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Richelieu Hardware Ltd. (RCH)
Exchange: Toronto Stock Exchange
$39.980
May 19, 2013, 4:58 PM EDT
Change: -0.27 (-0.67%)
Volume: 2,014

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39.980
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Strong growth for Richelieu in the third quarter of 2010
    <<
                 5 acquisitions since the beginning of 2010
           40.6% increase in net earnings for the first nine months

    -------------------------------------------------------------------------
    - Net earnings grew by 16.7% in the third quarter to $10.3 million or
      $0.48 per share, and by 40.6% for the first nine months of the year to
      $28.9 million or $1.33 per share
    - Consolidated sales stood at $116.0 million, an increase of 8.2% for the
      third quarter, and at $329.1 million, an increase of 7.2% for the first
      nine months of the year
    - Acquisition of Gordon Industrial Materials Ltd. (Montreal, Qc and
      Mississauga, Ont.) and New Century Distributors Grp LLC (Avenel,
      New Jersey)
    - Cash totalled $53.1 million as at August 31, 2010
    - SUBSEQUENT EVENT - Acquisition of E. Kinast Distributors, Inc. in the
      Greater Chicago market, Illinois, U.S.
    -------------------------------------------------------------------------

    TSX: RCH
    >>

MONTREAL, Sept. 30 /CNW Telbec/ - Richelieu achieved strong growth during the third quarter and ended the period as at August 31, 2010 with an excellent balance sheet. With the strength of its organization, its innovation strategy and development initiatives, the Company benefited from the sustained robustness of Canadian markets and won new market share in the United States, where economic conditions remain uncertain. During the quarter, Richelieu closed one acquisition in Canada and another in the United States, and on September 27, it closed its fifth acquisition since the beginning of 2010.

"Our strongest growth was posted in our key customer segments, notably the kitchen cabinet makers niche where sales grew by 18.5% in Canada and 14.2% in the United States, and we recorded significant increases in the Canadian home furnishing and office furniture manufacturers markets. We also highlight the 16.7% growth in our sales in U.S. dollars in the U.S. manufacturers market, attesting to our successful efforts to win new market share. Our consolidated sales totalled $116.0 million, up 8.2% over the third quarter of 2009, of which 4.6% from internal growth and 3.6% from acquisitions. As for the EBITDA margin, it improved to 14.7%, up from 13.9% in the corresponding quarter of 2009, and for the first nine months of the year, it stood at 14.2%, compared with 11.6% for the first nine months of 2009," indicated Richard Lord, President and Chief Executive Officer.

CENTRE START-UP AND ACQUISITIONS

During the first quarter, the Company opened a new distribution centre in Raleigh, North Carolina, while also completing the acquisition of Woodland Specialities, Inc. in New York State and Raybern Company in Connecticut - both of which contributed to third-quarter results. On July 14, Richelieu closed the acquisition of Gordon Industrial Materials Ltd., a distributor operating in Quebec and Ontario, which brought a six week contribution to the quarterly results, and on August 30, 2010 came the closing of the acquisition of New Century Distributors Grp LLC in New Jersey. Then on September 27, Richelieu closed the acquisition of E. Kinast Distributors, Inc., with operations in the Greater Chicago market. Another acquisition project (announced in July 2010) is currently undergoing due diligence and negotiation of the acquisition agreement to the satisfaction of both parties. With these five acquisitions and the transaction in progress, Richelieu will increase its sales by some $70 million annually and, as was the case for previous acquisitions, the Company will focus on creating attractive synergies in upcoming periods.

NEXT DIVIDEND PAYMENT

At its meeting on September 30, 2010, the Board of Directors approved the payment of a quarterly dividend of $0.09 per share. This dividend is payable on October 28, 2010 to shareholders of record as at October 14, 2010.

ANALYSIS OF OPERATING RESULTS FOR THE THIRD QUARTER AND FIRST NINE MONTHS ENDED AUGUST 31, 2010 COMPARED WITH THOSE OF THE THIRD QUARTER AND FIRST NINE MONTHS ENDED AUGUST 31, 2009

Third-quarter consolidated sales totalled $116.0 million, up by $8.8 million or 8.2% over the third quarter of 2009. Richelieu continued to build upon all its product offering and quality of service strengths to benefit from the sustained robustness of its Canadian markets, while successfully making further efforts to win market share in the United States. This sales increase came from a 4.6% internal growth and a 3.6% growth from the acquisition of Paint Direct Inc. ("Paint Direct") (Calgary, Alberta) and Woodland Specialties, Inc. ("Woodland") (Syracuse, New York), acquired on November 4 and December 1, 2009 respectively, Raybern Company, Inc. ("Raybern") (Rocky Hill, Connecticut), acquired on April 26, 2010, and the six-week contribution of Gordon Industrial Materials Ltd. ("Gordon") (Montreal, Quebec and Mississauga, Ontario), acquired on July 14, 2010.

Richelieu's sales to manufacturers grew by 10.2% to $96.3 million, up from $87.4 million for the corresponding period of 2009, an increase of $8.9 million. The strongest growth was posted in the kitchen and bathroom cabinet makers, residential and commercial woodworking and office furniture manufacturers markets. In the hardware retailers and renovation superstore markets, sales remained relatively stable at $19.6 million, compared with $19.8 million for the same quarter of 2009.

In Canada, Richelieu achieved sales of $98.1 million, compared with $90.8 million for the third quarter of 2009, an increase of $7.3 million or 8.0%, of which 7.3% from internal growth and 0.7% from the contribution of Paint Direct and Gordon. The three Canadian markets remained robust, favouring solid growth over the same quarter of 2009, with more significant increases in Eastern Canada and Ontario.

In the United States, Richelieu's sales grew by 16.7% to US$17.2 million, an increase of US$2.5 million, of which 5.2% from internal growth and 11.5% from the contribution of Woodland and Raybern, acquired in the first quarter of the year. The Company won further market share in the United States thanks to its diversified and distinctive product offering and the dynamism of its sales force. Considering the effect of exchange rates, U.S. sales rose 9.1% upon conversion to Canadian dollars; they stood at $17.9 million, compared with $16.4 million for the corresponding quarter of 2009, thereby accounting for 15.4% of the quarter's consolidated sales.

For the first nine months, Richelieu recorded consolidated sales of $329.1 million, up by $22.1 million or 7.2% over the corresponding period of 2009, of which 5.0% from internal growth and 2.2% from the acquisition of Paint Direct, Woodland and Raybern as well as Gordon's contribution for a six-week period.

Sales to manufacturers totalled $271.0 million, an increase of $16.7 million or 6.6% over the first nine months of the previous year. Sales to hardware retailers and renovation superstores stood at $58.1 million, up by $5.4 million or 10.3% over the corresponding period of 2009.

In Canada, Richelieu achieved sales of $280.5 million, an increase of $26.2 million or 10.3%, of which 9.6% from internal growth and 0.7% from the contribution of Paint Direct and Gordon. Canadian sales accounted for 85.2% of consolidated sales for the first nine months of 2010.

In the United States, sales amounted to US$46.8 million, up 5.6% - the 7.8% growth from the acquisition of Woodland and Raybern was partially offset by the 2.2% internal decrease due to the major market slowdown during the first two quarters of the year. Considering the effect of exchange rates, U.S sales declined by 7.7% upon conversion to Canadian dollars; they stood at US$48.6 million, compared with $52.6 million for the corresponding period of 2009, thereby accounting for 14.8% of consolidated sales for the first nine months of 2010.

Third-quarter earnings before income taxes, interest, amortization and non-controlling interest (EBITDA) amounted to $17.1 million, up 14.2% over the corresponding quarter of 2009. The gross margin was positively affected by the strong Canadian dollar and the product mix sold in Canada. Combined with these positive factors, the increase in consolidated sales and tight cost control measures raised the EBITDA profit margin to 14.7%, up from 13.9% in the third quarter of 2009.

Income taxes increased by $0.8 million to $5.1 million, due to the period's earnings growth.

For the first nine months, earnings before income taxes, interest, amortization and non-controlling interest (EBITDA) totalled $46.7 million, up 31.2% over the first nine months of 2009. The gross margin was positively affected by the strength of the Canadian dollar in 2010 and the product mix sold in Canada during the third quarter, and by the fact that the costs incurred to penetrate the retailers market were lower than last year and the Company is now reaping the benefits of this investment. Combined with these positive factors, the increase in consolidated sales and tight cost control measures raised the EBITDA profit margin to 14.2%, up from 11.6% for the first nine months of the previous year.

Income taxes increased by $3.7 million to $13.6 million, due to the earnings growth in the first nine months of 2010.

In the third quarter, considering the major aforementioned factors for the EBITDA, net earnings grew by 16.7% to $10.3 million. The net profit margin from continuing operations improved to 8.9% of consolidated sales, up from 8.3% for the third quarter of the previous year. Earnings per share amounted to $0.48 (basic and diluted), an increase of 20.0%.

Comprehensive income amounted to $11.3 million, on account of a positive adjustment of $1.0 million on translation of the financial statements of the self-sustaining subsidiary in the United States, compared with comprehensive income of $9.0 million for the third quarter of the previous year, on account of a positive adjustment of $0.1 million on translation of this same subsidiary's financial statements.

For the first nine months, net earnings totalled $28.9 million, up 40.6% over the corresponding period of 2009. This growth reflects the various aforementioned factors for the EBITDA as well as an after-tax non-recurring gain of $0.7 million on the disposal of the ceramics activities during the first quarter of the current fiscal year. The net profit margin improved significantly to 8.8% of consolidated sales, up from 6.7% for the first nine months of the previous year. Earnings per share amounted to $1.33 (basic and diluted), up 43.0% on account of the contribution of the discontinued operations of $0.03 per share for 2010, compared with a negative effect of $0.01 per share for 2009.

On account of the positive adjustment of $0.5 million on translation of the financial statements of the self-sustaining subsidiary in the United States, comprehensive income totalled $29.3 million for the first nine months, whereas comprehensive income for the corresponding period of 2009 stood at $14.4 million, on account of a negative adjustment of $6.1 million on translation of this same subsidiary's financial statements.

Operating activities

Third-quarter cash flows provided by operating activities (before net change in non-cash working capital balances related to operations) totalled $12.8 million or $0.59 per share, up from $10.9 million or $0.50 per share for the third quarter of 2009, mainly reflecting the $1.4 million growth in net earnings for the quarter. Net change in non-cash working capital balances related to operations represented a cash outflow of $3.6 million due primarily to the increase in inventories, compared with a cash inflow of $17.1 million for the third quarter of 2009, generated by accounts payable, income taxes, inventories and accounts receivable. Consequently, operating activities provided cash flows of $9.2 million, compared with $28.1 million for the third quarter of 2009.

In the first nine months, operating activities provided cash flows (before net change in non-cash working capital balances related to operations) of $34.0 million or $1.56 per share, up from $26.7 million or $1.21 per share for the first nine months of 2009, mainly reflecting the $7.4 million growth in net earnings. Net change in non-cash working capital balances related to operations represented a cash outflow of $6.2 million, compared with a cash inflow of $13.9 million for the corresponding period of 2009. This variation is due to an increase in accounts receivable, inventories and prepaid expenses totalling $14.6 million, whereas accounts payable and income taxes payable represented a variance of $8.4 million. Consequently, operating activities provided cash flows of $27.8 million, compared with $40.5 million for the first nine months of 2009.

Financing activities

Third-quarter financing activities represented a cash outflow of $4.3 million, compared with $1.8 million for the third quarter of 2009. The Company paid $1.9 million in dividends to its shareholders, up by $0.2 million over the third quarter of the previous year considering the 12.5% increase in the quarterly dividend announced on January 28, 2010. In addition, a total of 102,800 common shares were repurchased for cancellation for a consideration of $2.6 million under Richelieu's normal course issuer bid, whereas no shares were repurchased in the third quarter of the previous year.

In the first nine months, financing activities represented a cash outflow of $16.9 million, compared with $5.4 million for the corresponding period of 2009. The Company paid $5.8 million in dividends to its shareholders, a growth of $0.6 million reflecting the 12.5% increase in the quarterly dividend announced on January 28, 2010. In addition, a total of 466,900 common shares were repurchased for cancellation for a consideration of $11.5 million, compared with a repurchase of 4,000 common shares for a consideration of approximately $0.1 million during the first nine months of the previous year.

Investing activities

In the third quarter, the Company made investments of $4.8 million, of which $4.2 million in the acquisition of the principal net assets of Gordon and New Century Distributors Grp LLC ("New Century") (as at August 30, 2010), and the balance in leasehold improvements, equipment to improve the distribution centres' productivity and showrooms.

In the first nine months, the Company invested $8.2 million, of which $6.0 million in the acquisition of the principal assets of Woodland, Raybern and Gordon, and the balance in various leasehold improvements, equipment to improve the distribution centres' productivity and showrooms.

Sources of financing

As at August 31, 2010, cash and cash equivalents totalled $53.1 million, up from $37.0 million for the same period of 2009. The Company posted an excellent working capital of $164.0 million for a current ratio of 4.0:1, compared with $150.5 million and a 4.7:1 ratio as at November 30, 2009.

Assets

As at August 31, 2010, total assets amounted to $313.4 million, up from $285.2 million a year earlier, a 9.9% growth reflecting the increase in cash and the expansion completed since the beginning of the year. Current assets grew by 15.9% or $30.0 million over August 31, 2009; this growth is due mainly to the $16.1 million increase in cash and cash equivalents, a nil amount of income taxes receivable, compared with an amount receivable of $1.1 million as at August 31, 2009, a $2.9 million increase in accounts receivable related to acquisitions completed within the last 12 months and a $12.7 million increase in inventories derived from acquisitions and in response to the greater demand.

Net cash

    <<
    As at August 31                                         2010        2009
    (in thousands of $)
    -------------------------------------------------------------------------
    Current portion of long-term debt                      1,536         223
    Long-term debt                                           751         328
    -------------------------------------------------------------------------
    Total                                                  2,287         551
    -------------------------------------------------------------------------
    Cash and cash equivalents                             53,149      37,000
    Total net cash                                        50,862      36,449
    -------------------------------------------------------------------------
    >>

After deducting total interest-bearing debt of $2.3 million, the Company posted total net cash of $50.9 million as at August 31, 2010, showing that it continues to benefit from a healthy and solid financial position that enables it to pursue its business strategy.

Shareholders' equity totalled $253.5 million as at August 31, 2010, up from $238.0 million a year earlier; this 6.5% growth mainly reflects the $16.0 million increase in retained earnings, which amounted to $235.8 million at the end of the period, and an increase of $0.5 million in capital stock and of approximately $0.2 million in contributed surplus, less the $3.8 million reduction in accumulated comprehensive income. At the close of the first nine months, the book value per share stood at $11.87, compared with $10.84 as at August 31, 2009.

Subsequent event

On September 27, 2010, Richelieu closed the acquisition of the net assets of E. Kinast Distributors, Inc. ("EKD"), located in Hannover Park, in the Chicago region, Illinois (U.S.) for a cash consideration of US$2.4 million and a conditional balance of sale of US$0.7 million. EKD is a distributor of hardware, laminates, finishing and complementary products targeted to a customer base of kitchen cabinet makers and the residential and commercial woodworking industry.

Through this acquisition, Richelieu establishes its presence in the Greater Chicago Area, increases its sales by some $10 million annually and adds a new distribution centre to its U.S. network, which now comprises 22 centres. EKD's activities are fully compatible with Richelieu's operations and acquisition criteria and will contribute to the Company's earnings.

Outlook

The Company remains focused on its innovation strategy, the sales synergies arising from its acquisitions, the opening of new distribution centres, and winning new market share in Canada and the United States. Management expects Richelieu to end the year as at November 30, 2010 with increased results thanks to internal growth, the benefits of the new Raleigh, North Carolina centre and the acquisitions closed during the year.

    <<
    Profile as at August 31, 2010
    -----------------------------
    >>

Richelieu is a leading North American distributor, importer and manufacturer of specialty hardware and complementary products. Its products are targeted to an extensive customer base of kitchen and bathroom cabinet, furniture, and window and door manufacturers plus the residential and commercial woodworking industry, as well as a large customer base of hardware retailers, including renovation superstores. Richelieu offers customers a broad mix of high-end products sourced from manufacturers around the world. Its product selection consists of more than 70,000 different items targeted to a base of over 40,000 customers who are served by 53 centres in North America - 30 distribution centres across Canada, 21 in the United States and two manufacturing plants in Canada, specifically Cedan Industries Inc. which specializes in the manufacture of a wide variety of veneer sheets and edgebanding products, and Menuiserie des Pins Ltée which manufactures components for the window and door industry and a broad selection of decorative mouldings.

Notes to readers - Richelieu uses earnings before income taxes, interest, amortization and non-controlling interest ("EBITDA") because this measure enables management to assess the Company's operational performance. This measure is a widely accepted financial indicator of a company's ability to service and incur debt. However, EBITDA should not be considered by an investor as an alternative to operating income or net earnings, an indicator of operating performance or cash flows, or as a measure of liquidity. Because EBITDA is not a standardized measurement as prescribed by GAAP, it may not be comparable to the EBITDA of other companies. Certain statements set forth in this press release, such as statements about the growth outlook, constitute forward-looking statements. In some cases, these statements are identified by the use of terms such as "may", "could", "might", "intend", "should", "expect", "project", "plan", "believe", "estimate" or the negative form of these expressions or other comparable variants. These statements are based on the information available at the time they are written, on assumptions made by management and on the expectations of management, acting in good faith, regarding future events, including those relating to economic conditions, fluctuations in exchange rates and operating expenses, and the absence of unusual events entailing supplementary expenditures. Although management considers these assumptions and expectations reasonable based on the information available at the time they are written, they could prove inaccurate. Forward-looking statements are also subject, by their very nature, to known and unknown risks and uncertainties such as those related to the industry, acquisitions, labour relations, credit, key officers, supply, product liability, and other factors set forth in the Management's Report included in the Company's 2008 Annual Report as well as its Annual Information Form, which are available on the System for Electronic Document Analysis and Retrieval (SEDAR) website at www.sedar.com. Richelieu's actual results could differ materially from those indicated or underlying these forward-looking statements. The reader is therefore recommended not to unduly rely on these forward-looking statements. Forward-looking statements do not reflect the potential impact of special items, any business combination or any other transaction that may be announced or occur subsequent to the date hereof. Richelieu undertakes no obligation to update or revise the forward-looking statements to account for new events or new circumstances, except where provided for by applicable legislation.

    <<
    -------------------------------------------------------------------------
    CONFERENCE CALL - SEPTEMBER 30, 2010 AT 2:30 P.M. (EASTERN TIME)
    -------------------------------------------------------------------------
    >>

Financial analysts and investors interested in participating in the conference call on Richelieu's results to be held at 2:30 p.m. on September 30, 2010 can dial 1-866-865-3087 a few minutes before the start of the call. For those unable to participate, a taped rebroadcast will be available as of 5:30 p.m. on September 30, 2010 until midnight on October 7, 2010, by dialing 1-800-642-1687, access code: 11942791. Members of the media are invited to listen in.

    <<
    -------------------------------------------------------------------------
    Photos are available under "About Richelieu" - "Media" section at
    www.www.richelieu.com
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF EARNINGS
    (unaudited)

    (In thousands of dollars,
     except earnings per share)
                                       For the                  For the
                                  three-month period       nine-month period
                                   ended August 31,         ended August 31,
                                    2010        2009        2010        2009
                                          Adjusted(1)             Adjusted(1)
                                       $           $           $           $
                                 --------------------------------------------
    Sales                        115,957     107,181     329,100     307,005
    Cost of sales and warehouse,
     selling and administrative
     expenses                     98,903      92,252     282,402     271,406
                                 --------------------------------------------
    Earnings before the
     following                    17,054      14,929      46,698      35,599
                                 --------------------------------------------
    Amortization of capital
     assets                        1,295       1,281       3,851       3,797
    Amortization of intangible
     assets                          322         328         974       1,032
    Financial costs, net             (94)        (17)       (154)        (64)
                                 --------------------------------------------
                                   1,523       1,592       4,671       4,765
                                 --------------------------------------------
    Earnings before income
     taxes, non-controlling
     interest and discontinued
     operations                   15,531      13,337      42,027      30,834
    Income taxes                   5,049       4,297      13,614       9,879
                                 --------------------------------------------
    Earnings before
     non-controlling interest
     and discontinued operations  10,482       9,040      28,413      20,955
    Non-controlling interest         134         117         220         183
                                 --------------------------------------------
    Net earnings from continued
     operations                   10,348       8,923      28,193      20,722
                                 --------------------------------------------
                                 --------------------------------------------
    Net profit (net loss) from
     discontinued operations           -         (53)        659        (248)
                                 --------------------------------------------
    Net earnings                  10,348       8,870      28,852      20,524
                                 --------------------------------------------
                                 --------------------------------------------

    Earnings per share
    Basic
    From continued operations       0.48        0.40        1.30        0.94
    From discontinued operations       -           -        0.03       (0.01)
                                 --------------------------------------------
                                    0.48        0.40        1.33        0.93
                                 --------------------------------------------
                                 --------------------------------------------
    Diluted
    From continued operations       0.48        0.40        1.30        0.94
    From discontinued operations       -           -        0.03       (0.01)
                                 --------------------------------------------
                                    0.48        0.40        1.33        0.93
                                 --------------------------------------------
                                 --------------------------------------------

    (1) The comparative figures included in the consolidated statements of
        earnings and cash flows have been adjusted subsequent to the
        classification of the ceramic sales activities' results as
        discontinued operations.


    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
    (unaudited)
    (In thousands of dollars)
                                       For the                  For the
                                  three-month period       nine-month period
                                   ended August 31,         ended August 31,
                                    2010        2009        2010        2009
                                       $           $           $           $
                                 --------------------------------------------
    Net earnings                  10,348       8,870      28,852      20,524

    Retained earnings, beginning
     of period                   229,938     212,672     223,986     204,591
    Dividends                     (1,922)     (1,758)     (5,845)     (5,274)
    Premium on redemption of
     common shares for
     cancellation                 (2,521)          -     (11,150)        (57)
                                 --------------------------------------------
    Retained earnings, end
     of period                   235,843     219,784     235,843     219,784
                                 --------------------------------------------
                                 --------------------------------------------


    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
    (unaudited)

    (In thousands of dollars)
                                       For the                  For the
                                  three-month period       nine-month period
                                   ended August 31,         ended August 31,
                                    2010        2009        2010        2009
                                       $           $           $           $
                                 --------------------------------------------
    Net earnings                  10,348       8,870      28,852      20,524

    Other comprehensive income
    Translation adjustment of
     the net investment in
     self-sustaining foreign
     operations                      985         146         496      (6,141)
                                 --------------------------------------------
    Comprehensive income          11,333       9,016      29,348      14,383
                                 --------------------------------------------
                                 --------------------------------------------


    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (unaudited)

    (In thousands of dollars)
                                       For the                  For the
                                  three-month period       nine-month period
                                   ended August 31,         ended August 31,
                                    2010        2009        2010        2009
                                          Adjusted(1)             Adjusted(1)
                                       $           $           $           $
                                 --------------------------------------------
    OPERATING ACTIVITIES
    Net earnings from continued
     operations                   10,348       8,923      28,193      20,772
    Non-cash items
    Amortization of capital
     assets                        1,295       1,281       3,851       3,797
    Amortization of intangible
     assets                          322         328         974       1,032
    Future income taxes              515          76         225         226
    Non-controlling interest         134         117         220         183
    Stock-based compensation
     expense                         177         213         562         673
                                 --------------------------------------------
                                  12,791      10,938      34,025      26,683
    Net change in non-cash
     working capital  balances
     related to operations        (3,578)     17,136      (6,193)     13,859
                                 --------------------------------------------
                                   9,213      28,074      27,832      40,542
                                 --------------------------------------------

    FINANCING ACTIVITIES
    Reimbursement of long
     term debt                         -           -           -         (36)
    Dividends paid                (1,922)     (1,758)     (5,845)     (5,274)
    Issue of common shares           197           -         441           -
    Redemption of common shares
     for cancellation             (2,602)          -     (11,521)        (60)
                                 --------------------------------------------
                                  (4,327)     (1,758)    (16,925)     (5,370)
                                 --------------------------------------------

    INVESTING ACTIVITIES
    Business acquisitions         (4,239)          -      (6,006)          -
    Additions to capital assets     (591)       (673)     (2,242)     (2,445)
                                 --------------------------------------------
                                  (4,830)       (673)     (8,248)     (2,445)
                                 --------------------------------------------

    Effect of exchange rate
     fluctuations on cash and
     cash equivalents               (156)         (8)       (207)        (31)

    Net change in cash and cash
     equivalents from continued
     operations                     (100)     25,635       2,452      32,696

    Cash flows from discontinued
     operations                        -      (1,288)      2,255      (1,822)

                                 --------------------------------------------
    Cash and cash equivalents,
     beginning of year            53,249      12,653      48,442       6,126
                                 --------------------------------------------
    Cash and cash equivalents,
     end of year                  53,149      37,000      53,149      37,000
                                 --------------------------------------------
                                 --------------------------------------------

    Supplemental information
    Income taxes paid              3,113       2,232      10,909      11,945
    Interest received, net           (64)        (18)       (115)       (105)
                                 --------------------------------------------

    (1) The comparative figures included in the consolidated statements of
        earnings and cash flows have been adjusted subsequent to the
        classification of the ceramic sales activities' results as
        discontinued operations.


    CONSOLIDATED BALANCE SHEETS
    (unaudited)

    (In thousands of dollars)
                                           As at         As at         As at
                                       August 31,    August 31,  November 30,
                                            2010          2009          2009
                                               $             $             $
                                       --------------------------------------
    ASSETS
    Current assets
    Cash and cash equivalents             53,149        37,000        48,442
    Accounts receivable                   57,604        54,716        55,793
    Income tax receivable                      -         1,134             -
    Inventories                          107,804        95,153        87,058
    Prepaid expenses                         295           800           327
                                       --------------------------------------
                                         218,852       188,803       191,620
                                       --------------------------------------
    Capital assets                        18,184        20,241        19,569
    Intangible assets                     12,668        13,138        12,853
    Goodwill                              63,719        62,979        62,449
                                       --------------------------------------
                                         313,423       285,161       286,491
                                       --------------------------------------
                                       --------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
    Accounts payable and accrued
     liabilities                          49,875        41,154        40,108
    Income taxes payable                   3,471             -           676
    Current portion of long-term debt      1,536           223           351
                                       --------------------------------------
                                          54,882        41,377        41,135
                                       --------------------------------------
    Long-term debt                           751           328           317
    Future income taxes                      952         2,478         1,407
    Non-controlling interest               3,352         3,021         3,132
                                       --------------------------------------
                                          59,937        47,204        45,991
                                       --------------------------------------

    Shareholders' equity
    Capital stock                         17,613        17,102        16,916
    Contributed surplus                    3,858         3,711         3,922
    Retained earnings                    235,843       219,784       223,986
    Accumulated other comprehensive
     income                               (3,828)       (2,640)       (4,324)
                                       --------------------------------------
                                         253,486       237,957       240,500
                                       --------------------------------------
                                         313,423       285,161       286,491
                                       --------------------------------------
                                       --------------------------------------
    >>

Richard Lord, President and Chief Executive Officer; Alain Giasson, Vice-President and Chief Financial Officer, Tel: (514) 336-4144, www.richelieu.com

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