Richelieu Hardware Ltd Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Hamir Patel - CIBC Capital Markets - Analyst : hi. Good afternoon and congratulations, Antoine, on the new role.

Question: Hamir Patel - CIBC Capital Markets - Analyst : Richard, maybe we could just start first talking about the sort of price volume dynamics in the quarter. I know there's noise on the retailer side because of the US Lowe's business. But at least when I look at the manufacturer side, in Q4, you kind of had organic sort of 4% growth. What would be the breakdown there between price and and volume? Because it does -- from elsewhere, it looks like the price comps were still negative in Q4.

Question: Hamir Patel - CIBC Capital Markets - Analyst : Okay. And based on maybe what's been, obviously, we'll see what happens next week on tariffs. But Richard, based on sort of existing sort of communications of pricing, are you seeing signs of prices increasing yet?

Question: Hamir Patel - CIBC Capital Markets - Analyst : Okay. And I mean, Richard, I know we've had -- there's been tariff talk since the election in November. So given your strong balance sheet, have you positioned yourselves after the end of the quarter with perhaps staging or having more inventory in advance of tariffs, which maybe could drive some higher margins near term?

Question: Hamir Patel - CIBC Capital Markets - Analyst : Okay. That's helpful. And Antoine, are you able to just maybe update us what the geographic mix of your products are right now?

Question: Hamir Patel - CIBC Capital Markets - Analyst : No, I meant for the products when you're sourcing products from outside of --

Question: Hamir Patel - CIBC Capital Markets - Analyst : Okay, perfect. That's helpful. And just the last question I had, Richard. When you look at margins, 11.4% in Q4 looks like they kind of almost picked up 10 basis points each of the last three quarters. Should we expect that slow steady kind of 10 basis points each quarter, gradual over '25? And where is that long-term margin going?

Question: Hamir Patel - CIBC Capital Markets - Analyst : And so, Richard, is that the sort of the sales aspiration now for?

Question: Zachary Evershed - National Bank Financial - Analyst : Congrats on the quarter, and congrats, Antoine on the additional title. Just starting there quickly. Any change to the scope of your role now, Antoine? Or is this a case of your title catching up with your responsibilities?

Question: Zachary Evershed - National Bank Financial - Analyst : Excellent. And then flipping over to Q1 thus far, what are you guys seeing in terms of organic growth so far on both sides of the border?

Question: Zachary Evershed - National Bank Financial - Analyst : And so I'm hearing that EBITDA margin should be north of 12% over the longer term, and there are some good tailwinds for organic growth. So if that trend holds. What are your hopes for EBITDA margins this year in 2025?

Question: Zachary Evershed - National Bank Financial - Analyst : And any divergence in those trends between Canada and US, given interest rates or jobs data? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 16, 2025 / 7:30PM, RCH.TO - Q4 2024 Richelieu Hardware Ltd Earnings Call

Question: Zachary Evershed - National Bank Financial - Analyst : Good color. On the acquisition pipeline, how is 2025 shaping up for you?

Question: Zachary Evershed - National Bank Financial - Analyst : Beauty, thanks. And then I'll just end off with the tariff risk. With the threat of tariffs from China, are you seeing any of your customers move closer to you or maybe farther away from you in preparation?

Question: Hamir Patel - CIBC Capital Markets - Analyst : Richard, just thinking through some of the maybe organic growth CapEx. When you think about the platform, are there any states where maybe you haven't had as much success with acquisitions where you're looking to build the platform out organically? And how do we think about timing or maybe product categories where the opportunity lies?

Question: Hamir Patel - CIBC Capital Markets - Analyst : Okay. Fair enough. And just last question I have. Just looking at the US retailers business, sort of three quarters here of this negative 30% comps just with the loss of the Lowe's business in the US, I know in the past, it sounded like you thought over time, you could fully replace that with, I think, Tractor Supply And maybe ACE Hardware. So how do we think about -- there's probably, I guess, Q1 would still also be that kind of negative 30% comps, but how long to rebuild the sales that you've lost in the US retailer type category?