- Richelieu Hardware (TSX:RCH) has said that it will not declare dividends for the quarter ending February 29, 2020, despite a “vigorous” increase in sales
- Total sales for the quarter were up 10.2 per cent to C$249.4 million, compared to $226.4 million in the first quarter of 2019
- 3.5 per cent of sales came from internal growth, while the remaining 6.7 per cent came from acquisitions
- EBITDA also increased by 18.9 per cent to $24.9 million
- Richelieu (RCH) is currently up 5.34 per cent to $24.47 per share, with a market cap of $1.38 billion
Richelieu Hardware (TSX:RCH) has stated it will shelve dividends for the quarter ending February 29, 2020, despite a “vigorous” increase in sales.
With 82 centres across North America, the company distributes, imports and manufactures over 130,000 specialty hardware products for a variety of industries.
The decision by Richelieu’s Board of Directors to cancel dividends comes as part of a wider effort to preserve its liquidity and mitigate any potential financial impacts brought on by the COVID-19 pandemic.
At the end of the quarter, the company had C$337.2 million working capital.
Richelieu’s strong quarter concluded just prior to the the company reporting the initial effects of the virus on its business. As such, reduced financial performance in the second quarter is likely.
That said, the company is in a strong position to outlast the outbreak.
Total sales for the quarter were up 10.2 per cent to $249.4 million, compared to $226.4 million for the corresponding period in 2019. 3.5 per cent of these sales came from internal growth, while the remaining 6.7 per cent came from recent acquisitions.
These acquisitions included one in Canada, which was made in December last year, and two in the US that facilitate the Nebraska, Iowa and South Dakota markets. Collectively, these acquisitions are expected to generate an additional $60 million in revenue on an annualised basis.
In today’s announcement, Richard Lord, President and CEO of Richelieu, drew attention to a wide range of additional measure that the company has taken as a result of COVID-19.
Some of the more drastic actions include the temporary layoff of some staff, as well as salary and pay reductions for the Board of Directors and senior management.
“We have entered this crisis from a position of strength, with a leading market position and a solid financial position.
“We believe taking decisive yet flexible actions will help to protect our employees, operations and cash flows over the short-term and gives us the necessary agility to resume our long-term growth as soon as current confinement measures will be lifted,” he added.
Richelieu Hardware (RCH) is currently up 5.34 per cent to $24.47 per share at 2:32pm EST.