Main ladies and gentlemen, and welcome to Richelieu Hardware, first quarter 2025 results conference call. At this time, all lines are in the 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 this call is being recorded on April 10, 2025. Bonjour, mesdames et messieurs, et bienvenue aux résultats du premier trimestre 2025 de quincaillerie Richelieu. Présentement, vos lignes sont en mode d'écoute seulement. Suite à la présentation, nous allons procéder à une période de questions et réponses qui sera restreinte aux analystes seulement. Si vous avez besoin d'assistance au cours de l'appel, appuyez sur l'étoile et zéro. Veuillez aussi prendre note que cet appel est enregistré le 10 avril 2025. J'aimerais maintenant céder la parole à Monsieur Richard Lord, président et chef de la direction. La parole est à vous. Merci, thank you. Good afternoon, ladies and gentlemen, and welcome to Richelieu Hardware's conference call for the Q1 ended February 28, 2025. With me is Antoine Auclair, CFO and COO. 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 findings. Richelieu Hardware made a strong start in 2025. While the first quarter is generally the weakest period of the year and market conditions remain relatively stagnant, our total sales climbed by 8.6%, driven equally by internal growth and acquisition. This increase reflects the good performance of the manufacturers' market, where sales were up 10%, thanks to our strategy of innovation, acquisition, market penetration, and value-added service. In the retailers' and renovation superstores market, overall sales were stable compared with the Q1 of 2024. In order to maintain our strategic advantage as market leaders, we are investing substantially in this market to update our programs and product lines in retailers' stores, as well as introducing new products. We see these initiatives are already starting to bear fruit with sales growth in Canada. We are also very pleased with our five acquisitions completed, including four in the first quarter and one following the end of the quarter. On December 1, we acquired Mill Supply, operating in Dartmouth, Nova Scotia, and Charlottetown, Prince Edward Island. This acquisition, which was targeted since a long time, expands our presence in the Halifax region, where we already operate two centers. In January, we acquired Darren Distributing, a specialized hardware and decorative surfaces distributor in Denver, Colorado, marking our entry in the strategic market for Richelieu. We closed the acquisition of Midwest Specialty Products, a distributor of decorative surfaces, including quartz, which reinforces our presence in the Minneapolis area, where we already are established. In February, we acquired Modulex Partition, located in Hillside, New Jersey. This distributor of Division 10 products for the construction market enables us to expand our presence in the greater New York area. Our most recent acquisition, completed on April 1, is Waltz and O'Hara Architectural Products, a distributor of exclusive architectural panels and related products, working closely with architects and designers and high-end commercial woodworkers, with one distribution center in Vineland, New Jersey. These strategic acquisitions highlight our commitment to expand our reach and increase our product offering across North America. In addition to contributing $50 million in sales, these five acquisitions strengthen our position in certain markets, open up new ones, add new products to our range, and also talented teams and create opportunities for new synergies. Together with the four acquisitions completed in 2024, they add approximately $120 million in yearly sales. The last two years have been years of major investment in our network. Just to name a few in the U.S., we increased our footprint in Detroit, Atlanta, Fort Myers, Chicago, Pompano, Nashville, and Seattle region. We also started two greenfield locations in Minneapolis and Carlstadt, New Jersey. In Canada, we completed last year the opening of our brand new 250,000 sq ft building in Calgary, while consolidating two centers, giving us the opportunity to be a one-stop shop for all Western retail customers. We also undertook the same projects out of Kitchener, Ontario, for Eastern retail customers. Early this year, we concluded the consolidation of two centers into a 140,000 sq ft building in Vancouver, serving the pro market. We are pleased with this investment that we're required to continue to gain market shares and to offer a first-class service to our customers. Antoine will now review the financial highlights of the first quarter. Thanks, Richard. First quarter sales reached CAD 442 million, up 8.6%, driven equally by internal growth and acquisitions. Sales to manufacturers stood at CAD 385 million, up 9.9%, including 5.1% from internal growth. In the hardware retailers' and renovation superstores market, sales remained stable at CAD 56.6 million. In Canada, sales amounted to CAD 242 million, up 4.1%. Our sales to manufacturers reached CAD 195 million, and hardware retailers' and renovation superstores market sales stood at CAD 46.3 million, up 5%. In the U.S., sales grew to $140 million, up 7.6%, reflecting a 10% increase in the manufacturers' market, mostly resulting from acquisition, while sales to retailers' and renovation superstores markets were down. In Canadian dollars, sales in the U.S. reached CAD 200 million, an increase of 14.5%, representing 45% of total sales. First quarter EBITDA reached CAD 42.4 million, up CAD 2 million or 5% over 2024. The lower margin from our recent acquisition, the increased marketing costs for new product lines at our retail customers, affected the EBITDA margin slightly downward to 9.6% compared to 9.9% last year. First quarter net earnings attributable to shareholders totaled CAD 13.9 million, a decrease of 8.6% from the first quarter of 2024, mainly due to an increase in amortization expense resulting from the CapEx investment and lease asset additions from the expansion project and business acquisition made during the previous fiscal year and the first quarter of 2025. Consequently, diluted net earnings per share was $0.25, compared with $0.27 last year. First quarter cash flow from operating activities before net change in non-cash working capital balances was CAD 37 million or $0.67 per diluted shares. The net change in non-cash working capital used cash flow of CAD 34 million. As a result, operating activities provided a cash inflow of $3.7 million compared to a cash inflow of $0.5 million in the first quarter of 2024. We paid dividend of $8.5 million to shareholders, and we invested $25 million, including $20 million for four business acquisitions and $5 million in CapEx. At the end of the quarter, financial situation was healthy and solid, with working capital of $613.2 million and almost no debt. I now turn it over to Richard. Thank you, Antoine. In conclusion, we will integrate our recent acquisition and continue to monitor the market for new opportunities in line with our short and long-term growth objectives. We currently operate in an ever-changing and volatile market. We remain agile, adaptable, and connected to our market in order to continue to offer first-class service to customers. The tariff measures implemented by the U.S. administration might have an impact on the global economy, and we are on the lookout to take the necessary action to mitigate the effect on Richelieu. Our highly diversified and innovative product offering make us an essential destination for customers. We continue to build on our core strength, our business model, and our innovation and acquisition strategies, our comprehensive market coverage, and the strength of our network and our team, the penetration and effectiveness of our transactional website, richelieu.com, as well as the distinctive added value of our service and our solid balance sheet. Thanks, everyone. We'll now be happy to answer your questions. Thank you, sir. Ladies and gentlemen, if you do have any questions, please press star followed by one on your touch-tone phone. You will hear a prompt that your hand has been raised. As stated, questions will be taken from analysts. Should you wish to withdraw from the question queue, simply press star followed by two. If using a speakerphone, you will need to lift the handset first before pressing any keys. Please go ahead and press star one now if you do have any questions. Your first question will be from Zachary Evershed at National Bank. Please go ahead. Good afternoon. Thanks for taking my questions. Hello. Hello, Zach. Could you give us a little bit of color on what you saw throughout the quarter in terms of pricing versus volume to get where you were for the full quarter? Basically, the pricing, because of the exchange rate, I think we have affected our sales by something like I think it's less than 2%. So it's minor. Basically, the growth is number of products sold. Gotcha. Thanks. I was hoping you could dive down into the investment in retail channels. How much of a drag was that on margins, and what do you hope to get in terms of return on that? We're adding new product lines in the store for a few major customers in Canada. In terms of drag on the EBITDA, it's around $500,000 of drag, and these are one-time fees, so this will disappear and will benefit from the additional sales in the future. Yeah. Just to complement on Antoine's answer, we have added the fence components in the Home Depot stores. We're in the process of installing the new fence, new safety fence for the pools, which is something which becomes that's going to be part of the regulation of the Canadian market and US eventually. The safety of the children around the pool is most important. We are investing in order to displace those products at Home Depot as we speak. We have a major investment with RONA. 100% of the RONA stores, the big ones, have to be revamped in terms of refreshing our displays, refreshing our product lines, and adding products. We see that the product for organization is more and more important. We add a ton of those products in the stores across Canada at Home Hardware and other stores as well. Basically, it's major, but we already, when we make the changes in the store, we see sales increase to something like 15%-20%. Basically, that was due to be done, and it was not done before because we were not allowed at RONA, for example, to make any change because of the situation with Lowe's that was selling RONA. Now that RONA is a new executive group, these guys are very open to business, and Richelieu is allowed to make the necessary changes in order to improve the sales. For the other stores other than RONA, that has been slow because the market was slow for all the retailers, and they were quite hesitant before making any changes. I think this is behind us now. We do what we have to do in the stores, and we're going to reap the benefit. Very clear. Thank you. Given what you're seeing in the market, how's the pace of your M&A campaign going? Do you think you'll see an acceleration with people looking to exit a more volatile market, or are people shutting down discussions? No, no. Definitely not shutting down discussion, but we could see a more favorable market for acquisition in the future because we've seen that in the past, like in 2009 and 2010, we've seen an increase in good opportunities coming in. Even without that, the channel is very healthy. We've already closed five this year, and we're not done yet. We have other opportunities we're working on. It is very healthy either in Canada and the U.S., Zach. We also have to be prudent with some companies that maybe we do not know with the tariff, everything is changing every week. We do not know what is going to happen. If we see companies that are for sale but are really dependent on Chinese products, we have to be prudent. Sometimes we drag our feet because of that. We wait until we know exactly what is going to happen in the market. Basically, as Antoine said, the market for acquisition is very healthy. Makes sense. While we're touching on tariffs, could you go into more detail on your mitigation strategies? Because obviously, we're seeing some very high tariff levels on China, and you do have some exposure there into the U.S. Our exposure in the U.S. regarding our sales, the Chinese product represents less than 20% of our sales. Basically, all the products we buy from China, we also buy some local and some from Europe and other countries in the world. We could also add other alternatives like Turkey and Yugoslavia, for example, easily. We have friendly suppliers out there that could supply more products to us, similar to the ones we buy from China. The price might be slightly different, but with 125% or whatsoever tariff on Chinese products, that could become obvious that we're going to have to slow down selling those products. Even without selling any Chinese product in the U.S., Richelieu Hardware will do well with the other products because the same thing applies to our competitor as well. I just hope, and I think personally that things will change very quickly. I don't see that those tariffs at 125% and 150% on certain products could last forever and show that China and the U.S. will get into an agreement soon. As we speak, though, it does create a lot of uncertainty, and we don't know what's going to happen. We are very well prepared because we have the most diversified product lines in North America, much more than our competitors. We have many alternative hinges, but we have hinges that come from the U.S., that come from Italy, that come from Austria, that come from Germany. The customer has the choice, and the best deal would be the choice of the supplier, of the customer. Zach, as we speak, we have a team on site in China meeting with the suppliers. Yeah. Talking to Jerry Ni, every morning for me, every night for him. Regarding what's going on, the discussion, I think there is a lot of uncertainty as well with our Chinese suppliers. They do all the effort that they can to help Richelieu, but with over 100% of tariffs, nobody can imagine that they could compensate and lower their costs. Basically, hopefully, that will change. Anyway, the Chinese product will continue to sell very well in Canada, where we do not have any more tariffs that we had before. Basically, no change in Canada. In the U.S., we have to make sure that we're very prudent about what we're going to do in the next weeks. Understood. Thanks. Just mechanically, it's a very long supply chain for orders that you placed ahead of the tariff increases. Will those apply to the shipments when you receive them? Yes. Gotcha. Thanks. Then just one last one for me. It's potentially a good market for M&A like 2009 to 2010. We could see some upside to your annual target for acquisitions. What's your leverage comfort? How high would you take the balance sheet given the uncertainty out there in macro? I think for the right acquisition, we have no issue leveraging the balance sheet. Anywhere between two or three times EBITDA. It needs to be for the right investment, strategic investment for long-term value creation. When we make an investment, Zach, we make sure that the margin that we're, the EBITDA that we're acquiring is sustainable. We will do it for the right opportunity. Sustainable or visible. Thank you. Gotcha. I'll turn it over. Thank you. A reminder, ladies and gentlemen, if you're an analyst and would like to ask a question, please press star followed by one on your touch-tone phone. Next question will be from Nikolai Gouropitch at CIBC Capital Markets. Please go ahead. Hi there. Could you discuss how organic sales fared in March? We had the same trend in markets we had in the last quarter. Basically, I would say that without the tariffs, I think Richelieu would have a good year because I think we have all the people necessary in place in order to sell the products. Our inventory are intact. The high inventory with higher costs has disappeared almost 100% of our inventory. Basically, we're in a very healthy situation, and the market not being very, very not moving very much, but I think Richelieu can continue to grab market share. The investment that we have made, we see all the investment that I have named a few minutes ago, all those investments now, they give us some food. We see the benefit. We see sales increases, profit increases, maybe not at the level that we're looking for yet, but it's improving. Basically, I would be very positive. If you exclude the tariff of the picture, I would be very positive for the market in 2025. Okay. I see. Thanks. I guess you mentioned the overall market there. What do you see? What are your expectations this year? Many key players on the R&R side going to a flat market. Do you have a similar view? That's what we're in the market, and you see what Lowe's and Home Depot are also talking about. Yeah, flat or low single-digit growth, that's what we see as of today. Okay. Great. Thanks. That's all I had. I'll turn it over. Thank you. Thank you. At this time, Mr. Lord, we have no other questions registered. Please proceed. There's no more questions. Thanks again. It's always a pleasure to talk to you. Have a good 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.