Good afternoon, ladies and gentlemen, and welcome to Resideo Hardware Fourth Quarter Results Conference Call. At this time, all lines are in 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 video assistance, please press 0 for the operator. This call is being recorded on 01/21/2021.
Thank you. Good afternoon, ladies and gentlemen, and welcome to the Chagnier conference call for the fourth quarter and twelve month period ended 11/30/2020. With me is Antoine Locard, CFO. As usual, note that some of today's issue include forward looking information, which is provided with the usual disclaimer as reported in our financial filings. The fourth quarter was another period of high profitability and strong increase in sales resulting both from internal growth and acquisitions internal growth and acquisition.
Let's take a quick look at the Q4 financial highlights. Total sales increased by 20.4%, including 12% from organic growth and 8.4% from acquisitions. Sales to manufacturers were up 15.7%. Sales rose by 55.4% in the retailers and innovations for personal market. I also point out the 33.5% increase in EBITDA for the year, $150,000,000 or 13.7% and the 41.2% increase in net earnings per share reaching $1.15 compared to $1.16 last year.
These results as an essential service provider were achieved, thanks to our business model and strategies, which continue to prove their efficiency, mainly our one stop approach for the service, our innovation strategy, our market diversification, our acquisition strategy, which made a good contribution to the results for the quarter and whole year. Five acquisitions were completed in fiscal twenty twenty, adding over $70,000,000 in annual sales, rigorous cost control and finally, the support and dedication of our team. Under the circumstances, we are very satisfied with the results for fiscal twenty twenty, which shows we have spared no effort to continue to provide maximum support to our customers with care and quality. Antoine will now review the fourth quarter and fiscal year results and the financial position at 09/30/2020.
Thanks, Richard. Fourth quarter sales reached €319,000,000 up by 20.4%. Sales to manufacturers stood at €270,200,000 up by 15.7%, 9.8% from internal growth and 5.9 from acquisitions. In the Hardware Retailers and Renovation Superstores market, we achieved sales of 48,800,000.0, up by 55.4%, of which 28.5% resulting from internal growth and 26.9% from acquisitions. In Canada, sales amounted to CHF215 million, an increase of 35,900,000.0.
Our sales to manufacturers reached CHF174.5 million, up by 15.8%. As for the hardware retailers and renovation superstores market, sales stood at $40,500,000 up by 42.6%. In The U. S, sales totaled $78,900,000 in U. S.
Dollar, up 21.6%, of which 6.9% resulting from internal growth and 14.7% from acquisitions. Sales to manufacturers reached US72.6 million dollars up by 15.8%. In the hardware retailers and renovation superstores market, sales were up US4.1 million dollars or 186% for the quarter, resulting mainly from acquisitions. Total sales in The U. S.
Reached CAD104 million, an increase of 21.1%, representing 32.6 percent of total sales. Total sales in 2020 reached EUR $1,128,000,000, up by 8.3%, 0.7% from internal growth and 7.6% from acquisitions. Sales to manufacturers reached CHF $938,000,000, up by 4.55.4% from acquisition and 0.9% from internal decrease resulting from the slowdown in the second quarter due to the pandemic. Sales to hardware retailers and renovation superstores stood at 189,700,000.0 up by 32.2%, 10.2% from internal growth and 22% from acquisitions. In Canada, sales totaled $730,000,000, up by 6.4%, of which 5% from acquisition and 1.4% from internal growth.
Our sales to manufacturers amounted to €581,000,000 up by 2.1%, of which 4.1% resulting from acquisition and 2% from internal decrease. Sales to hardware retailers and renovation superstores were $117,000,000 up by 27%. In The U. S, sales amounted to $296,300,000 in U. S.
Dollars, up by 10.8%, 12.6% from acquisition and 1.9% from internal decrease. They reached CAD397.9 million, up by 11.9%, accounting for 35% of total sales. Sales to manufacturers reached US265.9 million dollars an increase of 7.3%, entirely from acquisition. Sales in the hardware retailers and renovation superstores market were up by 53.5% in U. S.
Dollars. Fourth quarter EBITDA stood at $46,700,000 compared with $35,000,000 last year, up 33.5%. The EBITDA margin stood at 14.6% compared with 13.2% for the fourth quarter of twenty nineteen, resulting from increased sales together with cost reduction measures implemented. For the year, EBITDA was one four hundred and point five million euros up by 24.4%. Gross margin remained stable with 2019.
EBITDA margin stood at 13.7% compared with 11.9% resulting from increased sales as well as cost reduction measures and government grants. Fourth quarter net earnings attributable to shareholders totaled $27,100,000 compared with $19,100,000 last year. Net earnings per share reached $0.48 basic and diluted compared with $0.34 for the same quarter last year, an increase of 41.2. For the year, net earnings attributable to shareholders reached $85,200,000 Net earnings per share were $1.5 diluted, up by 29.3%. Fourth quarter cash flow from operating activities before net change in non cash working capital balances were up by 29.5% to $36,200,000 or $0.64 per share.
Net change in non cash working capital balances used cash flow of $2,700,000 For the year, they were up 23.5, totaling $121,000,000 or $2.14 per share. Net change in non cash working capital balances represented a cash inflow of $24,600,000 During the year, we paid dividends of $11,300,000 of which $3,800,000 were in the fourth quarter and repurchased common share for €25,000,000 We have thus distributed a total of €36,300,000 to our shareholders this year. We also invested €45,500,000 during the year, of which $33,100,000 was for business acquisition and $12,400,000 for equipment to maintain and improve operational efficiency and for IT equipment. As at 11/30/2020, cash totaled 73,000,000 and our working capital was EUR377 million for a current ratio of 3.6:one. I now turn it over to Richard.
Thank you, Antoine. In the current situation, we continue to strictly respect all prevention measures issued by the various government to protect our employees, customers and business partner as much as possible. We continue to be proactive and manage the business efficiently while remaining very watchful of the evolving health and business environment. We will continue to apply the strategy that have paid off so far, mainly our strategies of innovation, business acquisition, distinctive service, e commerce with richardieu.com and market development. Our core strengths provide us provide a sound condition on which we will continue to build notably our business model well adapted to our customer's need, our value added service, the quality and efficiency of our network of 84 strategic centers, the number and diversity of our customers, our commitment and dedicated team and the soundness of our financial position.
In conclusion, I would like to mention that this morning, the Board of Directors approved a 4.8% increase in the quarterly dividend to EUR0.07 as well as the payment of a special dividend of EUR0.67 as a compensation for the dividend that was not declared in the first quarter of twenty twenty. I take this opportunity to thank our team and business partners for their support in this challenging period. Thanks, everyone, and I'll be happy to answer your question.
Thank you. Ladies and gentlemen, we will now begin the question and answer session for analysts only. Should you have a question, please press the star followed by the one on your touch tone phone. You will hear a pre tone prompt acknowledging your request, and your questions will followed in the order they are received. Should you wish to decline from the polling process, please press the star followed by the two.
If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, before your first question. And your first question is from Amir Patel, CBC. Please go ahead.
Good afternoon. Congrats on another strong quarter. Richard, could you comment on how sales have fared since the November?
I think the trend that we have in the last quarter continued to be strong with sales increase well over double digit. So we expect that to continue for still for a while. We don't know how long, but we still benefit from the fact that the hardware stores are buying more because we're the suppliers for essential services. And we also see an increase of with the manufacturers, which is stronger than it was in the last couple of quarters. So just to give you an idea, overall, North America without acquisition, the kitchen cabinet market increased by 12%, of which 15% in Canada and 7% in The U.
S. The agricultural woodworking increased global, like 2.2%. So it's just it's flat in The US, but we have an increased Canada for up to 10%, which is positive that this market is turning. Also, we have the residential furniture, which is up by 8.66% all over North America. Our fresh furniture is is down by 17%.
Hope you understand why this market is down because the offices, you know, which is the people working from the at home means that they need the best furniture for the offices. Another interesting aspect of our sales is the other what we call here, the other specialized market. As a matter of fact, this topic, have to we will have to maybe to to to split the various market segment that are included in this topic. But just to give you an idea, this topic, for the other specialized market, our sales increased by 20%. And this is due to the closet market, which is all new market, closet market, door and window market, glass hardware market and eaterals market.
That means the investment that we have made in this new market, we are really paying off and we see that the increases being very strong in those market segments.
Thanks, Richard. That's it's very helpful. I'm just curious, in Ontario and Quebec where maybe there's off lates more restrictions on construction. What impact are you expecting that to have?
We don't expect much impact with the construction. But what we expect though is that we see that for the hardware retailers because we had access to their POS point of sales figures. And we see that because of the restriction that both the government of Ontario and Quebec have imposed to the market, we see sales going down. That thing should last, I think, at least for another two or three weeks, if I remember well. So that means that we expect a slowdown in the sales to the hardware store maybe next month because so far though, we continue to buy as usual, but we see that because of those new restrictions, the market is affected.
As far as the construction is concerned, we don't see our customers like the cabinet manufacturer, we don't see any slowdown so far. Things are doing very well.
Okay. Thanks. That's helpful. And then Richard, on last conference call, you talked about potential for price hikes on some of the products in 2021. Is that playing out?
And what's the magnitude of any increases? And how much of the portfolio is affected?
We are working on that actually. We don't know yet what will be the magic numbers, but because we have not received all the price increases from our various suppliers from around the world. But we expect that I would say that price would increase probably between 45% in the course of the next few months. And those increases will take place on certain dates, let's say, takes about ninety days for the hardware retailers. And for the manufacturers, most of it for 80% of the market, it does apply twenty four hours after we made a decision.
And a few other customers that are manufacturer that we work with contract with, it takes another sixty days. So basically, yes, we have to expect that as far as we see right now.
Okay, great. No, that's helpful. That's all I had for now. I'll get back in the queue. Thanks.
Your next question is from Edward Friedman with CWB. Mister Freisman, you may proceed.
Oh, sorry. I was on mute.
The most famous sentence in 2020, I was on mute. Sorry. Again, congratulations for a very good strong quarter. I have two questions. One is on The U.
S. Market. I was wondering if you can give some sort of an update on how The U. S. Market is behaving because when I look at your results in The U.
S, your results were a little bit weaker than compared to Canada. So was just wondering if you can give an update on how the rental market is behaving in The U. S. Compared to Canada? And second, about capital allocation.
So you did an NCIB of $25,000,000 this year and also announced another one in December. Given I imagine that you have many opportunities of acquisitions, which you did also in 2020, was wondering if it's not better to spend the money on acquisition than to do buybacks given that your float is not enormous. That's all I have. Thank you.
Regarding The U. S. Market, maybe Antoine will answer the second part of the question. The U. S.
Market, yes, don't have the growth that we have in Canada. But the more we go since the beginning of the COVID, the more we see the sales improving in The U. S. It's hard to precisely mention what is the big difference between the Canadian and U. S.
Market. We as you, we thought as well that the growth could be similar, but that's not the case. But the more we go, more it's it's increasing. So basically, hopefully, that we continue to improve for the for the next quarter, and we could have different explanation for our next call. But we're on the right track in The U.
S. And that's about what I can say about that. Antoine?
Yes. And if I may, for the second portion of the question. So for sure, that the priority for capital allocation is acquisition. So the pipeline is still healthy. We have nice opportunities in The States and in Canada as well.
So this is the priority. We have a buyback program in place. So when we have opportunities to buy back blocks, we're there and we have a quarterly dividend policy. So that's it's been recipe for the last for the many years past many years, and it's still the recipe. But for sure, the priority is the acquisition.
Okay. Thank you.
The next question is from Zakari Ebershed with National Bank. Please proceed.
Good afternoon. It's actually Thomas calling in for Zakari. My two main questions have been answered. Maybe if I if I may ask, you you mentioned some cost saving initiatives. Could you give us more color on that and what you may or may not be able to retain after after the pandemic?
Yes. With the cost saving initiatives, it's basically in terms of resources and also travel expenses. So certainly, some of these expense will come back to normal, but we still have measures in place to make sure that we first of all, we follow the rules. Implement ban on travel. So those are still in place, and we're going to be monitoring the what's the different laws from various governments to make sure that we monitor this very carefully.
But those those those cost reduction are still in place.
Okay. And so so you mentioned that you still have travel ban in place. Is is does does this make it harder for you to conduct due diligence in your in your M and A pipeline?
No. We were
We we have local people almost everywhere. So people we we have our people that is in The US that go and visit the the the places, and the rest is done well by phone and Teams. Juan, could you add
some details? Yes. No, that's it. We've been able to close many acquisitions this year. So we've done things differently.
We've used our teams that are on-site. So we've done things differently. So it does not stop us for making acquisitions.
Fantastic. Maybe two last for me. The stress and the higher pace of activity due to COVID-nineteen, do you think older owner operators, have you seen them come forward and maybe start discussions? Or is it unchanged and people keep their heads down and keep working?
No, not yet. Basically, I said, the pipeline is still healthy. What you just described might happen, but not necessarily right away because it's not necessarily the time to sell your business. You'll want to rebuild it. But we think that probably some owners will have enough and will decide to that they don't want to leave that again and to start discussion with us.
But like we've seen in 02/2009, 2010, 2011, after this period, we've seen a lot of acquisition in the mainly in The U. S. So this could happen again. But as we speak, this did not happen yet.
Okay. And maybe my last one. We've seen some activity with bigger deals in the industry. Has Vishagu received any inbound interest to be acquired?
No. No. Not really. No. I think a lot a lot of people are looking at Richard Yu with a lot of interest.
But I I think that because of you, the industry is very well evaluated in the market so far, And the future remains great. The literature would continue to be on his own as we are now. I think that's the best way to go. And whatever is going to happen in the course of 2021 and after in 2022, You've seen that's not the first crisis that we have to live with, Richard. We've always been successful during and after the crisis.
I think all the crisis are reinforcing Richard. We really have the feeling that we're gaining market share because we have continued our best effort to maintain a very high service for all our customers. All our warehouses are connected together. So if a customer needs a product, wherever the product is, we make sure that the customer will receive the product as quick as possible. I don't know about any suppliers that could achieve some good deliveries like we're doing actually to the market.
Don't don't don't we don't try to save any effort to satisfy our customer. Our warehouses are all connected together. So the customer might be in Boston. The stock the stock is not available in Boston. That's gonna come from from Detroit.
It could come from Tronport for Montreal as well, if necessary. So that does result in increased sales and increase of loyalty from our customers, and we keep gaining new customers. So and that should continue on in the months to come.
Fantastic. That's all I had. Thank you very much.
Thanks.
There are no further questions at this time. You may proceed.
Okay. If there's no more questions, we'd like to thank you very much for your support, your good questions. And hopefully, we're going to have another chance to talk to you soon, maybe to meet you soon eventually. So thanks a lot, and have a nice day.
Ladies and gentlemen, this concludes your conference call for today. Thank you for your participating and ask that you please disconnect your