Richelieu Hardware is a leading manufacturer, distributor and importer of specialty hardware and ancillary products in North America. The company serves over 90,000 customers in North America through a network of 84 centers – 82 distribution centers in Canada and the United States and two manufacturing facilities in Canada.

Richelieu Hardware is known for its diverse product range, one-stop shopping experience and efficient logistics. It offers more than 130,000 products in various categories, from fittings for furniture and buildings to kitchen and cabinet storage solutions to lighting systems, finishing and decoration products and ergonomic workplaces.

This range is supplemented by special items such as veneer panels, moldings and components for the window and door industry. The company generates nearly 65% ​​of its sales in Canada and 35% in the US or abroad.

A wide range of colors, materials, designs and utility products have made Richelieu a preferred choice in the architecture and design community.

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Plant data

Sales growth & market presence

The housing and commercial renovation industries are one of the main sources of growth for Richelieu. The products are aimed at a large customer base of home textiles, office furniture manufacturers, residential and commercial wood processors as well as hardware dealers. More than 60% of Richelieu’s total range is sold under its brands. The specialty items are manufactured by two of their subsidiaries, Cedan Industries Inc. and Menuiserie des Pins Ltd.

Over the years the company has built solid relationships with the world’s leading suppliers that enable it to offer its customers the latest in innovative and customized products. Richelieu has built deep relationships with customers and suppliers alike that enable it to better understand and meet the unique needs of its customers.

A strong customer and innovation focus has enabled Richelieu Hardware to maintain a leading position for the last five decades of its existence. Richelieu is experiencing positive effects from its market development, acquisition and innovation strategies in the United States. The company is also expanding its digital presence.

Richelieu Hardware has seen sales growth of 9% + CAGR over the past two decades. The company is growing organically and through acquisitions. Acquisitions contributed more than 2% to sales growth in the last quarter. Richelieu’s recently announced acquisitions of two Canadian distributors that are estimated to generate ~ $ 36 million in additional annual sales.

The company had strong performances in both the manufacturing and retail markets. Richelieu is focused on continuously introducing diversified products and expanding its presence in North America. The company also has an online presence through Richelieu.com, the leading tool of its kind in the industry. Richelieu seeks future growth through continuous innovation, market development and acquisitions.

Dividends

Richelieu Hardware has increased its dividend growth by more than 5% over the past decade. Profit increased by 9.5% CAGR over the same period. The dividend yield is a modest 0.63% with a very low payout ratio of 16%. The most recent dividend increase was 33%.

It paid regular quarterly dividends of $ 7.6 million compared to $ 3.8 million in the corresponding quarter of 2020 and a special dividend of $ 0.0667 per share in addition to repurchasing shares worth $ 3 , $ 3 million last quarter. No share buybacks were carried out in the same period of the previous year.

The company’s efforts to develop markets, sales synergies and acquisition contributions are already bearing fruit. The acquisition strategy is the main growth driver and the company can look back on a solid track record of 71 successful acquisitions. The company continues to benefit from the synergies of its integrations by gaining new sales and operating advantages, market development in Canada and the United States, and overall profitability.

Over the years, the company has built close relationships with manufacturers of innovative products, offering customers the best decorative and functional hardware products and systems in the world. This has resulted in close customer relationships and strong connections to a network of global partners.

Richelieu has a strong financial position and expects cash flow from operations and other funding sources to meet its ongoing contractual obligations. Last quarter, $ 1.3 million in long-term debt was repaid. The company’s one-stop-shop approach, the efficiency of richelieu.com and the broad diversification of its customer base means that the company is well positioned to capitalize on opportunities in the Canadian and US home renovation markets.

Richelieu (RCH) historical return
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competition

Richelieu Hardware operates in a highly fragmented market consisting mainly of regional distributors who offer a limited range of products. The company enjoys the upper hand thanks to its broad distribution network, wide product range, one-stop-shop service approach and logistical efficiency.

Due to its size, the company has successfully acquired its competing distributors. The special fittings and renovation products segment is highly competitive. The company competes with companies such as Upper Canada Specialty Hardware, Allmar, and McGregor & Thompson Hardware Ltd.

Bottom line

Richelieu Hardware has strong market share positions in the decorative and functional hardware product markets in Canada and the United States. The company’s focus on developing and offering innovative products in conjunction with strong supplier partnerships has a major impact on its business.

The company is developing its current markets in Canada and the United States with the support of specialized outlets and the opening of new distribution centers. Given its strong position in the industry, a deep understanding of customer needs and an innovative product portfolio, the company should easily continue on its dividend growth path going forward.

RCH vs. TSX vs. SP500 2021
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Richelieu (RCH) historical PE
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