Dorel Reports Second Quarter Results

MONTRÉAL, QUÉBEC--(Marketwired - Aug. 4, 2017) - 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.

Summary of Financial Information (unaudited)
Second Quarters Ended June 30
All figures in thousands of US $, except per share amounts
			2017	2016		Change
			$	$		%
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	%
Number of shares outstanding -
	Basic weighted average		32,403,980	32,345,352
	Diluted weighted average		32,677,845	32,345,352

Summary of Financial Information (unaudited)
Six Months Ended June 30
All figures in thousands of US $, except per share amounts
			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	%
Number of shares outstanding -
	Basic weighted average		32,403,980	32,339,292
	Diluted weighted average		32,675,600	32,339,292

Dorel Home

All figures in thousands of US $
Second Quarters Ended June 30 (unaudited)
	2017			2016 Restated*			Change
	$	% 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	%
All figures in thousands of US $
Six Months Ended June 30 (unaudited)
	2017			2016 Restated*			Change
	$	% 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	%

* 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 $
Second Quarters Ended June 30 (unaudited)
	2017			2016 Restated*			Change
	$	% 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	%)
All figures in thousands of US $
Six Months Ended June 30 (unaudited)
	2017			2016 Restated*			Change
	$	% 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	%)

* 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 $
Second Quarters Ended June 30 (unaudited)
	2017			2016			Change
	$	% 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	%
All figures in thousands of US $
Six Months Ended June 30 (unaudited)
	2017			2016			Change
	$	% 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	%

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 1^st, Quinny, Maxi-Cosi and Tiny Love, complemented by regional brands such as Cosco, Bébé 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
Second Quarters Ended June 30,
	2017									2016
	Reported		% of revenue	Restructuring and other costs		Adjusted		% of revenue		Reported		% of revenue		Impairment losses, restructuring and other costs		Adjusted		% of revenue
	$		%	$		$		%		$		%		$		$		%
TOTAL REVENUE	611,270		100.0	-		611,270		100.0		637,296		100.0		-		637,296		100.0
Cost of sales	465,244		76.1	(172	)	465,072		76.1		486,734		76.4		-		486,734		76.4
GROSS PROFIT	146,026		23.9	172		146,198		23.9		150,562		23.6		-		150,562		23.6
Selling expenses	58,616		9.6	-		58,616		9.6		57,323		9.0		-		57,323		9.0
General and administrative expenses	55,894		9.1	-		55,894		9.1		63,193		9.9		-		63,193		9.9
Research and development expenses	7,194		1.2	-		7,194		1.2		8,331		1.3		-		8,331		1.3
Restructuring and other costs	1,485		0.2	(1,485	)	-		-		182		-		(182	)	-		-
Impairment losses on goodwill and intangible assets	-		-	-		-		-		55,341		8.7		(55,341	)	-		-
OPERATING PROFIT (LOSS)	22,837		3.8	1,657		24,494		4.0		(33,808	)	(5.3	)	55,523		21,715		3.4
Finance expenses	7,115		1.2	-		7,115		1.2		10,378		1.6		(712	)	9,666		1.5
INCOME (LOSS) BEFORE INCOME TAXES	15,722		2.6	1,657		17,379		2.8		(44,186	)	(6.9	)	56,235		12,049		1.9
Income taxes expense (recovery)	4,282		0.7	653		4,935		0.8		(5,542	)	(0.8	)	7,398		1,856		0.3
Tax rate	27.2	%				28.4	%			12.5	%					15.4	%
NET INCOME (LOSS)	11,440		1.9	1,004		12,444		2.0		(38,644	)	(6.1	)	48,837		10,193		1.6
EARNINGS (LOSS) PER SHARE
Basic	0.35			0.03		0.38				(1.19	)			1.51		0.32
Diluted	0.35			0.03		0.38				(1.19	)			1.50		0.31
SHARES OUTSTANDING
Basic - weighted average	32,403,980					32,403,980				32,345,352						32,345,352
Diluted - weighted average	32,677,845					32,677,845				32,345,352						32,580,339

Reconciliation of non-GAAP financial measures
Six Months Ended June 30,
	2017									2016
	Reported		% of revenue	Restructuring and other costs		Adjusted		% of revenue		Reported		% of revenue		Impairment losses, restructuring and other costs		Adjusted		% of revenue
	$		%	$		$		%		$		%		$		$		%
TOTAL REVENUE	1,257,982		100.0	-		1,257,982		100.0		1,283,163		100.0		-		1,283,163		100.0
Cost of sales	958,511		76.2	(445	)	958,066		76.2		982,548		76.6		-		982,548		76.6
GROSS PROFIT	299,471		23.8	445		299,916		23.8		300,615		23.4		-		300,615		23.4
Selling expenses	113,278		9.0	-		113,278		9.0		113,664		8.9		-		113,664		8.9
General and administrative expenses	108,388		8.5	-		108,388		8.5		114,813		8.9		-		114,813		8.9
Research and development expenses	14,717		1.2	-		14,717		1.2		16,600		1.3		-		16,600		1.3
Restructuring and other costs	6,318		0.6	(6,318	)	-		-		3,119		0.2		(3,119	)	-		-
Impairment losses on goodwill and intangible assets	-		-	-		-		-		55,341		4.3		(55,341	)	-		-
OPERATING PROFIT (LOSS)	56,770		4.5	6,763		63,533		5.1		(2,922	)	(0.2	)	58,460		55,538		4.3
Finance expenses	27,303		2.2	(10,475	)	16,828		1.4		21,056		1.7		(1,273	)	19,783		1.5
INCOME (LOSS) BEFORE INCOME TAXES	29,467		2.3	17,238		46,705		3.7		(23,978	)	(1.9	)	59,733		35,755		2.8
Income taxes expense (recovery)	9,186		0.7	2,370		11,556		0.9		(2,068	)	(0.2	)	7,959		5,891		0.5
Tax rate	31.2	%				24.7	%			8.6	%					16.5	%
NET INCOME (LOSS)	20,281		1.6	14,868		35,149		2.8		(21,910	)	(1.7	)	51,774		29,864		2.3
EARNINGS (LOSS) PER SHARE
Basic	0.63			0.45		1.08				(0.68	)			1.60		0.92
Diluted	0.62			0.46		1.08				(0.68	)			1.60		0.92
SHARES OUTSTANDING
Basic - weighted average	32,403,980					32,403,980				32,339,292						32,339,292
Diluted - weighted average	32,675,600					32,675,600				32,339,292						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 June 30,					Six Months Ended June 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									2016
										Restated *
	Reported	% of revenue		Restructuring and other costs		Adjusted	% of revenue			Reported	% of revenue		Restructuring and other costs		Adjusted	% of revenue
	$	%		$		$	%			$	%		$		$	%
TOTAL REVENUE	218,060	100.0		-		218,060	100.0			228,911	100.0		-		228,911	100.0
Cost of sales	152,930	70.1		(77	)	152,853	70.1			156,265	68.3		-		156,265	68.3
GROSS PROFIT	65,130	29.9		77		65,207	29.9			72,646	31.7		-		72,646	31.7
Selling expenses	29,140	13.4		-		29,140	13.4			27,288	11.9		-		27,288	11.9
General and administrative expenses	22,857	10.5		-		22,857	10.5			30,692	13.4		-		30,692	13.4
Research and development expenses	5,124	2.3		-		5,124	2.3			5,869	2.6		-		5,869	2.6
Restructuring and other costs	847	0.4		(847	)	-	-			320	0.1		(320	)	-	-
OPERATING PROFIT	7,162	3.3		924		8,086	3.7			8,477	3.7		320		8,797	3.8
Six Months Ended June 30,
	2017									2016
										Restated *
	Reported	% of revenue		Restructuring and other costs		Adjusted	% of revenue			Reported	% of revenue		Restructuring and other costs		Adjusted	% of revenue
	$	%		$		$	%			$	%		$		$	%
TOTAL REVENUE	446,718	100.0		-		446,718	100.0			470,810	100.0		-		470,810	100.0
Cost of sales	311,703	69.8		(1,294	)	310,409	69.5			327,347	69.5		-		327,347	69.5
GROSS PROFIT	135,015	30.2		1,294		136,309	30.5			143,463	30.5		-		143,463	30.5
Selling expenses	57,293	12.8		-		57,293	12.8			55,370	11.8		-		55,370	11.8
General and administrative expenses	45,205	10.2		-		45,205	10.2			50,346	10.6		-		50,346	10.6
Research and development expenses	10,383	2.3		-		10,383	2.3			11,540	2.5		-		11,540	2.5
Restructuring and other costs	5,378	1.1		(5,378	)	-	-			3,285	0.7		(3,285	)	-	-
OPERATING PROFIT	16,756	3.8		6,672		23,428	5.2			22,922	4.9		3,285		26,207	5.6

* 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							2016
	Reported	% of revenue	Restructuring and other costs		Adjusted	% of revenue		Reported		% of revenue		Impairment losses, restructuring and other costs		Adjusted		% of revenue
	$	%	$		$	%		$		%		$		$		%
TOTAL REVENUE	209,053	100.0	-		209,053	100.0		236,514		100.0		-		236,514		100.0
Cost of sales	161,029	77.0	(95	)	160,934	77.0		187,673		79.3		-		187,673		79.3
GROSS PROFIT	48,024	23.0	95		48,119	23.0		48,841		20.7		-		48,841		20.7
Selling expenses	22,546	10.8	-		22,546	10.8		23,953		10.1		-		23,953		10.1
General and administrative expenses	18,774	9.0	-		18,774	9.0		18,044		7.7		-		18,044		7.7
Research and development expenses	1,138	0.5	-		1,138	0.5		1,608		0.7		-		1,608		0.7
Restructuring and other costs	638	0.3	(638	)	-	-		(138	)	(0.1	)	138		-		-
Impairment losses on goodwill and intangible assets	-	-	-		-	-				55,341		23.4		(55,341	)	-
OPERATING PROFIT (LOSS)	4,928	2.4	733		5,661	2.7		(49,967	)	(21.1	)	55,203		5,236		2.2
Six Months Ended June 30,
	2017							2016
	Reported	% of revenue	Restructuring and other costs		Adjusted	% of revenue		Reported		% of revenue		Impairment losses, restructuring and other costs		Adjusted		% of revenue
	$	%	$		%	%		$		%		$		$		%
TOTAL REVENUE	423,069	100.0	-		423,069	100.0		453,011		100.0		-		453,011		100.0
Cost of sales	326,057	77.1	849		326,906	77.3		356,672		78.7		-		356,672		78.7
GROSS PROFIT	97,012	22.9	(849	)	96,163	22.7		96,339		21.3		-		96,339		21.3
Selling expenses	42,403	10.0	-		42,403	10.0		46,354		10.2		-		46,354		10.2
General and administrative expenses	36,137	8.5	-		36,137	8.5		36,343		8.1		-		36,343		8.1
Research and development expenses	2,490	0.6	-		2,490	0.6		3,180		0.7		-		3,180		0.7
Restructuring and other costs	940	0.2	(940	)	-	-		(166	)	-		166		-		-
Impairment losses on goodwill and intangible assets	-	-	-		-	-		55,341		12.2		(55,341	)	-		-
OPERATING PROFIT (LOSS)	15,042	3.6	91		15,133	3.6		(44,713	)	(9.9	)	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, 2017				December 30, 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, 2017				June 30, 2016				June 30, 2017				June 30, 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
							Accumulated other
							comprehensive income (loss)
		Share Capital		Contributed Surplus			Cumulative Translation Account			Cash Flow Hedges			Defined Benefit Plans			Other Equity			Retained Earnings			Total Equity
Balance as at December 30, 2015		$	200,277	$	26,480		$	(104,521	)	$	2,680		$	(12,115	)	$	1,527		$	988,069		$	1,102,397
Total comprehensive loss:
	Net loss		-		-			-			-			-			-			(21,910	)		(21,910	)
	Other comprehensive income (loss)		-		-			19,420			(417	)		(1	)		-			-			19,002
			-		-			19,420			(417	)		(1	)		-			(21,910	)		(2,908	)
	Issued under stock option plan		441		-			-			-			-			-			-			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	)		-			-			-			-			-			(42	)
	Share-based payments		-		943			-			-			-			-			-			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			-			-			-			-			(136	)		-
	Balance as at June 30, 2016	$	200,906	$	27,329		$	(85,101	)	$	2,263		$	(12,116	)	$	(522	)	$	946,622		$	1,079,381
	Balance as at December 30, 2016	$	202,400	$	27,139		$	(102,629	)	$	2,852		$	(14,063	)	$	3,027		$	937,373		$	1,056,099
Total comprehensive income:
	Net income		-		-			-			-			-			-			20,281			20,281
	Other comprehensive income (loss)		-		-			29,196			(5,336	)		(77	)		-			-			23,783
			-		-			29,196			(5,336	)		(77	)		-			20,281			44,064
	Share-based payments		-		932			-			-			-			-			-			932
	Remeasurement of written put option liabilities		-		-			-			-			-			(871	)		-			(871	)
	Dividends on common shares		-		-			-			-			-			-			(19,442	)		(19,442	)
	Dividends on deferred share units		-		143			-			-			-			-			(143	)		-
	Balance as at June 30, 2017	$	202,400	$	28,214		$	(73,433	)	$	(2,484	)	$	(14,140	)	$	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, 2017				June 30, 2016				June 30, 2017				June 30, 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				Dorel Sports					Dorel Home
		2017		2016			2017		2016		2017		2016			2017		2016
									Restated*									Restated*
Total revenue		$	611,270	$	637,296		$	218,060	$	228,911	$	209,053	$	236,514		$	184,157	$	171,871
Cost of sales (1)			465,244		486,734			152,930		156,265		161,029		187,673			151,285		142,796
Gross profit			146,026		150,562			65,130		72,646		48,024		48,841			32,872		29,075
Selling expenses			58,239		56,958			29,140		27,288		22,546		23,953			6,553		5,717
General and administrative expenses			50,303		56,478			22,857		30,692		18,774		18,044			8,672		7,742
Research and development expenses			7,194		8,331			5,124		5,869		1,138		1,608			932		854
Restructuring and other costs (1)			1,485		182			847		320		638		(138	)		-		-
Impairment losses on goodwill and intangible assets			-		55,341			-		-		-		55,341			-		-
Operating profit (loss)			28,805		(26,728	)	$	7,162	$	8,477	$	4,928	$	(49,967	)	$	16,715	$	14,762
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	$	2,258	$	3,088		$	977	$	1,121
(1)Restructuring and other costs charged to:
Cost of sales		$	172	$	-		$	77	$	-	$	95	$	-		$	-	$	-
Expenses			1,485		182			847		320		638		(138	)		-		-
		$	1,657	$	182		$	924	$	320	$	733	$	(138	)	$	-	$	-

* 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				Dorel Sports						Dorel Home
		2017		2016			2017		2016		2017			2016			2017		2016
									Restated*										Restated*
Total revenue		$	1,257,982	$	1,283,163		$	446,718	$	470,810	$	423,069		$	453,011		$	388,195	$	359,342
Cost of sales (1)			958,511		982,548			311,703		327,347		326,057			356,672			320,751		298,529
Gross profit			299,471		300,615			135,015		143,463		97,012			96,339			67,444		60,813
Selling expenses			112,398		112,836			57,293		55,370		42,403			46,354			12,702		11,112
General and administrative expenses			97,760		102,105			45,205		50,346		36,137			36,343			16,418		15,416
Research and development expenses			14,717		16,600			10,383		11,540		2,490			3,180			1,844		1,880
Restructuring and other costs (1)			6,318		3,119			5,378		3,285		940			(166	)		-		-
Impairment losses on goodwill and intangible assets			-		55,341			-		-		-			55,341			-		-
Operating profit (loss)			68,278		10,614		$	16,756	$	22,922	$	15,042		$	(44,713	)	$	36,480	$	32,405
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	$	4,564		$	5,926		$	2,028	$	2,237
(1)Restructuring and other costs charged to:
Cost of sales		$	445	$	-		$	1,294	$	-	$	(849	)	$	-		$	-	$	-
Expenses			6,318		3,119			5,378		3,285		940			(166	)		-		-
		$	6,763	$	3,119		$	6,672	$	3,285	$	91		$	(166	)	$	-	$	-

* 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.