A DYNAMIC
OF TEAM WORK
AND SERVICE
ANNUAL REPORT 2021
Our know-how
Specialty
distribution
We see distribution as a suite of complementary services
designed to meet our customers’ various residential,
institutional and commercial project needs.
We focus our efforts on delivering outstanding
multiaccess service based on Richelieu’s culture
of innovation, 24/7 product accessibility, logistics
expertise and operational efficiency.
That is what makes us a North American leader.
TA B LE O F CO NTE NTS
2
Profile
8-9
Financial Highlights
10
11
16
17
18
Acquisitions
Message to Shareholders
Directors and Officers
richelieu.com
Innovation – Products
29
Social and Environmental Responsibility
30
43
45
46
46
47
48
49
Management’s Report
Management’s Report and Independant Auditor’s Report
Consolidated Statements of Financial Position
Consolidated Statements of Earnings
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Value-added multiaccess service
To provide
a first-class
customer experience
At Richelieu, the customer is everyone's business.
Each customer is unique.
LISTE NING TO
THE CUSTOME R
• Understanding and
anticipating needs
SALES TOOLS
for customers
• Complete set of brochures
and technical catalogs
• Display systems for
manufacturers and retailers
• Website
DISTINCTIVE
SHOWROOMS
• Showrooms adjacent
to the distribution centers
MULTIACCESS
SE RVICE
• Proximity
• Customized service
• richelieu.com
CUSTOMER
CONTINUOUS
INNOVATION
• Catalyst for global
innovation
• Market Influencer
LOGISTICS
E XPE RTISE
• Interconnected distribution
centers
• One-Stop-Shop centers
• Just-in-time delivery
1
RichelieuAnnual Report 2021 A D E R
E
A L
I N NORTH AM
E
RIC
A
A WORLD-CLASS
IMPORTER
MANUFACTURER
AND DISTRIBUTOR
OF SPECIALTY HARDWARE AND COMPLEMENTARY PRODUCTS
WITH AN OFFERING
OF OVER
130,000 PRODUCTS
(SKUS)
IN AN UNEQUALLED VARIETY
OF CATEGORIES
WE SERVE
OVER
100,000
ACTIVE CLIENTS
IN NORTH AMERICA
IN A BROAD RANGE
OF MARKET SECTORS
WITH A STRONG AND
COMMITTED TEAM
OF OVER
2,700 EMPLOYEES
50% dedicated to sales,
marketing and
customer service
Nearly 50%
are shareholders
of Richelieu
Riche lieu
2
2
A n n u a l Re p o r t 202 1
RichelieuAnnual Report 2021 t y
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A ROBUST NETWORK OF
106
INTERCONNECTED
CENTERS*
OPERATED WITH
AN ENTREPRENEURIAL SPIRIT,
AN "ONE-STOP-SHOP" APPROACH
AND A "JUST-IN-TIME"
SERVICE MODE
47
DISTRIBUTION
CENTERS
IN CANADA
57
DISTRIBUTION
CENTERS
IN UNITED STATES
2
MANUFACTURING
CENTERS
Les Industries Cedan inc.
Veneer sheets and edgebanding
Menuiserie des Pins Ltée
Decorative mouldings and
components for the window
and door industry.
Diversifed market segments
The manufacturers
The segmentation of our
clientele allows us to target
the needs to provide the
most appropriate service
to the customer.
We serve tens of thousands
of manufacturers and
woodworkers in Canada and
the United States. An asset,
a strength and a challenge
that we take on with
responsibility and pride.
As entrepreneurs, we support
our customers and meet their
needs for in-plant efficiency,
manufacturing quality and
design, whether they are
manufacturers of kitchen and
bathroom cabinets – storage
– closets – residential and
office furniture – windows
and doors – or woodworking
contractors involved in
residential and commercial
projects.
* D e ce m b e r 202 1
Riche lieu
4
A n n u a l Re p o r t 202 1
The retailers
OF HARDWARE AND MATERIALS AND THE RENOVATION SUPERSTORES
We pay the utmost attention to the quality and efficiency of the
service we provide to the thousands of retailers who number
among our key partners: renovation superstores, renovation
centers and countless independent retailers operating under
different banners and buying groups.
5
RichelieuAnnual Report 2021 Architects
and designers
Architects and designers
are there to optimize
the functionality of their
clients’ homes, providing
inspiration and know-
how to instill them with
harmony and elegance.
Our role is to tell
them about the latest
innovations and discuss
their specific needs with
a view to providing
the best products
and solutions for their
residential, institutional
and commercial projects.
With Richelieu, they enjoy
access to solid expertise
and a comprehensive
array of functional and
decorative hardware
solutions and decorative
panels, to optimize and
customize the living spaces
entrusted to their care.
Together, we are helping
transform the market.
6
A n n u a l Re p o r t 202 1
Richelieu VALUES UNDE RLYING OUR CORPOR ATE CULTURE
Customer focus
Understand the challenges and needs of our
manufacturer and retailer customers. Support
them in achieving their competitiveness and
design objectives. Make their lives easier and
exceed their expectations.
Innovation
Remain on the lookout for the emerging global
trends most suitable for our customers’ business.
Be their partner in innovation.
Quality
of service
Accessibility
Proximity
Attitude, accessibility, proximity
and expertise: the keywords
for the professional behavior of
our sales and customer service
team. Local and customized
service at the reach of our
100,000 customers with our
multiaccess strategy. No
compromise on service quality.
Performance
Responsibility
Collaboration
Entrepreneurial
drive
Entrepreneurial spirit of the
team, commitment and
constant concern for
performance. Maintaining a
work climate that is conducive
to creating value for the four
pillars of the Corporation: our
customers, our employees, our
suppliers and our shareholders.
Ethical
behavior
Respect
Integrity
Values that guide us within
the company and in our
professional practices. They
have earned us the trust of
our partners and make us
proud to be part of the great
Richelieu team.
7
RichelieuAnnual Report 2021 Strong track record
of growth
Sales
(in millions $)
1,440.4
1,004.4
1,041.6
942.5
1,127.8
Net earnings per share
attributable to
shareholders (diluted)
(in $)
2.51
1.50
1.15
1.17
1.16
2017 2018 2019 2020
2017 2018 2019 2020
2021
2021
Adjusted cash flows
from operating activities*
(in millions $)
183.0
121.1
80.0
83.8
98.4
Equity attributable
to shareholders /
debt
(in millions $)
666.4
551.1
498.4
470.3
434.1
4.3
2.0
5.7
5.8
6.3
2017 2018 2019 2020
2017 2018 2019 2020
2021
2021
* Adjusted cash flows from operating activities
is a non-IFRS measure, as indicated on page 32
of this report.
8
RichelieuAnnual Report 2021 FINANCIAL HIGHLIGHTS
Years ended November 30
(in thousands of $, except per share amounts, number of shares and data expressed as a %)
Sales
EBITDA (1)
EBITDA Margin (%)
Net earnings
Net earnings attributable to the
Shareholders of the Corporation
basic per share ($)
diluted per share ($)
Net margin attributable to the
Shareholders of the Corporation (%)
Adjusted cash flows from
operating activities (2)
diluted per share ($)
Dividends paid to shareholders
of the Corporation
per share ($)
Weighted average number of shares
outstanding (diluted) (in thousands)
As at November 30
Total assets
Working capital
Current ratio
Equity attributable to the
Shareholders of the Corporation
Return on average equity (%)
Book value per share ($)
Total debt
2021
2020
2019 (3)
2018
2017
1,440,416
1,127,840
1,041,647
1,004,400
942,545
234,389
154,461
124,207
105,991
102,974
16.3
13.7
11.9
10.6
10.9
142,331
85,611
66,671
67,964
67,932
141,764
85,222
66,471
67,777
67,704
2.54
2.51
9.8
1.51
1.50
1.17
1.16
1.18
1.17
1.17
1.15
7.6
6.4
6.7
7.2
182,991
121,125
98,390
83,783
79,951
3.24
2.14
1.72
1.45
1.36
19,374
0.280
11,284
14,424
13,824
13,157
0.200
0.253
0.240
0.227
56,466
56,646
57,192
58,064
58,659
964,180
456,376
771,056
672,146
569,119
542,667
377,408
335,467
329,343
300,116
3.3
3.6
4.1
4.6
4.0
666,442
551,094
498,384
470,278
434,092
23.3
11.93
6,439
16.2
9.86
13.7
8.86
5,792
5,659
15.0
8.23
2,023
7,408
16.3
7.51
4,294
29,162
Cash and cash equivalents
58,707
73,928
24,701
(1) EBITDA is a non-IFRS measure, as indicated on page 32 of this report.
(2) Adjusted cash flows from operating activities and adjusted cash flows from operating activities per share are non-IFRS
measures, as indicated on pages 32 of this report.
(3) Those figures have been restated following the adoption of IFRS 16 on December 1, 2019.
9
RichelieuAnnual Report 2021
DYNAMIC E XPANSION IN NORTH AME RICA
79 successful
acquisitions
49
IN CANADA
30
IN UNITED STATES
AND STILL A SIGNIFICANT POTENTIAL FOR EXPANSION TO BE SEIZED IN NORTH AMERICA.
Since 1988, we have based our acquisition
strategy on the same criteria: quality,
complementarity, cultural compatibility, short
and long-term value creation and a fair
acquisition price.
The businesses we have acquired over the years
have provided us with solid service centers for
diversifying our market segments, expanding
and consolidating our presence across Canada
and the United States, incorporating teams with
close knowledge of their respective markets and
driving profitable growth.
SALES
MARKET CAPITALIZ ATION
1.44
BILLION $
2.7
BILLION $
60
MILLIONS $
1993
39
MILLIONS $
2021
1993
2021
APPRECIATION IN SHARE PRICE (RCH) :
SINCE INITIAL STOCK LISTING
TOTAL RETURN ON SHARE/10 YEARS*:
5,841%
404%
AVERAGE ANNUAL RETURN ON SHARE/10 YEARS*:
*INCLUDING DIVIDEND REINVESTMENT
1 0
17.6%
RichelieuAnnual Report 2021 MESSAGE TO SHARE HOLDE RS
Richard Lord
President and Chief Executive Officer
Richelieu posted the best financial performance in its history, with sales
of $1.44 billion, a strong increase in results, and an impeccable financial
position as at November 30, 2021. The fiscal year was also marked by five
new acquisitions in North America and a further three in December, making
2021 for a very active year of expansion. Our innovation and acquisition
strategies remain our two main growth drivers, working in synergy, as
shown by the healthy and dynamic progression of our financial track record.
Robotic distribution center
Ville St-Laurent, Quebec
11
RichelieuAnnual Report 2021 To take advantage of the thriving reno-
vation market in 2021, our expert and
talented team has leveraged our core
strengths: our value-added multiaccess
service with our capacity for innovation,
our "one-stop-shop" approach, our
"just-in-time" service mode, our website
richelieu.com, and the diversification of
our market segments.
All our markets contributed to the year’s record
growth, driving sales to 27.7%, with 22.8%
stemming from internal growth and 4.9% from
acquisitions. The manufacturers market was
most active, as our sales reached $1.2 billion,
up 30.9%, including increases of 32.5% in
Canada and 37.3% (in U.S. dollars) in the United
States. In the retailers market, sales amounted
to $236.8 million, up 13.7%, or 17.6% in Canada
and 11.0% (in US dollars) in the United States. We
met our profitability targets with EBITDA growth
of 51.8% and diluted net earnings per share of
$2.51, up 67.3%.
We pursued our strategic investments, injecting
$66.5 million into business acquisitions, infra-
structure and technology for the short and long
term. In addition, we invested $13.1 million in the
repurchase of Corporation shares (RCH) in the
normal course of business, and our sharehold-
ers received $19.4 million in dividends. Fiscal
2021 has allowed us to strengthen our financial
foundation and our ability to make new advan-
ces in the coming periods.
The fragmented market Richelieu
operates in is conducive to business
acquisitions, especially in the current
economic context. Every acquisition that
complements our business increases our
North American coverage, adds expertise
and contributes to growth.
We follow our selection criteria closely, to
ensure successful integration of the acquired
companies. We pursue an acquisition strategy
that is win-win for both the vendor and for
Richelieu, its customers and shareholders. We
do not wait for opportunities to come to us; we
are proactively alert. Our priorities are twofold:
to bolster our position in specialty markets to
serve our customers with an even more diverse
and comprehensive offering and to move into
new markets. The five acquisitions completed
during the fiscal year met our criteria for quality
and complementarity by adding new customers,
distribution centers solidly established in their
respective markets and annual sales of over
$80 million.
We have expanded our retail offering through the
acquisition of two well-established distributors
with over 50 years in the business: Task Tools,
which has two distribution centers in British
Columbia and Ontario, and Uscan Industrial
Fasteners, based in Quebec. Task Tools, a
specialist in hand tools, power tool accessor-
ies and related products, serves the Canadian
and U.S. markets, while Uscan provides a range
of screws, bolts and fasteners to the Canadian
market.
12
RichelieuAnnual Report 2021 Our other three acquisitions strengthen and
diversify our position on the manufacturers
market: Inter-Co, a distributor of Division 10
products for the construction industry in Canada
and the United States that operates two centers
in Ontario and three in Arizona, Ohio and Texas;
Cook Fasteners, a specialized distributor of
screws and bolts based in Mississauga, Ontario;
and Industrial Plywood, a distributor of panels
and related products in Pennsylvania with centers
in Reading and Lewistown.
To meet growth requirements in the United
States, we expanded our distribution centers
in Boston, Dallas, Detroit and Orlando. Other
expansion projects are now underway. We
also opened our fifth center in New York State in
Rochester, as well as a new specialty hardware
distribution center in Reading, Pennsylvania.
In addition, we are very pleased with the three
new acquisitions in the U.S. we completed in
December: Compi Distributors, which oper-
ates four distribution centers, three in Missouri
and one in Illinois; HGH Hardware Supply,
also with four distribution centers, including
one in Birmingham, Alabama; one in Nashville,
Tennessee, and two in the Atlanta, Georgia area;
and National Builders Hardware, which runs a
distribution center in Portland, Oregon.
The eight companies that joined us in 2021 are
well positioned in their respective markets and
share similar values to those of Richelieu, parti-
cularly in regard to customer service. They have
allowed us to make promising gains into new
markets and consolidate our position in regions
where we already had an active presence, while
adding $180 million in annual sales. These acqui-
sitions and center openings have expanded our
North American network to 106 strategically
located distribution centers, including 57 in the
United States.
Our innovation strategy is a core
component of our value-added service.
It keeps Richelieu on the cusp of
emerging trends, and as a trendsetter,
enabling us to anticipate our customers'
needs and provide them with the best
functional and decorative solutions the
world has to offer.
By teaming up with the top global manufactu-
rers renowned for their product and innovative
designs featuring the latest technology, we
maintain the most diversified, innovative and
comprehensive offering in our market in North
America. Over the years, we have built strong
and reliable relationships with these manufac-
turers. They have become our partners in inno-
vation, sharing expertise and helping guarantee
access to products with consistent consumer
appeal. Our interactions with our customers and
suppliers help shape the market and are crucial
to quality personalized service.
13
RichelieuAnnual Report 2021 In the past few years, we have introduced a
number of new specialty product categories
to meet changing needs in the field of residen-
tial and commercial renovation, either through
investments in innovation or through our acquisi-
tions. Examples include glass hardware and our
lines of high-end decorative panels. In 2021, we
launched the world’s leading decorative hard-
ware program and further expanded our product
lines with new additions designed to improve
workplace ergonomics, meet demand for green
solutions, enhance the functionality and aesthe-
tics of small spaces in response to the growing
trend in tiny living and provide do-it-yourselfers
and construction and renovation professionals
with efficiency-enhancing tools.
Our two manufacturing plants are also allies
in performance and innovation. We are proud
to supply our manufacturing and retail custo-
mers with products designed to the highest
brand standards, providing them with world-
class solutions that meet their needs for effi-
ciency and competitiveness.
Logistics play a central strategic and
differentiating role at Richelieu and are
a core component of our value-added
service concept. We rely on an expert
logistics team and on technology
solutions tailored to our business and
the needs of our customers.
In 2021, we continued to invest in technol-
ogy solutions that create value for us and our
customers so as to maximize upstream supply
chain efficiency and resource and asset use.
Customer knowledge, predictive analytics, 24/7
accessibility, and operational efficiency are of
the utmost importance to us. We are also intro-
ducing automation to optimize warehouse work-
flows, quality control and storage space use.
With our inventory levels, "one-stop-shop"
service approach and "just in time" operation
model, we readily meet the daily needs of thou-
sands of customers. Efficient logistics are also
a major selling point for richelieu.com as online
sales are growing strongly.
We have pioneered multiaccess service
in our market through digital innovation.
This access to our product offerings helps
ensure personalized local service for an
optimal customer experience – another
essential component of our value-added
service.
We prioritize all processes that optimize busi-
ness communications with our customers and
suppliers. Every year we invest in our multi-
access service. Nearly half of our team, about
1,000 persons, are dedicated to sales, marketing
and customer service, providing customers with
frontline support and advice – including on-site
service – to ensure they find the best products
for their project requirements. Our customers
can reach us on their mobile devices anytime,
anywhere in North America, visit us in person
at our distribution centers and showrooms or
contact our customer service team by phone.
14
RichelieuAnnual Report 2021 With richelieu.com, a key driver of efficient
service and differentiation, we cover the entire
North American market, meeting demand even
in regions where we don’t yet have a physical
presence. Customers can browse our entire
catalog at their own pace and access more than
130,000 products, complete with technical speci-
fications and assembly documents and videos.
They appreciate the convenience of quick and
easy product selection, complete order fulfill-
ment and access to updates and promotions,
as well as the ability to modify preconfigured
products to suit their needs.
In 2022, innovation, collaboration,
ongoing improvement and leadership are
the watchwords guiding us to profitable
growth for the benefit of our customers,
employees, suppliers and shareholders.
We will integrate our 2021 acquisitions to gene-
rate synergies consistent with our value crea-
tion objectives and continue to deepen existing
markets and develop new ones in conjunction
with our development team in Canada and the
United States.
We will pursue our innovation strategy, building
on our collaborative approach to innovation
with customers and suppliers so we can deliver
novel solutions while staying in tune with market
requirements.
The North American market still offers ample
opportunities for expansion, especially in the
United States. Richelieu’s solid financials and
business integration expertise put us in a good
position to forge ahead with our acquisition
strategy. To accelerate growth and consolidate
our North American leadership in 2022, we will
be looking for new opportunities consistent with
our vision and criteria.
Subsequent to the acquisitions completed in
2021, we are proud to have welcomed several
outstanding teams to the Corporation. We
thank them for the expertise and market know-
ledge they bring to the table, and for sharing
in Richelieu’s corporate culture. We also wish
to thank our team, customers, suppliers, direc-
tors and shareholders, as well as all our busi-
ness partners. Richelieu remains focused on its
customers, innovation and results.
President and Chief Executive Officer
Richard Lord
1 5
RichelieuAnnual Report 2021 DIRECTORS AND OFFICE RS
Direc tors
Sylvie Vachon (1)
Corporate Director
Richard Lord
President and Chief Executive Officer
Richelieu Hardware Ltd.
Lucie Chabot (2)
Corporate Director
Robert Courteau (3)
President
Courteau Mainville Management Inc.
Marie Lemay (2)
President
Royal Canadian Mint
Luc Martin (2)
Corporate Director
Pierre Pomerleau (3)
President and Chief Executive Officer
Pomerleau Inc.
Marc Poulin (3)
Corporate Director
(1) Chairman of the Board
(2) Member of the Audit Committee
(3) Member of the Human Resources
and Corporate Governance Committee
Of f icers
Richard Lord
President and Chief executive Officer
Antoine Auclair
Vice-President and Chief Financial Officer
Guy Grenier
Vice-President, Sales and Marketing – Industrial
Alain Charron
Vice-President – Logistics and Supply Chain
Denis Gagnon
Vice-President – Information Technology
Marjolaine Plante
Vice-President – Human Resources
Jeff Crews
Vice-President, Business Development
– Retailers Market, Canada
Craig Ratchford
Vice-President, General Manager
– United States
Larry Lucyshyn
Vice-President, Sales to US Retailers
Éric Daignault
General Manager of Divisions
Marion Kloibhofer
General Manager
– Central Canada Division
John Statton
General Manager
– Western Canada Division
Yannick Godeau
Legal Affairs and Corporate Secretary
1 6
RichelieuAnnual Report 2021 richelieu.com
A key part
of our value-added
service
O
G
R
N O M I C S | INTERACTION |
D
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T
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|
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E
A
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ALIS M | E
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|
E
P
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S
As an efficiency tool, richelieu.com facilitates
business management and communications for
our North American customers and serves as
a Richelieu product showcase that any Internet
user can access. Information about our products
and inventory is synched with our network of
interconnected centers to ensure a consistent sales
strategy across our channels.
Designed to optimize service, richelieu.com allows
us to better inform our customers and provide
web-friendly content to serve them more efficiently.
richelieu.com is a set of portals unique in our
North American market for its:
• Scope;
• Trilingual platform: English, French, Spanish;
• Ergonomic design;
• Level of user interactivity for employees,
customers and suppliers;
• Documentation available in real time,
including photos, technical drawings,
installation guidelines and product demo
videos;
• Transactional features enabling customers
to efficiently complete all their purchases;
• Possibility of configuring some products
based on specific needs.
17
RichelieuAnnual Report 2021
INNOVATION A S A FORCE FOR DIFFE RE NTIATION AND VALUE ADDE D
At Richelieu, we are resolutely
innovation-oriented.
As attentive observers of evolutions in
lifestyle, we keep a close eye on the design
and technology trends and innovations
driving change in residential, commercial
and institutional environments. This is how
we deliver original and effective solutions
that combine durability, looks, eco-design,
comfort and convenience, and meet our
customers’ quest for uniqueness and
efficiency.
Whether they are private label solutions
and/or proprietary products, combined
with product lines sources from top global
manufacturers, including local ones –
our world-class products are a testament
to the kind of know-how that really makes
a difference.
Our vast selection of complementary
decorative and functional solutions is
unique for its diversity and scope and
highly valued by the manufacturers,
retailers, decorators, designers and
architects we do business with.
1 8
RichelieuAnnual Report 2021
Innovation
Kitchen
The kitchen, both a place
of intimacy, creativity and conviviality
To suit every taste and style, the solutions are endless to make
the kitchen contemporary, functional, cozy and inviting.
Innovative storage systems, visible or concealed lighting,
convenient and attractive worktops.
1 9
A n n u e l Re p o r t 202 1
Richelieu Innovative mechanisms
for furniture and kitchens,
allowing, among others, the
design of pantries with sliding
shelves for easy, space-saving,
ergonomic storage.
Perfect combination of design
and functionality. The latest
innovations in corner cabinet
solutions.
A host of storage and
organization solutions
for drawers.
20
RichelieuAnnual Report 2021 Market Influencer
Functionality and design
Understanding of daily life
Multi-purpose shelf rails with concealed lighting.
Functional storage solutions with pull-out systems and swivel shelves
in various materials and colors.
A new easily accessible retractable shelf,
a convenient addition to the kitchen countertop that saves space.
2 1
Ra p p o r t a n n u e l 202 1
RichelieuAnnual Report 2021 The broadest
selection of
decorative
hardware
Innovation, tradition and
trends – A vast collection of
decorative handles to enhance
furniture, cabinets and doors,
as well as the widest selection
of finishes, materials and
designs. Product lines that
combine innovative design and
cutting-edge technology, from
the expertise of worldwide
leading designers.
A complete range of specialty
components, selected for their
functionality and aesthetics,
to meet the changing and
evolving needs and trends
for any type of residential or
commercial setting.
22
RichelieuAnnual Report 2021 Versatility and convenience –
a wide variety of decorative
panels for multiple uses, for
complete or partial coverage,
in an endless array of
materials, finishes and colors,
that enhance the beauty
and comfort of residential,
institutional and commercial
settings.
Decorative surface products
that inspire functional, durable
and stylish residential and
commercial designs.
23
RichelieuAnnual Report 2021 Market Influencer
Storage
Lighting systems
A comprehensive range of hardware products for customizing closets to fit spaces and needs.
Storage solutions that are both attractive and functional for the largest and smallest closets.
A vast choice of ambient, directional and task lighting systems,
adapted to the needs of each piece of furniture, room and layout.
24
RichelieuAnnual Report 2021 Storage
Lighting systems
Extensive product lines and
hardware systems for wall bed
designs of all sizes and styles.
Retractable table mechanisms
to maximize space.
A multitude of complete
and reliable sliding system
solutions to optimize space
and add character to living
areas in a wide variety of
folding, retractable, sliding,
side-opening or vertical
options.
25
RichelieuAnnual Report 2021 Several lines
of functional
hardware are
exclusive to
Richelieu.
A range of functional supports
in elegant and distinctive
designs, in line with
contemporary styling trends,
designed for shelves and
wall installations.
Distinctive
functional
products
A wide variety of products
designed to meet specific
needs such as facilities for
people with reduced mobility
and for small spaces, raised
ceilings, soundproofing for
open spaces, ergonomic
solutions for work at home,
and much more.
26
RichelieuAnnual Report 2021 Transparency
and safety of
glass railings
A complete range of hardware
products used to build balus-
trades with a clean, unclutte-
red look - a must for staircases,
patios and decks for indoor
and outdoor spaces in private
homes, commercial centers
and public areas.
Components
for any type
of doors and
windows
For their residential,
institutional and commercial
projects, glaziers and window
and door manufacturers find
at Richelieu all the required
components for the
manufacturing of doors
and windows.
27
RichelieuAnnual Report 2021 Showrooms
Sales tools
The North American network includes modern and inviting showrooms adjacent to
the distribution centers. They are visited daily by thousands of visitors throughout
the network, who find expert advice and solutions for their projects.
Richelieu provides its customers with a complete range of quality brochures
presenting the products and their references, and exclusive displays.
28
A n n u a l Re p o r t 202 1
Richelieu
SOCIAL AND E NVIRONME NTAL RESPONSIBILIT Y
At all levels of our organization, we are commit-
ted to the safe, efficient and environmentally-
responsible use of resources. By adopting
environmentally-friendly policies and procedures,
constantly striving to increase and promote our
environmentally-responsible product offering,
partnering with our major suppliers and carriers
as well as implementing efficient and effective
energy and waste management programs,
we will ultimately be able to significantly reduce
the carbon footprint of our network.
Fully aware of the major current trends in environ-
mental, social and governance (ESG) disclosure,
and taking into account the opportunities offered
by sustainable development with regard to its
corporate culture, risk management and stra-
tegic thinking, Richelieu recently embarked on
a process aimed at increasing the transparency
of its past and current ESG efforts, the impact of
these efforts on its business activities, and the
way in which these same efforts could contribute
to its future financial results.
And lastly, Richelieu is also involved in various
projects designed to maintain the biodiversity
of the areas where it operates. For example,
we have equipped our head office with a white
roof, we are ensuring the protection of urban
beehives, and we regularly participate in various
educational, conservation and environmental
awareness initiatives, in addition to actively
supporting numerous civic initiatives in the
communities where we operate and where
our team members live and go. These forms of
support include community and charitable organ-
izations dedicated to education, culture
and sports for youth, physical and mental health,
in addition to heritage conservation.
As a supplier of specialty products, we offer a
multitude of products with eco-friendly labels
for green renovation and construction projects.
These thousands of certified products are avail-
able in all our centers and online at richelieu.com.
Showrooms
Sales tools
Antibacterial knobs and surfaces
29
RichelieuAnnual Report 2021
Management’s
Report
Management’s discussion
and analysis of operating results
and financial position
31
32
32
33
33
34
35
36
36
37
39
2021 Highlights
Forward-looking Statements
Non-IFRS Measures
General Business Overview as at November 30, 2021
Mission and Strategy
Financial Highlights
Analysis of Operating Results
Summary of Quarterly Results
Fourth Quarter
Financial Position
Contractual Commitments
Financial Instruments
Internal control over Financial Reporting
Significant Accounting Policies and Estimates
New Accounting Methods
Risk Factors
Share Information
Outlook
Supplementary Information
Management’s Report and Independant Auditor’s Report
Consolidated Financial Statements
Related Notes
CO NTE NTS
39
39
39
40
40
42
42
42
43
45
49
3 0
RichelieuAnnual Report 2021 HIGHLIGHTS OF THE YE AR E NDE D NOVE MBE R 30, 2021
Fiscal 2021 stands out in Richelieu’s financial history as the best
performing year in terms of results and financial position, and one
of the most dynamic in terms of strategic expansion.
Through innovation and acquisition strategies, its distinctive value-
added service concept, the diversification of its market segments
and its team’s expertise, Richelieu continued to benefit from a
favorable context throughout 2021. The sharp increase in its results
shows that, with its strengths and assets, the Corporation was able
to take advantage of the rise in demand in the renovation market as
well as business acquisition opportunities. Both Canadian and U.S
markets made strong contributions to our annual growth, including
in the fourth quarter ended November 30.
In addition to the five acquisitions concluded during the fiscal
year, three acquisitions were completed after November 30, 2021.
Together, these eight acquisitions will enable the Corporation to
strengthen its presence in markets where it was already active,
enter new strategic territories, integrate new teams with solid
market knowledge and add over $180 million in annual sales. These
three latest acquisitions are U.S. distributors of specialty hardware
and complementary products serving manufacturer customers:
Compi Distributors, which operates four distribution centres, three
of which are in Missouri and one in Illinois; HGH Hardware Supply,
which also operates four distribution centres, located in Birmingham,
Alabama, Nashville, Tennessee, and two in Atlanta, Georgia; and
National Builders Hardware, which operates a distribution centre
in Portland, Oregon. The Corporation also opened two U.S. distri-
bution centres in Rochester, New York, and Reading, Pennsylvania,
and expanded several other U.S. centres, notably those located in
Detroit, Boston, Dallas, and Orlando. As a result of these develop-
ments and recent acquisitions, our North American network now
consists of 106 strategically located distribution centres, including
57 in the United States.
With the support and expertise of its Canadian and U.S. teams,
Richelieu intends to continue building on its solid foundation and
successful strategies to further develop markets and create syner-
gies. With its impeccable financial situation and strong cash posi-
tion, the Corporation also intends to pursue its strategic expansion
by seizing new acquisition opportunities that meet its short- and
long-term value creation criteria.
Considering the growth achieved in 2021, an 85.7% increase in
dividend was approved by the Corporation’s Board of Director on
January 20, 2022 thereby raising our quarterly dividend to $0.13
per share.
• Consolidated sales totalled $1,440 million, up 27.7%, of which
22.8% came from internal growth and 4.9% from acquisitions.
• Working capital increased by 20.9% to $456.4 million, for a
current ratio of 3.3:1.
• Cash and cash equivalents totalled $58.7 million compared
to $73.9 million as at November 30, 2020 and total debt was
$6.4 million.
• Average return on equity increased to 23.3% from 16.2% in
fiscal 2020.
• Repurchase of 316,374 common shares for $13.1 million and
payment of $19.4 million in dividends to shareholders. Richelieu
thus distributed $32.5 million to shareholders in 2021 while
maintaining the financial resources necessary for growth in
2022.
Five acquisitions completed in North America in fiscal 2021:
• April 5, 2021: Acquisition of all issued and outstanding shares of
Task Tools, a distributor of tools, power tools accessories and
related products serving the retailer market in Canada and the
United States from two centres in British Columbia and Ontario.
• June 1, 2021: Acquisition of all issued and outstanding shares of
Uscan Industrial Fasteners, a distributor of screws, bolts, and
fasteners serving the retailer market in Canada, operating a
distribution centre in Quebec.
• July 5, 2021: Acquisition, through a newly incorporated subsid-
iary, of 100% of the issued and outstanding shares of Inter-Co,
in partial consideration of which a participation equivalent to
25% has been granted to the sellers. Inter-Co is a distributor
of Division 10 products to the construction industry in Canada
(Ontario) and in the U.S. (Arizona, Ohio and Texas).
• September 1, 2021: Acquisition of all shares of Cook Fasteners, a
specialized distributor of fasteners for the manufacturer market,
operating a distribution centre in Mississauga, Ontario.
• September 20, 2021: Acquisition of all net assets of Industrial
Plywood, a distributor of panels and related products operating
from two centres in Pennsylvania (Reading and Lewistown).
(1) EBITDA and adjusted cash flows from operating activities are non-IFRS
measures, as indicated on page 32 of this report.
• Earnings before
income
interest and amortiza-
taxes,
tion (EBITDA)(1) grew 51.8% to $234.4 million, compared to
$154.5 million last year. EBITDA margin stood at 16.3%, compared
to 13.7% in fiscal 2020.
• Diluted net earnings per share rose to $2.51, up 67.3%
compared to $1.50 in the previous year and net earnings attrib-
utable to shareholders amounted to $141.8 million compared to
$85.2 million last year, up 66.3%.
• Adjusted cash flows from operating activities(1) grew by 47.7%
to $183.0 million compared to $123.9 million for fiscal 2020.
3 1
RichelieuAnnual Report 2021 This Management’s Discussion and Analysis
(“MD&A”)
relates to Richelieu Hardware Ltd.’s consolidated operat-
ing results and cash flows for the year ended November
30, 2021, in comparison with the year ended November 30,
2020, as well as the Corporation’s financial position as at
those dates. This report should be read in conjunction with
the audited consolidated financial statements and accompa-
nying notes for the year ended November 30, 2021 appear-
ing in the Corporation’s 2021 Annual Report. In this MD&A,
“Richelieu” or the “Corporation” designates, as the case may
be, Richelieu Hardware Ltd. and its subsidiaries and divi-
sions, or one of its subsidiaries or divisions. Supplementary
information, such as the Annual Information Form, interim
MD&As, Management Proxy Circular, certificates signed by
the Corporation’s President and Chief Executive Officer and
Vice-President and Chief Financial Officer, as well as press
releases issued during the year ended November 30, 2021,
is available on the System for Electronic Document Analysis
and Retrieval (“SEDAR”) website at www.sedar.com.
The information contained in this MD&A accounts for any
major event that occurred prior to January 20, 2022, on
which date the audited consolidated financial statements
and MD&A were approved by the Corporation’s Board of
Directors. Unless otherwise indicated, the financial informa-
tion presented below, including amounts shown in tables, is
expressed in Canadian dollars and prepared in accordance
with International Financial Reporting Standards (“IFRS”).
FORWARD-LOOKING STATEMENTS
Certain statements set forth in this MD&A, including state-
ments relating to the expected adequacy of cash flows to
cover contractual commitments, to maintain growth and to
provide for financing and investing activities, growth outlook,
Richelieu’s competitive position in its industry, or ability to
weather current economic conditions, access other exter-
nal financing, close new acquisitions, and other statements
not pertaining to past events, 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 on the
assumption that economic conditions and exchange rates
will not significantly deteriorate, that supplies will be suffi-
cient to fulfil Richelieu’s needs, the availability of credit will
remain stable during the year and no extraordinary events
will require supplementary capital expenditures.
Although management believes these assumptions and
expectations to be reasonable based on the information
available at the time they were prepared, they could prove
inaccurate. Forward-looking statements are also subject, by
their very nature, to known and unknown risks and uncertain-
ties such as those related to the industry, acquisitions, labour
relations, credit, key officers, supply and product liability
as well as other factors set forth in the Corporation’s 2021
Annual Report (see the “Risk Factors” section on page 40 of
the 2021 Annual Report available on SEDAR).
Richelieu’s actual results could differ materially from those
indicated in or underlying these forward-looking statements.
The reader is therefore cautioned not to place undue reliance
on these forward-looking statements. Forward-looking state-
ments 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 circum-
stances, except as required by law.
NON-IFRS MEASURES
Richelieu uses earnings before income taxes, interest and
amortization (“EBITDA”) as we believe this measure enables
management to assess the Corporation’s operational perfor-
mance. This measure is a widely accepted performance
indicator of a corporation’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 attrib-
utable to shareholders of the Corporation, as an indicator
of financial performance or cash flows, or as a measure of
liquidity. Since EBITDA does not have a standardized mean-
ing prescribed by IFRS, it may not be comparable to EBITDA
of other companies.
Richelieu also uses adjusted cash flows from operating
activities and adjusted cash flows from operating activities
per share. Adjusted cash flows from operating activities are
based on net earnings plus amortization of property, plant
and equipment, intangible and right-of-use assets, deferred
tax expense (or recovery) and share-based compensation
expense. These additional measures do not consider the
net change in non-cash working capital items in order to
exclude seasonality effects and are used by management
in its assessments of cash flows from long-term operations.
Therefore, adjusted cash flows from operating activities may
not be comparable to the cash flows from operating activities
of other companies.
32
RichelieuAnnual Report 2021 MISSION AND STRATEGY
Richelieu’s mission is to create shareholder value and contrib-
ute to its customers’ growth and success, while favouring a
business culture focused on quality of service and results,
partnership and intrapreneurship.
To sustain its growth and remain the leader in its specialty
market, the Corporation continues to implement the strategy
that has proved beneficial to date, with a particular focus on:
• strengthening its product selection by continuously intro-
ducing each year diversified products that meet its market
segment needs and position it as the specialist in func-
tional and decorative hardware for manufacturers and
retailers;
•
further developing its current markets in Canada and
the United States with the support of a specialized sales
and marketing force capable of providing customers with
personalized service, and
• pursuing its North America expansion by opening new
distribution centres and through efficiently integrated,
profitable acquisitions made at the right price, offering
high growth potential and complementary to its product
mix and expertise.
Richelieu’s solid and proven organization, highly diversified
product selection and long-term relationships with leading
suppliers worldwide allows the Corporation to compete
effectively in a fragmented market consisting mainly of a host
of regional distributors offering a limited range of products.
GENERAL BUSINESS OVERVIEW
as at November 30, 2021
Richelieu is a leading North American importer, manufac-
turer and distributor of specialty hardware and related
products.
Its products are targeted to an extensive customer base of
kitchen and bathroom cabinet, storage and closet, home
furnishing and office furniture, door and window manufac-
turers, residential and commercial woodworkers, as well as
hardware retailers including renovation superstores. The
residential and commercial renovation industry is one of the
Corporation’s principal sources of growth.
Richelieu offers customers a broad mix of products sourced
from manufacturers worldwide. The solid relationships
Richelieu has built with the world’s leading suppliers enable
it to provide customers with the latest innovative products
tailored to their business needs. The Corporation’s product
selection consists of over 130,000 different items target-
ing a base of more than 100,000 active customers served
by 97 centres across North America of which 47 distribu-
tion centres in Canada, 48 distribution centres in the United
States and 2 manufacturing plants in Canada.
Main product categories include furniture, glass and build-
ing decorative and functional hardware, lighting systems,
finishing and decorative products, ergonomic workstation
components, kitchen and closet storage solutions, sliding
door systems, decorative and functional panels, high-pres-
sure laminates, railings and balusters, floor protection prod-
ucts as well as accessories for power tools. This offering is
completed by the Corporation’s two manufacturing subsid-
iaries, Les Industries Cedan Inc. and Menuiserie des Pins
Ltée, which manufacture a variety of veneer sheets and edge
banding products as well as a broad selection of decorative
mouldings and components for the window and door indus-
try. Many of the Corporation’s products are manufactured
according to its specifications and those of its customers.
The Corporation employs over 2,500 people throughout its
network, close to half of whom work in marketing, sales and
customer service. Nearly 50% of the Corporation’s employees
are Richelieu shareholders.
33
RichelieuAnnual Report 2021 FINANCIAL HIGHLIGHTS
(in thousands of $, except per-share amounts, number of shares and data expressed as a %)
Years ended November 30
Sales
EBITDA(1)
EBITDA margin (%)
Net earnings
Net earnings attributable to shareholders of the Corporation
• per share - basic ($)
• per share - diluted ($)
Net margin attributable to shareholders of the Corporation (%)
2021
$
2020
$
2019 (3)
$
2018
$
2017
$
1,440,416
1,127,840
1,041,647 1,004,400
942,545
234,398
154,461
124,207
105,991
102,974
16.3
13.7
142,331
141,764
85,6 1 1
85,222
2.54
2.51
9.8
1 .51
1.50
7.6
11.9
66,671
66,471
1.17
1.16
6.4
10.6
10.9
67,964
67,777
67,932
67,704
1.18
1.17
6.7
1.17
1.15
7.2
Adjusted cash flows from operating activities (2)
182,991
121,125
98,390
83,783
79,951
• per share - diluted ($)
Dividends paid to shareholders of the Corporation
• per share ($)
3.24
19,374
0.280
2.14
1.72
1.45
11,284
14,424
13,824
0.200
0.253
0.240
1.36
13,157
0.227
Weighted average number of shares outstanding (diluted) (in thousands)
56,466
56,646
57,192
58,064
58,659
As at November 30
Total assets
Working capital
Current ratio
964,180
771,056
672,146
569,1 1 9
542,667
456,376
377,408
335,467
329,343
300,1 1 6
3.3
3.6
4.1
4.6
4.0
Equity attributable to shareholders of the Corporation
666,442
551,094
498,384
470,278
434,092
Return on average shareholders’ equity (%)
Book value per share ($)
Total debt
Cash and cash equivalents
23.3
1 1 . 93
6,439
16.2
9.86
5,792
58,707
73,928
13.7
8.86
5,659
24,701
15.0
8.23
2,023
7,408
16.3
7.51
4,294
29,162
(1) EBITDA is a non-IFRS measure, as indicated on page 32 of this report.
(2) Adjusted cash flows from operating activities and adjusted cash flows from operating activities per share are non-IFRS measures, as
indicated on page 32 of this report.
(3) Those figures have been restated following the adoption of IFRS 16 on December 1, 2019.
3 4
RichelieuAnnual Report 2021 ANALYSIS OF OPERATING RESULTS FOR THE YEAR ENDED NOVEMBER 30, 2021, COMPARED
WITH THE YEAR ENDED NOVEMBER 30, 2020
Consolidated sales
(in thousands of $, except exchange rates)
Consolidated EBITDA and EBITDA margin
(in thousands of $, unless otherwise indicated)
Years ended November 30
2021
$
2020
$
∆ (%)
Years ended November 30
Canada
944,836
729,957
+29.4
Sales
United States (CA$)
495,580
397,883
+24.6
EBITDA
(US$)
395,605
296,329
+33.5
EBITDA margin (%)
2021
$
2020
$
1,440,416
1,127,840
234,398
154,461
16.3
13.7
Earnings before income taxes, interest and amortization
(EBITDA) totalled $234.4 million, up by $79.9 million or 51.8%
over 2020. As for the EBITDA margin, it stood at 16.3%,
compared with 13.7% for 2020, resulting from improved gross
margin, increased sales and cost control.
Amortization expenses amounted to $37.0 million compared
with $34.0 million for 2020, an increase of $3.0 million resulting
from the increase in the amortization of intangible assets and
right-of-use assets mainly relating to business acquisitions
as well as lease renewals and expansions made during the
year. Income taxes amounted to $52.4 million, an increase of
$20.3 million over 2020.
Consolidated net earnings attributable to shareholders
(in thousands of $, unless otherwise indicated)
Years ended November 30
EBITDA
Amortization of property, plant and
equipment, intangible assets and
right-of-use assets
Financial costs, net
Income taxes
Net earnings
2021
2020
$
$
234,398
154,461
36,957
34,022
2,700
2,682
52,410
32,146
142,331
85,61 1
Net earnings attributable to shareholders
of the Corporation
141,764
85,222
Net margin attributable to the
shareholders of the Corporation (%)
Non-controlling interests
Net earnings
9.8
567
7.6
389
142,331
85,611
Average exchange rates
1.2527
1.3427
Consolidated sales
1 ,440,416
1,127,840
+27.7
Consolidated sales reached $1,440.4 million, an increase of
$312.6 million or 27.7% over 2020, of which 22.8% from internal
growth and 4.9% from acquisitions. At comparable exchange
rates to 2020, the consolidated sales growth would have been
30.9% for the year ended November 30, 2021.
Sales to manufacturers grew to $1,203.6 million, compared
with $919.5 million for fiscal 2020, an increase of $284.1 million
or 30.9%, of which 26.9% from internal growth and 4.0% from
acquisitions. Sales to hardware retailers and renovation super-
stores grew by 13.7% or $28.5 million to total $236.8 million, of
which 4.9% from internal growth and 8.8% from acquisitions.
In Canada, Richelieu achieved sales of $944.8 million, compa-
red with $730.0 million for fiscal 2020, up by $214.8 million
or 29.4%, of which 24.5% from internal growth and 4.9% from
acquisitions. Sales to manufacturers rose to $767.5 million, up
by $188.4 million or 32.5%, of which 29.3% from internal growth
and 3.2% from acquisitions. Sales to hardware retailers and
renovation superstores reached $177.3 million, compared with
$150.8 million, up by $26.5 million or 17.6% over fiscal 2020, of
which 6.4% from internal growth and 11.2% from acquisitions.
These increases are the result of increased demand in the
renovation market in Canada as well as higher selling prices.
In the United States, the Corporation recorded sales of
US$395.6 million, compared with US$296.3 million for fiscal
2020, an increase of US$99.3 million or 33.5%, of which
28.1% from internal growth and 5.4% from acquisitions. Sales
to manufacturers totalled US$348.1 million, compared with
US$253.5 million, an increase of US$94.6 million or 37.3%
over fiscal 2020, of which 31.5% from internal growth and
5.8% from acquisitions. Sales to hardware retailers and reno-
vation superstores were up by 11.0% compared to fiscal 2020,
of which 8.2% from an internal growth and 2.8% from acqui-
sitions. As in Canada, these increases can be explained by a
higher demand in the renovation market as well as the increase
of selling prices. Considering exchange rates, U.S. sales
expressed in Canadian dollars amounted to $495.6 million,
compared with $397.9 million for 2020, an increase of 24.6%.
They accounted for 34.4% of consolidated sales in fiscal 2021,
whereas they represented 35.3% of the year’s consolidated
sales in fiscal 2020.
35
RichelieuAnnual Report 2021
FOURTH QUARTER ENDED NOVEMBER 30,
2021
Fourth-quarter consolidated sales amounted to $398.2 million,
compared with $319.0 million for the corresponding quarter
of 2020, an increase of $79.2 million or 24.8%, of which 17.1%
resulting of internal growth and 7.7% from acquisitions. At
comparable exchange rates to the fourth quarter of 2020, the
consolidated sales growth would have been 26.9% for the quar-
ter ended November 30, 2021.
Richelieu achieved sales of $338.7 million in the manufacturers
market, compared with $265.1 million for the fourth quarter of
2020, an increase of $73.6 million or 27.8%, of which 21.2% from
internal growth and 6.6% from acquisitions. These increases
come from increased demand in the renovation market as well
as higher selling prices. Sales to hardware retailers and reno-
vation superstores stood at $59.5 million, up by $5.6 million or
10.4% over the fourth quarter of 2020, of which 13.1% resulting
from acquisitions and 2.7% from internal decrease, thus reducing
the volume of business to a pre-pandemic level. It should be
noted that in the second half of 2020, the Corporation benefited
from the favorable fallout of strong demand in the renovation
market in the context of the pandemic.
In Canada, Richelieu recorded sales of $260.1 million, an in-
crease of $45.1 million, or 21.0%, over the fourth quarter of 2020.
Sales to manufacturers amounted to $215.0 million, an increase
of 23.6% of which 18.9% resulting from internal growth and 4.7%
from acquisitions. Sales to hardware retailers and renovation
superstores reached $45.1 million, up by $4.1 million or 10.0%.
In the United States, sales totalled US$109.9 million, compared
with US$78.9 million for the fourth quarter of 2020, an increase
of US$31.0 million or 39.3%, of which 30.5% resulting from inter-
nal growth and 8.8% from acquisitions. Sales to manufacturers
amounted to US$98.4 million, an increase of US$29.3 million
or 42.4% over the fourth quarter of 2020. Sales to hardware
retailers and renovation superstores were up by US$1.7 million,
or 17.3%, from the corresponding quarter of 2020. Considering
exchange rates, total U.S. sales expressed in Canadian dollars
stood at $138.1 million, an increase of 32.8%. They accounted
for 34.7% of consolidated sales for the fourth quarter of 2021,
whereas they had represented 32.6% of the period’s consolidat-
ed sales for the fourth quarter of 2020.
Earnings before income taxes, interest and amortization
(EBITDA) amounted to $71.3 million compared with $46.7 million
in the fourth quarter of 2020, up 52.7%. EBITDA margin stood
at 17.9%, compared with 14.6% for the fourth quarter of 2020,
resulting from improved gross margin, increased sales and con-
tinued cost control.
Amortization expenses amounted to $10.6 million compared
with $8.7 million for the corresponding quarter of 2020, an in-
crease of $1.9 million. Income taxes amounted to $15.1 million
compared with $10.2 million for the fourth quarter of 2020.
Net earnings rose 66.3%. Considering non-controlling inter-
ests, net earnings attributable to shareholders of the Corpor-
ation totalled $141.8 million, an increase of 66.3% compared to
2020. Net earnings per share amounted to $2.54 basic and
$2.51 diluted, compared with $1.51 basic and $1.50 diluted for
2020, an increase of 68.2% and 67.3% respectively.
Comprehensive income totalled $141.1 million, reflecting a
negative adjustment of $1.2 million on translation of the finan-
cial statements of the subsidiary in the United States, com-
pared with $81.9 million for 2020, which reflected a negative
adjustment of $3.7 million on translation of the financial state-
ments of the subsidiary in the United States.
SUMMARY OF QUARTERLY RESULTS (unaudited)
(in thousands of $, except per-share amounts)
Quarters
1
2
3
4
2021
• Sales
• EBITDA
• Net earnings attributable
to shareholders of the
Corporation
basic per share
diluted per share
2020
• Sales
• EBITDA
• Net earnings attributable
to shareholders of the
Corporation
basic per share
diluted per share
2019 (1)
• Sales
• EBITDA
• Net earnings attributable
to shareholders of the
Corporation
basic per share
diluted per share
297,581 371,384 373,298 398,1 53
71,345
38,162
60,954
63,937
20,984
0.38
0.37
37,425
0.67
0.66
38,749
0.69
0.69
44,606
0.80
0.79
249,401 248,253 3 1 1 ,1 7 1
49,083
33,770
24,883
319,015
46,725
11,772
0.21
0.21
17,707
0.31
0.31
28,651
0.5 1
0.50
27,092
0.48
0.48
226,351 281,067 269,243 264,986
35,010
20,936
33,890
34,3 7 1
9,943
0.17
0.17
19,090
0.33
0.33
18,291
0.32
0.32
19,147
0.34
0.34
(1) These figures have been restated following the adoption of
IFRS 16 on December 1, 2019.
Quarterly variations in earnings — The first quarter closed
at the end of February is generally the year’s weakest for
Richelieu in light of fewer number of business days due to the
end-of-year holiday period and a wintertime slowdown in reno-
vation and construction work. The third quarter ending August
31 also includes fewer business days due to the summer holi-
days, which can be reflected in the period’s financial results.
The second and fourth quarters respectively ending May 31
and November 30 generally represent the year’s most active
periods.
Note: For further information about the Corporation’s performance
in the first, second and third quarters of 2021, the reader is referred
to the interim management’s reports available on SEDAR’s website
at www.sedar.com.
3 6
RichelieuAnnual Report 2021
Net earnings were up by 64.7%. Considering non-controlling
interests, net earnings attributable to shareholders of the
Corporation amounted to $44.6 million, up by 64.6% over the
fourth quarter of 2020. Net earnings per share rose to $0.80
basic and $0.79 diluted, compared with $0.48 basic and diluted
for the fourth quarter of 2020, an increase of 66.7% and 64.6%
respectively.
Comprehensive income amounted to $47.2 million, reflecting a
positive adjustment of $2.4 million on translation of the financial
statements of the subsidiary in the United States, compared with
$26.4 million for the fourth quarter of 2020, which reflected a
negative adjustment of $0.9 million on translation of the financial
statements of the subsidiary in the United States.
Cash flows from operating activities (before net change in
non-cash working capital balances) amounted to $55.0 million
or $0.97 per share, compared with $36.2 million or $0.64 per
share for the fourth quarter of 2020, an increase of 51.8% re-
sulting primarily from net earnings increase. Net change in non-
cash working capital balances used cash flows of $41.6 million,
reflecting the change in inventory and accounts receivable of
$41.7 million, whereas the change in accounts payable and other
items represented a cash inflow of $0.1 million. Consequently,
operating activities provided cash flows of $13.3 million, com-
pared with $33.5 million for the fourth quarter of 2020.
Financing activities used cash flows of $11.2 million, compared
with $31.0 million for the fourth quarter of 2020. This change
was primarily driven by common shares repurchases of $25.0
million for the fourth quarter of 2020 while no share repurchases
were made in the fourth quarter of 2021.
Investing activities used cash flows of $10.2 million in the fourth
quarter, of which $5.2 million for business acquisitions and
$5.0 million mainly for equipment to maintain and improve oper-
ational efficiency.
FINANCIAL POSITION
Analysis of significant cash flows for the year ended
November 30, 2021
Change in cash and cash equivalents and capital
resources
(in thousands of $, unless otherwise indicated)
Years ended November 30
Cash flows provided by
(used in):
Operating activities
Financing activities
Investing activities
2021
$
2020
$
104,406
148,513
(53,691)
(53,642)
(66,490)
(45,515)
Effect of exchange rate fluctuations
554
(129)
Net change in cash and
cash equivalents
Cash and cash equivalents,
beginning of year
Cash and cash equivalents end
of year
As at November 30
Working capital
(15,221)
49,227
73,928
24,7 0 1
58,707
73,928
2021
2020
456,376
377,408
Renewable line of credit (CA$)
65,000
65,000
Renewable line of credit (US$)
6,000
6,000
Operating activities
Cash flows from operating activities (before net change in
non-cash working capital balances) reached $183.0 million
or $3.24 diluted per share, compared with $123.9 million or
$2.19 diluted per share for 2020, an increase of 47.7% stem-
ming primarily from an increase in net earnings. Net change
in non-cash working capital balances used cash flows of
$78.6 million, primarily representing changes in inventory
and accounts receivable of $117.5 million whereas accounts
payable and other items represented a cash inflow of $38.9
million. Consequently, operating activities provided cash flows
of $104.4 million compared with $148.5 million for 2020.
Financing activities
Financing activities used cash flows of $53.7 million, compared
with $53.6 million for 2020. During the year, Richelieu repaid
long-term debt of $6.4 million, paid lease obligations of
$19.4 million and issued shares for $5.2 million, compared
to a long-term debt repayment of $5.2 million, lease obliga-
tions payments of $17.5 million and a $5.6 million share issue
in 2020. Dividends paid to shareholders of the Corporation
amounted to $19.4 million compared to $11.3 million up by 71.7%
over 2020.
37
RichelieuAnnual Report 2021
Note that the Corporation paid a special dividend of $0.0667
per share in addition to a dividend of $0.07 per share in the
first quarter of 2021. The Corporation also repurchased
common shares for an amount of $13.1 million compared with
$25.0 million in 2020.
Analysis of financial position as at
November 30, 2021
Summary of financial position
(in thousands of $, except exchange rates)
Investing activities
Investing activities used cash flows of $66.5 million, of which
$49.4 million for business acquisitions and $17.1 million, mainly
for equipment to maintain and improve operational efficiency
and for IT equipment.
Sources of financing
As at November 30, 2021, cash and cash equivalents
amounted to $58.7 million, compared with $73.9 million as at
November 30, 2020. The Corporation had a working capital
of $456.4 million for a current ratio of 3.3:1, compared with
$377.4 million (3.6:1 ratio) as at November 30, 2020.
Richelieu believes it has the capital resources to fulfill its
ongoing commitments and obligations and to assume the
funding requirements needed for its growth and the financing
and investing activities between now and the end of 2022.
The Corporation continues to benefit from an authorized line
of credit of $65 million as well as a line of credit of US$6 million
renewable annually and bearing interest at prime and base
rates respectively. In addition, Richelieu considers it could
obtain access to other outside financing if necessary.
The expectation set forth above consists of forward-looking infor-
mation based on the assumption that economic conditions and
exchange rates will not deteriorate significantly, operating expenses
will not increase considerably, deliveries will be sufficient to fulfill
Richelieu’s requirements, the availability of credit will remain stable
in 2022, and no unusual events will entail additional capital expen-
ditures. This expectation also remains subject to the risks identified
under the “Risk Factors” section.
As at November 30
Current assets
Non-current assets
Total
Current liabilities
Non-current liabilities
Equity attributable to shareholders
of the Corporation
Non-controlling interests
Total
2021
2020
$
$
659,179
522,702
305,001
248,354
964,180
771,056
202,803
145,294
92,440
7 1 , 3 1 9
666,442
551,094
2,495
3,349
964,180
771,056
Exchange rates on translation of a
subsidiary in the United States
1.279
1.297
Assets
Total assets amounted to $964.2 million as at November 30,
2021, compared with $771.1 million as at November 30, 2020.
Current assets increased by 26.1% or $136.5 million from
November 30, 2020. This increase stems from the addition
of current assets following the business acquisitions made
during the year, from internal growth of the business and,
to a lesser extent, to increase of inventory supply costs.
Non-current assets increased by 22.8% mainly due to the
addition of intangible assets and goodwill related to busi-
ness acquisitions,
Cash position and long-term debt
(in thousands of $)
As at November 30
Current portion of long-term debt
Long-term debt
Total debt
2021
2020
$
5,339
1,100
6,439
$
3,592
2,200
5,792
Cash and cash equivalents
58,707
73,928
As at November 30, 2021, the Corporation continues to bene-
fit from a healthy and solid financial position. Total debt was
$6.4 million, representing balances payable on acquisitions.
Equity attributable to shareholders of the Corporation to-
talled $666.4 million as at November 30, 2021, compared
with $551.1 million as at November 30, 2020, an increase of
$115.3 million. This increase is mainly due to a rise of $109.7 mil-
lion in retained earnings, which amounted to $590.5 million,
and of $6.9 million in share capital and contributed surplus,
while accumulated other comprehensive income was down
by $1.2 million. As at November 30, 2021, the book value per
share was $11.93, up by 21.0% over November 30, 2020, and
the return on average shareholders’ equity was 23.3%.
3 8
RichelieuAnnual Report 2021 As at November 30, 2021, the Corporation’s share capital con-
sisted of 55,841,119 common shares (55,893,568 shares as at
November 30, 2020). In 2021, upon the exercise of stock op-
tions under the stock option plan, Richelieu issued 263,925
common shares at an average price of $19.54 (331,900 in
2020 at an average price of $16.92). In addition, 316,374 com-
mon shares were repurchased for cancellation under the nor-
mal course issuer bid for a cash consideration of $13.1 million
in 2021 (678,362 common shares for a cash consideration
of $25.0 million in 2020). The Corporation granted 289,000
stock options in fiscal 2021 (300,500 in 2020) and cancelled
31,875 (41,375 in 2020). Consequently, as at November 30,
2021, 1,691,125 stock options were outstanding (1,697,925 as at
November 30, 2020).
CONTRACTUAL COMMITMENTS
Summary of contractual financial commitments as at
November 30, 2021
(in thousands of $)
Less than
1 year
Between 1
and 5 years
More
than
5 years
Total
Long-term debt
Operating leases
Total
5,339
20,753
26,092
1,100
— 6,439
56,883 25,899 103,535
57,983 25,899 109,974
For 2022 and for the foreseeable future, the Corporation
expects that cash flows from operating activities and other
sources of financing will be sufficient to meet its ongoing con-
tractual commitments
The expectation set forth above consists of forward-looking informa-
tion based on the assumption that economic conditions and exchange
rates will not deteriorate significantly, operating expenses will not inc-
rease considerably, deliveries will be sufficient to fulfill Richelieu’s re-
quirements, the availability of credit will remain stable in 2022, and no
unusual events will entail additional capital expenditures. This expec-
tation also remains subject to disclosed “Risk Factors”.
FINANCIAL INSTRUMENTS
Richelieu periodically enters into foreign exchange forward
contracts to fully or partially hedge the effects of foreign
currency fluctuations related to foreign-currency denominated
liabilities or to hedge forecasted purchase transactions. The
Corporation has a policy of not entering into derivatives for
speculative or negotiation purposes and to enter into these
contracts only with major financial institutions.
Richelieu also uses equity swaps to reduce the effect of fluctu-
ations in its share price on net earnings in connection with its
deferred share unit plan.
In notes 1 and 12 of the audited consolidated financial state-
ments for the year ended November 30, 2021, the Corporation
presents the information on the classification and fair value of
its financial instruments, as well as on their value and manage-
ment of the risks arising from their use.
INTERNAL CONTROL OVER FINANCIAL
REPORTING
Management has designed and evaluated internal controls
over financial reporting (ICFR) and disclosure controls and
procedures (DC&P) to provide reasonable assurance that the
Corporation’s financial reporting is reliable and that its publicly
disclosed financial statements are prepared in accordance with
IFRS. The President and Chief Executive Officer and the Vice-
President and Chief Financial Officer have assessed, within
the meaning of National Instrument 52-109 - Certification of
Disclosure in Issuers’ Annual and Interim Filings, the design
and the effectiveness of internal controls over financial report-
ing as at November 30, 2021. In light of this assessment, they
concluded that the design and the effectiveness of internal
controls over financial reporting (ICFR and DC&P) were effect-
ive. During the year ended November 30, 2021, manage-
ment ensured that there were no material changes in the
Corporation’s procedures that were reasonably likely to have a
material impact on its internal control over financial reporting.
No such changes were identified.
Due to their intrinsic limits, internal controls over financial
reporting only provide reasonable assurance and may not
prevent or detect misstatements. In addition, projections of an
assessment of effectiveness in future periods carry the risk that
controls will become inappropriate as a result of changes in
conditions or if the degree of conformity with standards and
methods should deteriorate.
SIGNIFICANT ACCOUNTING POLICIES AND
ESTIMATES
The Corporation’s audited consolidated financial statements
for the year ended November 30, 2021, have been prepared
by management in accordance with International Financial
Reporting Standards (IFRS). The preparation of the consoli-
dated financial statements requires management to make esti-
mates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes.
These estimates are based on management’s best know-
ledge of current events and actions that the Corporation may
undertake in the future and other factors deemed relevant and
reasonable.
The judgments made by management in applying the account-
ing policies that have the most significant effect on the amounts
recognized in the consolidated financial statements and the
assumptions about the future and other major sources of esti-
mation uncertainty as at the end of the reporting period that
could potentially result in material adjustments to the carrying
amount of assets and liabilities during the following period are
summarized as follows:
Impairment of inventory, including inventory losses and obso-
lescence, requires the use of judgment and assumptions
that may affect the amounts reported in the consolidated
financial statements. The underlying estimates and assump-
tions are reviewed regularly. Revised accounting estimates,
if any, are recognized in the period in which the estimates
are revised, as well as in the future periods affected by the
revisions. Actual results could differ from those estimates.
39
RichelieuAnnual Report 2021 SUBSEQUENT EVENTS
Foreign currency
Effective December 31, 2021, the Corporation acquired the prin-
cipal net assets of Compi Distributors, a distributor of special-
ized hardware operating four distribution centres in St. Louis,
MO, Kansas City, MO, Ozark, MO and Springfield, IL., HGH
Hardware Supply, a distributor of specialized hardware oper-
ating four distribution centres in Birmingham, AL, Nashville,
TN and two in Atlanta, GA and National Builders Hardware, a
distributor of specialized hardware operating one distribution
centre in Portland, OR, for a cash consideration of $46 million,
subject to certain conditions. Together these transactions will
generate sales estimated at $100 million annually.
NEW ACCOUNTING METHODS
At the date of approval of the financial statements, no new
applicable standards or interpretation of existing standards
or new amendments that have been published need to be
adopted by the Corporation.
RISK FACTORS
Richelieu is exposed to different risks that can have a material
adverse effect on its profitability. To offset such risks, the
Corporation has adopted various strategies adapted to the
major risk factors below:
Richelieu is exposed to the risks related to currency fluctua-
tions, primarily in regard to foreign-currency denominated
purchases and sales made abroad.
The Corporation’s products are regularly sourced from abroad.
Thus, any increase in foreign currencies (primarily the U.S.
dollar and euro) compared with the Canadian dollar tends to
raise its supply cost and thereby affect its consolidated finan-
cial results. These currency fluctuations related risks are miti-
gated by the Corporation’s ability to adjust its selling prices
within a relatively short timeframe so as to protect its profit
margins although significant volatility in foreign currencies may
have an adverse impact on its sales.
Sales made abroad are mainly recorded in the United States
and account for approximately 34% of Richelieu’s total sales.
Any volatility in the Canadian dollar therefore tends to affect
consolidated results. This risk is partially offset by the fact that
major purchases are denominated in U.S. dollars.
To manage its currency risk, the Corporation uses derivative
financial instruments, more specifically forward exchange
contracts in U.S. dollars and euros. There can be no assurance
that the Corporation will not sustain losses arising from these
financial instruments or fluctuations in foreign currency.
Economic conditions
Supply and inventory management
The Corporation’s business and financial results partly depend
on general economic conditions and the economic factors
specific to the renovation and construction industry. Any
economic downturn could lead to a decline in sales and have
an adverse impact on the Corporation’s financial performance.
Market and competition
The specialty hardware and renovation products segment is
highly competitive. Richelieu has developed a business strat-
egy rooted in a diversified product offering in various targeted
niche markets in North America and sourced from suppliers
around the world, in creative marketing and in unparalleled
expertise and quality of service. Up to now, this strategy has
enabled it to benefit from a solid competitive edge. However, if
Richelieu were unable to implement its business strategy with
the same success in the future, it could lose market shares and
its financial performance could be adversely affected.
Richelieu must anticipate and meet its customers’ supply
needs. To that end, Richelieu must maintain solid relationships
with suppliers respecting its supply criteria. The inability to
maintain such relationships or to efficiently manage the supply
chain and inventories could affect the Corporation’s financial
position. Similarly, Richelieu must track trends and its custom-
ers’ preferences and maintain inventories meeting their needs,
failing which its financial performance could be adversely
affected.
To mitigate its supply-related risks, Richelieu has built solid
long-term relationships with numerous suppliers on several
continents, most of whom are world leaders.
Acquisitions
Acquisitions in North America remain an important strategic
focus for Richelieu. The Corporation will maintain its strict
acquisition criteria and pay particular attention to the integra-
tion of its acquisitions. Nevertheless, there is no guarantee
that a business matching Richelieu’s acquisition criteria will be
available and there can be no assurance that the Corporation
will be able to make acquisitions at the same pace as in the
past. However, the fact that the U.S. market remains highly
fragmented and that acquisitions are generally of limited size
reduces the inherent financial and operational risks.
4 0
RichelieuAnnual Report 2021 A breach of the Corporation’s IT security, loss of customer data
or system disruption could adversely affect its business and
reputation.
Richelieu’s business is dependent on its online sales, payroll,
transaction, financial, accounting and other data processing
systems. The Corporation relies on these systems to process,
on a daily basis, a large number of transactions. Any security
breach in its business processes and/or systems has the poten-
tial to impact its customer information, which could result in the
potential loss of business. If any of these systems fail to oper-
ate properly or become disabled, the Corporation could poten-
tially lose control of customer data and suffer financial loss, a
disruption of its businesses, liability to customers, regulatory
intervention or damage to its reputation.
In addition, any issue of data privacy as it relates to unauthor-
ized access to, or loss of, customers and/or employees infor-
mation could result in the potential loss of business, damage to
Richelieu’s market reputation, litigation and regulatory investi-
gation and penalties.
To reduce its risk, the Corporation continuously invests in the
security of its IT systems, business processes improvements
and enhancements to its culture of information security.
Natural disasters, terrorist acts, civil unrest, pandemics and
other disruptions and dislocations, such as the recent COVID-
19 (coronavirus), may adversely affect the Corporation.
Upon the occurrence of a natural disaster, or upon an incident
of war, riot or civil unrest, the impacted country, province, state
or region may not efficiently and quickly recover from such
event, which could have a materially adverse effect on the
Corporation, its customers, and/or either of their businesses
or operations. Terrorist attacks, public health crisis including
epidemics, pandemics or outbreaks of new infectious disease
or viruses including, most recently, the COVID-19 outbreak,
domestic and global trade disruptions, infrastructure disrup-
tions, civil disobedience or unrest, natural disasters, national
emergencies, acts of war, technological attacks and related
events can result in volatility and disruption to local and global
supply chains, operations, mobility of people and the finan-
cial markets, which could affect interest rates, credit ratings,
credit risk, inflation, business, financial conditions, results of
operations and other factors relevant to the Corporation, its
customers, and/or either of their businesses or operations,
which may have a material adverse effect on the Corporation’s
reputation, business, financial conditions or operating results.
Credit
The Corporation is exposed to the credit risk related to its
accounts receivable. Richelieu has adopted a policy defining
the credit conditions for its customers to safeguard against
credit losses arising from doing business with them. For each
customer, the Corporation sets a specific limit that is regularly
reviewed. The diversification of its products, customers and
suppliers reasonably safeguards the Corporation against a
concentration of its credit risk. No customer of the Corporation
accounts for more than 10% of its revenues
Labour relations and qualified employees
To achieve its objectives, Richelieu must attract, train and
retain qualified employees while controlling its payroll. The
inability to attract, train and retain qualified employees and to
control its payroll could have an impact on the Corporation’s
financial performance. Close to 15% of Richelieu’s workforce
is unionized. The Corporation’s policy is to negotiate collective
agreements at conditions enabling it to maintain its competitive
edge and a positive and satisfactory working environment for
its entire team. Richelieu has not experienced any major labour
conflicts over the past five years. Any interruption in operations
as a result of a labour conflict could have an adverse impact on
the Corporation’s financial results.
Stability of key officers
Richelieu offers a stimulating working environment and a
competitive compensation plan, which help it retain a stable
management team. Failure to retain the services of a highly
qualified management team could compromise the success
of Richelieu’s strategic execution and expansion, which could
have an adverse impact on its financial results. To adequately
manage its future growth, the Corporation adjusts its organiz-
ational structure as needed and strengthens the teams at the
various levels of its business. It should be noted that close to
50% of its employees, including senior officers, are Richelieu
shareholders.
Product liability
In the normal course of business, Richelieu is exposed to vari-
ous product liability claims that could result in major costs and
affect the Corporation’s financial position. Richelieu has agree-
ments containing the usual limits with insurance companies to
cover the risks of claims associated with its operations.
IT contingency plan and data security
The IT structure implemented by Richelieu enables it to support
its operations and contributes to ensure their efficiency. As
the occurrence of a disaster, including a major interruption of
its computer systems, could affect its operations and finan-
cial performance, the Corporation has implemented a crisis
management and IT contingency plan to reduce the extent of
such a risk. This plan provides among others for an alternate
physical location in the event of a disaster, generators in the
event of power outages and a relief computer as powerful as
the central computer.
41
RichelieuAnnual Report 2021 SHARE INFORMATION AS AT JANUARY 20, 2022
SUPPLEMENTARY INFORMATION
Issued and outstanding common shares:
55,848,619
Outstanding stock options:
1,956,875
Further information about Richelieu, including its latest Annual
Information Form, is available on the System for Electronic
Document Analysis and Retrieval
(SEDAR) website at
www.sedar.com.
OUTLOOK
In 2022, Richelieu will continue to be customer oriented
and focus on quality of service and innovation. Its two major
sources of growth will remain innovation and business acqui-
sition strategies in its sector. The Corporation will pursue its
current market development in North America and its efforts
to penetrate new territories, especially in the United States.
It remains on the lookout for strategic acquisitions to further
strengthen its positioning and create additional sales and
operational synergies, while giving priority to operational effi-
ciency and sound financial management.
(Signed) Richard Lord
President and
Chief Executive Officer
(Signed) Antoine Auclair
Vice-President and
Chief Financial Officer
January 20, 2022
42
RichelieuAnnual Report 2021 MANAGEMENT’S REPORT
Related to the consolidated financial statements
The consolidated financial statements of Richelieu Hardware Ltd.
(the
“Corporation”) are the responsibility of the Corporation’s management. These
consolidated financial statements have been prepared by management in
accordance with IFRS and approved by the Board of Directors.
The Corporation maintains accounting and internal control systems which,
in management’s opinion, reasonably ensure the accuracy of the financial
information and maintain proper standards of conduct in the Corporation’s
activities.
The Board of Directors fulfills its responsibility regarding the consolidated
financial statements, primarily through its Audit Committee. This committee
which meets periodically with the Corporation’s managers and external
auditors, has reviewed the consolidated financial statements of the Corporation
and has recommended that they be approved by the Board of Directors.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of
most significance in our audit of the consolidated financial statements of the
current period. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters. For the
matter below, our description of how our audit addressed the matter is provi-
ded in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities
for the audit of the consolidated financial statements section of our report,
including in relation to these matters. Accordingly, our audit included the per-
formance of procedures designed to respond to our assessment of the risks
of material misstatement of the consolidated financial statements. The results
of our audit procedures, including the procedures performed to address the
matter below, provide the basis for our audit opinion on the accompanying
consolidated financial statements.
Key audit matter
The consolidated financial statements have been audited by the Corporation’s
external auditors, Ernst & Young LLP, Chartered Professional Accountants.
Valuation of customer relationships acquired through business
acquisitions
Montreal, Canada, January 20, 2022
(Signed) Richard Lord
President and
Chief Executive Officer
(Signed) Antoine Auclair
Vice-President and
Chief Financial Officer
INDEPENDANT AUDITOR’S REPORT
To the shareholders of Richelieu Hardware Ltd.
Opinion
We have audited the consolidated financial statements of Richelieu Hardware
Ltd. and its subsidiaries [the “Group”], which comprise the consolidated state-
ments of financial position as at November 30, 2021 and 2020, and the conso-
lidated statements of earnings, consolidated statements of comprehensive
income, consolidated statements of changes in equity and consolidated sta-
tements of cash flows for the years then ended, and notes to the consolidated
financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present
fairly, in all material respects, the consolidated financial position of the Group
as at November 30, 2021 and 2020, and its consolidated financial performance
and its consolidated cash flows for the years then ended in accordance with
International Financial Reporting Standards [“IFRSs”].
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted
auditing standards. Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of the consolidated
financial statements section of our report. We are independent of the Group in
accordance with the ethical requirements that are relevant to our audit of the
consolidated financial statements in Canada, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
During the year, the Group made business acquisitions for an aggregate
consideration of $56.2 million. As part of these business acquisitions, the
Group recognized customer relationship intangible assets with a combined
fair value of $16.8 million. The purchase price allocation related to these
business acquisitions is disclosed in Note 3 to the consolidated financial
statements.
We identified the valuation of the acquisition-date fair value of the custo-
mer relationship intangible assets acquired in the business acquisitions
as a key audit matter. The fair value of customer relationship intangible
assets acquired is determined in reference to valuation inputs including
estimates related to forecasted cash flows, such as revenue growth and
earnings before interest, taxes, depreciation, and amortization [“EBITDA”]
margins, as well as customer attrition and discount rates. These valuation
inputs utilized in establishing the fair value of customer relationship intan-
gible assets acquired require significant auditor judgement as well as the
involvement of valuation specialists due to the sensitivity of the fair value
conclusion to these significant assumptions.
How our audit addressed the key audit matter
Nos procédures d’audit ont compris, entre autres :
• Inspecting the share and asset purchase agreements to obtain an unders-
tanding of the transactions and the key terms;
• Involving our valuation specialists to assist in evaluating the valuation
methodology selected by management and its application to determine
the fair value of the customer relationships acquired;
• Involving our valuation specialists to assist in evaluating the reasonable-
ness of the significant valuation assumptions including, forecasted cash
flows, such as revenue growth and EBITDA margins, as well as customer
attrition and discount rates, by reviewing historical financial data of the
targets, and benchmarking against other acquisitions made by the Group;
and
• Performing sensitivity analyses to test the sensitivity of the fair value
conclusions to changes in significant assumptions such as revenue
growth, customer attrition and discount rates
4 3
RichelieuAnnual Report 2021 Other information
Management is responsible for the other information. The other information
comprises:
• Management’s discussion and analysis; and
• The information, other than the consolidated financial statements and our
auditor’s report thereon, in the Annual Report
Our opinion on the consolidated financial statements does not cover the other
information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our res-
ponsibility is to read the other information, and in doing so, consider whether
the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears to
be materially misstated.
We obtained management’s discussion and analysis prior to the date of this
auditor’s report. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to
report that fact in this auditor’s report. We have nothing to report in this regard.
The Annual Report is expected to be made available to us after the date of the
auditor’s report. If based on the work we will perform on this other information,
we conclude there is a material misstatement of other information, we are
required to report that fact to those charged with governance.
Responsibilities of management and those charged with governance for
the consolidated financial statements
Management is responsible for the preparation and fair presentation of the
consolidated financial statements in accordance with IFRSs, and for such inter-
nal control as management determines is necessary to enable the preparation
of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible
for assessing the Group’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Group
or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s
financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial
statements
Our objectives are to obtain reasonable assurance about whether the conso-
lidated financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Canadian generally
accepted auditing standards will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expec-
ted to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
• Obtain an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Group’s
internal control.
• Evaluate the appropriateness of accounting policies used and the reasonable-
ness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern
basis of accounting and, based on the audit evidence obtained, whether
a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention
in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated
financial statements, including the disclosures, and whether the consolidated
financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial infor-
mation of the entities or business activities within the Group to express an
opinion on the consolidated financial statements. We are responsible for the
direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit fin-
dings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide those charged with governance with a statement that we
have complied with relevant ethical requirements regarding independence,
and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those charged with governance, we
determine those matters that were of most significance in the audit of the
consolidated financial statements of the current period and are therefore the
key audit matter. We describe this matter in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated
in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s
report is Francis Guimond.
(Signed) Enrst & Young LLP
As part of an audit in accordance with Canadian generally accepted auditing
standards, we exercise professional judgment and maintain professional skep-
ticism throughout the audit. We also:
Montreal, Canada
January 20, 2022
• Identify and assess the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
1 CPA auditor, CA, public accountancy permit no. A118111
4 4
RichelieuAnnual Report 2021 CONSOLIDATE D STATE ME NTS OF FINANCIAL POSITION
As at November 30
[In thousands of dollars]
ASSETS
Current assets
Cash and cash equivalents
Accounts receivable
Inventories
Prepaid expenses
Non-current assets
Property, plant and equipment
Intangible assets
Right-of-use assets
Goodwill
Deferred taxes
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities
Income taxes payable
Current portion of long-term debt
Current portion of lease obligations
Non-current liabilities
Long-term debt
Lease obligations
Deferred taxes
Other liabilities
Equity
Share capital
Contributed surplus
Retained earnings
Accumulated other comprehensive income
Equity attributable to shareholders of the Corporation
Non-controlling interests
Commitments and contingencies [note 10]
See accompanying notes to the consolidated financial statements.
Notes
2021
$
2020
$
58,707
199,585
395,464
5,423
659,179
46,239
53,910
87,013
110,776
7,063
964,180
155,009
21,281
5,339
21,174
202,803
1,100
71,880
9,868
9,592
73,928
156,908
287,344
4,522
522,702
40,920
42,243
73,076
85,197
6,918
771,056
120,193
4,031
3,592
17,478
145,294
2,200
60,457
6,842
1,820
295,243
216,613
54,610
7,046
590,522
14,264
666,442
2,495
668,937
964,180
48,522
6,280
480,808
15,484
551,094
3,349
554,443
771,056
4
5
10
5
9
8
9
7
10
7
10
9
8
8
11
On behalf of the Board of Directors:
(Signed) Richard Lord
Director
(Signed) Luc Martin
Director
45
RichelieuAnnual Report 2021 CONSOLIDATE D STATE ME NTS OF E ARNINGS
Years ended November 30
[In thousands of dollars, except earnings per share]
Sales
Notes
2021
$
2020
$
1,440,416
1,127,840
Operating expenses excluding amortization
8, 12
1,206,018
Earnings before amortization, financial costs and income taxes
Amortization of property, plant and equipment and right-of-use assets
Amortization of intangible assets
Financial costs, net
Earnings before income taxes
Income taxes
Net earnings
Net earnings attributable to:
Shareholders of the Corporation
Non-controlling interests
Net earnings per share attributable to shareholders of the Corporation
Basic
Diluted
See accompanying notes to the consolidated financial statements.
4, 10
5
9
8
234,398
29,059
7,898
2,700
39,657
194,741
52,410
142,331
973,379
154,461
27,261
6,761
2,682
36,704
117,757
32,146
85,611
141,764
567
142,331
85,222
389
85,611
2.54
2.51
1.51
1.50
CONSOLIDATE D STATE ME NTS OF COMPRE HE NSIVE INCOME
Years ended November 30
[In thousands of dollars]
Net earnings
Other comprehensive loss that will be reclassified to net earnings
Exchange differences on translation of foreign operations
Notes
11
Comprehensive income
Comprehensive income attributable to:
Shareholders of the Corporation
Non-controlling interests
See accompanying notes to the consolidated financial statements.
2021
$
2020
$
142,331
85,611
(1,220)
141,111
140,544
567
141,111
(3,697)
81,914
81,525
389
81,914
4 6
RichelieuAnnual Report 2021 CONSOLIDATE D STATE ME NTS OF CHANGES IN EQUIT Y
Years ended November 30
[In thousands of dollars]
Attributable to shareholders of the Corporation
Share
capital
Contributed
surplus
Retained
earnings
$
8
$
8
$
Accumulated
other
comprehensive
income (loss)
$
11
Total
Non-controlling
interests
Total
equity
$
$
$
42,190
5,700 431,313
19,181 498,384
3,237
501,621
—
—
—
—
—
—
85,222
— 85,222
389
85,611
—
(3,697)
(3,697)
—
(3,697)
85,222
(3,697)
81,525
389
81,914
Notes
Balance as at
November 30, 2019
Net earnings
Other comprehensive loss
Comprehensive income (loss)
Shares repurchased
(587)
— (24,443)
— (25,030)
Stock options exercised
6,919
(1,305)
Share-based compensation
expense
Dividends (note 16)
Other liabilities
—
—
—
—
—
1,885
—
(11,284)
—
—
6,332
580
(35,727)
—
—
5,614
1,885
— (11,284)
—
—
— (28,815)
(25,030)
5,614
1,885
—
—
(277)
(11,561)
—
—
(277)
(29,092)
Balance as at
November 30, 2020
Net earnings
Other comprehensive loss
Comprehensive income (loss)
48,522
6,280 480,808
15,484 551,094
3,349
554,443
—
—
—
— 141,764
— 141,764
567
142,331
—
—
(1,220)
(1,220)
—
(1,220)
— 141,764
(1,220) 140,544
567
141,111
Shares repurchased
(295)
— (12,799)
— (13,094)
— (13,094)
Stock options exercised
6,383
(1,225)
Share-based compensation
expense
Dividends (note 16)
Other liabilities
Acquisition of non-controlling
interests (note 3)
Balance as at
November 30, 2021
—
—
—
—
5,158
1,991
—
—
5,158
1,991
1,991
— (19,374)
— (19,374)
(511)
(19,885)
—
—
—
123
—
—
—
123
(185)
(185)
(725)
(602)
—
—
—
—
6,088
766
(32,050)
— (25,196)
(1,421)
(26,617)
54,610
7,046 590,522
14,264 666,442
2,495
668,937
See accompanying notes to the consolidated financial statements.
47
RichelieuAnnual Report 2021 CONSOLIDATE D STATE ME NTS OF CA SH FLOWS
Years ended November 30
[In thousands of dollars]
Notes
2 02 1
$
2020
$
OPERATING ACTIVITIES
Net earnings
Items not affecting cash and cash equivalent
Amortization of property, plant and equipment and right-of-use assets
4, 10
5
9
8
16
8
8
3
4, 5
Amortization of intangible assets
Deferred taxes
Share-based compensation expense
Financial costs
Net change in non-cash working capital balances
FINANCING ACTIVITIES
Repayment of long-term debt
Dividends paid to Shareholders of the Corporation
Payment of lease obligations
Other dividends paid
Common shares issued
Common shares repurchased for cancellation
INVESTING ACTIVITIES
Business acquisitions
Additions to property, plant and equipment and intangible assets
Effect of exchange rate changes on cash and cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplementary information
Income taxes paid
Interest paid, net
See accompanying notes to the consolidated financial statements.
4 8
142 331
85 611
29 059
7 898
(1 216)
1 991
2 928
27 261
6 761
(393)
1 885
2 806
182 991
123 931
(78 585)
24 582
104 406
148 513
(6 424)
(19 374)
(19 446)
(511)
5 158
(13 094)
(53 691)
(49 436)
(17 054)
(66 490)
554
(15 221)
73 928
58 707
(5 173)
(11 284)
( 1 7 492)
(277)
5 614
(25 030)
(53 642)
(33 074)
(12 441)
(45 515)
(129)
49 227
24 701
73 928
36 703
2 700
27 062
2 682
RichelieuAnnual Report 2021
NOTES TO CONSOLIDATE D FINANCIAL STATE ME NTS
November 30, 2021 and 2020
(Amounts are in thousands of dollars, except per-share amounts or otherwise indicated)
NATURE OF BUSINESS
Cash and cash equivalents
Richelieu Hardware Ltd. [the “Corporation”] is incorporated under
the laws of Quebec, Canada. The Corporation is an importer, manu-
facturer and distributor of specialty hardware and complementary
products. Its products target an extensive customer base of kitchen
and bathroom cabinet, storage and closet, home furnishing and
office furniture manufacturers, residential and commercial wood-
workers and hardware retailers including renovation superstores.
The Corporation’s head office is located at 7900 Henri-Bourassa
Blvd. West, Montreal, Quebec, Canada, H4S 1V4.
1. SIGNIFICANT ACCOUNTING POLICIES
The Corporation’s consolidated financial statements, presented in
Canadian dollars, have been prepared by management in accord-
ance with International Financial Reporting Standards [“IFRS”]. The
Corporation’s accounting policies have been applied consistently to
all fiscal years presented in these consolidated financial statements.
The preparation of the consolidated financial statements requires
management to make estimates and assumptions that affect the
amounts reported in the consolidated financial statements and
accompanying notes. These estimates are based on management’s
best knowledge of current events and actions that the Corporation
may undertake in the future and other factors deemed relevant and
reasonable.
The judgments made by management in applying the accounting
policies that have the most significant effect on the amounts recog-
nized in the consolidated financial statements and the assumptions
about the future and other major sources of estimation uncertainty
as at the end of the reporting period that could potentially result in
material adjustments to the carrying amount of assets and liabil-
ities during the following period relate to impairment of inventory,
including inventory losses and obsolescence, and require the use
of judgment and assumptions that may affect the amounts reported
in the consolidated financial statements. The underlying estimates
and assumptions are reviewed regularly. Revised accounting esti-
mates, if any, are recognized in the period in which the estimates are
revised, as well as in future periods affected by the revisions. Actual
results could differ from those estimates.
The Corporation’s consolidated financial statements have been
properly prepared within the reasonable limits of materiality, in
accordance with the accounting policies summarized below :
Consolidation
The consolidated financial statements include the accounts of
Richelieu Hardware Ltd. and its subsidiaries described in note 13.
All significant intercompany balances and transactions have been
eliminated upon consolidation.
Cash and cash equivalents consist of cash on hand and highly liquid
investments with a term of three months or less. Cash and cash
equivalents are measured at amortized cost.
Accounts receivable
Accounts receivable are carried at cost, which is equivalent to fair
market value on initial recognition. Subsequent measurements are
recorded at amortized cost using the effective interest method. For
the Corporation, this measurement is usually equivalent to cost due
to their short-term maturities. At each period-end, the Corporation
estimates the expected credit losses. These expected losses are
adjusted to reflect factors that are specific to the accounts receiv-
able, general economic conditions as well as an assessment of both
current and forecasted economic conditions prevailing at the report-
ing date. The evaluation is calculated using the simplified method.
The net change in expected credit losses on accounts receivable is
recognized in net earnings.
Inventories
Inventories, which consist primarily of finished goods, are valued at
the lower of average cost and net realizable value. Net realizable
value is the expected selling price in the normal course of business,
less estimated costs to sell. The Corporation uses judgment when
estimating the effect of certain factors on the net realizable value of
inventory, such as inventory obsolescence and losses. The quantity,
age and condition of inventory are measured and assessed regularly
during the year.
Property, plant and equipment
Property, plant and equipment are recorded at cost and amor-
tized on a straight-line basis over their estimated useful lives. The
main components have different useful lives and are amortized
separately. The amortization method and useful life estimates are
reviewed annually.
Buildings
20 years
Leasehold improvements
Lease terms, maximum 5 years
Machinery and equipment
5-10 years
Rolling stock
Furniture and fixtures
Computer equipment
Lease
i) Right-of-use assets
5 years
3-5 years
3-5 years
Right-of-use assets are recognized at the commencement date of
the lease (i.e., the date the underlying asset is available for use)
and are measured at cost, less any accumulated amortization and
impairment losses, and adjusted for any remeasurement of the lease
obligations. The cost of right-of-use assets includes the amount of
lease obligations recognized, initial direct costs incurred and lease
payments made at or before the commencement date less any lease
incentives received. Right-of-use assets are amortized on a straight-
line basis over the shorter of the lease term and the estimated useful
lives of the assets, which is currently between 2 and 15 years.
49
RichelieuAnnual Report 2021 1. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
ii) Lease obligations
At the commencement date of the lease, the lease obligation is
measured at the present value of lease payments to be made over
the lease term. The lease payments include fixed payments less any
lease incentives receivable, variable lease payments that depend
on an index or a rate, and amounts expected to be paid under resid-
ual value guarantees. The lease payments also include the exer-
cise price of a purchase option reasonably certain to be exercised
and payments of penalties for terminating the lease, if applicable.
Variable lease payments that do not depend on an index or a rate are
recognized as expenses in the period in which the event or condition
that triggers the payment occurs.
Intangible assets
Intangible assets are acquired assets that lack physical substance
and meet the specified criteria for recognition apart from property,
plant and equipment. Intangible assets consist mainly of purchased
or internally developed software, non-competition agreements,
customer relationships, and trademarks. Software and customer
relationships are amortized on a straight-line basis over their useful
lives of 3 and 8-20 years, respectively, while non-competition
agreements are amortized over the terms of the agreements which
is currently between 2 and 5 years. Trademarks have an indefinite
useful life and are therefore not amortized.
Goodwill
Goodwill represents the excess of the purchase price over the
fair value of net assets acquired and corresponds to the develop-
ment potential of the acquired businesses, combined with the
Corporation’s operations and from the expected synergies and
expanding of the product offering and network. Goodwill is not
amortized.
Impairment of non-current assets
At the end of each reporting period, the Corporation determines
whether indicators of impairment exist for its non-current assets,
excluding goodwill and intangible assets with indefinite useful lives.
If such indicators exist, the non-current assets are tested for impair-
ment. When the impairment test indicates that the carrying amount
of the tangible or intangible asset exceeds its recoverable amount,
an impairment loss is recognized in net earnings in an amount equal
to the excess.
The Corporation is required to test goodwill and intangible assets
with indefinite useful lives for impairment at least once a year,
whether or not indicators of impairment exist. Impairment tests are
carried out on the asset itself, the cash-generating unit [“CGU”] or
group of CGUs as at November 30. A CGU is the smallest identi-
fiable group of assets that generates cash inflows that are largely
independent of the cash inflows from other assets or groups of
assets. Goodwill and the supporting assets that cannot be wholly
allocated to a single CGU are tested for impairment at the group
of CGUs level. Impairment tests consist in a comparison between
the carrying and recoverable amounts of an asset, CGU or group
of CGUs. The recoverable amount is the higher of value in use and
fair value less costs to sell. Where the carrying amount exceeds
the recoverable amount, an impairment loss equal to the excess
is recognized in net earnings, however, the carrying amount of the
assets is not reduced below the higher of their fair value less costs
to sell and their value in use. Other than for goodwill, if a reversal of
an impairment loss occurs, it must be recognized immediately in net
earnings. On reversal of an impairment loss, the increased recover-
able amount of an asset must not exceed the carrying amount that
would have been determined, net of amortization, if no impairment
loss had been recognized in respect of the asset in prior years. As
part of goodwill impairment tests, the Corporation generally uses fair
value less costs to sell to estimate the recoverable amount, which
is calculated by multiplying earnings before depreciation, amortiz-
ation, financial charges and taxes [“EBITDA”] of the CGU or group
of CGUs by the multiple of the EBITDA from comparable companies
whose activities are similar to those of the Corporation. As part of
the impairment tests on intangible assets with indefinite useful lives,
the Corporation also uses the fair value less costs to sell in order to
estimate the recoverable amount, which is calculated according to
the relief-from-royalty method. This method involves estimating the
fair value of trademarks by reference to royalty levels payable for the
use of comparable assets.
Other financial liabilities
Accounts payable, accrued liabilities and long-term debt are initially
recorded at fair value. They are subsequently measured at amor-
tized cost using the effective interest method. For the Corporation,
this measurement is usually equivalent to cost. Options to purchase
non-controlling interests that correspond to the definition of a finan-
cial liability are measured at fair value and presented under other
liabilities. Gains or losses resulting from revaluation at the end of
each period may be recorded in net earnings or in retained earnings.
The Company has chosen to record them in retained earnings. The
Company has classified the measurement of this fair value as level 3,
as it is based on data which are not observable in the market.
Revenue recognition
Revenues are measured at the fair value of the consideration
received or receivable, net of returns and discounts granted, and are
recognized when control of the goods is transferred to the customer,
which occurs when the Corporation satisfies its performance obliga-
tion, generally upon delivery of the goods to the customer.
Income taxes
The Corporation follows the liability method of accounting for
income taxes. Under this method, deferred tax assets and liabilities
are accounted for based on estimated taxes recoverable or payable
that would result from the recovery or settlement of the carrying
amount of assets and liabilities. Deferred tax assets and liabilities are
measured at the tax rates that are expected to apply in the years in
which the temporary differences are expected to reverse. Changes
in these balances are recognized in net earnings in the year in which
they arise.
Deferred tax assets are recognized to the extent that it is probable
that the Corporation will have future taxable income against which
these tax assets may be offset. In determining these deferred tax
assets, assumptions are considered, such as the period for tax loss
carrying forwards to be completely used up and the level of future
taxable income in accordance with tax planning strategies.
5 0
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNovember 30, 2021 and 2020 (Amounts are in thousands of dollars, except per-share amounts or otherwise indicated)RichelieuAnnual Report 2021 1. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Deferred share unit plan
The Corporation offers a deferred share unit [“DSU”] plan to its
directors who can elect to receive part or all of their compensation in
DSUs. The value of DSUs is redeemable for cash only when a director
ceases to be a member of the Board. The number of DSUs granted to
a director equals the compensation amount to be converted in DSUs
divided by the average closing price of the shares on the Toronto
Stock Exchange for the five (5) business days immediately preced-
ing the date of the payment. The DSU liability is measured at fair
value at each closing date on the basis of the number of outstand-
ing share units and the market price of the Corporation’s common
shares and is included in Accounts payable and accrued liabilities.
The Corporation has entered into equity swaps to reduce its expos-
ure on net earnings related to the fluctuations of the Corporation’s
share price. The net effect of the equity swaps mostly offsets the
impact of the change in the Corporation’s share price and is included
in the Operating expenses excluding amortization.
Net earnings per share
Net earnings per share are calculated based on the weighted aver-
age number of common shares outstanding during the year. Diluted
earnings per share are calculated using the treasury stock method
and take into account all the elements that have a dilutive effect.
2. CHANGES IN ACCOUNTING METHODS
At the date of approval of the financial statements, no new applicable
standards or interpretation of existing standards or new amendments
that have been published need to be adopted by the Corporation.
3. BUSINESS ACQUISITIONS
2021
Effective March 29, 2021, the Corporation acquired the principal net
assets of Ontario Building Supply, a decorative panel and related
products distributor operating a distribution centre in Rochester,
New York.
Effective April 5, 2021, the Corporation acquired all issued and
outstanding shares of Caplan Industries Inc. doing business as Task
Tools, a distributor of power tool accessories and related products
serving retailers in Canada and the U.S. from two centres in British
Columbia and Ontario.
Effective as of June 1, 2021, the Corporation acquired all of the
issued and outstanding shares of Uscan Industrial Fasteners Ltd, a
distributor of industrial screws, bolts and industrial fasteners for the
retailer’s market in Canada, which operates one distribution centres
located in Quebec.
Effective as of July 5, 2021, the Corporation acquired, through a
newly incorporated subsidiary (“Newco”), 100% of the issued and
outstanding shares of Inter-Co Inc., in partial consideration of which
a participation equivalent to 25% of the share capital of Newco has
been issued in the name of the sellers. Inter-Co Inc. is a distributor of
Division 10 products intended for the construction industry operat-
ing five distribution centres, three in the United States (Arizona, Ohio
and Texas) and two in Canada (Ontario).
Foreign currency translation
Monetary assets and liabilities of the Corporation are translated at
the exchange rate in effect at the end of the reporting period and the
other items in the statements of financial position and earnings are
translated at the exchange rates in effect at the date of transaction.
Foreign exchange gains and losses are recognized in net earnings in
the year in which they arise.
The assets and liabilities of the U.S. subsidiary are translated into
Canadian dollars at the exchange rate in effect at the end of the
reporting period. Revenues and expenses are translated at the rate
in effect at the date of transaction. Foreign exchange gains and
losses are recognized in the consolidated statements of compre-
hensive income.
Derivative financial instruments
The Corporation periodically enters into foreign exchange forward
contracts with financial institutions to partially hedge the effects of
fluctuations in foreign exchange rates related to foreign currency
liabilities, as well as to hedge anticipated purchase transactions.
The Corporation enters into equity swaps to reduce its exposure on
net earnings related to the fluctuations in the Corporation’s share
price relating to its deferred share unit plan.
The Corporation does not use derivatives for speculative purposes.
The Corporation uses hedge accounting only when IFRS documen-
tation criteria are met. Derivative financial instruments designated
as cash flow hedges are measured at fair value, which is the instru-
ments’ approximate settlement value at market rates. Gains and
losses on remeasurement at each year-end are recorded in compre-
hensive income. If the instrument is not designated and documented
as an hedge, changes in fair value are recognized in the statement
of consolidated earnings for the year. Assets or liabilities related
to derivative financial instruments are included in Accounts receiv-
able or Accounts payable and accrued liabilities in the consolidated
statements of financial position.
Fair value measurements hierarchy
Fair value measurements of financial asset and liabilities recognized
at fair value in the consolidated statements of financial position or
whose fair value is presented in the notes to the consolidated finan-
cial statements are categorized in accordance with the following
hierarchy:
Level 1:
quoted prices (unadjusted) in active markets for identical
assets or liabilities;
Level 2:
inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (i.e., as
prices) or indirectly (i.e., derived from prices);
Level 3:
inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
Share-based payment
The Corporation offers a stock option plan to its officers and key
employees. The subscription price of each share issuable under the
plan is equal to the weighted average market price of the shares for
the five (5) business days prior to the day the option was granted and
must be paid in full at the time the option is exercised. Options vest
at a rate of 25% per year starting one year after grant date and expire
on the tenth anniversary of the grant date. The Corporation recog-
nizes stock-based compensation and other share-based payments
in net earnings using the fair value method for stock options granted
with a corresponding increase recorded in contributed surplus. The
Black & Scholes model is used to determine the grant date fair value
of stock options. The application of this method is based on different
assumptions such as risk-free interest rate, expected life, volatility
and dividend yield as described in note 8.
51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNovember 30, 2021 and 2020 (Amounts are in thousands of dollars, except per-share amounts or otherwise indicated)RichelieuAnnual Report 2021
3. BUSINESS ACQUISITIONS (cont’d)
Summary of acquisitions
Effective September 1, 2021, the Corporation acquired all of the
issued and outstanding shares of Cook Fasteners Inc., an industrial
fastener distributor operating a distribution centre in Mississauga,
Ontario.
Effective September 20, 2021, the Corporation acquired the prin-
cipal net assets of Industrial Plywood, a distributor of panels and
related products operating two distribution centres in Pennsylvania.
Sales of $39.5 million have been generated by these acquisi-
tions since their completion. Had these acquisitions been made
on December 1, 2020, management believes that sales included
in the consolidated statement of earnings would have totalled
approximately $80 million.
2020
Effective December 2, 2019, the Corporation acquired all the issued
and outstanding shares of Decotec Inc, a distributor of decorative
panels and related products operating a distribution centre in North
York, Ontario.
Effective December 9, 2019, the Corporation acquired the principal
net assets of Mibro, a distributor of hardware and power tools acces-
sories for the retailers’ market in Canada and the United States.
Mibro operates a distribution centre in Toronto, Ontario.
Effective February 3, 2020, the Corporation acquired the princi-
pal net assets of Omaha Hardwood Lumber Company (“O’Harco”),
a distributor of specialized hardware operating three distributions
centres in Omaha, NB, Des Moines, IA and Sioux Falls, SD.
Effective June 29, 2020, the Corporation acquired the principal net
assets of Central Wholesale Supply, a distributor of specialized hard-
ware operating a distribution centre in Richmond, VA.
Effective August 4, 2020, the Corporation acquired the principal net
assets of Lion Hardware, a specialty hardware distributor serving
a clientele of door and window manufacturers in Eastern Canada,
operating a distribution centre in Saint-Jacques, New Brunswick.
The preliminary purchase price allocations, at the transaction
dates are summarized as follows:
Current assets acquired
Property, plant and equipment and
right-of-use assets
Intangible assets [Note 5]
Goodwill [Note 5]
Current liabilities assumed
Non current liabilities assumed
Deferred taxes
Non controlling interests
Net assets acquired
Consideration
Cash, net of cash acquired
Consideration payable [Note 7]
2021
$
2020
$
34,508
27,324
6,702
18,653
25,751
85,614
(13,174)
(4,269)
(4,400)
(7,589)
56,182
4,758
11,849
6,1 8 7
50,1 1 8
(5,455)
(3,935)
(955)
—
39,773
48,834
7,348
56,1 82
33,074
6,699
39,773
Goodwill deductible for tax purposes with regard to these acqui-
sitions amounts to 648 $ [$3,629 in 2020]. On March 1, 2021, the
Corporation acquired from a minority shareholder an additional
5% interest in the voting shares of Menuiserie des Pins Ltée,
increasing its ownership interest to 85%, for a cash consideration
of $602.
Preliminary purchase price allocations are subject to fair value
adjustments to assets, liabilities and goodwill until the estimation
process is complete. The final allocation of the purchase price
should be completed as soon as management has gathered all
the information available and deemed necessary to finalize the
calculation, in particular for intangible assets, no later than 12
months after the acquisition date.
52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNovember 30, 2021 and 2020 (Amounts are in thousands of dollars, except per-share amounts or otherwise indicated)RichelieuAnnual Report 2021 4. PROPERTY, PLANT AND EQUIPMENT
Land
Buildings
$
$
Leasehold
improvements
Machinery
and
equipment
Rolling
stock
Furniture
and fixtures
Computer
equipment
$
$
$
$
$
Total
$
Cost
3,743
30,246
8,8 6 1
45,494
17,894
21,400
16,454 144,092
Accumulated amortization
—
(21,035)
(6,720)
(30,301)
(12,037)
(19,278)
(13,412)
(102,783)
Net carrying amount as at November 30, 2019
3,743
9,2 1 1
2,1 4 1
15,193
5,857
2,122
3,042
41,309
Acquisitions
Business acquisitions [note 3]
Amortization
Effect of changes in foreign exchange rates
1 7
—
—
—
323
—
728
—
4,866
2,497
41 0
353
735
59
1 , 1 8 1
10,347
—
822
(1,377)
(855)
(3,775)
(2,485)
(1,322)
(1,556)
( 1 1 ,370)
—
(22)
(69)
(77)
(15)
(5)
(188)
Net carrying amount as at November 30, 2020
3,760
8,1 5 7
1,992
16,625
6,145
1,579
2,662
40,920
Cost
3,760
30,568
8,555
49,505 19,694
1 7,604
1 6 ,728 146,414
Accumulated amortization
— (22,4 1 1 )
(6,563)
(32,880)
(13,549)
( 1 6,025)
( 1 4 ,066) (105,494)
Net carrying amount as at November 30, 2020
3,760
8,157
1,992
1 6,625
6,145
1,579
2,662
40,920
Acquisitions
Business acquisitions [note 3]
Amortization
Effect of changes in foreign exchange rates
—
—
—
—
829
—
1,155
6,078
3,492
—
127
182
762
437
3,643
15,959
69
815
(1,130)
(793)
(4,122)
(2,601)
(941)
(1,778)
(11,365)
—
(7)
(25)
(47)
(8)
(3)
(90)
Net carrying amount as at November 30, 2021 3,760
7,856
2,347
1 8,683
7,1 7 1
1,829
4,593
46,239
Cost
3,760
3 1 ,378
9,476
54,949 22,706
17,970
20,021 160,260
Accumulated amortization
— (23,522)
(7,129)
(36,266) (15,535)
(16,1 41 )
(15,428) (114,021)
Net carrying amount as at November 30, 2021 3,760
7,856
2,347
1 8,683
7, 1 7 1
1,829
4,593
46,239
5. INTANGIBLE ASSETS AND GOODWILL
Software
$
Non-competition
agreements
$
Customer
relationships
$
Trademarks
$
Total
$
Cost
Accumulated amortization
Net carrying amount as at November 30, 2019
Acquisitions
Business acquisitions [note 3]
Amortization
Effect of changes in foreign exchange rates
Net carrying amount as at November 30, 2020
Cost
Accumulated amortization
Net carrying amount as at November 30, 2020
Acquisitions
Business acquisitions [note 3]
Amortization
Effect of changes in foreign exchange rates
Net carrying amount as at November 30, 2021
Cost
Accumulated amortization
Net carrying amount as at November 30, 2021
9,008
(7,558)
1,450
2,094
—
(981)
—
2,563
11 ,1 0 0
(8,537)
2,563
1,095
—
(944)
(10)
2,704
12,186
(9,482)
2,704
5,396
54,788
6,545
75,737
(4,656)
(28,140)
—
(40,354)
26,648
6,545
35,383
80,1 6 4
740
—
501
(852)
( 1 )
388
5,791
388
—
1,247
(399)
(2)
1,234
7,002
—
1 1 , 1 86
(4,839)
(212)
32,783
64,956
—
162
(89)
(109)
6,509
6,509
2,094
1 1 ,849
(6,761 )
(322)
42,243
88,356
—
16,836
(6,555)
(137)
42,927
81,424
—
570
—
(34)
1,095
18,653
(7,898)
(183)
7,045
53,910
7,045
107,657
(5,403)
(32,173)
—
(46,1 1 3 )
32,783
6,509
42,243
85,197
Goodwill
$
80,164
—
—
6,1 8 7
—
(1,154)
85,197
85,197
—
—
25,751
—
(172)
110,776
110,776
—
(5,768)
(38,497)
—
(53,747)
1,234
42,927
7,045
53,910
110,776
53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNovember 30, 2021 and 2020 (Amounts are in thousands of dollars, except per-share amounts or otherwise indicated)RichelieuAnnual Report 2021 5. INTANGIBLE ASSETS AND GOODWILL (cont’d)
Stock option plan
For impairment test purposes, the carrying amounts of goodwill and
intangible assets have been allocated to CGUs or groups of CGUs.
The carrying amounts of goodwill for the two groups of CGUs that
are significant in comparison with the total carrying amount of good-
will are $93.8 million and $14.9 million, while $2.1 million is allocated
to another CGU. The carrying amounts of intangible assets with
indefinite useful lives are allocated across multiple CGUs or groups
of CGUs and the amount allocated is not individually significant in
comparison with the total carrying amount.
6. BANK INDEBTEDNESS
As at November 30, 2021 and 2020, the Corporation has lines of
credit with a Canadian banking institution with respective author-
ized amount of C$65 million and US$6 million, bearing interest at
the bank’s prime and base rates, which were respectively 2.45% and
3.75% as at November 30, 2021 [2.45% and 3.75% as at November 30,
2020]. These lines of credit are renewable annually. As at November
30, 2021 and 2020, both were undrawn.
7. LONG-TERM DEBT
Non-interest bearing business acquisition
considerations payable, including US$1,805
Current portion of long-term debt
Long-term debt
2021
$
6,439
5,339
1,100
2020
$
5,792
3,592
2,200
The long-term portion of the debt is payable in full in January 2023.
8. SHARE CAPITAL
Authorized
Unlimited number of:
• Common shares, participating, entitling the holder to one vote per
share.
• Non-voting first and second ranking preferred shares issuable
in series, the characteristics of which are to be determined by the
Board of Directors.
Changes in common shares are summarized as follows:
Number of shares
(in thousands)
$
Outstanding, November 30, 2019
56,240
42,190
Issued
Repurchased
332
6 919
(678)
(587)
Outstanding, November 30, 2020
55,894 48,522
Issued
Repurchased
264
6,383
(316)
(295)
Outstanding, November 30, 2021
55,842
54,610
During fiscal 2021, the Corporation issued 263,925 common shares
[331,900 in 2020] at a weighted average exercise price of $19.54
per share [$16.92 in 2020] pursuant to the exercise of stock options
under the stock option plan. The weighted average share price on
the market at the date of exercise was $41,74 [$33,03 in 2020]. In
addition, during fiscal 2021, the Corporation, through a normal
course issuer bid, repurchased 316,374 common shares for cancel-
lation in consideration of $13,094 [678,362 common shares for a
consideration of $25,030 in 2020], which resulted in a premium on
the redemption in the amount of $12,799 recognized as a reduction
of retained earnings [premium of $24,443 in 2020].
Changes in stock options are summarized as follows:
Outstanding, November 30, 2019
Granted
Exercised
Cancelled
Outstanding, November 30, 2020
Granted
Exercised
Cancelled
Outstanding, November 30, 2021
Number of
options
(in thousands)
Weighted
average
share price
$
1,771
301
(332)
( 4 1 )
1,699
289
(264)
(33)
1,691
22.80
28.48
16.92
28.70
24.81
34.84
19.54
30.25
27.14
The table below summarizes information regarding the stock options
outstanding as at November 30, 2021:
Options outstanding
Exercisable options
Range in
exercise price
Number of
options
Weighted
average
remaining
period
Weighted
average
exercise
price
Number of
options
Weighted
average
exercise price
(in dollars)
(in thousands)
(in years)
(in dollars)
(in thousands)
(in dollars)
9.14 - 12.75
12.76 - 17.75
17.76 - 24.75
34
36
375
24.76 - 34.84
1,246
1,691
0.96
2.15
3.87
7.24
6.26
11.98
14.50
20.87
29.81
34
36
375
595
27.1 4
1,040
11.98
14.50
20.87
28.30
24.62
During fiscal 2021, the Corporation granted 289,000 options
[300,500 in 2020] with an average exercise price of $34.84 per
share [$28.48 in 2020] and an average fair value of $9.04 per op-
tion [$6.43 in 2020] as determined using the Black & Scholes op-
tion pricing model using an expected dividend yield of 0.8% [0.9% in
2020], a volatility of 22.9% [21.6% in 2020], a risk-free interest rate
of 0.80% [1.70% in 2020] and an expected life of 7 years [7 years in
2020] and 31,875 options were cancelled [41,375 in 2020]. For the
year ended November 30, 2021, compensation expense related to
stock options amounted to $1,991 [$1,885 in 2020] and is recognized
under Operating expenses excluding amortization.
Deferred share unit plan
The financial liability resulting from the DSU plan of $8,949 [$7,316
as at November 30, 2020] is presented under the Accounts payable
and accrued liabilities. As at November 30, 2021, the fair value of
the equity swaps amounted to a liability of $164 [a liability of $314
as at November 30, 2020] and is presented under Accounts pay-
able and accrued liabilities. The Corporation classified the fair value
measurement in Level 2, as it is derived from observable market
data. The compensation expense for the DSUs for the year ended
November 30, 2021 amounted to $819 [$738 in 2020] and is recog-
nized under Operating expenses excluding amortization.
5 4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNovember 30, 2021 and 2020 (Amounts are in thousands of dollars, except per-share amounts or otherwise indicated)RichelieuAnnual Report 2021 8. SHARE CAPITAL (cont’d)
Number of DSUs
Outstanding, beginning of year
Paid
Granted
The effective income tax rate differs from the combined statutory
rates for the following reasons:
2021
2020
193,445
274,194
— (88,907)
Combined statutory rates
2021
$
2020
$
26.60% 26.59%
17,964
8,158
Income taxes at combined statutory rates
51,801
31,312
Outstanding, end of year
211,409 193,445
Increase (decrease) resulting from:
Share purchase plan
Compensation expense related to the share purchase plan amount-
ed to $813 for the year ended November 30, 2021 [$713 in 2020] and
is recognized under Operating expenses excluding amortization.
Net earnings per share
Basic and diluted net earnings per share were calculated based on
the following number of shares:
Impact of statutory rates differences for the
subsidiary outside Canada
Share-based compensation
Non-deductible expenses and other
Changes related to tax laws and tax rates
(422)
420
658
(47)
(181)
415
607
(7)
52,410
32,146
(in thousands)
Weighted average number of shares
outstanding - Basic
2021
2020
55,896
56,315
Deferred taxes reflect the net tax impact of temporary differences
between the value of assets and liabilities for accounting and tax
purposes. The major components of deferred tax assets and liabil-
ities of the Corporation were as follows:
Dilutive effect under stock option plan
570
331
Weighted average number of shares
outstanding - Diluted
56,466
56,646
Deferred taxes
2021
$
2020
$
The computation of diluted net earnings per share includes all out-
standing options [in 2020 did not take into account the weighted
average of 306,000 stock options since their exercise price being
higher than the average price of the shares for the period would
have had an anti-dilutive effect].
9. INCOME TAXES
Reserve for tax purposes only upon
disbursement and other tax attributes
11,542
8,567
Excess of the net carrying value of property,
plant and equipment over their tax value
(2,638)
(838)
Excess of the net carrying value of intangible
assets and goodwill over their tax value
(13,310)
(8,914)
The main components of the income tax expense were as follows:
Right-of-use assets and lease obligations
1,601
1,261
Current
Deferred:
2021
$
2020
$
53,626
32,539
Net amount
(2,805)
76
The net deferred taxes included the following as at November 30 :
Related to temporary differences
(1,169)
(386)
Deferred tax assets
Deferred tax related to changes in tax rates
(47)
(7)
Deferred tax liabilities
52,410
32,146
2021
$
7,063
2020
$
6,918
(9,868)
(6,842)
(2,805)
76
Changes in deferred taxes for the years ended November 30 are
detailed as follows:
Balance at the beginning of the year, net
In net earnings
Business acquisitions [note 3]
Other
Balance at the end of the year, net
2021
$
76
1 216
2020
$
750
393
(4 400)
(955)
303
(2 805)
(112)
76
As at November 30, 2021, the Corporation had $25,080 of taxable
temporary differences related to investments in subsidiaries [nil in
2020]. Deferred tax liabilities were not recognized in respect of such
taxable temporary differences as the Corporation controls the deci-
sions affecting the realization of such liabilities and does not expect
these temporary differences to reverse in the foreseeable future.
55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNovember 30, 2021 and 2020 (Amounts are in thousands of dollars, except per-share amounts or otherwise indicated)RichelieuAnnual Report 2021
10. COMMITMENTS AND CONTINGENCIES
Foreign exchange forward contracts
As at November 30, 2021, the Corporation held the following for-
eign exchange forward contracts having maturity dates in December
2021 and January 2022.
Type
Purchase
Currency
€6,333
Average exhange rate
1.44
their liabilities towards the Corporation. The average days outstand-
ing of accounts receivable, as at November 30, 2021 and 2020 are
deemed acceptable given the industry in which the Corporation
operates.
The Corporation performs ongoing credit evaluation of customers
and generally does not require collateral. The allowance for doubtful
accounts for the years ended November 30 is as follows:
Lease obligations
As at November 30, 2021
Less than one year
Between 1 and 5 years
More than 5 years
$
20,753
56,883
25,899
103,535
Balance, beginning of year
Allowance for doubtful accounts
Write-offs
Exchange rate variations and other
Balance, end of year
2021
$
6,613
860
2020
$
6,763
1,242
(1,375)
(1,753)
73
6,171
361
6,613
During fiscal 2021, right-of-use assets additions amounted to
$32,089 [$26,076 in 2020]. Depreciation of right-of-use assets of
$17,694 [$15,891 in 2020] and Interest on lease liabilities of $2,922
[$2,806 in 2020] are included in the consolidated statement of
earnings.
Claims
In the normal course of business, various proceedings and claims
are instituted against the Corporation. Management believes that
any forthcoming settlement in respect of these claims will not have a
material effect on the Corporation’s financial position or consolidated
net earnings.
11. ACCUMULATED OTHER COMPREHENSIVE
INCOME
The accumulated other comprehensive income, including the follow-
ing items and their variances, were as follows:
Balance, beginning of year
Exchange differences on translation of
foreign operations
Balance, end of year
2021
$
15,484
2020
$
19,181
(1,220)
(3,697)
14,264
15,484
12. FINANCIAL INSTRUMENTS AND OTHER
INFORMATION
Fair value
The carrying value of long-term debt approximates their fair value
because of the short maturity on balance of sale payable. The Cor-
poration classified the fair value measurement in Level 2, as it is de-
rived from observable market data.
As at November 30, 2021, the fair value of the foreign exchange
forward contracts amounted to an asset of $59 [a liability of $15 as
at November 30, 2020], representing the amount the Corporation
would pay on settlement of these contracts at spot rates. The Cor-
poration categorized the fair value measurement in Level 2, as it is
derived from observable market data.
Credit risk
The Corporation sells its products to numerous customers in
Canada, and in a lesser proportion in the United States. The credit
risk refers to the possibility that customers will be unable to assume
The aging of the accounts receivable is as follows :
Current
Past due 1-30 days
Past due more than 30 days
Allowance for doubtful accounts
2021
$
2020
$
142,779
120,215
41,824
21,153
35,915
7,391
(6,17 1 )
(6,613)
199,585
156,908
The balance of accounts receivable of the Corporation that are over-
due for more than 60 days, but which were not provided for, totaled
$1,067 [$1,070 in 2020]. As at November 30, 2021 and 2020, no cus-
tomer accounted for more than 10% of the total accounts receivable.
Market risk
The Corporation’s foreign currency exposure arises from purchas-
es and sales transacted mainly in US dollars and euros. Operating
expenses included, for the year ended November 30, 2021, an ex-
change gain of $3,244 [gain of $2,880 in 2020].
The Corporation’s policy is to maintain purchase prices and selling
prices of its commercial activities by mitigating its exposure through
the use of derivative financial instruments. To protect its operations
from exposure to exchange rate fluctuations, foreign exchange con-
tracts are used. Major exchange rate risks are covered by a cen-
tralized cash flow management. Exchange rate risks are managed
in accordance with the Corporation’s policy on exchange rate risk
management. The goal of this policy is to protect the Corporation’s
profits by reducing the exposure to exchange rate fluctuations. The
Corporation’s policy does not allow speculative trades.
As at November 30, 2021, a decrease of 5% of the Canadian dollar
against the US dollar and the euro on translation of monetary assets
and liabilities, all other variables remaining the same, would have
increased consolidated net earnings by $685 [$392 as at Novem-
ber 30, 2020] and would have increased comprehensive income by
$7,019 [$7,123 as at November 30, 2020]. The exchange rate sensi-
tivity is calculated by aggregation of the net foreign exchange rate
exposure of the Corporation’s financial instruments as at Novem-
ber 30, 2021.
5 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNovember 30, 2021 and 2020 (Amounts are in thousands of dollars, except per-share amounts or otherwise indicated)RichelieuAnnual Report 2021
Liquidity risk
The Corporation manages its risk of not being able to settle its finan-
cial liabilities when required by taking into account its operational
needs and by using different financing tools, as required. In recent
years, the Corporation has financed its growth, business acquisi-
tions, share repurchases and payout to shareholders using mainly
the cash generated by the operating activities.
As at November 30, 2021, out of the total amount in property, plant
and equipment, $9,582 [$7,677 in 2020] is located in the United
States. In addition, intangible assets located in the United States
amounted to C$13,514 [C$14,145 in 2020] and goodwill to C$14,954
[C$14,479 in 2020] and to US$10,565 [US$10,910 in 2020] and good-
will to US$11,690 [US$11,168 in 2020]. Of the total amount of right-of-
use assets, $45,993 [November 30, 2020 - $31,408] was located in
the United States.
Operating expenses excluding amortization
2021
$
2020
$
15. CAPITAL MANAGEMENT
The Corporation’s objectives are:
• Maintain a low debt ratio to preserve its capacity to pursue its
growth both internally and through acquisitions; and
1,030,869
825,552
• Provide an adequate shareholders return.
Inventories from the distribution, imports
and manufacturing activities recognized
as an expense
Salaries and related charges
Other charges
166,269
140,969
8,880
6,858
1,206,018
973,379
An expense of $6,486 [$4,054 in 2020] for inventory obsolescence
was included in Inventories from the distribution, imports and manu-
facturing activities.
Government grant
During fiscal 2020, the Corporation recognized an amount of $6,904
as a reduction of Salaries and related charges, included under
Operating expenses excluding amortization, in connection with the
Canada Emergency Wage Subsidy (“CEWS”) program. No amount
has been recorded for in 2021.
13. RELATED PARTY INFORMATION
Scope of consolidation
Names
Country of
incorporation
Equity
interest
%
Voting
rights
%
Richelieu America Ltd.
United States
Richelieu Finances Ltée (1)
Les industries Cedan Inc.
Distributions 20/20 Inc.
Canada
Canada
Canada
Provincial Woodproducts Ltd.
Canada
Menuiserie des Pins Ltée
Canada
Interco division 10 Inc.
Canada
100
100
100
100
85
85
75
100
100
100
100
85
85
75
The Corporation manages and makes adjustments to its capital
structure in light of changes in economic conditions and the risk
characteristics of underlying assets. To maintain or adjust its capital
structure, the Corporation may adjust the amount of dividends paid
to shareholders, return capital to shareholders or issue new shares.
As at November 30, 2021 and for the year then ended, the Corpora-
tion achieved the following results regarding its capital management
objectives:
• Debt/equity ratio: 1.0% [1.1% as at November 30, 2020] [Long-term
debt/Equity]
• Return on average shareholder’s equity of 23.3% over the last
12 months [16.2% for the year ended November 30, 2020]
The Corporation’s capital management objectives remained un-
changed from the previous fiscal year.
16. DIVIDENDS PAID TO SHAREHOLDERS OF THE
CORPORATION
For the year ended November 30, 2021, the Corporation paid four
quarterly dividends of $0.07 per common share and one special
dividend of $0,0667 to common shareholders [three quarterly divi-
dends of $0.0667 per common share in 2020] for a total amount of
$19,374 [$11,284 in 2020]. On January 20, 2022, the Board of Dir-
ectors approved the payment of a quarterly dividend of $0.13 per
common share for the first quarter of 2022.
17. APPROVAL OF FINANCIAL STATEMENTS
The consolidated financial statements for the year ended Novem-
ber 30, 2021 (including comparative figures) were approved for issue
by the Board of Directors on January 20, 2022.
(1) Richelieu Finances Ltée is the owner of 100% of
18. SUBSEQUENT EVENTS
Richelieu Hardware Canada Ltd.
Executive officers’ compensation
Short-term employee benefits
Other long-term benefits
Share-based compensation
2021
$
4,266
633
687
2020
$
4,213
514
692
5,586
5,419
Accounts payable and accrued liabilities included a retirement al-
lowance amounting to $3,920 [$3,440 as at November 30, 2020]
payable to an executive officer.
14. GEOGRAPHIC INFORMATION
During the year ended November 30, 2021, nearly 66% of sales
had been made in Canada [65% in 2020]. The Corporation’s sales
to foreign countries, almost entirely directed to the United States,
amounted to C$495,580 [C$397,883 in 2020] and US$395,605
[US$296,329 in 2020].
57
Effective December 31, 2021, the Corporation acquired the principal
net assets of Compi Distributors, a distributor of specialized hard-
ware operating four distribution centres in St. Louis, MO, Kansas
City, MO, Ozark, MO and Springfield, IL, HGH Hardware Supply, a
distributor of specialized hardware operating four distribution cen-
tres in Birmingham, AL, Nashville, TN and two in Atlanta, GA and
National Builders Hardware, a distributor of specialized hardware
operating one distribution centre in Portland, OR, for a cash con-
sideration of $46 million, subject to certain conditions. Together
these transactions will generate sales estimated at $100 million an-
nually.
19. COMPARATIVE FIGURES
Some figures disclosed for the year ended November 30, 2020,
have been reclassified to conform to the presentation adopted for
the year ended November 30, 2021.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNovember 30, 2021 and 2020 (Amounts are in thousands of dollars, except per-share amounts or otherwise indicated)RichelieuAnnual Report 2021 Transfer Agent and Registrar
Computershare Trust Company of Canada
Auditors
Ernst & Young LLP
900 De Maisonneuve Blvd. West,
Suite 2300
Montreal, Quebec H3A 0A8
Head Office
Richelieu Hardware Ltd.
7900 Henri-Bourassa Blvd. West
Montreal, Quebec, H4S 1V4
Telephone: 514 336-4144
Fax: 514 832-4002
www.richelieu.com
Printed in Canada
Riche lieu
5 8
A n n u a l Re p o r t 202 1
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