Dorel Industries Inc.
TSX : DII.A
TSX : DII.B

Dorel Industries Inc.

August 06, 2015 08:16 ET

Dorel Reports Second Quarter Results

- Quarter organic revenue up 5%

- Home Furnishings revenues increase 30% in the quarter

- Juvenile China factories integration ahead of plan

- New model year bicycles to drive sales in second half at Dorel Sports

- Currency continues to impact earnings

MONTREAL, QUEBEC--(Marketwired - Aug. 6, 2015) - Dorel Industries Inc. (TSX:DII.B)(TSX:DII.A) today announced results for the second quarter and six months ended June 30, 2015. Total revenue for the quarter was US$669.6 million, up 2.1% from US$655.8 million recorded in the same period last year. Adjusted net income was US$16.6 million or US$0.51 per diluted share, compared to adjusted net income of US$19.8 million or US$0.61 per diluted share a year ago. Reported net income was US$16.2 million or US$0.50 per diluted share, compared to US$15.2 million or US$0.47 per diluted share in the second quarter of 2014.The net negative impact of foreign exchange on Dorel's earnings equated to approximately US$0.23 per diluted share for the second quarter and US$0.53 per diluted share for the first six months of 2015.

Revenue for the six months increased 2.4% to US$1.34 billion compared to US$1.30 billion last year. First half adjusted net income reached US$28.4 million or US$0.87 per diluted share, compared to adjusted net income of US$49.2 million or US$1.52 per diluted share last year. Reported net income for the period was US$27.8 million or US$0.86 per diluted share, compared to net income of US$40.0 million or US$1.24 per diluted share in the first half of 2014.

"In Home Furnishings we are having a breakout year with revenues increasing by 29.9% in the quarter and 23.1% year-to-date. Operating profit was up 65.3% and 36.9% in the quarter and six months respectively. Dorel's Juvenile and Sports segments continue to operate in an environment of challenging foreign exchange rates as the US dollar remains strong against practically all currencies. This had a significant effect on our earnings, impacting operating profit in the two segments combined by a net negative amount of approximately US$12 million in the second quarter alone, bringing the net negative FX year-to-date impact to approximately US$25 million. We have done a good job mitigating this impact with selective price increases and other proactive measures and our results reflect that. There have been numerous improvements at our Dorel Juvenile China factories and we are pleased with the progress of the integration process," said Dorel President & CEO, Martin Schwartz.

Summary of Adjusted Financial Information
Second Quarters Ended June 30
All figures in thousands of US $, except per share amounts
2015 2014 Change %
Total revenue 669,643 655,831 2.1 %
Adjusted net income 16,622 19,769 (15.9 %)
Per share - Basic 0.51 0.61 (16.4 %)
Per share - Diluted 0.51 0.61 (16.4 %)
Average number of shares outstanding -
Basic weighted average 32,322,011 32,297,064
Diluted weighted average 32,519,877 32,488,794
Summary of Adjusted Financial Information
Six Months Ended June 30
All figures in thousands of US $, except per share amounts
2015 2014 Change %
Total revenue 1,335,132 1,303,532 2.4 %
Adjusted net income 28,421 49,204 (42.2 %)
Per share - Basic 0.88 1.53 (42.5 %)
Per share - Diluted 0.87 1.52 (42.8 %)
Average number of shares outstanding -
Basic weighted average 32,321,825 32,117,648
Diluted weighted average 32,521,398 32,384,207

Dorel Juvenile

Second Quarters Ended June 30
2015 2014
$ % of rev. $ % of rev. Change %
Total revenue 264,919 251,322 5.4 %
Gross profit 72,989 27.6 % 72,777 29.0 % 0.3 %
Adjusted operating profit 15,353 5.8 % 16,331 6.5 % (6.0 %)
Six Months Ended June 30
2015 2014
$ % of rev. $ % of rev. Change %
Total revenue 539,614 520,554 3.7 %
Gross profit 144,430 26.8 % 149,191 28.7 % (3.2 %)
Adjusted operating profit 25,645 4.8 % 35,978 6.9 % (28.7 %)

Dorel Juvenile second quarter revenue increased US$13.6 million or 5.4% to US$264.9 million and was up US$19.1 million or 3.7% to US$539.6 million year-to-date. Organic revenue growth was in all major regions and increased by approximately 7% in the quarter and 5% year-to-date. In Europe, improved car seat sales in most Northern markets drove the growth with US sales increases coming from juvenile wooden furniture. In local currencies, sales in Latin America continued to increase in the low double digits.

Second quarter adjusted operating profit of US$15.4 million, which included a full quarter of results from Dorel Juvenile China, declined by 6.0% from $16.3 million a year ago. Year-to-date adjusted operating profit was US$25.6 million, a decline of 28.7% from US$36.0 million in 2014. Segment operating profit was impacted by a net negative impact of foreign exchange rates of approximately US$5 million for the second quarter and US$11 million for the first six months of the year.

The integration process of Dorel Juvenile China is ahead of plan with all operational areas being addressed. As part of the change management process, particular emphasis is being placed on operational improvements at the Zhongshan factory, staffing capabilities and growing the domestic sales business. The research and development groups based in Taiwan and China are now aligned with the segment's global teams based in the US, Europe and Israel.

Dorel Sports

Second Quarters Ended June 30
2015 2014
$ % of rev. $ % of rev. Change %
Total revenue 251,087 286,249 (12.3% )
Adjusted gross profit 56,627 22.6 % 67,839 23.7 % (16.5% )
Adjusted operating profit 10,655 4.2 % 18,399 6.4 % (42.1% )
Six Months Ended June 30
2015 2014
$ % of rev. $ % of rev. Change %
Total revenue 480,016 526,597 (8.8% )
Adjusted gross profit 110,087 22.9 % 128,461 24.4 % (14.3% )
Adjusted operating profit 22,017 4.6 % 35,303 6.7 % (37.6% )

Second quarter Dorel Sports revenue decreased by US$35.2 million, or 12.3% to US$251.1 million compared to last year's US$286.2 million. Six month revenue decreased by US$46.6 million, or 8.8% to US$480.0 million from US$526.6 million a year ago. Organic revenue declined by approximately 5% in the quarter and 2% year-to-date, after removing the impact of varying foreign exchange rates year over year.

The Brazilian based Caloi division had double digit organic revenue growth in local currency as that division rebounded from last year's soft second quarter due to the negative impact of World Cup events. Sales also increased organically in Japan and the UK. Offsetting this, was organic sales decline in the quarter in Europe as dealers purchased inventory in the first quarter ahead of price increases implemented in April and in anticipation of the launch of new model-year 2016 products in the third quarter. New pricing on model year 2016 bicycles is being announced and the introductions have received excellent reviews from retailers and media. Sales decline in North America was due partly to a wet month of May as well as to mass customers reducing inventory levels in the sporting goods category.

Second quarter adjusted operating profit, excluding restructuring and other costs, decreased by US$7.7 million, or 42.1% to US$10.7 million, compared to US$18.4 million a year ago. For the six months, adjusted operating profit was down US$13.3 million, or 37.6% to US$22.0 million, compared to US$35.3 million in 2014. The US dollar appreciation against most of the currencies in Dorel's markets accounted for a net negative impact on the segment's operating profit of approximately US$7 million during the second quarter and US$14 million during the first six months.

Dorel Home Furnishings

Second Quarters Ended June 30
2015 2014
$ % of rev. $ % of rev. Change %
Total revenue 153,637 118,260 29.9 %
Gross profit 20,621 13.4 % 15,812 13.4 % 30.4 %
Operating profit 8,685 5.7 % 5,254 4.4 % 65.3 %
Six Months Ended June 30
2015 2014
$ % of rev. $ % of rev. Change %
Total revenue 315,502 256,381 23.1 %
Gross profit 41,295 13.1 % 33,904 13.2 % 21.8 %
Operating profit 18,235 5.8 % 13,324 5.2 % 36.9 %

Home Furnishings revenue increased by US$35.4 million or 29.9% to US$153.6 from US$118.3 million. Six months revenue was up US$59.1 million or 23.1% to US$315.5 million from US$256.4 million last year. Driven by an expanded product line that resonates with consumers, the segment's sales to Internet retailers continued to drive revenue, representing over 34% of total segment sales in the quarter. As in the first quarter, sales to brick and mortar stores also increased significantly leading to double digit growth.

Operating profit was up US$3.4 million or 65.3% to US$8.7 million from US$5.3 million in the prior year. Year -to-date operating profit grew US$4.9 million or 36.9% to US$18.2 million from US$13.3 million. All divisions posted improved operating results.

Other

The second quarter and six months ended June 30, 2015 reported tax rates were 8.1% and 15.6%, respectively versus 20.2% and 18.1% for the same periods last year. For the full year the annual tax rate is expected to be between 15% and 20%. The main causes of the variations year-over-year are changes in the jurisdictions in which the Company generated its income, the recognition of tax benefits related to tax losses following a Canadian reorganization and the decrease in the fair value adjustments related to the forward purchase agreement liabilities which are non-deductible for tax purposes.

Quarterly dividend

Dorel's Board of Directors declared its regular quarterly dividend of US$0.30 per share on the outstanding number of the ompany'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 September 3, 2015 to shareholders of record as at the close of business on August 20, 2015.

Outlook

"Dorel Home Furnishings has established substantial momentum in the first half and we are bullish on the outlook over the balance of the year. Our strength in e-commerce sales in our categories is a tribute to the investments made in the business over the past several years. We are now consistently benefiting from the product development and logistics initiatives put in place as our retail partners have come to rely on us for e-commerce solutions to service consumers. Even brick and mortar sales are benefiting from strong POS at major retailers," stated Martin Schwartz, Dorel President & CEO.

"Dorel Juvenile had a good quarter and approached last year's earnings levels despite the very challenging currency issues. We are ahead of our plan to be breakeven by the fourth quarter at Dorel Juvenile China and we see further upside as we near the end of the year. The third quarter will not be as strong as this year's second quarter due to the timing of sales and additional spending to support several new product launches and marketing initiatives.

"Dorel Sports new product launches are expected to deliver better results in the second half versus last year, driven by the Cycling Sports Group and Pacific Cycle. Most of the benefit will be in the fourth quarter due to the seasonality of our business and the positive impact of the Christmas shopping season.

"Since the end of the quarter, most currencies have further declined against the US dollar. We therefore remain cautious in our outlook through 2015 for our Sports and Juvenile segments," concluded Mr. Schwartz.

Conference Call

Dorel Industries Inc. will hold a conference call to discuss these results today, August 6, 2015 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 83573223 on your phone. This recording will be available on Thursday, August 6, 2015 as of 4:00 P.M. until 11:59 P.M. on Thursday, August 13, 2015.

Complete condensed consolidated interim financial statements as at June 30, 2015 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 1 st, Quinny, Maxi-Cosi, Bébé Confort and Tiny Love, complemented by regional brands such as Cosco and Infanti. In Dorel Sports, brands include Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse and SUGOI. Dorel Home Furnishings markets a wide assortment of both domestically produced and imported furniture products, principally within North America. Dorel Industries Inc. has annual sales of US$2.7 billion and employs approximately 11,200 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 few 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 measures

As a result of the restructuring and other costs incurred in both 2015 and 2014, 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", "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 are in thousands of USD, except per share amounts)

Reconciliation of Non-GAAP measures:
Results for the second quarter ended June 30, 2015

Reported
Restructuring and
other costs

Adjusted
$ $ $
Total Revenue 669,643 669,643
Cost of sales 519,406 519,406
GROSS PROFIT 150,237 - 150,237
Selling expenses 60,252 60,252
General and administrative expenses 52,279 52,279
Research and development expenses 9,319 9,319
Restructuring and other costs 174 (174 ) -
OPERATING PROFIT 28,213 174 28,387
Finance expenses 10,566 (233 ) 10,333
INCOME BEFORE INCOME TAXES 17,647 407 18,054
Income Taxes 1,432 - 1,432
Tax rate 8.1 % 7.9 %
NET INCOME 16,215 407 16,622
EARNINGS PER SHARE
Basic 0.50 0.01 0.51
Diluted 0.50 0.01 0.51
SHARES OUTSTANDING
Basic - weighted average 32,322,011 32,322,011
Diluted - weighted average 32,519,877 32,519,877
Results for the second quarter ended June 30, 2014

Reported
Restructuring and
other costs

Adjusted
$ $ $
Total Revenue 655,831 655,831
Cost of sales 499,894 (491 ) 499,403
GROSS PROFIT 155,937 491 156,428
Selling expenses 60,516 60,516
General and administrative expenses 55,371 55,371
Research and development expenses 6,945 6,945
Restructuring and other costs 2,864 (2,864 ) -
OPERATING PROFIT 30,241 3,355 33,596
Finance expenses 11,200 (2,421 ) 8,779
INCOME BEFORE INCOME TAXES 19,041 5,776 24,817
Income taxes 3,841 1,207 5,048
Tax rate 20.2 % 20.3 %
NET INCOME 15,200 4,569 19,769
EARNINGS PER SHARE
Basic 0.47 0.14 0.61
Diluted 0.47 0.14 0.61
SHARES OUTSTANDING
Basic - weighted average 32,297,064 32,297,064
Diluted - weighted average 32,488,794 32,488,794

Reconciliation of Non-GAAP measures:
Results for the six months ended June 30, 2015

Reported
Restructuring and
other costs

Adjusted
$ $ $
Total Revenue 1,335,132 1,335,132
Cost of sales 1,039,320 1,039,320
GROSS PROFIT 295,812 - 295,812
Selling expenses 116,509 116,509
General and administrative expenses 108,435 108,435
Research and development expenses 17,831 17,831
Restructuring and other costs 1,091 (1,091 ) -
OPERATING PROFIT 51,946 1,091 53,037
Finance expenses 18,941 168 19,109
INCOME BEFORE INCOME TAXES 33,005 923 33,928
Income Taxes 5,158 349 5,507
Tax rate 15.6 % 16.2 %
NET INCOME 27,847 574 28,421
EARNINGS PER SHARE
Basic 0.86 0.02 0.88
Diluted 0.86 0.01 0.87
SHARES OUTSTANDING
Basic - weighted average 32,321,825 32,321,825
Diluted - weighted average 32,521,398 32,521,398

Results for the six months ended June 30, 2014
Restructuring and
Reported other costs Adjusted
$ $ $
Total Revenue 1,303,532 1,303,532
Cost of sales 992,647 (671 ) 991,976
GROSS PROFIT 310,885 671 311,556
Selling expenses 117,214 117,214
General and administrative expenses 103,608 103,608
Research and development expenses 15,696 15,696
Restructuring and other costs 3,344 (3,344 ) -
OPERATING PROFIT 71,023 4,015 75,038
Finance expenses 22,164 (6,451 ) 15,713
INCOME BEFORE INCOME TAXES 48,859 10,466 59,325
Income taxes 8,859 1,262 10,121
Tax rate 18.1 % 17.1 %
NET INCOME 40,000 9,204 49,204
EARNINGS PER SHARE
Basic 1.25 0.28 1.53
Diluted 1.24 0.28 1.52
SHARES OUTSTANDING
Basic - weighted average 32,117,648 32,117,648
Diluted - weighted average 32,384,207 32,384,207

Dorel Juvenile

Reconciliation to non-GAAP financial measures Second quarters ended June 30
2015 2014
As
reported
Other
Costs
Adjusted As
reported
Other
Costs
Adjusted
Total revenue $ 264,919 $ - $ 264,919 $ 251,322 $ - $ 251,322
Cost of sales 191,930 - 191,930 178,545 - 178,545
Gross profit 72,989 - 72,989 72,777 - 72,777
Gross profit as a percentage of total revenue 27.6 % 27.6 % 29.0 % 29.0 %
Selling expenses 27,850 - 27,850 28,761 - 28,761
General and
administrative expenses
23,034 - 23,034 23,514 - 23,514
Research and
development expenses
6,752 - 6,752 4,171 - 4,171
Other costs 598 (598 ) - 168 (168 ) -
Operating profit $ 14,755 $ 598 $ 15,353 $ 16,163 $ 168 $ 16,331
Operating profit as a percentage of total revenue 5.6 % 5.8 % 6.4 % 6.5 %
Reconciliation to non-GAAP financial measures Six months ended June 30
2015 2014
As
reported
Other
costs
Adjusted As
reported
Other
costs
Adjusted
Total revenue $ 539,614 $ - $ 539,614 $ 520,554 $ - $ 520,554
Cost of sales 395,184 - 395,184 371,363 - 371,363
Gross profit 144,430 - 144,430 149,191 - 149,191
Gross profit as a percentage of total revenue 26.8 % 26.8 % 28.7 % 28.7 %
Selling expenses 56,668 - 56,668 57,714 - 57,714
General and
administrative expenses
49,195 - 49,195 44,979 - 44,979
Research and
development expenses
12,922 - 12,922 10,520 - 10,520
Other costs 1,715 (1,715 ) - 235 (235 ) -
Operating profit $ 23,930 $ 1,715 $ 25,645 $ 35,743 $ 235 $ 35,978
Operating profit as a percentage of total revenue 4.4 % 4.8 % 6.9 % 6.9 %

Dorel Sports

Reconciliation to non-GAAP financial measures Second quarters ended June 30
2015 2014


As
reported
Restruc-
turing
and other

costs


Adjusted


As
reported
Restruc-turing
and other

costs


Adjusted
Total revenue $ 251,087 $ - $ 251,087 $ 286,249 $ - $ 286,249
Cost of sales 194,460 - 194,460 218,901 (491 ) 218,410
Gross profit 56,627 - 56,627 67,348 491 67,839
Gross profit as a percentage of total revenue 22.6 % 22.6 % 23.5 % 23.7 %
Selling expenses 26,615 - 26,615 26,852 - 26,852
General and administrative expenses 17,706 - 17,706 20,795 - 20,795
Research and development expenses 1,651 - 1,651 1,793 - 1,793
Restructuring and other costs (424 ) 424 - 2,696 (2,696 ) -
Operating profit $ 11,079 $ (424 ) $ 10,655 $ 15,212 $ 3,187 $ 18,399
Operating profit as a percentage of total revenue 4.4 % 4.2 % 5.3 % 6.4 %

Reconciliation to non-GAAP financial measures Six months ended June 30
2015 2014


As reported


Restruc-turing
and other
costs





Adjusted




As reported


Restruc-turing
and other
costs





Adjusted

Total revenue $ 480,016 $ - $ 480,016 $ 526,597 $ - $ 526,597
Cost of sales 369,929 - 369,929 398,807 (671 ) 398,136
Gross profit 110,087 - 110,087 127,790 671 128,461
Gross profit as a percentage of total revenue 22.9 % 22.9 % 24.3 % 24.4 %
Selling expenses 49,202 - 49,202 49,860 - 49,860
General and administrative expenses 35,754 - 35,754 40,013 - 40,013
Research and development expenses 3,114 - 3,114 3,285 - 3,285
Restructuring and other costs (624 ) 624 - 3,109 (3,109 ) -
Operating profit $ 22,641 $ (624 ) $ 22,017 $ 31,523 $ 3,780 $ 35,303
Operating profit as a percentage of total revenue 4.7 % 4.6 % 6.0 % 6.7 %
DOREL INDUSTRIES INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
ALL FIGURES IN THOUSANDS OF US $
(unaudited)
as at
June 30,
2015
as at
December 30,
2014
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 48,434 $ 47,101
Trade and other receivables 464,428 474,704
Inventories 683,017 633,022
Other financial assets 2,717 4,299
Income taxes receivable 11,977 15,731
Prepaid expenses 33,604 25,343
1,244,177 1,200,200
Assets held for sale 2,865 1,308
1,247,042 1,201,508
NON-CURRENT ASSETS
Property, plant and equipment 217,181 226,893
Intangible assets 500,050 519,798
Goodwill 529,305 544,782
Other financial assets - 571
Deferred tax assets 31,972 31,009
Other assets 5,336 5,398
1,283,844 1,328,451
$ 2,530,886 $ 2,529,959
LIABILITIES
CURRENT LIABILITIES
Bank indebtedness $ 82,070 $ 27,053
Trade and other payables 437,092 490,527
Written put option and forward purchase agreement liabilities 6,938 -
Other financial liabilities 4,508 1,655
Income taxes payable 22,230 19,046
Long-term debt 31,481 62,556
Provisions 32,614 37,727
616,933 638,564
NON-CURRENT LIABILITIES
Long-term debt 570,752 490,188
Net pension and post-retirement defined benefit liabilities 45,026 46,128
Deferred tax liabilities 80,925 89,199
Provisions 1,675 1,765
Written put option and forward purchase agreement liabilities 36,935 44,640
Other financial liabilities 2,090 2,063
Other long-term liabilities 10,333 10,428
747,736 684,411
EQUITY
Share capital 199,988 199,927
Contributed surplus 26,233 25,691
Accumulated other comprehensive income (70,029 ) (20,579 )
Other equity 317 579
Retained earnings 1,009,708 1,001,366
1,166,217 1,206,984
$ 2,530,886 $ 2,529,959
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, 2015 June 30, 2014 June 30, 2015 June 30, 2014
Restated Restated
Sales $ 666,929 $ 653,415 $ 1,328,323 $ 1,296,573
Licensing and commission income 2,714 2,416 6,809 6,959
TOTAL REVENUE 669,643 655,831 1,335,132 1,303,532
Cost of sales (1) 519,406 499,894 1,039,320 992,647
GROSS PROFIT 150,237 155,937 295,812 310,885
Selling expenses 60,252 60,516 116,509 117,214
General and administrative expenses 52,279 55,371 108,435 103,608
Research and development expenses 9,319 6,945 17,831 15,696
Restructuring and other costs (1) 174 2,864 1,091 3,344
OPERATING PROFIT 28,213 30,241 51,946 71,023
Finance expenses 10,566 11,200 18,941 22,164
INCOME BEFORE INCOME TAXES 17,647 19,041 33,005 48,859
Income taxes expense 1,432 3,841 5,158 8,859
NET INCOME $ 16,215 $ 15,200 $ 27,847 $ 40,000
EARNINGS PER SHARE
Basic $0.50 $0.47 $0.86 $1.25
Diluted $0.50 $0.47 $0.86 $1.24
SHARES OUTSTANDING
Basic - weighted average 32,322,011 32,297,064 32,321,825 32,117,648
Diluted - weighted average 32,519,877 32,488,794 32,521,398 32,384,207
(1) Restructuring and other costs charged to:
Cost of sales $ - $ 491 $ - $ 671
Expenses 174 2,864 1,091 3,344
$ 174 $ 3,355 $ 1,091 $ 4,015
DOREL INDUSTRIES INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME
ALL FIGURES IN THOUSANDS OF US $
(unaudited)
Second Quarters Ended Six Months Ended
June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014
NET INCOME $ 16,215 $ 15,200 $ 27,847 $ 40,000
OTHER COMPREHENSIVE INCOME (LOSS):
Items that are or may be reclassified subsequently tonet 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

15,586


441


(45,824
)

109
Net changes in cash flow hedges:
Net change in unrealized gains (losses) on derivatives designated as cash flow hedges
(4,117
)
(1,070
)
(233
)
(939
)
Reclassification to income 283 190 594 480
Reclassification to the related non-financial asset (1,876 ) 993 (5,472 ) 1,477
Deferred income taxes 1,521 71 1,423 (227 )
(4,189 ) 184 (3,688 ) 791
Items that will not be reclassified to net income:
Defined benefit plans:
Remeasurements of the net pension and post-retirement defined benefit liabilities
(41
)
9

92

9
Deferred income taxes 14 (3 ) (30 ) (3 )
(27 ) 6 62 6
TOTAL OTHER COMPREHENSIVE INCOME (LOSS) 11,370 631 (49,450 ) 906
TOTAL COMPREHENSIVE INCOME (LOSS) $ 27,585 $ 15,831 $ (21,603 ) $ 40,906
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
Share
Capital
Contributed
Surplus
Cumulative
Translation
Account

Cash Flow
Hedges
Defined
Benefit
Plans

Other
Equity

Retained
Earnings

Total
Equity
Balance as at December 30, 2013 $ 190,458 $ 26,994 $ 75,378 $ (2,154 ) $ (5,400 ) $ - $ 1,061,484 $ 1,346,760
Total comprehensive income:
Net income - - - - - - 40,000 40,000
Other comprehensive income - - 109 791 6 - - 906
$ - $ - $ 109 $ 791 $ 6 $ - $ 40,000 $ 40,906
Issued under stock option plan 6,916 - - - - - - 6,916
Reclassification from contributed surplus due to exercise of stock options 1,829 (1,829 ) - - - - - -
Reclassification from contributed surplus due to settlement of deferred share units 155 (233 ) - - - - - (78 )
Share-based payments - 650 - - - - - 650
Dividends on common shares - - - - - - (19,266 ) (19,266 )
Dividends on deferred share units - 97 - - - - (97 ) -
Balance as at June 30, 2014 $ 199,358 $ 25,679 $ 75,487 $ (1,363 ) $ (5,394 ) $ - $ 1,082,121 $ 1,375,888
Balance as at December 30, 2014 $ 199,927 $ 25,691 $ (8,842 ) $ 2,180 $ (13,917 ) $ 579 $ 1,001,366 $ 1,206,984
Total comprehensive income (loss):
Net income - - - - - - 27,847 27,847
Other comprehensive income (loss) - - (45,824 ) (3,688 ) 62 - - (49,450 )
$ - $ - $ (45,824 ) $ (3,688 ) $ 62 $ - $ 27,847 $ (21,603 )
Reclassification from contributed surplus due to settlement of deferred share units 61 (101 ) - - - - - (40 )
Share-based payments - 531 - - - - - 531
Remeasurement of written put option liabilities - - - - - (262 ) - (262 )
Dividends on common shares - - - - - - (19,393 ) (19,393 )
Dividends on deferred share units - 112 - - - - (112 ) -
Balance as at June 30, 2015 $ 199,988 $ 26,233 $ (54,666 ) $ (1,508 ) $ (13,855 ) $ 317 $ 1,009,708 $ 1,166,217
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, 2015 June 30, 2014 June 30, 2015 June 30, 2014
Restated Restated
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net income $ 16,215 $ 15,200 $ 27,847 $ 40,000
Items not involving cash:
Depreciation and amortization 14,445 14,692 28,735 29,712
Unrealized losses (gains) arising on financial assets and financial liabilities classified as held for trading 518 538 165 538
Finance expenses 10,566 11,200 18,941 22,164
Restructuring costs (424 ) 1,703 (624 ) 2,154
Income taxes expense 1,432 3,841 5,158 8,859
Share-based payments 119 192 190 506
Defined benefit pension and post-retirement costs 808 833 1,633 1,704
Loss (gain) on disposal of property, plant and equipment 68 43 (18 ) 20
43,747 48,242 82,027 105,657
Net changes in balances related to operations:
Trade and other receivables 42,669 32,227 (5,792 ) (11,329 )
Inventories (33,486 ) (16,705 ) (67,608 ) (31,616 )
Other financial assets (71 ) 6 112 (177 )
Prepaid expenses 9 1,111 (9,018 ) (6,503 )
Other assets (51 ) 1,920 (82 ) 1,072
Trade and other payables (31,829 ) (31,678 ) (52,587 ) (6,667 )
Net pension and post-retirement defined benefit liabilities (584 ) (548 ) (1,985 ) (2,152 )
Provisions, other financial liabilities and other long-term liabilities (1,084 ) (7,843 ) (4,673 ) (6,478 )
(24,427 ) (21,510 ) (141,633 ) (63,850 )
Income taxes paid (2,805 ) (5,935 ) (9,398 ) (18,544 )
Income taxes received 3,403 1,226 6,128 6,445
Interest paid (2,968 ) (9,700 ) (6,810 ) (13,390 )
Interest received 33 85 173 274
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 16,983 12,408 (69,513 ) 16,592
FINANCING ACTIVITIES
Bank indebtedness 10,137 (28,937 ) 59,768 (37,194 )
Increase of long-term debt 56,938 73,296 123,997 147,173
Repayments of long-term debt (58,172 ) (24,968 ) (61,978 ) (26,395 )
Increase of written put option and forward purchase agreement liabilities - - 525 -
Financing costs (1,431 ) (900 ) (1,465 ) (1,291 )
Issuance of share capital - 301 - 6,901
Dividends on common shares (9,696 ) (9,691 ) (19,393 ) (19,266 )
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (2,224 ) 9,101 101,454 69,928
INVESTING ACTIVITIES
Acquisition of businesses - (6,432 ) (1,736 ) (54,593 )
Additions to property, plant and equipment (9,750 ) (8,054 ) (16,829 ) (18,084 )
Disposals of property, plant and equipment 74 535 530 568
Additions to intangible assets (5,186 ) (5,370 ) (9,675 ) (10,076 )
CASH USED IN INVESTING ACTIVITIES (14,862 ) (19,321 ) (27,710 ) (82,185 )
Effect of foreign currency exchange rate changes on cash and cash equivalents 1,226 (2,996 ) (2,898 ) (3,551 )
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,123 (808 ) 1,333 784
Cash and cash equivalents, beginning of period 47,311 41,666 47,101 40,074
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 48,434 $ 40,858 $ 48,434 $ 40,858
DOREL INDUSTRIES INC.
INDUSTRY SEGMENTED INFORMATION
SECOND QUARTERS ENDED JUNE 30
ALL FIGURES IN THOUSANDS OF US $
(unaudited)
Total Dorel Juvenile Dorel Sports Dorel Home Furnishings
2015 2014 2015 2014 2015 2014 2015 2014
(Restated) (Restated) (Restated)
Total revenue $ 669,643 $ 655,831 $ 264,919 $ 251,322 $ 251,087 $ 286,249 $ 153,637 $ 118,260
Cost of sales (1) 519,406 499,894 191,930 178,545 194,460 218,901 133,016 102,448
Gross profit 150,237 155,937 72,989 72,777 56,627 67,348 20,621 15,812
Selling expenses 59,012 59,694 27,850 28,761 26,615 26,852 4,547 4,081
General and administrative expenses 47,213 49,805 23,034 23,514 17,706 20,795 6,473 5,496
Research and development expenses 9,319 6,945 6,752 4,171 1,651 1,793 916 981
Restructuring and other costs (1) 174 2,864 598 168 (424 ) 2,696 - -
Operating profit 34,519 36,629 $ 14,755 $ 16,163 $ 11,079 $ 15,212 $ 8,685 $ 5,254
Finance expenses 10,566 11,200
Corporate expenses 6,306 6,388
Income taxes 1,432 3,841
Net income $ 16,215 $ 15,200
Earnings per share
Basic $0.50 $0.47
Diluted $0.50 $0.47
Depreciation and amortization included inoperating profit
$

14,399

$

14,646

$

9,836

$

10,097

$

3,362

$

3,522

$

1,201

$

1,027
(1) Restructuring and other costs recorded to:
Cost of sales $ - $ 491 $ - $ - $ - $ 491 $ - $ -
Expenses 174 2,864 598 168 (424 ) 2,696 - -
$ 174 $ 3,355 $ 598 $ 168 $ (424 ) $ 3,187 $ - $ -
DOREL INDUSTRIES INC.
INDUSTRY SEGMENTED INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30
ALL FIGURES IN THOUSANDS OF US $
(unaudited)
Total Dorel Juvenile Dorel Sports Dorel Home Furnishings
2015 2014 2015 2014 2015 2014 2015 2014
(Restated) (Restated) (Restated)
Total revenue $ 1,335,132 $ 1,303,532 $ 539,614 $ 520,554 $ 480,016 $ 526,597 $ 315,502 $ 256,381
Cost of sales (1) 1,039,320 992,647 395,184 371,363 369,929 398,807 274,207 222,477
Gross profit 295,812 310,885 144,430 149,191 110,087 127,790 41,295 33,904
Selling expenses 114,559 115,685 56,668 57,714 49,202 49,860 8,689 8,111
General and administrative expenses 97,525 95,570 49,195 44,979 35,754 40,013 12,576 10,578
Research and development expenses 17,831 15,696 12,922 10,520 3,114 3,285 1,795 1,891
Restructuring and other costs (1) 1,091 3,344 1,715 235 (624 ) 3,109 - -
Operating profit 64,806 80,590 $ 23,930 $ 35,743 $ 22,641 $ 31,523 $ 18,235 $ 13,324
Finance expenses 18,941 22,164
Corporate expenses 12,860 9,567
Income taxes 5,158 8,859
Net income $ 27,847 $ 40,000
Earnings per share
Basic $0.86 $1.25
Diluted $0.86 $1.24
Depreciation and amortization included in operating profit $ 28,645 $ 29,625 $ 19,522 $ 20,597 $ 6,743 $ 6,868 $ 2,380 $ 2,160
(1) Restructuring and other costs charged to:
Cost of sales $ - $ 671 $ - $ - $ - $ 671 $ - $ -
Expenses 1,091 3,344 1,715 235 (624 ) 3,109 - -
$ 1,091 $ 4,015 $ 1,715 $ 235 $ (624 ) $ 3,780 $ - $ -

Contact Information

  • MaisonBrison Communications
    Rick Leckner
    (514) 731-0000

    Dorel Industries Inc.
    Jeffrey Schwartz
    (514) 934-3034