Good afternoon, ladies and gentlemen, and welcome to Richelieu Hardware second quarter 2022 conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session which will be restricted to analysts only. If at any time during this call you require immediate assistance, please press star zero for the operator. Also note that the call is being recorded on July 7, 2022. Merci. Thank you. Good afternoon, ladies and gentlemen, and welcome to this Richelieu conference call for the second quarter and first six months ended May 31st, 2022. With me is Antoine Auclair, CFO. As usual, note that some of today's issues include forward-looking information, which is provided with the usual disclaimer as reported in our financial filings. We achieved strong growth in the second quarter, as reflected in our results, with a 31.4% increase in total sales, including a record 55% increase in the U.S. sales. A 25.8% increase in net earnings per share and a sound financial position with a 24.4% return on average equities. We are benefiting from our recent acquisitions and the investments that we have made in recent years in new market segments and strategic areas, both in Canada and in the U.S. Our dynamic and sustained market development and penetration efforts continue to pay off, and each market segment made a solid contribution to the quarter's growth. In Canada, we achieved a 17.2% increase in sales, and as I mentioned earlier, we realized a record 55% increase in the U.S. market. Overall, increases in the manufacturers and the retailers market were 34.6% and 15.2% respectively. The expansion of our customer base and network, the diversification of our market segment, coupled with our ongoing innovation strategy and our value-added multi-access service are the key drivers of our growth. I will now hand it over to Antoine for a review of the results and financial situation of the quarter. Thanks, Richard. Second quarter sales reached CAD 487.9 million, up 31.4%, of which 16.1% from internal growth and 15.3% from acquisitions. At comparable exchange rate to last year, sales increase would have been 30.1%. In Canada, sales amounted to CAD 292.2 million, up 17.8%, of which 11.3% from internal growth and 6.5% from acquisitions. Our sales to manufacturers reached CAD 237.3 million, up 17.3%, of which 19.9% from internal growth and 4.4% from acquisitions. As for the hardware retailers, sales stood at CAD 55 million, up 20.4%, of which 4.3% from internal growth and 16.1% from acquisitions. In the U.S., sales grew to $154 million, up 54.8%, 22.7% from internal growth, and 32.1% from acquisitions. Sales to manufacturers reached $142 million, up 63%, 26.4% from internal growth, and 36.6% from acquisitions. The hardware retailers and renovation superstores market sales were down 1.6%. In Canadian dollars, total sales in the U.S. reached CAD 195.6 million, an increase of 58.6% and representing 40.1% of total sales. For the first half, sales reached CAD 872.4 million, up 30.4%, of which 16.2% from internal growth and 14.2% from acquisitions. In Canada, sales reached CAD 521.6 million, up CAD 80.3 million or 18.2%, of which 11.9% from internal growth and 6.2% from acquisition. Sales to manufacturers reached CAD 422.8 million, up CAD 67.3 million or 18.9%. Sales to hardware retailers and renovation superstores reached CAD 98.8 million compared to CAD 85.8 million, up 15.2%. In the U.S., sales amounted to $276.1 million in U.S. dollars, up 52.3%, of which 23.1% from internal growth and 29.2% from acquisitions. They reached CAD 250.8 million in Canadian dollars, up 54.1%, accounting for 40.2% of total sales. Sales to manufacturers total $252.6 million, an increase of $96.5 million or 61.8%, of which 28.3% from internal growth and 33.5% from acquisition. Sales to hardware retailers and renovation superstores were down 6.7% compared to last year. Second quarter EBITDA reached CAD 77.9 million, up CAD 16.9 million or 27.7% over last year, resulting from increased sales and continued control of expenses. Gross margin declined slightly and the EBITDA margin stood at 16% compared to 16.4% last year. First half EBITDA reached CAD 131.6 million, up 32.8%. As for the EBITDA margin, it stood at 15.1% compared to 14.8% last year. Second quarter net earnings attributable to shareholders totaled CAD 47 million, up 25.5%. Net earnings per share were CAD 0.84 basic and CAD 0.83 diluted compared to CAD 0.67 basic and CAD 0.66 diluted last year, an increase of 25.4% and 25.8% respectively. First half net earnings attributable to shareholders reached CAD 77.1 million, up 32%. Diluted net earnings per share stood at CAD 1.37 compared to CAD 1.03, up 33%. Second quarter cash flow from operating activities before net change in working capital amounted to CAD 60.7 million or CAD 1.07 per share, an increase of 28.5%, resulting primarily from the net earnings growth. Net change in non-cash working capital used cash flow of CAD 63.7 million, mainly reflecting increases in inventories of CAD 44.1 million, resulting from higher demand and cost of supply increases. Change in accounts receivable and other items used cash flow of CAD 19.6 million. Consequently, operating activities used cash flow of CAD 3 million. For the first half, cash flow from operating activities before net change in working capital were up 32.4%, totaling CAD 103 million or CAD 1.83 per share. Net change in non-cash working capital balances used cash flow of CAD 143.8 million, primarily representing changes in inventories that used cash flow of CAD 117.3 million, and accounts receivable and other items used cash flow of CAD 26.5 million. Consequently, operating activities used cash flows of CAD 40.5 million compared to a cash flow of CAD 55.9 million last year. For the second quarter, financing activities used cash flow of CAD 21.5 million compared to CAD 7.4 million last year. Dividends paid to shareholder of the corporation amounted to CAD 7.3 million compared to CAD 3.9 million in the same period of 2021. We also repurchased common share for an amount of CAD 7.9 million. First half, financing activities used cash flows of CAD 29.8 million compared to 23.9 in 2021. Dividends paid to shareholders amounted to CAD 14.6 million compared to CAD 11.6 million last year. During the first half, we invested CAD 52.4 million for the three business acquisition made in the first quarter and CAD 10 million for the purchase of equipment to maintain and improve operational efficiency as well as further IT investments. We continue to benefit from a healthy and solid financial position with a working capital of CAD 481.5 million for a current ratio of 2.8 to 1, and an average return on equity of 24.4%. I now turn it over to Richard. We'd like to reinforce the fact that our sales are now above 40% in the U.S. market, which represents an important milestone for us as we are getting closer and closer to the 50% mark. We continue to expand our U.S. network to capture market demand. As previously announced, we completed last year the expansion of our Detroit, Orlando, Boston, and Dallas locations while opening two centers in Rochester and Reading. In addition, this year, we started the expansion of our Atlanta, Fort Myers, Chicago, and Pompano locations, which are progressing very well and are on the schedule. The manufacturer's market remains strong, and our customers are still very busy. While the retailer's market growth has been fueled via the acquisition of Uscan and Task Tools. While pursuing the integration of our most recent acquisition, we are still watching the acquisition market closely and hope to see new opportunities that fit our criteria by the end of the year. We remain focused on innovation, acquisition, and value-added service strategy, as well as on cost control in order to continue to grow profitability. Thanks, everyone. We'll now be happy to answer your question. Thank you. Ladies and gentlemen, as stated, we will take questions from analysts. If you would like to ask a question at this time, please press star followed by one on your touchtone phone. You will hear a three-tone prompt acknowledging your request. If you would like to remove yourself from the question queue, please press star followed by two. If you're using a speakerphone, please lift the handset before pressing any of the keys. Your first question will be from Hamir Patel at CIBC. Please go ahead. Hi, good afternoon. Richard, are you able to share with us in terms of the growth in the quarter, how much was driven by price versus volume? We estimate it's only an approximation, but I would think the price increases as we speak affect the sales by something like 10%-12%. Basically, we think that the growth that we've seen actually is very healthy. Okay. Fair enough. Richard, when you think about, you know, the year ahead, and if we were to enter a recession here, how do you think about the risks of price deflation across your product categories? I think we're still far from a price deflation. The price will probably. I would say the freight cost might decrease. I would say it has started already to decrease, but before that, the industry in North America feels the effects of the decrease in freight. That will take a few months, probably that will go until the second quarter of 2023. That will apply to Richelieu as well. Regarding the cost of the products, even though we see changes in the price of the commodities like steel, aluminum, that type of thing, we think that actually the shortage of labor is worldwide and we don't feel that the. Any supplier would be in a position to decrease their pricing unless maybe temporarily. Basically we don't see a deflation as being at our doors as of now. That might come in the future. I would say that, you know, with the decrease of the freight costs and whatever is going to happen in the months to come, you know, we have to turn our inventory at least one time again, and then we're gonna get into the new costing strategy. I've been here for 35 years, I've never had to decrease any pricing. I would say the world and the suppliers will find a way to keep the price at the level that they are. Except for the freight, that has to go down, there's no doubt in my mind. The cost of the freight on one is what? 3% of our average of the purchasing of our products. That's not a huge effect on the pricing. Okay. Fair enough. I wanted to ask about M&A. You know, the company had been quite active in 2020, 2021. We haven't seen any new deals yet this year. Could you comment on, you know, how the pipeline looks and have you seen any moderation in vendor expectations, just given the deteriorating housing outlook in the U.S.? No, it's, I mean, it's just timing. We're working on many files in Canada, in the U.S. as well. It's just the timing of closing these files. The pipeline is still very healthy. I mean, we're planning to open new greenfield stock in certain area of the U.S. in the months to come as well. Just to mention Minneapolis, that we have made a decision not yet. That decision has been made. Basically, I mean, we have other spot where we would like to open new distribution centers in the future, even if we don't make acquisitions. We have to combine, you know, the new establishment, the new location for this year with the acquisition. That should continue to fuel our growth in the future. Okay. Fair enough. Just the last question from me. I'm not sure if you have this handy, but could you speak to how sales in the month of June fared on both the manufacturers side and with retailers? It's very similar versus what you've seen in the quarter. Okay, great. That's all I had. I'll get back in queue. Thanks. Thank you. Next question will be from Zachary Evershed at National Bank. Please go ahead. Hi, it's actually Thomas calling in for Zach. Most of our questions have been answered. Maybe one, we're trying to drill down on the margin trajectory here. Was there any benefit from low-cost inventory on gross margins? How fast is that fading, if there is? I'll have another one. Yeah. We're looking more at the EBITDA level. EBITDA level, we're around the 16% mark. What we're seeing towards the end of the year, we're seeing high 14s or 15% to 15%. Post-COVID normalized margins should be around that level. High 14%, 15%. Okay, perfect. Last one from me. Now that shipments might be coming in faster, do you think you're gonna have to incur additional warehousing costs? Is there any signs of retailers needing to dial back on some orders, as they build inventory? You're absolutely right. Actually, since the shipment from our suppliers from overseas faster, you see that we already have an excess of inventory. That should continue on for a month or two maximum. After that, we should see a decrease of the inventory. I have to complete my answer with the additional warehouse costs. You're absolutely right. I would say that actually this year overall we're gonna pay close to CAD 4 million in additional costs for warehousing those excess inventory. On the other side, though, if you remember, we used to pay extra money in order to get our containers faster here in Canada and the U.S. We expect that will not be the case again in the third and fourth quarter. Basically, we're gonna save money there and we have to pay the extra warehouses, which is normal in the type of business we are in. All right. That's very helpful. Thank you very much. Thank you. Once again, as a reminder, ladies and gentlemen, if you do have any questions at this time, please press star followed by one. Your next question will be from Meaghen Annett at TD Securities. Thank you. Good afternoon. Is there anything you can provide... Good afternoon, Richard. Is there anything you can talk about with regards to what your customers are expecting for 2023 at this point? Like, how long are backlogs typically, and at what point do you start to get some visibility out to 2023? As we speak now, our customers are still very busy. You know, just to give you the last quarter in the U.S., for example, the kitchen manufacturers market in the U.S., our kitchen manufacturing customers have bought 25% more for the quarter. This is continuing on as we speak now. We see the commercial woodworkers, you know, business in the U.S. has been increasing by 35%. You know, that's without acquisition. That was for the last quarter. We have other specialized market where the new market that we have invested in the last few years, and we see a benefit, actually, a sales growth of 35% in U.S. again, and something like 20% in Canada. The market is still strong and healthy. As we speak, we still see the same growth. When we speak with our customers, they're still busy at least for the next, I would say the four to five months. It's hard to tell you how much they're gonna do in 2023, but what we see is that most of our customers are busy still. Those that have some restriction, some labor restriction, for example, what I hear from the customers that I spoke to myself, is that they have less employees, but they choose the best opportunity for them. They're gonna choose the best contract, you know, the kitchen, the higher price kitchen cabinet that are usually fully equipped with Richelieu product. That does bring some positive benefit, as well. That's what we see so far. I'm still very optimistic for 2023, because I think the renovation market is there. It's a must. People need to do some renovation. As far as the recession, if we see that the recession is coming, at Richelieu, we don't see that. I think it's a good thing. That would be, I don't know if I could put it that way, but not a bad thing for Richelieu to see a recession coming, because usually Richelieu does very well during the recession. We make more acquisition, and that could fix the labor shortage situation and the inflation for our customers as well as for us. Basically, we see the future as being very positive. Yeah. Again, the market share in the U.S., there's so much to gain. Even in a recession, we have so many customers we can touch on. We're very confident about what we're seeing in front of us. Great. Thank you. I just had a question on free cash flow. You talked a bit about the inventory and some of the dynamics there, but the free cash flow for the business was negative for the first half of the year. Do you have any comments as to what we could expect for the second half, related to working capital, and, you know, as it relates to inventory? Would you expect that to be a source of cash, or will you continue to reinforce your inventory positions? Yeah. The first half of the third quarter, we should continue to build up the inventory, and it should start reversing afterwards. Just last question, Antoine, I wanted to follow up on your comments around the EBITDA margin. Are you effectively raising your expectation from 13.5%-14%, up to the high 14% to 15%? Right. For this year, the high 14s, 15% makes sense. For the, let's say a post-COVID normalized margin, I would say if we have those kind of these level of volume, I would say the high 14s could make sense. Great. Thank you. Thank you. At this time, Richard Lord, we have no other questions registered, sir. There's no more questions. Thank you again for attending. We'd be happy to talk to you if you wish to give us a call or visit us. Thank you very much and have a nice day. Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we do ask that you please disconnect your lines.