Richelieu: Acoustic Acquisitions Amplify Growth Amid Tariff Squeeze

Q2 shows steady organic growth and a strategic push into acoustic solutions, while tariff pass-through continues to pressure EBITDA margins.

RCH.TO · Earnings Call · 2026-07-09

A Steady Quarter with a Strategic Pivot

Richelieu Hardware's Q2 results, reported on 2026-07-09, delivered sales of CAD 532.1 million, up 3.9% (5% in constant currency), with internal growth of 1.8% and acquisitions adding 2.1%. While the numbers were solid, the real story lies in the company's accelerating acquisition strategy and its push into new high-growth niches.

“We recorded good growth and positive results during the Q2. We have remained focused on acquisition strategy, completing one new acquisition, followed by two further ones after the end of the quarter.” — Richard Lord, CEO · 2026-07-09

The three acquisitions announced around the quarter—Finium, Solutions Acoustiques, and Winnec—add approximately CAD 45 million in annual sales and, more importantly, diversify the product portfolio. The most notable is Solutions Acoustiques, a specialized distributor of acoustic solutions, which CEO Richard Lord described as reinforcing leadership in acoustic solutions. This marks a deliberate expansion into decorative and acoustic panels, a segment the company believes has high growth potential.

Solutions Acoustiques, along with Finium's premium wall panels, strengthens Richelieu's offering to architects and designers—a customer base the company has been courting with its market segment strategy. This is a clear evolution from the past focus on kitchen cabinets and conventional hardware.

Tariff Pass-Through: A Margin Squeeze in Disguise

Revenue growth was healthy, but EBITDA margins slipped to 10.6% from 10.8% a year ago. CFO Antoine Auclair explained that the decline is almost entirely due to tariffs, which inflate both sales and cost of sales proportionately:

“Slight decrease in percentage reflects the impact of tariffs, which proportionately increased both sales and cost of sales.” — Antoine Auclair, CFO and COO · 2026-07-09

This is a recurring theme. In the prior call, the company reiterated its policy of passing through tariff costs dollar-for-dollar, with no impact on EBITDA dollars but a dilution of the margin percentage. As Auclair said in July 2025, “We only charge the cost of the tariff. So we just passed through the expense to our customers, and it is 100% done regarding the Chinese products.” The impact is small—about 20 basis points—but it underscores the ongoing trade friction that has become a global headline.

Ontario Drag, US Closet Strength

Geographically, Canada ex-Ontario performed well, with Quebec up over 10% and Western Canada up over 5%. Ontario, however, remains a drag. CEO Richard Lord noted that Ontario represents 44% of Canadian sales and 17% of total sales. In contrast, the U.S. market is experiencing strong growth in the closet segment:

“we have different market segments, like the specialized market, like the closet market, for example, we continue to experience sales between 15 and 20% increase.” — Richard Lord, CEO · 2026-07-09

The company is responding by investing more in its U.S. sales force. Lord admitted, “We think the market is in a kind of lethargy as we speak. I think we have to be more aggressive in visiting more customers and acquiring new customers, and as a result, new sales as well.”

We think the market is in a kind of lethargy as we speak. I think we have to be more aggressive in visiting more customers and acquiring new customers, and as a result, new sales as well.
Richard Lord, CEO · 2026-07-09

M&A Momentum and the Path to 11% EBITDA

Management remains committed to its $100 million annual M&A target. The pipeline is healthy on both sides of the border, and the recent acquisitions are expected to be immediately EBITDA-accretive. As Auclair noted, “The one that we announced this year in the Q2 are businesses that are generating EBITDA already.”

The company's full-year EBITDA margin goal of 11% remains within reach, but it hinges on a slightly more favourable market. The second half is seasonally stronger, and the tariff dilution should ease. Working capital improvements—targeting a CAD 5-10 million reduction in inventory—add to the confidence.

Prior calls had already set the expectation: In October 2025, Auclair said, “Ontario represents 18% of our total sales.” And as recently as January 2026, he reiterated the acquisition target: “We're still on a $100 million a year.” The current quarter confirms these trends rather than marking a surprising turn.

What Changed?

The most significant change is the strategic diversification into acoustic and decorative panels, which positions Richelieu in higher-margin, designer-led niches. While the top-line growth is modest, the acquisition-driven expansion into these segments could differentiate the company from competitors. That said, the recurring tariff margin dilution and Ontario softness are reminders of the headwinds. The company's resilience lies in its ability to pass through tariffs and its disciplined M&A approach.

This is a company executing on a well-communicated strategy. The earnings call did not reveal any dramatic pivot, but the acoustic acquisitions are a fresh angle worth watching.