Review of Richelieu Hardware Ltd.

AUG 14, 2025 - The company’s margin issue occurred a few years ago, as RCH’s EBITDA has contracted because the company was facing supply-side challenges due to the current inventory that was bought at higher prices, and the company believed they could resolve it within a few quarters, but it has been almost two years since, and the EBITDA does not show improvement yet. In addition, the renovation industry RCH operates in is currently in a tough spot in the cycle, given a weak consumer spending environment. The company just recently went through a one-time increase in price to offset tariff pressure. Overall, RCH has experienced some operational challenges in the last few years. RCH’s EBITDA margin has been quite weak, and the company is still highly dependent on the state of the trade war. Though there is some upside potential once the margin profiles improve and the uncertainty around tariffs subsides. To remain conservative, we are downgrading our rating by one notch to ‘B’.