Richelieu Hardware Ltd.

Richard Lord - President and CEO Antoine Auclair - CFO

Anthony Zicha - Scotia Bank Frederic Tremblay - National Bank

Thank you. Good afternoon, ladies and gentlemen.

Welcome to Richelieu’s conference call for the fourth quarter and the year ended November 30, 2014. With me is Antoine Auclair, 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 filings. Before summing up 2014, I want to say that we are very pleased with our fourth quarter results.

Our performance was strong in terms of sales and profitability, both in the manufacturers and retailers market and in Canada and the U.S. Thanks to strong internal growth and the good contribution from our acquisitions.

That resulted in significant increase in value for the shareholders, as the share price grew by 26.7%. We were also extremely proud to see our market cap exceed for the first time $1 billion.

We closed two acquisitions in the fourth quarter. On September 22, we acquired XM Export-Import, a Quebec based specialty hardware distributor, which will complement our onward product line.

Then on October 27, we acquired the net asset of Thruway, a distributor of specialty panels and hardware operating in the New York State. It gave us access to the Buffalo market and reinforced our positioning where we are already established.

Regarding 2014 as a whole, it was a very good year, a strong sales growth, profitability and expansion with five acquisitions. Our market development and penetration initiatives paid us, supported by our sustained innovation strategy and the great job of our sales force.

During the year, we introduced many product innovations and we use as we used to do every year and we invested to ensure our business concept always anticipates and meet customer’s evolving needs. We’ve continued to invest in our Web site richelieu.com, which is more and more used and popular.

We remain focused on our business model and our supply chain efficiency and made further improvements to these key aspects of our organization. As already announced, we closed three acquisitions in the first nine months, Procraft in Nova Scotia and New Brunswick, Pleasantside in Western Canada and CabinetWare in Florida for a total of five in 2014, including the two closed in the fourth quarter.

They represent additional sales of about 27 million on an annualized basis and gave us access to new markets and reinforced our positioning where we were already well established. We repurchased shares for a total of 30.4 million in 2014, including the dividends paid during the year.

We thereby distributed 41.4 million to shareholders. Now let’s look at financial highlights for the fourth quarter and fiscal 2014.

First, our fourth quarter results. Fourth quarter total sales reached 177.8 million, up by 14.5% of which 10.4% from internal growth and 4.1% from acquisitions.

Sales to manufacturers totaled 152.3 million, an increase of 14.2% of which 9.4% from internal growth and 4.8% from acquisitions. Sales to retailers and renovation superstores stood at 25.5 million, up by 16.4%.

In Canada, we recorded sales of 127.7 million, an increase of 10.2%, 7.7% from internal growth and 2.5% from acquisitions. Our sales to Canadian manufacturers were up by 9.2% to 105.3 million of which 6.2% from internal growth and 3% from acquisitions.

In the Canadian hardware retailers and renovation superstores market also our sales totaled 22.4 million, up by 16.4% due mainly to exceptional seasonal sales. In the U.S.

in U.S. dollar, we achieved sales of 44.8 million, up by 18.2% of which 10% from internal growth and 8% from acquisition.

Our sales to U.S. manufacturers reached $42 million, an increase of 18.3%, 9.7% from internal growth and 8.6% from acquisitions.

Sales to hardware retailers and renovation superstores were up by 15%. In Canadian dollars, U.S.

sales grew to 50.1 million, an increase of 27.2 million. They accounted for 28.2% of the quarter’s consolidated sales.

EBITDA reached 23.5 million, up by 16.1% due primarily to the sales growth. The gross margin was stable and EBITDA margin was 13.2% compared with 13% for the same quarter of 2013.

Net earnings attributable to shareholders grew to 15.9 million, up by 20%. The net margin stood at 9% compared with 8.6%.

Net earnings per share amounted to $0.82 basic and $0.80 diluted, up by 26.2% and 25% respectively. Cash flows from operating activity before net charge in non-cash working capital balances related to operation grew to 17.9 million, up by 17.9%.

Per share they reached $0.90 diluted, up by 23.3%. During the fourth quarter, we repurchased common shares for 0.2 million and paid 2.7 million in shareholder dividends.

We invested a total of 6.5 million of which 4.2 million from the acquisition of XM and Thruway and 2.3 million for equipment needed for operations. Now for 2014 as a whole, we recorded total sales of 646.9 million, up by 10.2%.

7.1% of this increase came from internal growth and 3.1 from acquisition. Sales to manufacturers reached 550.9 million, up by 11.1% of which 7.4% from internal growth and 3.7% from acquisition.

Sales to hardware retailers and renovation superstores totaled 96 million, up by 5.7%. In Canada, sales were 471.1 million, an increase of 7.1% due to a 4.3% internal growth and 2.1% from acquisition.

In the Canadian manufacturers market, we recorded sales of 386.8 million, up by 7.7%, on account of 4.2% internal growth and 3.5% from acquisition. Sales to Canadian retailers amounted to 84.3 million, up by 4.7%.

In the U.S. in U.S.

dollars, our sales reached $160 million, up by 11.6%. We recorded an internal growth of 8.1% and 3.5% from acquisitions.

Sales to U.S. manufacturers amounted to 149.3 million, up by 12% of which 8.2% from internal growth and 3.8% from acquisitions.

Sales with U.S. retailers were up by 6.6%.

In Canadian dollar, U.S. sales came to 175.8 million and accounted for 27.2% of the sales.

Eastern Canada the Atlantic Provinces represented 34% of total sales, Ontario 17%, Western Canada 22% and the U.S. 27%.

EBITDA reach 77.4 million, up by 10%. The gross margin and EBITDA margin is stable compared with 2013 despite the lower margin of certain prior acquisitions aiding a different product mix and the higher proportion of sales in the U.S.

where the product mix also defers. Net earnings attributable to shareholders totaled 52.4 million, up by 12.9%.

The net margin was up to 8.1% compared with 7.9% last year. Earnings per share reached $2.67 basic and $2.63 diluted, up by 18.7% and 18.5% respectively.

Operating activity before net change in non-cash working capital balances related to operation provided cash flows of 60.3 million or $3.3 diluted per share. Financing activities represented a cash outflow of 37.4 million for the year.

Considering we repurchased share for 30.4 million paying $11 million in dividend and issued common shares for 4 million. And investing activities totaled 15.4 million, including 9.9 million in our five acquisitions and 5.5 million in equipment for operations.

Total debt was 5.4 million at year-end, representing balances payable on acquisitions of which 3.4 million of short-term debt. As of November 30th, our cash and cash equivalents totaled 33.7 million, net cash totaled 28.4 million.

We posted a working capital of 214.9 million for a current ratio 4:1. The book value per share was $15.80 and return on average equity reached 17.5%, the highest in the five years.

Regarding our outlook, we assure we will remain a customer oriented company, leading the evolution of the North American market through innovation and service. In 2015, we will be reporting you to innovate and introduce new products, maintain out top quality of execution and service, efficiently integrate our recent acquisition and build synergy while improving profitability.

Develop new markets in Canada and the U.S., finance our operational efficiency and seize all the strong acquisition opportunities. That concludes our overview.

Thank you for your interest and now we will be happy to answer your questions.

Richard, could you give us some color on your organic growth rate? It was quite strong.

Do you believe it’s sustainable? And could you give us some insight on the geographic mix?

That was a very strong internal growth. Actually we have seen that the Western market mainly Alberta and D.C.

were very strong in the last two quarters. And as well as the sales to hardware retailers that increased nicely in the last two quarter as well.

So, we really benefited from those increases. And we see the growth in the U.S.

continuing to be quite strong in circumstances. So, basically these are the main factors of that growth.

And in terms of your margins, they have improved, however the Canadian dollar has weakened and looks like your costs pull up. So could you talk to us a bit about the pricing dynamics which you anticipate over the next year?

It’s a hard price. And I think we did very well in whatever the circumstances were in 2014.

Actually, we’ve seen the Canadian dollar going to US$1.25 I think it reached that yesterday. So it’s a challenge and no doubt, most of the time we can increase our pricing in a few hours if we have to.

And for hardware retailers it takes little bit more time. So it would be challenging for the next couple of quarters.

But as usual we’ve dealt with that type of situation in the past and it won’t -- I don’t think it will affect our margin in the course of 2015.

And then last question, considering the dollar has devalued the Canadian, how challenging will it to be make U.S. acquisitions?

That doesn’t change anything for us there. It’s going to require both full Canadian dollar to make acquisition but as then we always acquired good value.

And I don’t think that it will affect -- have any effect on the circumstances of our future acquisition. We’re going to still very aggressive with the market and that wont’ stop us.

Okay. Thank you very much.

Thank you. Just wanted to ask on the sales to retailers and renovation superstars in Canada, which were up 15%, you mentioned that was due primarily to exceptional seasonal sales.

I was wondering if you can maybe elaborate a bit on that. Was there any?

Are you referring promotions or what does that mean exactly?

It means that we have new customers that talked to us in March 2014 that’s the main first quarter is buying our medical products. The sales that you see in the first quarters now they placed an order in spring, one in fall.

Hopefully, we’re going to continue on to that business in 2015. But it’s been quite successful in 2015.

So, we’re quite happy with that type of business. But without that the increase with 10%, which is already very strong so we feel for the last couple of quarters that the retailer business it always is slightly waking up and we see the movements.

Okay. And you mentioned Western Canada has been pretty strong in the past two quarters.

I was wondering with the lower oil prices, do you think that that’s going to have an impact maybe on economic activity and like housing and renovation markets in that part of the country?

We’ll say the Alberta is there, and then Saskatchewan market to be affected no doubt. We think D.C.

is going to remain strong because there is a lot of construction going on in the Vancouver, for example. But we’re going to have to live with whatever is going to happen in Alberta.

That could -- we expect the market to slow down, yes, because we have the very strong growth in the quarters to reporting.

And just for the quarter, can you provide the usual breakdown for cabinet manufacturers, commercial and workers and the other categories please?

For the quarter actually we’ve seen an increase with the kitchen manufacturers. This is increases without acquisition.

So a 5.7% with retail manufacturer, which -- it’s a good sign that the people will spend money on improving their lifestyle. We have the commercial innovation that improved by 4%, which is reasonable.

And we have the residential furniture, which is -- that continues to pick up production with 6% increase. The office furniture market, as well, increased by 12%.

So we see that our efforts in a way and that we’ve invested in good people actually to go after this market. So, those are furniture market gave us very good results in the last couple quarters.

So, these are basically the situation with the different market segments for sure.

Okay. And you’ve -- the purchased significant amount of shares during 2014.

Do you expect to do the same in 2015 at the current share price?

Well, without any problem

Okay. And then last question just from your CapEx budget for 2015, do you have a number for that?

I think we’re going to be around -- between $3 million and $4 million as usual, I would say at $3 million and $5 million

Okay, great. Thank you very much.

So if there is no more question, thanks again. It’s always a pleasure to talk to you.

Do not hesitate to give us a phone call if you have any further questions in the future. Thank you very much and have a good day.