to the residential renovation. The door and window market, we increased that by 5% in Canada, 8% in the U.S.

Residential furniture, it's interesting to mention that we see that this is a difficult market, but we see the customer of those market segment buying more from Richelieu instead of importing their own goods from overseas because the tariff affect their sales, they buy less, they don't import directly from Asia anymore, so that brings some business to Richelieu. Office furniture is also encouraging in Canada with our sales increased by 10%, while it's flat in the U.S.

Basically, all of market segment by different industry that we serve is very positive to realize that there is some business there at Richelieu. It keeps moving.

By adding sales people in the U.S., we try to keep the market moving, we don't stand still because the market is uncertain.

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

Great. Thanks, Antoine.

Just to clarify, I guess all the breakdown Richard provided was for the third quarter.

Yeah. Exactly.

Okay. Then, Antoine, just thinking about EBITDA margins, look like if you exclude the tariff refunds, it came in around 11.1% 1% 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 2027?

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

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

We would need a more rigorous market. Sales growth is good, but real volume will definitely help to improve this EBITDA margin.

Great. Just a 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?

The Penrod's EBITDA margin is similar to Richelieu, and 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 seven times EBITDA.

Great. That's all I had.

I'll turn it over. Thanks.

Thank you.

Good morning, everyone. Thank you for taking my question.

My first question is about the EBITDA margins. Without the $3 million tariff refund, Q3 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.

You have to consider that we're passing the tariff as a dollar, we're not taking any margin on those tariffs. Even though the price increases there, we're not gaining any additional margin there.

In total, this has a diluting impact on the margin, not in dollars, but in percentage. I think that after Q3, this should be behind us.

Now the higher-cost products are in, the tariffs impact are included in our average costing as well. That should be behind us starting Q4 and moving forward.

Thank you for the clarification there. On the major U.S.

initial shipments, how much of that rollout was completed in Q3 and perhaps how much is left for Q4?

Basically the initial sales to this major customer, it's around $7 million U.S. in the third quarter, and on a yearly basis, we're talking about approximately $10 million U.S.

on a yearly basis. 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, approximately $2.5 million per quarter.

Thank you very much for that color. Regarding the manufacturers organic growth, notably strong, can you break down the drivers of that, perhaps were there any non-recurring benefits to that quarter, and then perhaps yeah, no, that's it, just manufacturers organic growth.

Not necessarily non-recurring. I think that it's been a strong quarter in all region, and if we look at the industrial business in the different region in Canada, 9% growth on the East, Ontario it was plus 7.8% also, this is encouraging, and Western around 8% growth in the industrial business.

Like Richard said, around 40% of this is price, around the rest is volume. We're encouraged by this performance, but as I said earlier, if we look at September and the beginning of October, we're seeing 3% to 4% growth today.

Basically what Richelieu is doing, we create the movement in the market, we are adding sales people, our website is second to none, it's contributing largely to our sales increase as well. Basically all the means that we can find to reach the customers, to be close to the customers, service the customers, and communicate well with the customers, we're investing in those segment in order to be close to our customers and getting the orders.

Thank you. For the comment on early September/October internal growth, does that still match up with the commentary on 40% price and rest as volumes, or how does that break out?

Pretty much.

Last one for me. With U.S.

mortgage rates at a three-year high, can you tell us how customers and their order books are looking right now?

Customers 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 a new kitchen cabinet, a new closet, whatsoever, I think people that have money, they do not hesitate to make those projects.

If you remember during the pandemic, people could not find a contractor to do their work. Now it's easier to find a contractor, to find a kitchen cabinet manufacturers, and find furniture as well.

Basically the market is also favorable for the people that have money to spend in order to maintain their houses, and that does apply to the commercial renovation market as well. When we see a growth of 11% in Canada, this is very strong.

It's because of the commercial projects, the airports, restaurants, and hotels are doing renovation. They're obliged to, they have to keep their place clean.

We see the tourists in Montreal and in Toronto and other area of Canada as well. The hotels keep, I think are doing very good business, and they keep renovating.

Great to hear. Oh, 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 call-out to Ontario, but you pointed out some pretty strong growth, seems like an inflection this quarter. What was driving that?

You see in Ontario increased by 7.8%, but we have to admit that the quarter of last year was not very good, basically it's a jump over something that was not very good last year. What we're happy to see, though, is that the Ontario market seems to have reached the bottom of the barrel, thing cannot be worse, and I see in the months to come that the business is going to pick up.

Hopefully this is a trend.

We'll see

that's a good quarter. We'll see if this continues, but like Richard said, we're comparing our sales with low comparables.

We'll see. Hopefully this will continue, but don't know yet.

Thank you very much. I will turn it over.

Thank you.

Thank you.

there's no more questions, thanks again. It's always a pleasure for us to talk to you.

You can phone us at your convenience. Thank you, and have a good day.