Amortization of Assets and Sales Decline Contribute to Decrease
Richelieu Hardware, a specialty hardware manufacturer and distributor, experienced a decline in earnings during the second quarter as the strong market conditions seen during the pandemic subsided. The company reported a 35% fall in net earnings attributable to shareholders, amounting to 30.7 million Canadian dollars ($23.1 million), or C$0.55 a share. This decrease is primarily attributed to increased amortization of rights-of-use assets related to business acquisitions, expansion projects, and interest on its line of credit.
For the three-month period ending on May 31, Richelieu’s earnings before interest, taxes, depreciation, and amortization declined by 21% year-on-year, reaching C$61.5 million.
In addition to the decline in earnings, sales also dipped from C$487.9 million last year to C$472.1 million. Interestingly, despite completing four acquisitions in Canada during the previous quarter, the company experienced a sales decline in both Canada and the U.S. Richelieu further expanded its operations by closing acquisitions in Oregon and Minnesota during the fiscal second quarter, with a focus on market penetration.
