Dorel Reports Second Quarter Results
- Dorel Home e-commerce sales account for more than half of segment revenues - Dorel Sports improved sales mix results in earnings increase - Dorel Juvenile improvements to come in second half as new product launches roll-out
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E-mailMONTREAL, QUEBEC -- (Marketwired) -- 08/04/17 -- Dorel Industries Inc. (TSX: DII.B)(TSX: DII.A) today announced results for the second quarter and six months ended June 30, 2017. Second quarter revenue was US$611.3 million, down 4.1% from US$637.3 million recorded in the same period a year ago. Adjusted net income increased 22.1% to US$12.4 million or US$0.38 per diluted share, compared to adjusted net income of US$10.2 million or US$0.31 per diluted share last year. Reported net income was US$11.4 million or US$0.35 per diluted share, compared to reported net loss of US$38.6 million or US$1.19 per diluted share in the second quarter of 2016.
Revenue for the six months was US$1.26 billion, a decrease of 2.0% compared to US$1.28 billion last year. First half adjusted net income increased to US$35.1 million or US$1.08 per diluted share, compared to adjusted net income of US$29.9 million or US$0.92 per diluted share a year ago. Reported net income for the period was US$20.3 million or US$0.62 per diluted share, compared to a reported net loss of US$21.9 million or US$0.68 per diluted share in the first half a year ago.
"Dorel Home's on-line sales exceeded 50% of segment revenue for the first time, resulting in another stellar performance for the quarter. The continued growth in e-commerce has allowed greater flexibility to expand the segment's on-line offerings with additional excellent value products at higher price points. Disciplined cost management and better gross margins at Dorel Sports offset lower revenues, resulting in the fourth consecutive quarter of year-over-year earnings improvement. In Juvenile, we had a quarter that was below our expectations. We corrected many of our first quarter manufacturing issues in China in the past 60 days and our production levels have increased significantly. This did lead to higher costs, but as we enter the second half of the year, Dorel Juvenile is poised for a strong rebound from its second quarter. This will come from a robust product introduction execution across all of our operating businesses and with our most important retail customers; as well as additional factory improvements taking effect," commented Martin Schwartz, Dorel President & CEO.
The Company is presenting adjusted financial information, excluding impairment losses, restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt as it believes this provides a more meaningful comparison of its core business performance between the periods presented. These previously announced items are detailed in the attached tables of this press release. Contained within this press release are reconciliations of non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP.
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Summary of Financial Information (unaudited)
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Second Quarters Ended June 30
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All figures in thousands of US $, except per share amounts
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2017 2016 Change
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$ $ %
Total revenue 611,270 637,296 (4.1%)
Net income (loss) 11,440 (38,644) 129.6%
Per share - Basic 0.35 (1.19) 129.4%
Per share - Diluted 0.35 (1.19) 129.4%
Adjusted net income 12,444 10,193 22.1%
Per share - Basic 0.38 0.32 18.8%
Per share - Diluted 0.38 0.31 22.6%
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Number of shares outstanding -
Basic weighted average 32,403,980 32,345,352
Diluted weighted average 32,677,845 32,345,352
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Summary of Financial Information (unaudited)
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Six Months Ended June 30
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All figures in thousands of US $, except per share amounts
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2017 2016 Change
$ $ %
Total revenue 1,257,982 1,283,163 (2.0%)
Net income (loss) 20,281 (21,910) 192.6%
Per share - Basic 0.63 (0.68) 192.6%
Per share - Diluted 0.62 (0.68) 191.2%
Adjusted net income 35,149 29,864 17.7%
Per share - Basic 1.08 0.92 17.4%
Per share - Diluted 1.08 0.92 17.4%
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Number of shares outstanding -
Basic weighted average 32,403,980 32,339,292
Diluted weighted average 32,675,600 32,339,292
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Dorel Home
All figures in thousands of US $
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Second Quarters Ended June 30 (unaudited)
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2016
2017 Restated(i) Change
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$ % of rev. $ % of rev. %
Total revenue 184,157 171,871 7.1%
Gross profit 32,872 17.8% 29,075 16.9% 13.1%
Operating profit 16,715 9.1% 14,762 8.6% 13.2%
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All figures in thousands of US $
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Six Months Ended June 30 (unaudited)
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2016
2017 Restated(i) Change
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$ % of rev. $ % of rev. %
Total revenue 388,195 359,342 8.0%
Gross profit 67,444 17.4% 60,813 16.9% 10.9%
Operating profit 36,480 9.4% 32,405 9.0% 12.6%
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(i) During the fourth quarter of 2016, the Company changed its internal
organization and the composition of its reportable segments. The design,
sourcing, manufacturing, distribution and retail of the children's furniture
was transferred from Dorel Juvenile to Dorel Home. Accordingly, the Company
has restated the segmented information for the second quarter and six months
ended June 30, 2016.
Second quarter revenue rose US$12.3 million, or 7.1%, to US$184.2 million compared with US$171.9 million a year ago. For the first six months, revenue grew US$28.9 million, or 8.0%, to US$388.2 million from US$359.3 million in 2016. These improvements were driven by increased sales in all divisions to on-line retailers. In the second quarter and for the six months, on-line sales represented 52% and 49% of total segment sales respectively compared to 43% and 42% for the comparable periods in 2016. This represents the highest percentage of on-line sales in Dorel Home's history and exceeded reductions in sales to brick and mortar stores.
Gross profit, at 17.8% in the second quarter and 17.4% for the six months, improved by 90 and 50 basis points respectively over last year's second quarter and year-to-date periods. The improved margins from increased on-line sales were partly offset by slightly higher input and warehousing costs.
Second quarter operating profit increased to US$16.7 million from US$14.8 million a year ago which was driven by higher sales volumes and slightly offset by increased selling and general and administrative expenses. For the first six months, operating profit increased US$4.1 million, or 12.6%, to US$36.5 million compared to US$32.4 million in the first six months of 2016.
Dorel Juvenile
All figures in thousands of US $
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Second Quarters Ended June 30 (unaudited)
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2016
2017 Restated(i) Change
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$ % of rev. $ % of rev. %
Total revenue 218,060 228,911 (4.7%)
Gross profit 65,130 29.9% 72,646 31.7% (10.3%)
Operating profit 7,162 3.3% 8,477 3.7% (15.5%)
Adjusted gross
profit 65,207 29.9% 72,646 31.7% (10.2%)
Adjusted operating
profit 8,086 3.7% 8,797 3.8% (8.1%)
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All figures in thousands of US $
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Six Months Ended June 30 (unaudited)
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2016
2017 Restated(i) Change
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$ % of rev. $ % of rev. %
Total revenue 446,718 470,810 (5.1%)
Gross profit 135,015 30.2% 143,463 30.5% (5.9%)
Operating profit 16,756 3.8% 22,922 4.9% (26.9%)
Adjusted gross
profit 136,309 30.5% 143,463 30.5% (5.0%)
Adjusted operating
profit 23,428 5.2% 26,207 5.6% (10.6%)
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(i) During the fourth quarter of 2016, the Company changed its internal
organization and the composition of its reportable segments. The design,
sourcing, manufacturing, distribution and retail of the children's furniture
was transferred from Dorel Juvenile to Dorel Home. Accordingly, the Company
has restated the segmented information for the second quarter and six months
ended June 30, 2016.
Second quarter revenue decreased US$10.9 million, or 4.7%, to US$218.1 million. Organic revenue decreased by approximately 3.8%, primarily in the U.S. and European markets, after removing the impact of varying exchange rates year-over-year. Prior year operating profit included significant costs of US$7.0 million associated with product liability in the U.S. and the year-over-year reduction in these costs was US$5.8 million in the quarter. Revenues and earnings in our other markets were up overall, led by strong growth in Brazil and Australia.
In the U.S., point of sale at the segment's largest customer increased versus prior year, but the customer limited orders to reduce their own in-stock inventory levels. Sales to several other brick and mortar customers were also lower, a reflection of challenges in this channel overall. E-commerce sales are increasing which partially offset these declines. In Europe, late product launches and manufacturing challenges in China delayed new product going into retail, negatively impacting sales.
Six months revenue decreased US$24.1 million, or 5.1%, to US$446.7 million. Organic revenue declined approximately 4.5% due mainly to challenges within the U.S. and European markets as well as to reduced Dorel Juvenile China sales to non-domestic third-party customers.
Production levels at the China based facilities increased by approximately 20% from the first quarter, however the recovery plan put into place resulted in higher costs in the short-term. This was the principal contributor to lower gross margins in the quarter. The lower sales and gross margins, partially offset by lower product liability and other operating costs, resulted in operating profit decreasing US$1.3 million, or 15.5%, to US$7.2 million during the second quarter. Excluding restructuring and other costs, adjusted operating profit decreased by US$0.7 million, or 8.1%, to US$8.1 million from US$8.8 million a year ago. Year-to-date operating profit declined US$6.2 million, or 26.9%, to US$16.8 million. Adjusted operating profit declined US$2.8 million, or 10.6%, to US$23.4 million from US$26.2 million principally for the same reasons as in the second quarter.
Dorel Sports
All figures in thousands of US $
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Second Quarters Ended June 30 (unaudited)
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2017 2016 Change
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$ % of rev. $ % of rev. %
Total revenue 209,053 236,514 (11.6%)
Gross profit 48,024 23.0% 48,841 20.7% (1.7%)
Operating profit
(loss) 4,928 2.4% (49,967) (21.1%) 109.9%
Adjusted gross
profit 48,119 23.0% 48,841 20.7% (1.5%)
Adjusted operating
profit 5,661 2.7% 5,236 2.2% 8.1%
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All figures in thousands of US $
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Six Months Ended June 30 (unaudited)
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2017 2016 Change
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$ % of rev. $ % of rev. %
Total revenue 423,069 453,011 (6.6%)
Gross profit 97,012 22.9% 96,339 21.3% 0.7%
Operating profit
(loss) 15,042 3.6% (44,713) (9.9%) 133.6%
Adjusted gross
profit 96,163 22.7% 96,339 21.3% (0.2%)
Adjusted operating
profit 15,133 3.6% 10,462 2.3% 44.6%
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Second quarter revenue decreased US$27.5 million, or 11.6%, to US$209.1 million and by approximately 11.1% after removing the impact of varying exchange rates year-over-year. Six months revenue decreased US$29.9 million, or 6.6%, to US$423.1 million and by approximately 6.4% after removing the impact of varying exchange rates year-over-year. Organic revenue declined by approximately 13.4% and 11.7% for the quarter and six months respectively when removing foreign exchange fluctuations and the change in Cycling Sports Group (CSG) International's business model for which the revenue recognition transitioned from a licensing model to a distribution platform.
Part of the revenue shortfall in the second quarter resulted from weakness in consumer demand in the mass bike channel due particularly to the prolonged unfavourable North American weather. CSG second quarter revenues declined due to lower discounted sales to the Independent Bike Dealer (IBD) channel when compared to prior year's second quarter. CSG's closeout sales in the quarter represented 7% of sales volume in 2017 compared to 21% in the prior year's second quarter and excluding these closeout sales, revenues were flat for the second quarter year-over-year and as a result, gross margins were improved. In Brazil, Caloi's top line was affected by weak consumer demand, amid ongoing political and economic turmoil, as well as increased competitive pressure as other key brands in the market began to reduce retail price points. This was true for both the quarter and year-to-date.
Second quarter operating profit was US$4.9 million compared to an operating loss of US$50.0 million a year ago. Excluding 2016's impairment losses, restructuring and other costs, adjusted operating profit rose to US$5.7 million from US$5.2 million in 2016. For the first six months, operating profit was US$15.0 million compared to an operating loss of US$44.7 million in 2016. Excluding impairment losses, restructuring and other costs, adjusted operating profit was US$15.1 million compared to US$10.5 million a year ago. The improvement in adjusted operating profit for both periods was due to improved margins and a reduction in operating expenses.
Other
During the second quarter and six months ended June 30, 2017, the Company's effective tax rates were 27.2% and 31.2% respectively versus 12.5% and 8.6% for the same periods in the prior year. Excluding income taxes on impairment losses, on restructuring and other costs, on remeasurement of forward purchase agreement liabilities and on loss on early extinguishment of long-term debt, the Company's second quarter adjusted tax rate was 28.4% in 2017 and 15.4% in 2016. The adjusted tax rate for the first six months was 24.7% in 2017 versus 16.5% in 2016. The main cause of the variation year-over-year of the adjusted tax rate is due to changes in the jurisdictions in which the Company generated its income. The Company is stating that for the full year it expects its annual adjusted tax rate to be between 20% and 25%. However, variations in earnings across quarters mean that this rate may vary significantly between quarters.
Quarterly dividend
Dorel's Board of Directors declared its regular quarterly dividend of US$0.30 per share on the outstanding number of the Company's Class "A" Multiple Voting Shares, Class "B" Subordinate Voting Shares, Deferred Share Units, cash-settled Restricted Share Units and cash-settled Performance Share Units. The dividend is payable on September 1, 2017 to shareholders of record as at the close of business on August 18, 2017.
Outlook
"The strength and flexibility of Dorel Home's e-commerce platform has allowed for an expansion of its on-line offerings with excellent value products at higher price points. E-commerce sales are expected to continue to drive the segment's overall growth and profits, both above plan and prior year levels for the balance of the year", stated Dorel President & CEO, Martin Schwartz.
"At Dorel Juvenile, several factors support our confidence of a strong second half rebound. Many new products are currently entering the market, particularly in Europe and these launches will continue into 2018. In the U.S., there are several new placements at major retailers, and at Dorel's largest customer, orders are in line with point-of-sale levels, which are up over last year. This was not the case in the second quarter as that customer reduced its in-stock levels. Further, Dorel Juvenile's growth with e-commerce retailers is at a greater pace than budgeted. We also expect our smaller markets to continue their overall excellent performance. The China factory has successfully caught up on its order back-log and sales should be strong going forward. The focus in China will now turn to additional cost saving opportunities. Finally, the majority of our major currencies are trending favourably which will further help our various markets around the world.
"We anticipate that Dorel Sports overall will have a better second half than last year with an increased adjusted operating profit. We are currently seeing some weakness in the mass channel which means third quarter results are likely to be lower than last year, but expect that a solid fourth quarter performance should more than compensate for this," concluded Mr. Schwartz.
Conference Call
Dorel Industries Inc. will hold a conference call to discuss these results today, August 4, 2017 at 11:00 A.M. Eastern Time. Interested parties can join the call by dialing 1-877-223-4471. The conference call can also be accessed via live webcast at http://www.dorel.com/eng/events. If you are unable to call in at this time, you may access a recording of the meeting by calling 1-800-585-8367 and entering the passcode 36916239 on your phone. This recording will be available on Friday, August 4, 2017 as of 2:00 P.M. until 11:59 P.M. on Friday, August 11, 2017.
Complete condensed consolidated interim financial statements as at June 30, 2017 will be available on the Company's website, www.dorel.com, and will be available through the SEDAR website.
Profile
Dorel Industries Inc. (TSX: DII.B)(TSX: DII.A) operates three distinct businesses in the juvenile products, bicycles and home products. The Company's safety and lifestyle leadership is pronounced in both its Juvenile and Bicycle categories with an array of trend-setting, innovative products. Dorel Juvenile's powerfully branded products include global juvenile brands Safety 1st, Quinny, Maxi-Cosi and Tiny Love, complemented by regional brands such as Cosco, Bebe Confort and Infanti. In Dorel Sports, brands include Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse and SUGOI. Dorel Home markets a wide assortment of both domestically produced and imported furniture, principally within North America. Dorel Industries Inc. has annual sales of US$2.6 billion and employs approximately 10,000 people in facilities located in twenty-five countries worldwide.
Caution Regarding Forward-Looking Statements
Certain statements included in this press release may constitute "forward-looking statements" within the meaning of applicable Canadian securities legislation. Except as may be required by Canadian securities laws, Dorel does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements, by their very nature, are subject to numerous risks and uncertainties and are based on several assumptions which give rise to the possibility that actual results could differ materially from Dorel's expectations expressed in or implied by such forward-looking statements and that the objectives, plans, strategic priorities and business outlook may not be achieved. As a result, Dorel cannot guarantee that any forward-looking statement will materialize, or if any of them do, what benefits Dorel will derive from them. Forward-looking statements are provided in this press release for the purpose of giving information about Management's current expectations and plans and allowing investors and others to get a better understanding of Dorel's operating environment. However, readers are cautioned that it may not be appropriate to use such forward-looking statements for any other purpose.
Forward-looking statements made in this press release are based on a number of assumptions that Dorel believed were reasonable on the day it made the forward-looking statements. Factors that could cause actual results to differ materially from Dorel's expectations expressed in or implied by the forward-looking statements include: general economic conditions; changes in product costs and supply channels; foreign currency fluctuations; customer and credit risk, including the concentration of revenues with small number of customers; costs associated with product liability; changes in income tax legislation or the interpretation or application of those rules; the continued ability to develop products and support brand names; changes in the regulatory environment; continued access to capital resources and the related costs of borrowing; changes in assumptions in the valuation of goodwill and other intangible assets; and there being no certainty that Dorel's current dividend policy will be maintained. These and other risk factors that could cause actual results to differ materially from expectations expressed in or implied by the forward-looking statements are discussed in Dorel's annual Management Discussion and Analysis and Annual Information Form filed with the applicable Canadian securities regulatory authorities. The risk factors outlined in the previously-mentioned documents are specifically incorporated herein by reference.
Dorel cautions readers that the risks described above are not the only ones that could impact it. Additional risks and uncertainties not currently known to Dorel or that Dorel currently deems to be immaterial may also have a material adverse effect on Dorel's business, financial condition or results of operations. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.
Non-GAAP financial measures
As a result of impairment losses, restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt incurred in 2017 and 2016, the Company is including in this press release the following non-GAAP financial measures: "adjusted cost of sales", "adjusted gross profit", "adjusted operating profit", "adjusted finance expenses", "adjusted income before income taxes", "adjusted income taxes expense", "adjusted tax rate", "adjusted net income" and "adjusted earnings per basic and diluted share". The Company believes that this results in a more meaningful comparison of its core business performance between the periods presented. These non-GAAP financial measures do not have a standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other issuers. Contained within this press release are reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP.
(All figures in the tables below are in thousands of US$, except per share amounts)
Reconciliation of non-GAAP financial measures
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Second Quarters Ended June 30,
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2017
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% of Restructuring and
Reported revenue other costs
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$ % $
TOTAL REVENUE 611,270 100.0 -
Cost of sales 465,244 76.1 (172)
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GROSS PROFIT 146,026 23.9 172
Selling expenses 58,616 9.6 -
General and administrative
expenses 55,894 9.1 -
Research and development
expenses 7,194 1.2 -
Restructuring and other
costs 1,485 0.2 (1,485)
Impairment losses on
goodwill and intangible
assets - - -
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OPERATING PROFIT (LOSS) 22,837 3.8 1,657
Finance expenses 7,115 1.2 -
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INCOME (LOSS) BEFORE INCOME
TAXES 15,722 2.6 1,657
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Income taxes expense
(recovery) 4,282 0.7 653
Tax rate 27.2%
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NET INCOME (LOSS) 11,440 1.9 1,004
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EARNINGS (LOSS) PER SHARE
Basic 0.35 0.03
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Diluted 0.35 0.03
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SHARES OUTSTANDING
Basic - weighted average 32,403,980
Diluted - weighted average 32,677,845
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Reconciliation of non-GAAP financial measures
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Second Quarters Ended June 30,
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2017 2016
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% of % of
Adjusted revenue Reported revenue
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$ % $ %
TOTAL REVENUE 611,270 100.0 637,296 100.0
Cost of sales 465,072 76.1 486,734 76.4
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GROSS PROFIT 146,198 23.9 150,562 23.6
Selling expenses 58,616 9.6 57,323 9.0
General and administrative
expenses 55,894 9.1 63,193 9.9
Research and development
expenses 7,194 1.2 8,331 1.3
Restructuring and other
costs - - 182 -
Impairment losses on
goodwill and intangible
assets - - 55,341 8.7
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OPERATING PROFIT (LOSS) 24,494 4.0 (33,808) (5.3)
Finance expenses 7,115 1.2 10,378 1.6
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INCOME (LOSS) BEFORE INCOME
TAXES 17,379 2.8 (44,186) (6.9)
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Income taxes expense
(recovery) 4,935 0.8 (5,542) (0.8)
Tax rate 28.4% 12.5%
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NET INCOME (LOSS) 12,444 2.0 (38,644) (6.1)
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EARNINGS (LOSS) PER SHARE
Basic 0.38 (1.19)
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Diluted 0.38 (1.19)
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SHARES OUTSTANDING
Basic - weighted average 32,403,980 32,345,352
Diluted - weighted average 32,677,845 32,345,352
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Reconciliation of non-GAAP financial measures
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Second Quarters Ended June 30,
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2016
--------------------------------------------
Impairment losses,
restructuring and % of
other costs Adjusted revenue
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$ $ %
TOTAL REVENUE - 637,296 100.0
Cost of sales - 486,734 76.4
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GROSS PROFIT - 150,562 23.6
Selling expenses - 57,323 9.0
General and administrative
expenses - 63,193 9.9
Research and development
expenses - 8,331 1.3
Restructuring and other
costs (182) - -
Impairment losses on
goodwill and intangible
assets (55,341) - -
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OPERATING PROFIT (LOSS) 55,523 21,715 3.4
Finance expenses (712) 9,666 1.5
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INCOME (LOSS) BEFORE INCOME
TAXES 56,235 12,049 1.9
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Income taxes expense
(recovery) 7,398 1,856 0.3
Tax rate 15.4%
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NET INCOME (LOSS) 48,837 10,193 1.6
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EARNINGS (LOSS) PER SHARE
Basic 1.51 0.32
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Diluted 1.50 0.31
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SHARES OUTSTANDING
Basic - weighted average 32,345,352
Diluted - weighted average 32,580,339
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Reconciliation of non-GAAP financial measures
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Six Months Ended June 30,
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2017
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% of Restructuring and
Reported revenue other costs
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$ % $
TOTAL REVENUE 1,257,982 100.0 -
Cost of sales 958,511 76.2 (445)
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GROSS PROFIT 299,471 23.8 445
Selling expenses 113,278 9.0 -
General and administrative
expenses 108,388 8.5 -
Research and development
expenses 14,717 1.2 -
Restructuring and other
costs 6,318 0.6 (6,318)
Impairment losses on
goodwill and intangible
assets - - -
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OPERATING PROFIT (LOSS) 56,770 4.5 6,763
Finance expenses 27,303 2.2 (10,475)
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INCOME (LOSS) BEFORE INCOME
TAXES 29,467 2.3 17,238
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Income taxes expense
(recovery) 9,186 0.7 2,370
Tax rate 31.2%
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NET INCOME (LOSS) 20,281 1.6 14,868
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EARNINGS (LOSS) PER SHARE
Basic 0.63 0.45
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Diluted 0.62 0.46
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SHARES OUTSTANDING
Basic - weighted average 32,403,980
Diluted - weighted average 32,675,600
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Reconciliation of non-GAAP financial measures
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Six Months Ended June 30,
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2017 2016
------------------------ ------------------------
% of % of
Adjusted revenue Reported revenue
--------------------------------------------------- ------------------------
$ % $ %
TOTAL REVENUE 1,257,982 100.0 1,283,163 100.0
Cost of sales 958,066 76.2 982,548 76.6
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GROSS PROFIT 299,916 23.8 300,615 23.4
Selling expenses 113,278 9.0 113,664 8.9
General and administrative
expenses 108,388 8.5 114,813 8.9
Research and development
expenses 14,717 1.2 16,600 1.3
Restructuring and other
costs - - 3,119 0.2
Impairment losses on
goodwill and intangible
assets - - 55,341 4.3
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OPERATING PROFIT (LOSS) 63,533 5.1 (2,922) (0.2)
Finance expenses 16,828 1.4 21,056 1.7
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INCOME (LOSS) BEFORE INCOME
TAXES 46,705 3.7 (23,978) (1.9)
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Income taxes expense
(recovery) 11,556 0.9 (2,068) (0.2)
Tax rate 24.7% 8.6%
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NET INCOME (LOSS) 35,149 2.8 (21,910) (1.7)
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EARNINGS (LOSS) PER SHARE
Basic 1.08 (0.68)
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Diluted 1.08 (0.68)
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SHARES OUTSTANDING
Basic - weighted average 32,403,980 32,339,292
Diluted - weighted average 32,675,600 32,339,292
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Reconciliation of non-GAAP financial measures
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Six Months Ended June 30,
-----------------------------------------------------------------------
2016
--------------------------------------------
Impairment losses,
restructuring and % of
other costs Adjusted revenue
-----------------------------------------------------------------------
$ $ %
TOTAL REVENUE - 1,283,163 100.0
Cost of sales - 982,548 76.6
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GROSS PROFIT - 300,615 23.4
Selling expenses - 113,664 8.9
General and administrative
expenses - 114,813 8.9
Research and development
expenses - 16,600 1.3
Restructuring and other
costs (3,119) - -
Impairment losses on
goodwill and intangible
assets (55,341) - -
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OPERATING PROFIT (LOSS) 58,460 55,538 4.3
Finance expenses (1,273) 19,783 1.5
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INCOME (LOSS) BEFORE INCOME
TAXES 59,733 35,755 2.8
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Income taxes expense
(recovery) 7,959 5,891 0.5
Tax rate 16.5%
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NET INCOME (LOSS) 51,774 29,864 2.3
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EARNINGS (LOSS) PER SHARE
Basic 1.60 0.92
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Diluted 1.60 0.92
-----------------------------------------------------------------------
-----------------------------------------------------------------------
SHARES OUTSTANDING
Basic - weighted average 32,339,292
Diluted - weighted average 32,572,105
-----------------------------------------------------------------------
-----------------------------------------------------------------------
The details of impairment losses, restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt recorded are presented below:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Second Quarters Ended Six Months Ended June
June 30, 30,
------------------------ ------------------------
2017 2016 2017 2016
$ $ $ $
----------------------------------------------------------------------------
Write-down of long-lived
assets (reversal) (149) - 368 -
Inventory markdowns 321 - 228 -
----------------------------------------------------------------------------
Recorded within gross
profit 172 - 596 -
----------------------------------------------------------------------------
Employee severance and
termination benefits 913 482 3,400 2,186
Write-down of long-lived
assets - - - 424
Net losses (gains) from the
remeasurement and
disposals of assets held
for sale (90) (381) 622 (381)
Other associated costs 662 81 2,296 161
----------------------------------------------------------------------------
Recorded within a separate
line in the condensed
consolidated interim
income statements 1,485 182 6,318 2,390
----------------------------------------------------------------------------
Total restructuring costs 1,657 182 6,914 2,390
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Other costs recorded within
gross profit - - (151) -
----------------------------------------------------------------------------
Acquisition-related costs
recorded within a separate
line in the condensed
consolidated interim
income statements - - - 729
----------------------------------------------------------------------------
Total other costs - - (151) 729
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total restructuring and
other costs 1,657 182 6,763 3,119
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Impairment losses on
goodwill and intangible
assets - 55,341 - 55,341
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Loss on remeasurement of
forward purchase agreement
liabilities - 712 276 1,273
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Loss on early
extinguishment of long-
term debt - - 10,199 -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total impairment losses,
restructuring and other
costs, remeasurement of
forward purchase agreement
liabilities and loss on
early extinguishment of
long-term debt before
income taxes(1) 1,657 56,235 17,238 59,733
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total impairment losses,
restructuring and other
costs, remeasurement of
forward purchase agreement
liabilities and loss on
early extinguishment of
long-term debt after
income taxes 1,004 48,837 14,868 51,774
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total impact on diluted
earnings (loss) per share (0.03) (1.50) (0.46) (1.60)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1)Includes non-cash
amounts of: 82 55,672 2,911 56,657
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Dorel Juvenile
Reconciliation of non-GAAP financial measures
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Second Quarters Ended June 30,
2017
--------------------------------------------
Restructuring
% of and other
Reported revenue costs
--------------------------------------------
$ % $
TOTAL REVENUE 218,060 100.0 -
Cost of sales 152,930 70.1 (77)
-----------------------------------------------------------------------
GROSS PROFIT 65,130 29.9 77
Selling expenses 29,140 13.4 -
General and administrative
expenses 22,857 10.5 -
Research and development
expenses 5,124 2.3 -
Restructuring and other
costs 847 0.4 (847)
-----------------------------------------------------------------------
OPERATING PROFIT 7,162 3.3 924
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Six Months Ended June 30,
2017
--------------------------------------------
Restructuring
% of and other
Reported revenue costs
--------------------------------------------
$ % $
TOTAL REVENUE 446,718 100.0 -
Cost of sales 311,703 69.8 (1,294)
-----------------------------------------------------------------------
GROSS PROFIT 135,015 30.2 1,294
Selling expenses 57,293 12.8 -
General and administrative
expenses 45,205 10.2 -
Research and development
expenses 10,383 2.3 -
Restructuring and other
costs 5,378 1.1 (5,378)
-----------------------------------------------------------------------
OPERATING PROFIT 16,756 3.8 6,672
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Dorel Juvenile
Reconciliation of non-GAAP financial measures
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Second Quarters Ended June 30,
2017 2016
Restated (i)
------------------------ ------------------------
% of % of
Adjusted revenue Reported revenue
------------------------ ------------------------
$ % $ %
TOTAL REVENUE 218,060 100.0 228,911 100.0
Cost of sales 152,853 70.1 156,265 68.3
----------------------------------------------------------------------------
GROSS PROFIT 65,207 29.9 72,646 31.7
Selling expenses 29,140 13.4 27,288 11.9
General and administrative
expenses 22,857 10.5 30,692 13.4
Research and development
expenses 5,124 2.3 5,869 2.6
Restructuring and other
costs - - 320 0.1
----------------------------------------------------------------------------
OPERATING PROFIT 8,086 3.7 8,477 3.7
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Six Months Ended June 30,
2017 2016
Restated (i)
------------------------ ------------------------
% of % of
Adjusted revenue Reported revenue
------------------------ ------------------------
$ % $ %
TOTAL REVENUE 446,718 100.0 470,810 100.0
Cost of sales 310,409 69.5 327,347 69.5
----------------------------------------------------------------------------
GROSS PROFIT 136,309 30.5 143,463 30.5
Selling expenses 57,293 12.8 55,370 11.8
General and administrative
expenses 45,205 10.2 50,346 10.6
Research and development
expenses 10,383 2.3 11,540 2.5
Restructuring and other
costs - - 3,285 0.7
----------------------------------------------------------------------------
OPERATING PROFIT 23,428 5.2 22,922 4.9
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Dorel Juvenile
Reconciliation of non-GAAP financial measures
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Second Quarters Ended June 30,
2016
Restated (i)
--------------------------------------------
Restructuring
and other % of
costs Adjusted revenue
--------------------------------------------
$ $ %
TOTAL REVENUE - 228,911 100.0
Cost of sales - 156,265 68.3
-----------------------------------------------------------------------
GROSS PROFIT - 72,646 31.7
Selling expenses - 27,288 11.9
General and administrative
expenses - 30,692 13.4
Research and development
expenses - 5,869 2.6
Restructuring and other
costs (320) - -
-----------------------------------------------------------------------
OPERATING PROFIT 320 8,797 3.8
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Six Months Ended June 30,
2016
Restated (i)
--------------------------------------------
Restructuring
and other % of
costs Adjusted revenue
--------------------------------------------
$ $ %
TOTAL REVENUE - 470,810 100.0
Cost of sales - 327,347 69.5
-----------------------------------------------------------------------
GROSS PROFIT - 143,463 30.5
Selling expenses - 55,370 11.8
General and administrative
expenses - 50,346 10.6
Research and development
expenses - 11,540 2.5
Restructuring and other
costs (3,285) - -
-----------------------------------------------------------------------
OPERATING PROFIT 3,285 26,207 5.6
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(i) During the fourth quarter of 2016, the Company changed its internal
organization and the composition of its reportable segments. The design,
sourcing, manufacturing, distribution and retail of the children's furniture
was transferred from Dorel Juvenile to Dorel Home. Accordingly, the Company
has restated the segmented information for the second quarter and six months
ended June 30, 2016.
Dorel Sports
Reconciliation of non-GAAP financial measures
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Second Quarters Ended June 30,
-----------------------------------------------------------------------
2017
--------------------------------------------
% of Restructuring and
Reported revenue other costs
-----------------------------------------------------------------------
$ % $
TOTAL REVENUE 209,053 100.0 -
Cost of sales 161,029 77.0 (95)
-----------------------------------------------------------------------
GROSS PROFIT 48,024 23.0 95
Selling expenses 22,546 10.8 -
General and administrative
expenses 18,774 9.0 -
Research and development
expenses 1,138 0.5 -
Restructuring and other
costs 638 0.3 (638)
Impairment losses on
goodwill and intangible
assets - - -
-----------------------------------------------------------------------
OPERATING PROFIT (LOSS) 4,928 2.4 733
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Six Months Ended June 30,
-----------------------------------------------------------------------
2017
--------------------------------------------
% of Restructuring and
Reported revenue other costs
-----------------------------------------------------------------------
$ % $
TOTAL REVENUE 423,069 100.0 -
Cost of sales 326,057 77.1 849
-----------------------------------------------------------------------
GROSS PROFIT 97,012 22.9 (849)
Selling expenses 42,403 10.0 -
General and administrative
expenses 36,137 8.5 -
Research and development
expenses 2,490 0.6 -
Restructuring and other
costs 940 0.2 (940)
Impairment losses on
goodwill and intangible
assets - - -
-----------------------------------------------------------------------
OPERATING PROFIT (LOSS) 15,042 3.6 91
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Dorel Sports
Reconciliation of non-GAAP financial measures
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Second Quarters Ended June 30,
----------------------------------------------------------------------------
2017 2016
------------------------ ------------------------
% of % of
Adjusted revenue Reported revenue
--------------------------------------------------- ------------------------
$ % $ %
TOTAL REVENUE 209,053 100.0 236,514 100.0
Cost of sales 160,934 77.0 187,673 79.3
----------------------------------------------------------------------------
GROSS PROFIT 48,119 23.0 48,841 20.7
Selling expenses 22,546 10.8 23,953 10.1
General and administrative
expenses 18,774 9.0 18,044 7.7
Research and development
expenses 1,138 0.5 1,608 0.7
Restructuring and other
costs - - (138) (0.1)
Impairment losses on
goodwill and intangible
assets - - 55,341
----------------------------------------------------------------------------
OPERATING PROFIT (LOSS) 5,661 2.7 (49,967) (21.1)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Six Months Ended June 30,
----------------------------------------------------------------------------
2017 2016
------------------------ ------------------------
% of % of
Adjusted revenue Reported revenue
--------------------------------------------------- ------------------------
% % $ %
TOTAL REVENUE 423,069 100.0 453,011 100.0
Cost of sales 326,906 77.3 356,672 78.7
----------------------------------------------------------------------------
GROSS PROFIT 96,163 22.7 96,339 21.3
Selling expenses 42,403 10.0 46,354 10.2
General and administrative
expenses 36,137 8.5 36,343 8.1
Research and development
expenses 2,490 0.6 3,180 0.7
Restructuring and other
costs - - (166) -
Impairment losses on
goodwill and intangible
assets - - 55,341 12.2
----------------------------------------------------------------------------
OPERATING PROFIT (LOSS) 15,133 3.6 (44,713) (9.9)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Dorel Sports
Reconciliation of non-GAAP financial measures
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Second Quarters Ended June 30,
-----------------------------------------------------------------------
2016
--------------------------------------------
Impairment losses,
restructuring and % of
other costs Adjusted revenue
-----------------------------------------------------------------------
$ $ %
TOTAL REVENUE - 236,514 100.0
Cost of sales - 187,673 79.3
-----------------------------------------------------------------------
GROSS PROFIT - 48,841 20.7
Selling expenses - 23,953 10.1
General and administrative
expenses - 18,044 7.7
Research and development
expenses - 1,608 0.7
Restructuring and other
costs 138 - -
Impairment losses on
goodwill and intangible
assets 23.4 (55,341) -
-----------------------------------------------------------------------
OPERATING PROFIT (LOSS) 55,203 5,236 2.2
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Six Months Ended June 30,
-----------------------------------------------------------------------
2016
--------------------------------------------
Impairment losses,
restructuring and % of
other costs Adjusted revenue
-----------------------------------------------------------------------
$ $ %
TOTAL REVENUE - 453,011 100.0
Cost of sales - 356,672 78.7
-----------------------------------------------------------------------
GROSS PROFIT - 96,339 21.3
Selling expenses - 46,354 10.2
General and administrative
expenses - 36,343 8.1
Research and development
expenses - 3,180 0.7
Restructuring and other
costs 166 - -
Impairment losses on
goodwill and intangible
assets (55,341) - -
-----------------------------------------------------------------------
OPERATING PROFIT (LOSS) 55,175 10,462 2.3
-----------------------------------------------------------------------
-----------------------------------------------------------------------
DOREL INDUSTRIES INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
ALL FIGURES IN THOUSANDS OF US $
(unaudited)
As at As at
June 30, December 30,
2017 2016
------------- -------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 38,173 $ 31,883
Trade and other receivables 408,035 431,062
Inventories 586,722 549,688
Other financial assets 601 4,333
Income taxes receivable 13,828 14,466
Prepaid expenses 34,179 21,040
------------- -------------
1,081,538 1,052,472
Assets held for sale 4,391 20,017
------------- -------------
1,085,929 1,072,489
------------- -------------
NON-CURRENT ASSETS
Property, plant and equipment 194,970 191,294
Intangible assets 434,551 427,587
Goodwill 448,705 435,790
Deferred tax assets 35,501 39,324
Other financial assets 568 -
Other assets 7,213 6,148
------------- -------------
1,121,508 1,100,143
------------- -------------
$ 2,207,437 $ 2,172,632
------------- -------------
------------- -------------
LIABILITIES
CURRENT LIABILITIES
Bank indebtedness $ 52,986 $ 49,490
Trade and other payables 437,700 437,009
Forward purchase agreement liabilities - 7,500
Other financial liabilities 3,918 569
Deferred revenue 8,148 6,475
Income taxes payable 10,201 15,143
Long-term debt 10,628 51,138
Provisions 45,099 63,169
------------- -------------
568,680 630,493
------------- -------------
NON-CURRENT LIABILITIES
Long-term debt 429,038 355,118
Net pension and post-retirement defined
benefit liabilities 35,561 35,206
Deferred tax liabilities 52,591 53,293
Provisions 1,834 1,681
Written put option liabilities 27,196 26,325
Other financial liabilities 553 1,115
Other long-term liabilities 11,202 13,302
------------- -------------
557,975 486,040
------------- -------------
EQUITY
Share capital 202,400 202,400
Contributed surplus 28,214 27,139
Accumulated other comprehensive loss (90,057) (113,840)
Other equity 2,156 3,027
Retained earnings 938,069 937,373
------------- -------------
1,080,782 1,056,099
------------- -------------
$ 2,207,437 $ 2,172,632
------------- -------------
------------- -------------
DOREL INDUSTRIES INC.
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENTS
ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS
(unaudited)
Second Quarters Ended Six Months Ended
----------------------------- -----------------------------
June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016
------------- --------------- ------------- ---------------
Sales $ 610,805 $ 635,666 $ 1,257,230 $ 1,278,238
Licensing and
commission
income 465 1,630 752 4,925
------------- --------------- ------------- ---------------
TOTAL REVENUE 611,270 637,296 1,257,982 1,283,163
Cost of sales(1) 465,244 486,734 958,511 982,548
------------- --------------- ------------- ---------------
GROSS PROFIT 146,026 150,562 299,471 300,615
Selling expenses 58,616 57,323 113,278 113,664
General and
administrative
expenses 55,894 63,193 108,388 114,813
Research and
development
expenses 7,194 8,331 14,717 16,600
Restructuring and
other costs(1) 1,485 182 6,318 3,119
Impairment losses
on goodwill and
intangible
assets - 55,341 - 55,341
------------- --------------- ------------- ---------------
OPERATING PROFIT
(LOSS) 22,837 (33,808) 56,770 (2,922)
Finance expenses 7,115 10,378 27,303 21,056
------------- --------------- ------------- ---------------
INCOME (LOSS)
BEFORE INCOME
TAXES 15,722 (44,186) 29,467 (23,978)
Income taxes
expense
(recovery) 4,282 (5,542) 9,186 (2,068)
------------- --------------- ------------- ---------------
NET INCOME (LOSS)$ 11,440 $ (38,644) $ 20,281 $ (21,910)
------------- --------------- ------------- ---------------
------------- --------------- ------------- ---------------
EARNINGS (LOSS)
PER SHARE
Basic $ 0.35 $ (1.19) $ 0.63 $ (0.68)
------------- --------------- ------------- ---------------
------------- --------------- ------------- ---------------
Diluted $ 0.35 $ (1.19) $ 0.62 $ (0.68)
------------- --------------- ------------- ---------------
------------- --------------- ------------- ---------------
SHARES
OUTSTANDING
Basic - weighted
average 32,403,980 32,345,352 32,403,980 32,339,292
Diluted -
weighted
average 32,677,845 32,345,352 32,675,600 32,339,292
(1)Restructuring
and other costs
charged to:
Cost of sales $ 172 $ - $ 445 $ -
Expenses 1,485 182 6,318 3,119
------------- --------------- ------------- ---------------
$ 1,657 $ 182 $ 6,763 $ 3,119
------------- --------------- ------------- ---------------
------------- --------------- ------------- ---------------
DOREL INDUSTRIES INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
ALL FIGURES IN THOUSANDS OF US $
(unaudited)
Second Quarters Ended Six Months Ended
------------------------- -------------------------
June 30, June 30, June 30, June 30,
2017 2016 2017 2016
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 11,440 $ (38,644) $ 20,281 $ (21,910)
------------ ------------ ------------ ------------
OTHER COMPREHENSIVE
INCOME (LOSS):
Items that are or may be
reclassified
subsequently to net
income:
Cumulative translation
account:
-------------------------
Net change in unrealized
foreign currency gains
(losses) on translation
of net investments in
foreign operations, net
of tax of nil 12,074 (5,149) 21,650 16,847
Net gains (losses) on
hedge of net investments
in foreign operations,
net of tax of nil 6,616 (4,003) 7,546 2,573
------------ ------------ ------------ ------------
18,690 (9,152) 29,196 19,420
------------ ------------ ------------ ------------
Net changes in cash flow
hedges:
-------------------------
Net change in unrealized
gains (losses) on
derivatives designated
as cash flow hedges (4,852) 2,681 (5,051) (933)
Reclassification to
income 40 127 139 310
Reclassification to the
related non-financial
asset (628) (275) (2,271) (513)
Deferred income taxes 1,432 (633) 1,847 719
------------ ------------ ------------ ------------
(4,008) 1,900 (5,336) (417)
------------ ------------ ------------ ------------
Items that will not be
reclassified to net
income:
Defined benefit plans:
-------------------------
Remeasurements of the net
pension and post-
retirement defined
benefit liabilities (73) 10 (110) (3)
Deferred income taxes 25 (5) 33 2
------------ ------------ ------------ ------------
(48) 5 (77) (1)
------------ ------------ ------------ ------------
TOTAL OTHER COMPREHENSIVE
INCOME (LOSS) 14,634 (7,247) 23,783 19,002
------------ ------------ ------------ ------------
TOTAL COMPREHENSIVE
INCOME (LOSS) $ 26,074 $ (45,891) $ 44,064 $ (2,908)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
DOREL INDUSTRIES INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN
EQUITY
ALL FIGURES IN THOUSANDS OF US $
(unaudited)
Attributable to equity holders
of the Company
-------------------------------
Share Contributed
Capital Surplus
------------------------------------------------------------
Balance as at December 30,
2015 $ 200,277 $ 26,480
------------------------------------------------------------
Total comprehensive loss:
-----------------------------
Net loss - -
Other comprehensive income
(loss) - -
------------------------------------------------------------
- -
------------------------------------------------------------
Issued under stock option
plan 441 -
Reclassification from
contributed surplus due to
exercise of stock options 127 (127)
Reclassification from
contributed surplus due to
settlement of deferred
share units 61 (103)
Share-based payments - 943
Remeasurement of written put
option liabilities - -
Dividends on common shares - -
Dividends on deferred share
units - 136
------------------------------------------------------------
Balance as at June 30, 2016 $ 200,906 $ 27,329
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
Balance as at December 30,
2016 $ 202,400 $ 27,139
------------------------------------------------------------
Total comprehensive income:
-----------------------------
Net income - -
Other comprehensive income
(loss) - -
------------------------------------------------------------
- -
------------------------------------------------------------
Share-based payments - 932
Remeasurement of written put
option liabilities - -
Dividends on common shares - -
Dividends on deferred share
units - 143
------------------------------------------------------------
Balance as at June 30, 2017 $ 202,400 $ 28,214
------------------------------------------------------------
------------------------------------------------------------
DOREL INDUSTRIES INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
ALL FIGURES IN THOUSANDS OF US $
(unaudited)
Attributable to equity holders of the Company
-----------------------------------------------
Accumulated other
comprehensive income (loss)
-----------------------------------------------
Cumulative Cash Defined
Translation Flow Benefit
Account Hedges Plans
----------------------------------------------------------------------------
Balance as at December 30,
2015 $ (104,521) $ 2,680 $ (12,115)
----------------------------------------------------------------------------
Total comprehensive loss:
-----------------------------
Net loss - - -
Other comprehensive income
(loss) 19,420 (417) (1)
----------------------------------------------------------------------------
19,420 (417) (1)
----------------------------------------------------------------------------
Issued under stock option
plan - - -
Reclassification from
contributed surplus due to
exercise of stock options - - -
Reclassification from
contributed surplus due to
settlement of deferred
share units - - -
Share-based payments - - -
Remeasurement of written put
option liabilities - - -
Dividends on common shares - - -
Dividends on deferred share
units - - -
----------------------------------------------------------------------------
Balance as at June 30, 2016 $ (85,101) $ 2,263 $ (12,116)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance as at December 30,
2016 $ (102,629) $ 2,852 $ (14,063)
----------------------------------------------------------------------------
Total comprehensive income:
-----------------------------
Net income - - -
Other comprehensive income
(loss) 29,196 (5,336) (77)
----------------------------------------------------------------------------
29,196 (5,336) (77)
----------------------------------------------------------------------------
Share-based payments - - -
Remeasurement of written put
option liabilities - - -
Dividends on common shares - - -
Dividends on deferred share
units - - -
----------------------------------------------------------------------------
Balance as at June 30, 2017 $ (73,433) $ (2,484) $ (14,140)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
DOREL INDUSTRIES INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
ALL FIGURES IN THOUSANDS OF US $
(unaudited)
Attributable to equity holders of the Company
-----------------------------------------------
Other Retained Total
Equity Earnings Equity
----------------------------------------------------------------------------
Balance as at December 30,
2015 $ 1,527 $ 988,069 $ 1,102,397
----------------------------------------------------------------------------
Total comprehensive loss:
-----------------------------
Net loss - (21,910) (21,910)
Other comprehensive income
(loss) - - 19,002
----------------------------------------------------------------------------
- (21,910) (2,908)
----------------------------------------------------------------------------
Issued under stock option
plan - - 441
Reclassification from
contributed surplus due to
exercise of stock options - - -
Reclassification from
contributed surplus due to
settlement of deferred
share units - - (42)
Share-based payments - - 943
Remeasurement of written put
option liabilities (2,049) - (2,049)
Dividends on common shares - (19,401) (19,401)
Dividends on deferred share
units - (136) -
----------------------------------------------------------------------------
Balance as at June 30, 2016 $ (522) $ 946,622 $ 1,079,381
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance as at December 30,
2016 $ 3,027 $ 937,373 $ 1,056,099
----------------------------------------------------------------------------
Total comprehensive income:
-----------------------------
Net income - 20,281 20,281
Other comprehensive income
(loss) - - 23,783
----------------------------------------------------------------------------
- 20,281 44,064
----------------------------------------------------------------------------
Share-based payments - - 932
Remeasurement of written put
option liabilities (871) - (871)
Dividends on common shares - (19,442) (19,442)
Dividends on deferred share
units - (143) -
----------------------------------------------------------------------------
Balance as at June 30, 2017 $ 2,156 $ 938,069 $ 1,080,782
----------------------------------------------------------------------------
----------------------------------------------------------------------------
DOREL INDUSTRIES INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
ALL FIGURES IN THOUSANDS OF US $
(unaudited)
Second Quarters Ended Six Months Ended
------------------------- -------------------------
June 30, June 30, June 30, June 30,
2017 2016 2017 2016
------------ ------------ ------------ ------------
CASH PROVIDED BY (USED
IN):
OPERATING ACTIVITIES
Net income (loss) $ 11,440 $ (38,644) $ 20,281 $ (21,910)
Items not involving cash:
Depreciation and
amortization 12,387 13,415 24,404 26,460
Impairment losses on
goodwill and intangible
assets - 55,341 - 55,341
Unrealized losses
(gains) arising on
financial assets and
financial liabilities
classified as held for
trading (216) 464 (144) 1,210
Share-based payments 105 117 96 230
Defined benefit pension
and post-retirement
costs 1,050 1,169 1,970 2,130
Loss on disposal of
property, plant and
equipment 115 504 182 520
Restructuring and other
costs 82 (381) 1,218 43
Finance expenses 7,115 10,378 27,303 21,056
Income taxes expense
(recovery) 4,282 (5,542) 9,186 (2,068)
Net changes in balances
related to operations(1) 4,054 38,180 (49,712) (10,684)
Income taxes paid (7,334) (8,852) (12,211) (12,292)
Income taxes received 1,866 1,466 4,905 6,256
Interest paid (7,094) (13,535) (17,237) (18,214)
Interest received 135 119 254 205
------------ ------------ ------------ ------------
CASH PROVIDED BY
OPERATING ACTIVITIES 27,987 54,199 10,495 48,283
------------ ------------ ------------ ------------
FINANCING ACTIVITIES
Bank indebtedness 7,609 2,994 2,700 (8,638)
Increase of long-term
debt 22,000 - 208,782 31,154
Repayments of long-term
debt (35,327) (35,775) (179,217) (27,826)
Repayments of forward
purchase agreement
liabilities - - (7,857) (4,414)
Increase of written put
option liabilities - 673 - 673
Financing costs (64) (199) (2,706) (1,939)
Issuance of share capital - 406 - 406
Dividends on common
shares (9,721) (9,699) (19,442) (19,401)
------------ ------------ ------------ ------------
CASH (USED IN) PROVIDED
BY FINANCING ACTIVITIES (15,503) (41,600) 2,260 (29,985)
------------ ------------ ------------ ------------
INVESTING ACTIVITIES
Acquisition of businesses - - - 5,475
Additions to property,
plant and equipment (8,043) (4,569) (14,364) (9,811)
Disposals of property,
plant and equipment 110 25 182 138
Net proceeds from
disposals of assets held
for sale 3,378 2,981 15,027 2,981
Additions to intangible
assets (5,173) (4,568) (8,627) (9,050)
------------ ------------ ------------ ------------
CASH USED IN INVESTING
ACTIVITIES (9,728) (6,131) (7,782) (10,267)
------------ ------------ ------------ ------------
Effect of foreign
currency exchange rate
changes on cashand cash
equivalents 280 (1,855) 1,317 1,940
------------ ------------ ------------ ------------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 3,036 4,613 6,290 9,971
Cash and cash
equivalents, beginning
of period 35,137 38,540 31,883 33,182
------------ ------------ ------------ ------------
CASH AND CASH
EQUIVALENTS, END OF
PERIOD $ 38,173 $ 43,153 $ 38,173 $ 43,153
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
(1) Supplemental
information on net
changes in balances
related to operations:
Trade and other
receivables $ 54,098 $ 21,535 $ 31,089 $ (8,446)
Inventories (11,589) (20,056) (27,611) 12,962
Other financial assets (368) 1,133 (505) 5
Prepaid expenses (2,947) 1,131 (12,057) (10,836)
Other assets (70) (39) (146) (356)
Trade and other payables (40,048) 29,757 (18,751) (7,445)
Net pension and post-
retirement defined
benefit liabilities (485) (669) (2,463) (2,080)
Provisions, other
financial liabilities,
deferred revenue and
other
long-term liabilities 5,463 5,388 (19,268) 5,512
------------ ------------ ------------ ------------
$ 4,054 $ 38,180 $ (49,712) $ (10,684)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
DOREL INDUSTRIES INC.
SEGMENTED INFORMATION
SECOND QUARTERS ENDED JUNE 30
ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS
(unaudited)
----------------------------------------------------
Total Dorel Juvenile
----------------------------------------------------
2017 2016 2017 2016
Restated(i)
Total revenue $ 611,270$ 637,296 $ 218,060$ 228,911
Cost of sales (1) 465,244 486,734 152,930 156,265
----------------------------------------------------
Gross profit 146,026 150,562 65,130 72,646
Selling expenses 58,239 56,958 29,140 27,288
General and
administrative expenses 50,303 56,478 22,857 30,692
Research and development
expenses 7,194 8,331 5,124 5,869
Restructuring and other
costs (1) 1,485 182 847 320
Impairment losses on
goodwill and intangible
assets - 55,341 - -
----------------------------------------------------
Operating profit (loss) 28,805 (26,728)$ 7,162$ 8,477
--------------------------
--------------------------
Finance expenses 7,115 10,378
Corporate expenses 5,968 7,080
Income taxes expense
(recovery) 4,282 (5,542)
--------------------------
Net income (loss) $ 11,440$ (38,644)
--------------------------
--------------------------
Earnings (loss) per
share
------------------------
Basic $ 0.35$ (1.19)
--------------------------
--------------------------
Diluted $ 0.35$ (1.19)
--------------------------
--------------------------
----------------------------------------------------
Depreciation and
amortization included
in operating profit
(loss) $ 12,186$ 13,215 $ 8,951$ 9,006
----------------------------------------------------
----------------------------------------------------
(1)Restructuring and
other costs charged to:
Cost of sales $ 172$ - $ 77$ -
Expenses 1,485 182 847 320
----------------------------------------------------
$ 1,657$ 182 $ 924$ 320
----------------------------------------------------
----------------------------------------------------
DOREL INDUSTRIES INC.
SEGMENTED INFORMATION
SECOND QUARTERS ENDED JUNE 30
ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS
(unaudited)
----------------------------------------------------
Dorel Sports Dorel Home
----------------------------------------------------
2017 2016 2017 2016
Restated(i)
Total revenue $ 209,053$ 236,514 $ 184,157$ 171,871
Cost of sales (1) 161,029 187,673 151,285 142,796
----------------------------------------------------
Gross profit 48,024 48,841 32,872 29,075
Selling expenses 22,546 23,953 6,553 5,717
General and
administrative expenses 18,774 18,044 8,672 7,742
Research and development
expenses 1,138 1,608 932 854
Restructuring and other
costs (1) 638 (138) - -
Impairment losses on
goodwill and intangible
assets - 55,341 - -
----------------------------------------------------
Operating profit (loss) $ 4,928$ (49,967)$ 16,715$ 14,762
----------------------------------------------------
----------------------------------------------------
Finance expenses
Corporate expenses
Income taxes expense
(recovery)
Net income (loss)
Earnings (loss) per
share
------------------------
Basic
Diluted
----------------------------------------------------
Depreciation and
amortization included
in operating profit
(loss) $ 2,258$ 3,088 $ 977$ 1,121
----------------------------------------------------
----------------------------------------------------
(1)Restructuring and
other costs charged to:
Cost of sales $ 95$ - $ -$ -
Expenses 638 (138) - -
----------------------------------------------------
$ 733$ (138)$ -$ -
----------------------------------------------------
----------------------------------------------------
(i) During the fourth quarter of 2016, the Company changed its internal
organization and the composition of its reportable segments. The design,
sourcing, manufacturing, distribution and retail of the children's furniture
was transferred from Dorel Juvenile to Dorel Home. Accordingly, the Company
has restated the segmented information for the second quarter ended June 30,
2016.
DOREL INDUSTRIES INC.
SEGMENTED INFORMATION
SIX MONTHS ENDED JUNE 30
ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS
(unaudited)
----------------------------------------------------
Total Dorel Juvenile
----------------------------------------------------
2017 2016 2017 2016
Restated(i)
Total revenue $ 1,257,982$ 1,283,163 $ 446,718$ 470,810
Cost of sales (1) 958,511 982,548 311,703 327,347
----------------------------------------------------
Gross profit 299,471 300,615 135,015 143,463
Selling expenses 112,398 112,836 57,293 55,370
General and
administrative expenses 97,760 102,105 45,205 50,346
Research and development
expenses 14,717 16,600 10,383 11,540
Restructuring and other
costs (1) 6,318 3,119 5,378 3,285
Impairment losses on
goodwill and intangible
assets - 55,341 - -
----------------------------------------------------
Operating profit (loss) 68,278 10,614 $ 16,756$ 22,922
--------------------------
--------------------------
Finance expenses 27,303 21,056
Corporate expenses 11,508 13,536
Income taxes expense
(recovery) 9,186 (2,068)
--------------------------
Net income (loss) $ 20,281$ (21,910)
--------------------------
--------------------------
Earnings (loss) per
share
------------------------
Basic $ 0.63$ (0.68)
--------------------------
--------------------------
Diluted $ 0.62$ (0.68)
--------------------------
--------------------------
----------------------------------------------------
Depreciation and
amortization included
in operating profit
(loss) $ 24,003$ 26,059 $ 17,411$ 17,896
----------------------------------------------------
----------------------------------------------------
(1)Restructuring and
other costs charged to:
Cost of sales $ 445$ - $ 1,294$ -
Expenses 6,318 3,119 5,378 3,285
----------------------------------------------------
$ 6,763$ 3,119 $ 6,672$ 3,285
----------------------------------------------------
----------------------------------------------------
DOREL INDUSTRIES INC.
SEGMENTED INFORMATION
SIX MONTHS ENDED JUNE 30
ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS
(unaudited)
----------------------------------------------------
Dorel Sports Dorel Home
----------------------------------------------------
2017 2016 2017 2016
Restated(i)
Total revenue $ 423,069 $ 453,011 $ 388,195$ 359,342
Cost of sales (1) 326,057 356,672 320,751 298,529
----------------------------------------------------
Gross profit 97,012 96,339 67,444 60,813
Selling expenses 42,403 46,354 12,702 11,112
General and
administrative expenses 36,137 36,343 16,418 15,416
Research and development
expenses 2,490 3,180 1,844 1,880
Restructuring and other
costs (1) 940 (166) - -
Impairment losses on
goodwill and intangible
assets - 55,341 - -
----------------------------------------------------
Operating profit (loss) $ 15,042 $ (44,713)$ 36,480$ 32,405
----------------------------------------------------
----------------------------------------------------
Finance expenses
Corporate expenses
Income taxes expense
(recovery)
Net income (loss)
Earnings (loss) per
share
------------------------
Basic
Diluted
----------------------------------------------------
Depreciation and
amortization included
in operating profit
(loss) $ 4,564 $ 5,926 $ 2,028$ 2,237
----------------------------------------------------
----------------------------------------------------
(1)Restructuring and
other costs charged to:
Cost of sales $ (849)$ - $ -$ -
Expenses 940 (166) - -
----------------------------------------------------
$ 91 $ (166)$ -$ -
----------------------------------------------------
----------------------------------------------------
(i) During the fourth quarter of 2016, the Company changed its internal
organization and the composition of its reportable segments. The design,
sourcing, manufacturing, distribution and retail of the children's furniture
was transferred from Dorel Juvenile to Dorel Home. Accordingly, the Company
has restated the segmented information for the six months ended June 30,
2016.
Contacts: MaisonBrison Communications Rick Leckner (514) 731-0000 Dorel Industries Inc. Jeffrey Schwartz (514) 934-3034
Source: Dorel Industries Inc.
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