Thank you. Good afternoon, ladies and gentlemen, and welcome to Richelieu's conference call for the second quarter and first half ended May 31st, 2026.

With me is Antoine Auclair, CFO and COO. As usual, note that some of today's issues and future forward-looking informations, 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 one new acquisition, followed by two further ones after the end of the quarter.

Three 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 four acquisitions: one in the U.S.

during the first quarter, another in Quebec during the second quarter, and two additional acquisitions after the end of the quarter in Canada. On May 1st, 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 their unique design, quality, and installation ease for both residential and commercial applications, and they fit perfectly with our decorative panel offering. On June 26th, we completed the acquisition of Solutions Acoustiques, which operates in the Greater Montreal as a specialized distributor in acoustic solutions, known for their performance and architectural design.

Then, on July 8th, we completed the acquisition of Winic, a distributor of specialized hardware operating in the GTA area with three distribution centers. This reinforces our position in the key market of Ontario.

These four 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 strengthens our leadership in decorative and acoustic solutions, two 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 two different product categories and reflects our commitment to differentiate ourselves and remain a leader in innovation. I would now ask Antoine to review the financial highlights for the quarter and the first six 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 $175 million in U.S.

dollar, up 4.4%. Sales to manufacturers reached $166 million in U.S.

dollar, 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 dollar, total sales in the U.S. reached $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 $331 million in U.S. dollar, up 7.5%, with 3.7% from internal growth and 3.8% from acquisitions.

They reached $455 million in Canadian dollar, up 4.2%, accounting for 46% of total sales. In U.S.

dollar, sales to manufacturers totaled $313 million, an increase of $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 increase 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 42 cents from 41 cents last year. First-half net earnings attributable to shareholders reached $37.6 million, up 3.5%.

Diluted net earnings per share stood at 68 cents compared to 66 cents last year. Second-quarter cash flow from operating activities before net change in non-cash working capital reached $47.9 million, up 2.4% from $46.8 million last year.

Change in non-cash working capital used cash flow of $28.5 million, primarily driven by a $14.8 million increase in accounts receivable and $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 $23.5 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 two 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 opportunity 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 product that are first to the market, and many of them being exclusive with our own brand name, we have become a trusted partner for architects, designers, woodworking professional, 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 Richelieu, reinforcing our competitive advantage and helps our customers being more successful in their own business.

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

Hi, good afternoon. Richard, can you share how sales fared in the month of June and any differences there across categories or geographies?

I think last time you'd kind of highlighted Ontario as being particularly weak, any signs of turnaround there?

I think the sales performance is follow the same performance that we had in the last quarter. What we see, Canada is doing well as a whole except for Ontario, I think.

Quebec is doing very well with sales increase by more than 10%, Western Canada is also very healthy, I think it's over 5% increase. Basically, except for Ontario, Canada is pretty good.

In U.S., it's about the same everywhere, but we have different market segment 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.

Basically we're satisfied with that, but what we have decided in this company is that maybe to invest a little bit more in sales people, 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.

I think we have to be more aggressive in visiting more customers and acquiring new customers, and as a result, new sales as well. Basically, we don't think that the months to come in the near future will help us, we have to help ourselves by making them moving the sales.

Fair enough. Richard, how much is Ontario as a percent of your Canadian business?

Is that 40%, 50%? 40 40

44%.

44%. Great.

And Hamir, it's

17% of total sales.

Of total sales, including U.S., everything.

Right. Okay.

Then 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.

Is that now playing out here in Q3?

Yeah. It has started.

We're in the process of delivering our first orders. Basically that's going to create more sales here for a couple of quarters.

After that, it's going to be maybe flat for the next quarters, because once we fill up the stores, it takes a while before they reorder. After that, you can imagine $10 to $12 million sales, yearly sales.

Hamir, it started in June.

June, perfect. Okay.

Just last question I had, Antoine, your EBITDA margins averaged 10% in the first half, on the last conference call in April you were 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?

We would need a bit more vigor in the market to pump up those margin. Keep in mind, Hamir, that the second half is always stronger than the first half.

You understand as well that this very slight decrease, 0.2, is basically due to tariff, because when we're passing through the tariff, we're passing the dollar, it has, for sure, a slight dilution on the percentage. We should be able to be close to the 11%.

We would need a bit more vigor in the market.

Fair enough. That's all I had.

I'll turn it over. Thanks.

Thank you.

Good afternoon, everyone. This is Nate calling in for Zach.

Thank you for taking my questions today. I want to ask first on the margins.

Was there anything else to call out on the margin compression year-over-year other than tariffs? Because we noticed your gross margins fell around 200 basis points year-over-year, but your EBITDA margins only fell 20 basis points.

No, there's not nothing else than that. Structurally it's the same, really the tariffs is definitely what has impacted the margin.

I see. Okay.

With the aforementioned 11% EBITDA margin goal, how are you feeling about that on top with recent acquisitions now in the mix, and several you have currently evaluating in your pipeline?

Some of the one we closed last year were businesses that we acquired that needed some restructuring. The one that we announced this year in the second quarter are businesses that are generating EBITDA already.

We're confident about these acquisitions, the one we just did will not dilute the EBITDA margin.

Thank you very much. We did notice also that capital expenditures ticked up to $7.5 million this quarter.

Are there any plans you can tell us about? No.

Basically, there's a $2 million of IT equipment that we have to make every three to four three to four years, except that it's pretty much back to maintenance CapEx. At the end of the year we should be between $18 and $20 million, like we told you guys earlier, we should be around that.

We're looking at a few projects, we're looking at increasing our footprint in our Drummondville location. As we have a building there, we have a land available, we're going to have some lease coming expiring, and we're going to be building in Drummondville, Quebec.

That should occur at the end of the year and beginning of next year. Else than that, there's nothing else to mention.

Great color. Thank you.

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 inventories.

I think on the AR side, we're in good shape. We have a DSO around 45, 46 46 days, which is pretty aligned with historical levels.

On the inventory side, you've seen increases in the first two quarters. We've also captured some opportunistic acquisition in terms of inventory, before a price increase.

We've closed some deals to bring in the inventory at a lower price. We've done that, we should see a reduction in the second half.

I'm hoping to see a reduction between $5 to $10 million in the second half.

Thank you very much. I will turn it over.

Thank you.

Thank you very much. It was very nice talking to you again.

If you have any further questions, do not hesitate to call us. Thank you.