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Richelieu Hardware Ltd. reported its first-quarter earnings for 2026, missing both EPS and revenue forecasts, which led to a 4.22% decline in its stock price. The company posted an EPS of CAD 0.26, below the expected CAD 0.34, and reported revenue of CAD 463.6 million, short of the CAD 471.48 million forecast. The earnings miss overshadowed positive operational developments, including strong U.S. sales growth and strategic acquisitions.
Key Takeaways
- Richelieu’s Q1 EPS fell short by 23.53%, with revenue also missing by 1.67%.
- Stock price dropped 4.22%, reflecting investor disappointment.
- U.S. sales growth was strong at 11.3% in USD terms.
- The company won awards for innovation at a major trade show.
- Canadian hardware retailers segment showed weakness, declining 6%.
Company Performance
Richelieu Hardware demonstrated resilience in mixed market conditions, with a 5% year-over-year increase in sales to CAD 463.6 million. This growth was driven by both organic efforts and strategic acquisitions, despite challenges in the Canadian market. The company’s dual-track growth strategy continues to support its expansion efforts, although the earnings miss suggests potential hurdles.
Financial Highlights
- Revenue: CAD 463.6 million, up 5% year-over-year
- Earnings per share: CAD 0.26, up 4% from CAD 0.25 in Q1 2025
- EBITDA: CAD 43.2 million, up 1.9% year-over-year
- EBITDA margin: 9.3%, down from 9.6% in Q1 2025
Earnings vs. Forecast
Richelieu’s actual EPS of CAD 0.26 missed the forecast of CAD 0.34 by 23.53%. Revenue also fell short, coming in at CAD 463.6 million against a CAD 471.48 million forecast, indicating a negative surprise of 1.67%. This marks a significant deviation from the company’s historical performance, where it typically met or exceeded expectations.
Market Reaction
Following the earnings announcement, Richelieu’s stock fell by 4.22% to close at CAD 40.51. This decline reflects the market’s negative reaction to the earnings and revenue shortfalls. The stock is moving closer to its 52-week low of CAD 31.81, indicating investor concerns over the company’s performance. Despite the recent weakness, analysis from InvestingPro suggests the stock may be undervalued at current levels, with the platform’s Fair Value estimate pointing to potential upside. Investors seeking deeper insights can access comprehensive valuation metrics and over 10 additional ProTips on the InvestingPro platform.
Outlook & Guidance
Richelieu maintains its strategic focus on acquisitions, with a target of adding CAD 100 million in revenue through M&A in 2026. The company remains optimistic about market recovery, driven by construction activity and consumer spending. However, guidance revisions were not specified in the earnings call.
Executive Commentary
CEO Richard Lord emphasized the company’s resilience and growth strategy, stating, "Our dual-track growth through organic expansion and disciplined acquisitions continues to deliver value." He also highlighted the company’s commitment to innovation, as evidenced by recent awards at the Best of KBIS 2026 trade show.
Risks and Challenges
- Foreign exchange and tariff impacts continue to compress margins.
- Weakness in the Canadian hardware retailers segment poses a challenge.
- Rising mortgage rates and global market turmoil could affect future acquisitions.
- Dependence on U.S. market growth amid broader economic uncertainties.
- Potential supply chain disruptions impacting product availability.
Q&A
During the earnings call, analysts questioned the company’s ability to sustain growth amid economic headwinds. Concerns were raised about the Canadian market’s weakness and the potential impact of rising interest rates on future acquisitions. Executives reassured that their diversified strategy and strong financial position would help navigate these challenges.
Full transcript - Richelieu Hardware Ltd. (RCH) Q1 2026:
Richard Lord, President and CEO, Richelieu: Good afternoon, ladies and gentlemen, and welcome to Richelieu’s conference call for the first quarter ended February 28, 2026. With me is Antoine Auclair, CFO and COO. As usual, note that some of today’s remarks include forward-looking information, which is provided with the usual disclaimer as reported in our financial filings. During the quarter, we maintained our growth momentum with good results.
After a strong year of acquisitions in 2025, we completed our first acquisition of 2026 in December, adding three distribution centers of McKillican American in Oregon and Washington State, as previously announced. Additionally, we signed two letters of intent for new acquisitions in Canada. Quarterly sales increased by 5% to CAD 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 CAD 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 certain sector slowdowns.
In fact, the hardware retailers and renovation superstores market declined by 1.9% compared to the same quarter of 2025. Sales total CAD 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. dollar. 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 CAD 0.26 per share. I am pleased and proud to note that during the quarter, Richelieu was awarded two prestigious top prizes at the Best of KBIS 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 hardware collection, ATIPICA, received silver in the style statement category. This exclusive collection, created in collaboration with our long-term Italian partner, redefines modern, sleek design. In addition, we earned gold in the wellness trailblazer category for the VERTI 840 motorized system for cabinets and closet. This unique innovative system is designed to enhance mobility, safety, and autonomous living in any environment. Antoine will now review the financial highlights of the first quarter.
Antoine Auclair, CFO and COO, Richelieu: Thanks, Richard. First quarter sales reached CAD 463.6 million, up 5%, driven by 2% internal growth and 3% contribution from acquisitions. Sales to manufacturers stood at CAD 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 CAD 55.4 million, down 1.9%. In Canada, sales amounted to CAD 249.8 million, up 3.4%. Our sales to manufacturers reached CAD 206.3 million, and hardware retailers and renovation superstores market, sales stood at CAD 43.5 million, down 6%. In the U.S., sales grew to $155.6 million in US dollar, up 11.3%, reflecting 6.4% internal growth and 4.9% from acquisitions. In Canadian dollar, sales in the U.S. reached CAD 214 million, an increase of 6.8%, representing 46% of the total sales.
First quarter EBITDA reached CAD 43.2 million, up CAD 0.8 million or 1.9%, despite a negative foreign exchange impact of CAD 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 CAD 14.4 million, an increase of 3.6% from the first quarter of 2025. Diluted net earnings per share was CAD 0.26 compared to CAD 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 CAD 37.9 million, or CAD 0.69 per diluted shares. The net change in non-cash working capital used cash flow of CAD 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 CAD 17.1 million, compared to a cash inflow of CAD 3.7 million in the first quarter of 2025. We paid dividends of CAD 8.6 million to shareholders, and we invested CAD 13.2 million, including CAD 10 million for one business acquisition and CAD 3.2 million in CapEx. At the end of the quarter, financial situation was healthy and solid with working capital of CAD 625.7 million and almost no debt. I now turn it over to Richard.
Richard Lord, President and CEO, Richelieu: 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 opportunities for long-term value creation. Thanks, everyone. We’ll now be happy to answer your questions.
Operator/Moderator, Richelieu: Thank you, monsieur. Ladies and gentlemen, as stated, we will take questions from analysts. Should you have any questions, please press star followed by one on your touch-tone phone. You will then hear a prompt that your hand has been raised. If you would like to decline from the polling process, please press star followed by two. If you’re using a speakerphone, you will need to lift the handset first before pressing any keys. Please go ahead and press star one now if you have any questions. First, we will hear from Hamir Patel at CIBC Capital Markets. Please go ahead.
Hamir Patel, Analyst, CIBC Capital Markets: Hi. Good morning. Richard, are you able to comment on how sales have fared in Q2 so far for both the manufacturers and retailers?
Richard Lord, President and CEO, Richelieu: The market is still very good. Just to give you some 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. Eastern Canada, we see a regain in the construction industry for multiple buildings that are being built. Basically, it’s positive. The only market in Canada that is growing not very well is the Ontario market. We’re down by 4%, the Ontario market, while the Western Canada is up by 3%. In the U.S., as we have already mentioned, the growth in the U.S. Basically, it’s doing well in the circumstances, even though we have the retailers market, which is flat. We’re in constant communication with the retailers in Canada, and they all have a negative POS sales.
Basically, I think this market is going to come back.
Hamir Patel, Analyst, CIBC Capital Markets: Okay, great. Thanks, Richard. Just looking at Q1, organic growth was 2%. What was the price and volume sort of composition that got you to 2%?
Antoine Auclair, CFO and COO, Richelieu: Hamir, just to complete also your previous question, the month of March is pretty aligned with what you’ve seen in the first quarter. We’re still seeing growth in March and the beginning of April as well. Regarding the price increase versus the volume, the increase you’re seeing in the U.S. is pretty much price increase driven. In Canada, it’s 50/50 price increase and volume.
Hamir Patel, Analyst, CIBC Capital Markets: Okay, great. Thanks, Antoine. That’s helpful. 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?
Antoine Auclair, CFO and COO, Richelieu: First of all, you understand that the first quarter is always the softer quarter of the year. You will see the EBITDA increase in the next three periods for sure. The EBITDA margins should be similar or slightly higher than last year if you look at Q2, Q3, and Q4. 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%. At the end of the day, that’s what we are heading for. For 2026, it should be around the 11% mark. One thing, Hamir, 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.
Richard Lord, President and CEO, Richelieu: 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.
Hamir Patel, Analyst, CIBC Capital Markets: Okay. Antoine, do you have a sense as to maybe how many basis points that’s represented?
Antoine Auclair, CFO and COO, Richelieu: 0.2.
Hamir Patel, Analyst, CIBC Capital Markets: Okay, great. That’s all I have for now. I’ll turn it over. Thanks.
Operator/Moderator, Richelieu: Thank you. Next question will be from Zachary Evershed at National Bank. Please go ahead.
Zachary Evershed, Analyst, National Bank: Hey, thanks for taking my questions. Last quarter, you were hopeful for a continuation of the year-over-year margin expansion in Q1. We heard about the FX impact, which is about 30-40 basis points, and the tariff pass-through impact, which is about 20 basis points. Anything else happen in the quarter that pushed down on the year-over-year comparison versus Q1 last year?
Richard Lord, President and CEO, Richelieu: If you exclude, Zach, the FX impact, you would be slightly higher than last year, and the tariff impact also is impacting negatively the margin percentage. If you exclude that, we would be higher than last year.
Zachary Evershed, Analyst, National Bank: Got you. Thanks. What drove 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?
Richard Lord, President and CEO, Richelieu: No, the business 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. Basically, the consumer will have to spend one day or the other. The patio business, that’s a project that the consumers will do soon as well, for which we have many products. Basically, we hope that the market should not be that bad with the hardware retailers.
Zachary Evershed, Analyst, National Bank: Thank you very much. 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.
Richard Lord, President and CEO, Richelieu: No, the M&A pipeline is healthy in the U.S. as well. We’ve signed two letter of intent in Canada. We have other opportunities that we’re hoping to close soon, but it’s very healthy as we speak.
Zachary Evershed, Analyst, National Bank: Got you. Thanks.
Richard Lord, President and CEO, Richelieu: Coming back, Zach, to the hardware retailer as well, I think we already told you that we’re gonna gain some business with Lowe’s in the U.S. That will represent something like $10 million per year, and that project should start in the third and the fourth quarter of this year.
Zachary Evershed, Analyst, National Bank: Perfect. Thanks. Despite the turmoil we’re seeing in global markets, no change to your expectations for roughly ± CAD 100 million in added revenue through M&A?
Richard Lord, President and CEO, Richelieu: Yes, sir. No problem at all. That should be reached.
Zachary Evershed, Analyst, National Bank: Beauty. Thanks. I’ll turn it over.
Operator/Moderator, Richelieu: Thank you. Ladies and gentlemen, a reminder to please press star one if you have any questions. Thank you. At this time, Mr. Lord, it appears we have no other questions. Please proceed.
Richard Lord, President and CEO, Richelieu: Thank you very much, all of you. We’re always happy to answer your questions if you call us. Bye-bye.
Operator/Moderator, Richelieu: Thank you. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending, and at this time, we do ask that you please disconnect your lines.
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