Dorel Reports Strong First Quarter 2017 Results
- Dorel Home posts another record quarter - Dorel Sports significantly improves earnings - Credit facilities amended to provide immediate savings and flexibility
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E-mailMONTREAL, QUEBEC -- (Marketwired) -- 05/05/17 -- Dorel Industries Inc. (TSX: DII.B)(TSX: DII.A) today released results for the first quarter ended March 31, 2017. Total revenue was US$646.7 million compared to US$645.9 million a year ago. Adjusted net income for the quarter increased 15.4% to US$22.7 million or US$0.69 per diluted share from US$19.7 million, or US$0.60 per diluted share in 2016. Reported net income decreased to US$8.8 million, or US$0.27 per diluted share, compared to US$16.7 million or US$0.51 per diluted share last year.
"Dorel's adjusted operating profit improved by over 15% versus last year's first quarter when excluding restructuring and other costs within our income statement. Of our three business segments, Dorel Home was again a standout with revenues increasing 9% and operating profit approaching 10% of revenues. Dorel Sports also improved earnings from prior year, leveraging better margins and its more efficient cost structure. Dorel Juvenile is benefitting from its strategic direction on improving gross margins, but faced challenges at its China facility with a large ramp up on new products and labour shortages around the Chinese New Year which delayed some scheduled launches. In our smaller Juvenile markets, Brazil and Australia performed exceptionally well and are now recognized as industry leaders. At the corporate level, with the support of our lenders, we successfully re-negotiated our credit facilities. This resulted in a first quarter pre-tax expense of US$10.2 million, or US$0.30 per diluted share, related to the extinguishment of existing debt. This change will allow for better management of our long-term capital needs and will decrease our financing costs going-forward. Interest costs are expected to be reduced by approximately US$4.0 million through the balance of 2017 and will continue annually going forward," stated Martin Schwartz, Dorel President & CEO.
The Company is presenting adjusted financial information, excluding 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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Three Months Ended March 31
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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 646,712 645,867 0.1%
Net income 8,841 16,734 (47.2%)
Per share - Basic 0.27 0.52 (48.1%)
Per share - Diluted 0.27 0.51 (47.1%)
Adjusted net income 22,705 19,671 15.4%
Per share - Basic 0.70 0.61 14.8%
Per share - Diluted 0.69(1) 0.60 15.0%
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Number of shares
outstanding -
Basic weighted
average 32,403,980 32,333,261
Diluted weighted
average 32,654,173 32,545,454
Adjusted diluted
weighted average 35,221,018 32,545,454
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(1) As at March 31, 2017, the convertible debentures were included in the
calculation of the adjusted diluted EPS by adjusting the adjusted net
income attributable to equity holders as well as the adjusted diluted
weighted average number of shares outstanding as these debentures were
deemed to be dilutive.
Dorel Home
All figures in thousands of US $
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Three Months Ended March 31 (unaudited)
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2016
2017 Restated(i) Change
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$ % of rev. $ % of rev. %
Total revenue 204,038 187,471 8.8%
Gross profit 34,572 16.9% 31,738 16.9% 8.9%
Operating profit 19,765 9.7% 17,643 9.4% 12.0%
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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
three months ended March 31, 2016.
First quarter revenue rose US$16.6 million, or 8.8% to US$204.0 million, representing the best quarter in the segment's history. Growth was driven by increased sales to on-line retailers in all divisions, representing 46% of total segment sales compared to 42% in the first quarter of 2016. Brick and mortar sales remained flat compared with last year's first quarter.
Gross profit, at 16.9%, remained comparable to last year's first quarter as improved margins from increased on-line sales were offset by higher input and warehousing costs.
Operating profit for the quarter was also a record, at US$19.8 million, up 12.0% from US$17.6 million a year ago, driven by higher sales volumes, slightly offset by a modest increase in selling expenses in line with the sales growth.
Dorel Juvenile
All figures in thousands of US $
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Three Months Ended March 31 (unaudited)
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2016
2017 Restated(i) Change
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$ % of rev. $ % of rev. %
Total revenue 228,658 241,899 (5.5%)
Gross profit 69,885 30.6% 70,817 29.3% (1.3%)
Operating profit 9,594 4.2% 14,445 6.0% (33.6%)
Adjusted gross
profit 71,102 31.1% 70,817 29.3% 0.4%
Adjusted
operating profit 15,342 6.7% 17,410 7.2% (11.9%)
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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
three months ended March 31, 2016.
Dorel Juvenile's first quarter revenue decreased by US$13.2 million or 5.5% to US$228.7 million compared with US$241.9 million in 2016, which was mostly organic. The decline in revenue was mainly attributable to the European market and reduced sales by Dorel Juvenile China to non-domestic third-party customers. Certain scheduled product launches were delayed due to production issues at the China factory caused by labour shortages associated with the Chinese New Year and the large number of concurrent new products, placing additional strain on the factory's ability to deliver on schedule. This also negatively impacted sales in several markets.
The benefits of a focused effort to improve sales mix, as well as cost savings and other operational efficiencies from our restructuring activities resulted in an adjusted gross profit of 31.1%. This represented a year-over-year improvement of 180 basis points on an adjusted basis and was in almost all markets. Adjusted operating profit decreased by US$2.1 million, or 11.9% to US$15.3 million from US$17.4 million in 2016 due to higher operating expenses.
Dorel Sports
All figures in thousands of US $
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Three Months Ended March 31 (unaudited)
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2017 2016 Change
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$ % of rev. $ % of rev. %
Total revenue 214,016 216,497 (1.1%)
Gross profit 48,988 22.9% 47,498 21.9% 3.1%
Operating profit 10,114 4.7% 5,254 2.4% 92.5%
Adjusted gross
profit 48,044 22.4% 47,498 21.9% 1.1%
Adjusted
operating
profit 9,472 4.4% 5,226 2.4% 81.2%
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First quarter revenue decreased US$2.5 million or 1.1% to US$214.0 million and approximately 1.3% after removing the impact of varying exchange rates year-over-year. Organic revenue declined approximately 9.9% 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 mass channel was due to unfavourable North American weather and a shift in Easter holiday sales moving from the end of the first quarter to April 2017. Lower first quarter CSG sales volumes were also caused by inclement weather, lower discounted sales than prior year and continued reductions in IBD retailers' inventories which reached historically low levels.
Dorel Sports initiated restructuring actions last year which are expected to result in annualized savings of US$5.0 million. First quarter operating profit rose by US$4.9 million, or 92.5% to US$10.1 million as a result of the restructuring plan, improved margins and cost control initiatives in almost all regions. A combination of less discounting and selective price increases in CSG as well as Pacific Cycle's improved product mix also contributed to the improvement. Caloi achieved higher margins with its improved pricing and product mix as well as from the strengthening of the Brazilian Real.
Other
Effective March 24, 2017, the Company amended its Credit Agreement with respect to its revolving bank loans and secured a term loan of US$200.0 million with the same maturity date as its revolving bank loans. As such, the net proceeds from the term loan were used by the Company to repay its Series "B" and "C" Senior Guaranteed Notes, its Brazilian non-convertible debentures and to reduce bank indebtedness. Included in finance expenses for the three months ended March 31, 2017, is a cost of US$10.2 million or US$0.30 per diluted share for early extinguishment of long-term debt. With the lower average interest rates of the term loan facilities going forward, the Company expects to reduce its interest costs by approximately US$4.0 million in the balance of 2017.
During the first quarter of 2017, the Company's effective tax rate was 35.7% versus 17.2% in the prior year. Excluding income taxes 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 adjusted tax rate was 22.6% and 17.0% respectively. 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 has stated that for the full year it expects its annual adjusted tax rate to be between 15% and 20%. However, variations in earnings across quarters mean that this rate may vary significantly between quarters.
During the first three months of 2017, cash flow used in operating activities was US$17.5 million compared to US$5.9 million used in last year's first quarter mainly explained by lower net income, increased inventories and product liability costs payments during the first quarter of 2017 related to settlements in 2016, partly offset by increases in trade and other receivables as well as trade and other payables.
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 and cash-settled Performance Share Units. The dividend is payable on June 2, 2017 to shareholders of record as at the close of business on May 19, 2017.
Outlook
"In the outlook provided with our year end results, we stated that for 2017 all three of our business segments were positioned to improve earnings. In the first quarter, both Dorel Home and Dorel Sports delivered on that expectation. Dorel Juvenile had a slower than anticipated start to the year as our factory in China faced challenges on new product launches, but we are proactively managing this and will see improvements through the year," stated Martin Schwartz, Dorel President & CEO.
"We still expect all three segments to exceed prior year earnings. Dorel Home again demonstrated its ability to deliver an expanded product range to consumers with its industry leading e-commerce platform. This will continue to drive sales and earnings improvements for the balance of the year. We expect a strong second half at Dorel Juvenile due to multiple new product introductions and new local management in China delivering on needed improvements in operations. In addition, 2016's abnormally high product liability costs will return to normal levels, contributing to the segment's substantial earnings improvement. The bicycle industry is currently facing short-term challenges, therefore sales growth opportunities in 2017 could be limited. Dorel Sports has re-structured itself to increase earnings this year through improved margins and lower operating expenses, and we expect this to more than offset sales challenges.
In addition, we made the strategic decision to amend the Company's Credit Agreement and the related costs impacted the quarter, but this will lower our finance expenses through the rest of the year," concluded Mr. Schwartz.
Conference Call
Dorel Industries Inc. will hold a conference call to discuss these results today, May 5, 2017 at 1:00 P.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 4696858 on your phone. This recording will be available on Friday, May 5, 2017 as of 4:00 P.M. until 11:59 P.M. on Friday, May 12, 2017.
Complete condensed consolidated interim financial statements as at March 31, 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) is a world class juvenile products and bicycle company. 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 include a wide assortment of both domestically produced and imported furniture products, 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 over 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 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", "adjusted earnings per basic and diluted share" and "adjusted diluted weighted average number of shares outstanding". 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 tables below are in thousands of US$, except per share amounts)
Reconciliation of non-GAAP financial measures
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Three Months Ended March 31,
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2017
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Restructuring
% of and other % of
Reported revenue costs Adjusted revenue
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$ % $ $ %
TOTAL REVENUE 646,712 100.0 - 646,712 100.0
Cost of sales 493,267 76.3 (273) 492,994 76.2
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GROSS PROFIT 153,445 23.7 273 153,718 23.8
Selling expenses 54,662 8.5 - 54,662 8.5
General and
administrative
expenses 52,494 8.1 - 52,494 8.1
Research and
development
expenses 7,523 1.2 - 7,523 1.2
Restructuring and
other costs 4,833 0.7 (4,833) - -
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OPERATING PROFIT 33,933 5.2 5,106 39,039 6.0
Finance expenses 20,188 3.1 (10,475) 9,713 1.5
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INCOME BEFORE
INCOME TAXES 13,745 2.1 15,581 29,326 4.5
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Income taxes
expense 4,904 0.7 1,717 6,621 1.0
Tax rate 35.7% - 22.6%
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NET INCOME 8,841 1.4 13,864 22,705 3.5
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EARNINGS PER SHARE
Basic 0.27 0.43 0.70
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Diluted 0.27 0.42 0.69(1)
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SHARES OUTSTANDING
Basic - weighted
average 32,403,980 32,403,980
Diluted - weighted
average 32,654,173 35,221,018
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Reconciliation of non-GAAP financial measures
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Three Months Ended March 31,
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2016
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Restructuring
% of and other % of
Reported revenue costs Adjusted revenue
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$ % $ $ %
TOTAL REVENUE 645,867 100.0 - 645,867 100.0
Cost of sales 495,814 76.8 - 495,814 76.8
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GROSS PROFIT 150,053 23.2 - 150,053 23.2
Selling expenses 56,341 8.7 - 56,341 8.7
General and
administrative
expenses 51,620 8.0 - 51,620 8.0
Research and
development
expenses 8,269 1.3 - 8,269 1.3
Restructuring and
other costs 2,937 0.4 (2,937) - -
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OPERATING PROFIT 30,886 4.8 2,937 33,823 5.2
Finance expenses 10,678 1.7 (561) 10,117 1.5
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INCOME BEFORE
INCOME TAXES 20,208 3.1 3,498 23,706 3.7
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Income taxes
expense 3,474 0.5 561 4,035 0.7
Tax rate 17.2% - 17.0%
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NET INCOME 16,734 2.6 2,937 19,671 3.0
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EARNINGS PER SHARE
Basic 0.52 0.09 0.61
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Diluted 0.51 0.09 0.60
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SHARES OUTSTANDING
Basic - weighted
average 32,333,261 32,333,261
Diluted - weighted
average 32,545,454 32,545,454
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(1) As at March 31, 2017, the convertible debentures were included in the
calculation of the adjusted diluted EPS by adjusting the adjusted net
income attributable to equity holders as well as the adjusted diluted
weighted average number of shares outstanding as these debentures were
deemed to be dilutive.
The details of restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt recorded are presented below:
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Three Months Ended March 31,
------------------------------
2017 2016
$ $
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Write-down of long-lived assets 517 -
Inventory markdowns (reversals) (93) -
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Recorded within gross profit 424 -
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Employee severance and termination benefits 2,487 1,704
Write-down of long-lived assets - 424
Net losses from the remeasurement and
disposals of assets held for sale 712 -
Other associated costs 1,634 80
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Recorded within a separate line in the
condensed consolidated interim income
statements 4,833 2,208
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Total restructuring costs 5,257 2,208
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Other costs recorded within gross profit (151) -
Acquisition-related costs recorded within a
separate line in the condensed consolidated
interim income statements - 729
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Total other costs (151) 729
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Total restructuring and other costs 5,106 2,937
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Loss on remeasurement of forward purchase
agreement liabilities 276 561
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Loss on early extinguishment of long-term debt 10,199 -
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Total restructuring and other costs,
remeasurement of forward purchase agreement
liabilities and loss on early extinguishment
of long-term debt before income taxes(1) 15,581 3,498
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Total restructuring and other costs,
remeasurement of forward purchase agreement
liabilities and loss on early extinguishment
of long-term debt after income taxes 13,864 2,937
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Total impact on diluted earnings per share (0.42) (0.09)
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(1)Includes non-cash amounts of: 2,829 985
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Dorel Juvenile
Reconciliation of non-GAAP financial measures
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Three Months Ended March 31,
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2017
----------------------------------------------------------
Restructuring
% of and other % of
Reported revenue costs Adjusted revenue
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$ % $ $ %
TOTAL REVENUE 228,658 100.0 - 228,658 100.0
Cost of sales 158,773 69.4 (1,217) 157,556 68.9
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GROSS PROFIT 69,885 30.6 1,217 71,102 31.1
Selling expenses 28,153 12.3 - 28,153 12.3
General and
administrative
expenses 22,348 9.8 - 22,348 9.8
Research and
development
expenses 5,259 2.3 - 5,259 2.3
Restructuring and
other costs 4,531 2.0 (4,531) - -
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OPERATING PROFIT 9,594 4.2 5,748 15,342 6.7
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Dorel Juvenile
Reconciliation of non-GAAP financial measures
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Three Months Ended March 31,
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2016
Restated(i)
---------------------------------------------------------
Restructuring
% of and other % of
Reported revenue costs Adjusted revenue
---------------------------------------------------------
$ % $ $ %
TOTAL REVENUE 241,899 100.0 - 241,899 100.0
Cost of sales 171,082 70.7 - 171,082 70.7
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GROSS PROFIT 70,817 29.3 - 70,817 29.3
Selling expenses 28,082 11.6 - 28,082 11.6
General and
administrative
expenses 19,654 8.2 - 19,654 8.2
Research and
development
expenses 5,671 2.3 - 5,671 2.3
Restructuring and
other costs 2,965 1.2 (2,965) - -
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OPERATING PROFIT 14,445 6.0 2,965 17,410 7.2
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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
three months ended March 31, 2016.
Dorel Sports
Reconciliation of non-GAAP financial measures
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Three Months Ended March 31,
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2017
----------------------------------------------------------
Restructuring
% of and other % of
Reported revenue costs Adjusted revenue
----------------------------------------------------------------------------
$ % $ $ %
TOTAL REVENUE 214,016 100.0 - 214,016 100.0
Cost of sales 165,028 77.1 944 165,972 77.6
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GROSS PROFIT 48,988 22.9 (944) 48,044 22.4
Selling expenses 19,857 9.3 - 19,857 9.3
General and
administrative
expenses 17,363 8.1 - 17,363 8.1
Research and
development
expenses 1,352 0.6 - 1,352 0.6
Restructuring and
other costs 302 0.2 (302) - -
- -
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OPERATING PROFIT 10,114 4.7 (642) 9,472 4.4
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Dorel Sports
Reconciliation of non-GAAP financial measures
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Three Months Ended March 31,
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2016
---------------------------------------------------------
Restructuring
% of and other % of
Reported revenue costs Adjusted revenue
------------------ ---------------------------------------------------------
$ % $ $ %
TOTAL REVENUE 216,497 100.0 - 216,497 100.0
Cost of sales 168,999 78.1 - 168,999 78.1
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GROSS PROFIT 47,498 21.9 - 47,498 21.9
Selling expenses 22,401 10.3 - 22,401 10.3
General and
administrative
expenses 18,299 8.5 - 18,299 8.5
Research and
development
expenses 1,572 0.7 - 1,572 0.7
Restructuring and
other costs (28) - 28 - -
- -
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OPERATING PROFIT 5,254 2.4 (28) 5,226 2.4
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DOREL INDUSTRIES INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
ALL FIGURES IN THOUSANDS OF US $
(unaudited)
as at as at
March 31, 2017 December 30, 2016
--------------- ---------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 35,137 $ 31,883
Trade and other receivables 460,784 431,062
Inventories 569,615 549,688
Other financial assets 2,460 4,333
Income taxes receivable 13,399 14,466
Prepaid expenses 30,291 21,040
--------------- ---------------------
1,111,686 1,052,472
Assets held for sale 4,397 20,017
--------------- ---------------------
1,116,083 1,072,489
--------------- ---------------------
NON-CURRENT ASSETS
Property, plant and equipment 191,560 191,294
Intangible assets 429,981 427,587
Goodwill 438,354 435,790
Deferred tax assets 36,302 39,324
Other assets 7,692 6,148
--------------- ---------------------
1,103,889 1,100,143
--------------- ---------------------
$ 2,219,972 $ 2,172,632
--------------- ---------------------
--------------- ---------------------
LIABILITIES
CURRENT LIABILITIES
Bank indebtedness $ 45,911 $ 49,490
Trade and other payables 471,999 437,009
Written put option and forward
purchase agreement liabilities - 7,500
Other financial liabilities 570 569
Deferred revenue 4,960 6,475
Income taxes payable 14,587 15,143
Long-term debt 8,139 51,138
Provisions 43,185 63,169
--------------- ---------------------
589,351 630,493
--------------- ---------------------
NON-CURRENT LIABILITIES
Long-term debt 441,506 355,118
Net pension and post-retirement
defined benefit liabilities 34,341 35,206
Deferred tax liabilities 51,493 53,293
Provisions 1,784 1,681
Written put option and forward
purchase agreement liabilities 26,993 26,325
Other financial liabilities 967 1,115
Other long-term liabilities 9,846 13,302
--------------- ---------------------
566,930 486,040
--------------- ---------------------
EQUITY
Share capital 202,400 202,400
Contributed surplus 27,194 27,139
Accumulated other comprehensive loss (104,691) (113,840)
Other equity 2,359 3,027
Retained earnings 936,429 937,373
--------------- ---------------------
1,063,691 1,056,099
--------------- ---------------------
$ 2,219,972 $ 2,172,632
--------------- ---------------------
--------------- ---------------------
DOREL INDUSTRIES INC.
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENTS
ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS
(unaudited)
Three Months Ended
--------------------------------
March 31, 2017 March 31, 2016
--------------- ----------------
Sales $ 646,425 $ 642,572
Licensing and commission income 287 3,295
--------------- ----------------
TOTAL REVENUE 646,712 645,867
Cost of sales(1) 493,267 495,814
--------------- ----------------
GROSS PROFIT 153,445 150,053
Selling expenses 54,662 56,341
General and administrative expenses 52,494 51,620
Research and development expenses 7,523 8,269
Restructuring and other costs(1) 4,833 2,937
--------------- ----------------
OPERATING PROFIT 33,933 30,886
Finance expenses 20,188 10,678
--------------- ----------------
INCOME BEFORE INCOME TAXES 13,745 20,208
Income taxes expense 4,904 3,474
--------------- ----------------
NET INCOME $ 8,841 $ 16,734
--------------- ----------------
--------------- ----------------
EARNINGS PER SHARE
Basic $ 0.27 $ 0.52
--------------- ----------------
--------------- ----------------
Diluted $ 0.27 $ 0.51
--------------- ----------------
--------------- ----------------
SHARES OUTSTANDING
Basic - weighted average 32,403,980 32,333,261
Diluted - weighted average 32,654,173 32,545,454
(1)Restructuring and other costs charged to:
Cost of sales $ 273 $ -
Expenses 4,833 2,937
--------------------------------
$ 5,106 $ 2,937
--------------------------------
--------------------------------
DOREL INDUSTRIES INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME
ALL FIGURES IN THOUSANDS OF US $
(unaudited)
Three Months Ended
-------------------------------
March 31, 2017 March 31, 2016
-------------- ----------------
NET INCOME $ 8,841 $ 16,734
-------------- ----------------
OTHER COMPREHENSIVE INCOME:
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 9,576 21,996
Net gains (losses) on hedge of net
investments in foreign operations, net of
tax of nil 930 6,576
-------------- ----------------
10,506 28,572
-------------- ----------------
Net changes in cash flow hedges:
Net change in unrealized gains (losses) on
derivatives designated as cash flow hedges (199) (3,614)
Reclassification to income 99 183
Reclassification to the related non-financial
asset (1,643) (238)
Deferred income taxes 415 1,352
-------------- ----------------
(1,328) (2,317)
-------------- ----------------
Items that will not be reclassified to net
income:
Defined benefit plans:
Remeasurements of the net pension and post-
retirement defined benefit liabilities (37) (13)
Deferred income taxes 8 7
-------------- ----------------
(29) (6)
-------------- ----------------
TOTAL OTHER COMPREHENSIVE INCOME 9,149 26,249
-------------- ----------------
TOTAL COMPREHENSIVE INCOME $ 17,990 $ 42,983
-------------- ----------------
-------------- ----------------
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
Share Contributed Translation Flow Benefit
Capital Surplus Account Hedges Plans
-----------------------------------------------------------
----------------------------------------------------------------------------
Balance as at
December 30,
2015 $ 200,277 $ 26,480 $ (104,521) $ 2,680 $ (12,115)
----------------------------------------------------------------------------
Total
comprehensive
income:
Net income - - - - -
Other
comprehensive
income (loss) - - 28,572 (2,317) (6)
----------------------------------------------------------------------------
- - 28,572 (2,317) (6)
----------------------------------------------------------------------------
Reclassification
from
contributed
surplus due to
settlement of
deferred share
units 61 (103) - - -
Share-based
payments - 113 - - -
Remeasurement of
written put
option
liabilities - - - - -
Dividends on
common shares - - - - -
Dividends on
deferred share
units - 62 - - -
----------------------------------------------------------------------------
Balance as at
March 31, 2016 $ 200,338 $ 26,552 $ (75,949) $ 363 $ (12,121)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance as at
December 30,
2016 $ 202,400 $ 27,139 $ (102,629) $ 2,852 $ (14,063)
----------------------------------------------------------------------------
Total
comprehensive
income:
Net income - - - - -
Other
comprehensive
income (loss) - - 10,506 (1,328) (29)
----------------------------------------------------------------------------
- - 10,506 (1,328) (29)
----------------------------------------------------------------------------
Share-based
payments - (9) - - -
Remeasurement of
written put
option
liabilities - - - - -
Dividends on
common shares - - - - -
Dividends on
deferred share
units - 64 - - -
----------------------------------------------------------------------------
Balance as at
March 31, 2017 $ 202,400 $ 27,194 $ (92,123) $ 1,524 $ (14,092)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
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
income:
Net income - 16,734 16,734
Other
comprehensive
income (loss) - - 26,249
-----------------------------------------------------------------------
- 16,734 42,983
-----------------------------------------------------------------------
Reclassification
from
contributed
surplus due to
settlement of
deferred share
units - - (42)
Share-based
payments - - 113
Remeasurement of
written put
option
liabilities (1,890) - (1,890)
Dividends on
common shares - (9,702) (9,702)
Dividends on
deferred share
units - (62) -
-----------------------------------------------------------------------
Balance as at
March 31, 2016 $ (363) $ 995,039 $ 1,133,859
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Balance as at
December 30,
2016 $ 3,027 $ 937,373 $ 1,056,099
-----------------------------------------------------------------------
Total
comprehensive
income:
Net income - 8,841 8,841
Other
comprehensive
income (loss) - - 9,149
-----------------------------------------------------------------------
- 8,841 17,990
-----------------------------------------------------------------------
Share-based
payments - - (9)
Remeasurement of
written put
option
liabilities (668) - (668)
Dividends on
common shares - (9,721) (9,721)
Dividends on
deferred share
units - (64) -
-----------------------------------------------------------------------
Balance as at
March 31, 2017 $ 2,359 $ 936,429 $ 1,063,691
-----------------------------------------------------------------------
-----------------------------------------------------------------------
DOREL INDUSTRIES INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
ALL FIGURES IN THOUSANDS OF US $
(unaudited)
Three Months Ended
----------------------------------------
March 31, 2017 March 31, 2016
------------------- --------------------
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net income $ 8,841 $ 16,734
Items not involving cash:
Depreciation and amortization 12,017 13,045
Unrealized losses (gains) arising
on financial assets and financial
liabilities classified as held for
trading 72 746
Share-based payments (9) 113
Defined benefit pension and post-
retirement costs 920 961
Loss on disposal of property, plant
and equipment 67 16
Restructuring and other costs 1,136 424
Finance expenses 20,188 10,678
Income taxes expense 4,904 3,474
Net changes in balances related to
operations(1) (53,766) (48,864)
Income taxes paid (4,877) (3,440)
Income taxes received 3,039 4,790
Interest paid (10,143) (4,679)
Interest received 119 86
------------------- --------------------
CASH USED IN OPERATING ACTIVITIES (17,492) (5,916)
------------------- --------------------
FINANCING ACTIVITIES
Bank indebtedness (4,909) (11,632)
Increase of long-term debt 217,447 43,412
Repayments of long-term debt (174,555) (4,309)
Repayments of forward purchase
agreement liabilities (7,857) (4,414)
Financing costs (2,642) (1,740)
Dividends on common shares (9,721) (9,702)
------------------- --------------------
CASH PROVIDED BY FINANCING
ACTIVITIES 17,763 11,615
------------------- --------------------
INVESTING ACTIVITIES
Acquisition of businesses - 5,475
Additions to property, plant and
equipment (6,321) (5,242)
Disposals of property, plant and
equipment 72 113
Net proceeds from disposals of
assets held for sale 11,649 -
Additions to intangible assets (3,454) (4,482)
------------------- --------------------
CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES 1,946 (4,136)
------------------- --------------------
Effect of foreign currency exchange
rate changes on cash and cash
equivalents 1,037 3,795
------------------- --------------------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 3,254 5,358
Cash and cash equivalents, beginning
of period 31,883 33,182
------------------- --------------------
CASH AND CASH EQUIVALENTS, END OF
PERIOD $ 35,137 $ 38,540
------------------- --------------------
------------------- --------------------
(1)Supplemental information on net changes in balances
related to operations:
Trade and other receivables $ (23,009)$ (29,981)
Inventories (16,022) 33,018
Other financial assets (137) (1,128)
Prepaid expenses (9,110) (11,967)
Other assets (76) (317)
Trade and other payables 21,297 (37,202)
Net pension and post-retirement
defined benefit liabilities (1,978) (1,411)
Provisions, other financial
liabilities, deferred revenue and
other long-term liabilities (24,731) 124
------------------- --------------------
$ (53,766)$ (48,864)
------------------- --------------------
------------------- --------------------
DOREL INDUSTRIES INC.
SEGMENTED INFORMATION
THREE MONTHS ENDED MARCH 31
ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS
(unaudited)
---------------------------------------------------
Total Dorel Juvenile
---------------------------------------------------
2017 2016 2017 2016
Restated(i)
Total revenue $ 646,712 $ 645,867 $ 228,658 $ 241,899
Cost of sales (1) 493,267 495,814 158,773 171,082
---------------------------------------------------
Gross profit 153,445 150,053 69,885 70,817
Selling expenses 54,159 55,878 28,153 28,082
General and
administrative expenses 47,457 45,627 22,348 19,654
Research and development
expenses 7,523 8,269 5,259 5,671
Restructuring and other
costs (1) 4,833 2,937 4,531 2,965
---------------------------------------------------
Operating profit 39,473 37,342 $ 9,594 $ 14,445
--------------------------
--------------------------
Finance expenses 20,188 10,678
Corporate expenses 5,540 6,456
Income taxes expense 4,904 3,474
-------------------------
Net income $ 8,841 $ 16,734
-------------------------
-------------------------
Earnings per share
Basic $ 0.27 $ 0.52
-------------------------
-------------------------
Diluted $ 0.27 $ 0.51
-------------------------
-------------------------
Depreciation and
amortization included in
operating profit $ 11,817 $ 12,844 $ 8,460 $ 8,890
---------------------------------------------------
---------------------------------------------------
(1)Restructuring and
other costs charged to:
Cost of sales $ 273 $ - $ 1,217 $ -
Expenses 4,833 2,937 4,531 2,965
---------------------------------------------------
$ 5,106 $ 2,937 $ 5,748 $ 2,965
---------------------------------------------------
---------------------------------------------------
DOREL INDUSTRIES INC.
SEGMENTED INFORMATION
THREE MONTHS ENDED MARCH 31
ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS
(unaudited)
---------------------------------------------------
Dorel Sports Dorel Home
---------------------------------------------------
2017 2016 2017 2016
Restated(i)
Total revenue $ 214,016 $ 216,497 $ 204,038 $ 187,471
Cost of sales (1) 165,028 168,999 169,466 155,733
---------------------------------------------------
Gross profit 48,988 47,498 34,572 31,738
Selling expenses 19,857 22,401 6,149 5,395
General and
administrative expenses 17,363 18,299 7,746 7,674
Research and development
expenses 1,352 1,572 912 1,026
Restructuring and other
costs (1) 302 (28) - -
---------------------------------------------------
Operating profit $ 10,114 $ 5,254 $ 19,765 $ 17,643
---------------------------------------------------
---------------------------------------------------
Finance expenses
Corporate expenses
Income taxes expense
Net income
Earnings per share
Basic
Diluted
Depreciation and
amortization included in
operating profit $ 2,306 $ 2,838 $ 1,051 $ 1,116
---------------------------------------------------
---------------------------------------------------
(1)Restructuring and
other costs charged to:
Cost of sales $ (944) $ - $ - $ -
Expenses 302 (28) - -
---------------------------------------------------
$ (642) $ (28) $ - $ -
---------------------------------------------------
---------------------------------------------------
(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
three months ended March 31, 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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