Good afternoon, ladies and gentlemen, and welcome to this Richelieu's conference call for the third quarter and nine month period ended August 3139. With me is Antoine Hautler, CFO. As usual, note that some of today's issue includes forward looking information, which is provided with the usual disclaimer as reported in our financial filings. Richelieu performed well in the third quarter as shown by increases in sales, EBITDA, net earnings and cash flows compared to last year. Note that the third quarter had one less business day than last year, negatively impacting sales by 1.5%.
Despite a softer market in Canada, our growth was fueled by the contribution of our five acquisitions made over the past twelve months, namely Euro Architectural Components, Lion Industries, Blackstone Building Products, TruForm Building Products and Chair City Supply. Together, we fostered a good performance in our manufacturers market, both in Canada and in The U. S. The manufacturer's market softness is felt across Canada, but more importantly in Alberta and the Atlantic provinces. As for the retailers market in Canada, as mentioned in previous quarters, the store closures, the inventory realignment of our retail customers combined with the softer market had a negative impact on our sales.
Cyclical sales were also lower this quarter. However, we are particularly pleased with our U. S. Performance, where our sales increased by 8.2%, including acquisition, and also by the continued improvement in our margins in this market. Our consolidated EBITDA margin, as a percentage, slightly increased as a result of rigorous control and gross margins as well as operational costs.
I will come back with additional information comments, but I will now ask Antoine to go through the financial highlights. Antoine? Thanks, Richard. Third quarter sales reached $269,000,000
up by 3.4%, of which 5% from acquisition and 1.6% from internal decrease. In Canada, sales amounted to $180,000,000 up by 0.7, of which 4.7% from acquisition and 4% from internal decrease. Our sales to manufacturers reached $147,900,000 up by 3%. As for the hardware retailers and renovation superstores, sales stood at $32,000,000 down 8.8%. In The U.
S, sales totaled $67,500,000 an increase of 8.2%. Sales to manufacturers reached $64,900,000 an increase of 8.9%, of which 3.1% resulted from internal growth and 5.8% from acquisition. Sales to hardware retailers and renovation superstore were down 10.3%, however, are showing year to date growth of 10.8%. Total sales in The U. S.
Reached CAD89.3 million, an increase of 9.2% and represented 33% of total sales. For the first nine months of twenty nineteen, sales totaled $777,000,000 up 4.2%, 0.4% from internal growth and 3.8% from acquisitions. In Canada, sales reached $5.00 $7,000,000 up by $3,300,000 or 0.7%, of which 2.7% resulted from acquisition and internal decrease of 2.1%. Sales to manufacturers rose to $417,600,000 up by $12,900,000 or 3.2 percent, mostly resulting from acquisitions. Sales to hardware retailers and renovation superstores reached $89,100,000 compared to $98,700,000 down 9.7%.
In The U. S, sales amounted to $2.00 $3,000,000 up by 7.5, 1.6% from internal growth and 5.9% from acquisitions. They reached $270,000,000 in Canadian dollar, up by 11.5%, accounting for 24.8% of total sales. Sales to manufacturers totaled $185,300,000 an increase of $12,500,000 or 7.2% over the same period last year, of which 0.8% resulted from internal growth and 6.4% resulted from acquisitions. As reported in previous quarters, the internal growth in the manufacturers' market was affected by the termination of a supply agreement with a major customer.
Note that at comparable sales level, internal growth in The U. S. Manufacturers' market would have been 3.4%. Sales to hardware retailers and renovation superstores were up 10.8% versus 2018. Third quarter EBITDA reached $30,200,000 up by $1,300,000 or 4.3% over last year.
Gross margin and EBITDA margin improved slightly. The EBITDA margin stood at 11.2% compared to 11.1% last year. For the first nine months, EBITDA reached $78,300,000 up 2%. The gross margin remained stable. As for the EBITDA margin, it stood at 101% compared to 10.3% last year.
The EBITDA was impacted by the slowdown in the hardware retailer market in Canada and market development costs incurred to increase our offering and our presence in the retailers market in The U. S. Third quarter net earnings attributable to shareholders totaled $18,600,000 up 1.3%. Net earnings per share were zero three three dollars basic and diluted, an increase of 3.1%. For the first nine months, net earnings attributable to shareholders reached $48,000,000 down 2.6%.
Diluted net earnings per share stood at $0.84 Third quarter cash flow from operating activities before net change in working capital balance amounted to $23,400,000 or $0.41 per share, an increase of 4.3%. For the first nine months, they were up 0.6%, totaling 61,000,000 or $1.06 per share. For the third quarter of twenty nineteen, dividend paid amounted to $3,600,000 up by 4.4%. Since the beginning of fiscal year, we repurchased common shares for $9,400,000 including $4,900,000 during the third quarter. During the first nine months, we paid dividends of $10,800,000 up by 4.3%.
We also invested $28,400,000 for business acquisitions and €7,600,000 primarily for equipment to maintain and improve our operational efficiency. We continue to benefit from a healthy and solid financial position,
cash balance of €14,800,000 almost no debt, working capital of €346,800,000 for a current ratio of 4.5:one. I now turn it over to Richard. Thank you, Edouard. Our ongoing innovation and market penetration strategies enabled us to grow in various market segments. Our development efforts in specialized markets such as door and window hardware, closet, glass hardware, architectural hardware and stainless steel components for stairs, banisters and railings were reinforced by our recent acquisition resulting in a 20 sales growth in these markets.
We continue to improve our operational efficiency and customer service. Our auto restore system implemented last year continues to deliver as per expectation. This robotic system is highly effective, reliable and provides leisurely with a significant competitive advantage. We just launched a new project to expand the current auto store footprint to add up to 5,000 product locations. This will require an investment of about $500,000 Speaking about competitive advantage, we also are constantly investing in our unique website, which is largely used by our customers.
And the website is a very important contributor to our success. We are also proud to increase our presence and seize new market opportunity in the important New York market, where we are moving our Long Island City location to a larger one in the same area. It would be a key location that will include a state of the art and welcoming showroom available for our customers and New York architects and designers. Turning to our outlook. We remain focused on outstanding customer service, market share gain in Canada and The U.
S, the new synergies, operational efficiencies and profitability and new acquisition opportunity compatible with our growth objectives. We remain confident that our strategies of ongoing innovation, market development and acquisition will continue to bring good results and end the year with a strong and stable financial position. We have grown this company to $1,000,000,000 of sales over 100,000,000 of EBITDA with no debt. Our priority our priority is to continue on the path of the path of growth by ensuring that we always have the strategies, human resources and system in place in order to keep our leadership and remain a strong, innovative and customer driven company. Thanks everyone.
We'll now be happy to answer your questions.
Thank you. Questions will be taken in the order received. And your first question will be from Zachary Evershed at National Bank Financial. Please go ahead.
Good afternoon. Thank you for taking my questions.
Good afternoon.
I was hoping if you could speak more about the auto store expansion. What is being added?
We just add locations. We're gonna we're gonna add about the possibility of of storing between 12,000 more products into the auto store. The the result of that will be to increase our operational efficiency as well as to shorten our delivery time, which is the fastest way to deliver the type of product that we're selling at leisure use. So that will add to our competitive advantage as well to expedite to our deliveries and save cost.
Thank you. That's helpful. And this actually might tie into that. U. S.
Sales made up a larger portion of consolidated sales versus the same quarter last year, and you have indicated in the past that your U. S. Margins are generally lower than your margins in Canada. Yet this quarter, despite softening markets and growing exposure in The U. S, margins increased 10 basis points year over year on EBITDA.
So could you provide us with some insight into where that's coming from?
It's only I think it's a that's a result of a rigorous control of our margins, and not to name our selling prices as well as the operational costs as they also working hard in order to save on the cost of freight, which is actually quite expensive in North America, mean, all over the world. So basically, it's I think we have a good team in The U. S. They have a good plan and they drive the business the way it should be driven.
And do you think that there's more you can extract there?
There will always be more to extract.
Moving on to the activity in Canada, which has been poor year to date. Have you seen any signs of end markets turning a corner?
No. The soft net in the third quarter was felt pretty much all across Canada. But like we said, it's more importantly in the Atlantic provinces and also in Alberta.
Yes. Alberta is down by something like 10%. Quebec will still be up compared to last year and as well as BC. The rest of the market are slightly negative, including Ontario, which is down by 4%. But I don't want to confuse you with some other information, but I can tell you though that including acquisition in the East, sales increased by 6%, Ontario increased by 9.7% as a result mainly of the latest acquisition.
Western Canada will be decreasing by only 0.3% compared to 3.5% without acquisitions. So overall, in Canada, as mentioned in the entire Antoine report, sales increased by 3.1%. So basically, we're quite happy with the results, including our acquisitions.
Thank you for the extra information there. That's very helpful. Any sign of things turning around in the month since the quarter ended?
No, I would say it's hard to tell for the manufacturers' market. But I think regarding the retail oil market in the first quarter of the following fiscal, I think we're going to see improvement. It cannot be worse because we know the percentage of sales or the same performance per POS for our big returning customers. Actually, we see there is a big difference between their purchases and their POS performance. So that means that they keep reducing and realign their inventory.
So that cannot last forever. So we expect that to be improving in the future quarters. Eventually, we'll be back to normal.
Okay. Thank you.
Except for the store closure though, for those that have closed, we don't expect them to reopen.
That's fair. Then of the impact that we're seeing on the retailer front, how much do think is attributable to the inventory rightsizing? And how much is end market slowness?
I would say it's 80% in the inventory, the alignment, the rest is in the soft market, yes.
Excellent. Thank you. And we have brought this up in the past, but the Home Depot new self pickup lockers are seeing positive reactions. Are you seeing any impact on your sales, or have any customers mentioned it?
No. No. That doesn't have any impact with us.
That's clear. Moving on to the M and A pipeline, always an important topic. How is it looking these days?
Exciting. So we're busy and we keep working hard and and if the business become more difficult, that would be just setting more possibility of acquisition. But for the time being, I think this is a very healthy list of acquisition that we have on our table. So we will probably make other moves very soon.
And in context of a weaker market in Canada, do you think that may cause an acceleration of the pace of M and A?
Yes. That will certainly be favorable to that.
Excellent. And one last one from me then. How did the various end markets perform? Any weak spots in your manufacturing end markets?
No. It was pretty steady in all of our markets, Zac.
Excellent. Thank you very much for the extra color. I'll turn
it over.
Thank you. And your next question will be from John Novak at CCL. Please go ahead.
Antoine, can you just talk to the working capital? It looks like you've taken a lot out of both inventory and receivables.
How do you see the rest
of the year playing out from a working capital perspective?
Yes. Usually, the fourth quarter is pretty neutral. So third quarter is usually favorable. But if also if you remember, last in the second quarter, we had very large sales to very large cyclical sales. So basically, we got the receivables in during the third quarter and we're also working very hard to reduce inventory.
But I'm not expecting a major reversal in the fourth quarter. So the major reversal, we got it in the third quarter, so it should be neutral in the fourth quarter. And usually, the first quarter is where you invest in your inventory in order to capture the busier market in the spring.
Okay. And lastly, should we expect the same pace of use on the normal course issuer bid in the next quarter? Yes. Okay. Thank you very much.
Thank you. And at this time, we have no other questions. So I would like to turn the conference back over to Rishal Law. Please go ahead, sir.
Thank you very much. And it's always a pleasure to talk to you. So we will be in our office if you have further questions. It was a pleasure to talk to you. Have a good afternoon.
Thank you. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines. Enjoy the rest of your day.