Dorel Industries Inc. Class A · TSX:DII.A
Dorel Industries Inc. Class A — Q2 2015 Earnings Presentation
30 slides from Dorel Industries Inc. Class A's earnings presentation, Sep 5, 2015
Slide 1: Investor Presentation Second Quarter Ended June 30, 2015
Investor Presentation Second Quarter Ended June 30, 2015 1
Slide 2: Forward-looking statements
Except for historical information provided herein, this presentation may contain information and statements of a forward-looking nature concerning the future performance of Dorel Industries Inc. These statements are based on assumptions and uncertainties as well as on management's best possible eval
Slide 3: Non-GAAP financial measures
As a result of the restructuring and other costs incurred in both 2015 and 2014, as well as impairment losses on goodwill and trademarks, the Company is including in this investor presentation the following non- GAAP financial measures: “adjusted gross profit”, “adjusted operating profit”, “adjusted
Slide 4: Dorel at a glance
• 3 major segments • Dorel Juvenile (2014 revenue - $1.07 billion) • Dorel Sports (2014 revenue - $1.05 billion) • Dorel Home furnishings (2014 revenue - $554 million) • $2.7 billion in sales annually • Approximately 11,200 employees • Sales to 100+ countries • Facilities located in 25 countries 4
Slide 5: Dorel's Key Brands
Dorel’s Key Brands Emaxvcosr safety —vaveconions) ry ED Angel cosco infanti QR vovace cannondale SCHWINN’ Mutrax CALO/ mongoose c=aar es ssucoi_ fabric
Slide 6: Total revenue, adjusted net income, adjusted EPS
(in thousands, other than EPS) 2015 2014 Total revenue $ 669,643 $ 655,831 Adjusted net income $ 16,622 $ 19,769 Adjusted EPS (diluted) $ 0.51 $ 0.61 6
Slide 7: Dorel Juvenile second quarter financials
Second Quarters Ended June 30 (in thousands) 2015 2014 Total revenue $ 264,919 $ 251,322 Gross profit $ 72,989 $ 72,777 Adjusted operating profit $ 15,353 $ 16,331 7
Slide 8: Dorel Juvenile Q2 results commentary
• Revenue increased US$13.6M or 5.4% to US$264.9M. Q2 adjusted operating profit was US$15.4M, including a full quarter of results from Dorel Juvenile China, and declined 6.0% from $16.3M a year ago. • Organic revenue growth was in all major regions and increased by approximately 7%. • Operating prof
Slide 9: Dorel Juvenile China update
Dorel Juvenile China update The integration process 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
Slide 10: Dorel Juvenile strengths
• Company owned factories in China to optimize supply chain • Global brand presence with global, regional and local brands around the world • Leading brands in multiple categories • Global leadership in Car Seat Safety • Extensive product development and local adaptation to fit consumers needs • Str
Slide 11: Safety 1st Step and Go Travel System
• Dorel Juvenile has created a way to make mobility a little easier, innovative travel system solution for modern day parents and caregivers: the Safety 1st Step and Go™ Travel System, featuring the onBoard™35 infant car seat. • A first-of-its-kind stroller that features the only step-to-open design
Slide 12: Maxi-Cosi AxissFix
• The new Maxi-Cosi AxissFix is the first swiveling child seat to meet, and exceed, the latest EU child car seat regulation. Not only is it extremely safe, but it's easy for parents to use without straining their backs or necks. • The AxissFix is able to swivel a full 360 degrees • Parents can strap
Slide 13: Quinny brand building
• Quinny further builds global consumer brand presence – Global Website launches – Social networks • New Limited Edition Collections and expansion of in-Store Shop-in-Shops, elevates brand recognition and supports strong sales growth 13
Slide 14: Dorel Sports second quarter financials
Second Quarters Ended June 30 (in thousands) 2015 2014 Total revenue $ 251,087 $ 286,249 Adjusted gross profit $ 56,627 $ 67,839 Adjusted operating profit $ 10,655 $ 18,399 14
Slide 15: Dorel Sports Q2 results commentary
Revenue decreased US$35.2M, or 12.3% to US$251.1M compared to last year’s US$286.2M. Caloi had double digit organic revenue growth in local currency as it rebounded from last year’s soft second quarter due to the negative impact of World Cup events. Sales also increased organically in Japan and
Slide 16: Cycling Sports Group
Four distinct operating divisions 1) Cycling Sports Group (CSG) • IBD Division • Premium Brands • Growing dealer network • CSG sales growing rapidly outside North America • Innovation – continuing focus • Building Dorel’s bike business to # 1 position 16
Slide 17: Pacific Cycle
2) Pacific Cycle • Mass merchants/sporting goods chains • Bicycle parts/accessories • Full service provider – bikes, parts and accessories, branded apparel • Brand building has enhanced Schwinn’s awareness 17
Slide 18: Caloi
3) Caloi • Acquired 70% interest in Q3 2013 • Established in 1898 in Brazil, Caloi is one of the world’s oldest and most established bike brands • It is the largest bicycle brand in Latin America and the leader in the Brazilian market • Caloi’s portfolio includes a full range of bicycles, from high-
Slide 19: Apparel Footwear Group (AFG)
4) Apparel Footwear Group (AFG) • Performance apparel division comprised of the SUGOI, Sombrio, Cannondale and Schwinn brands • Award-winning manufacturer and distributor of world class cycling, run and triathlon apparel and outdoor gear • Products sold globally 19
Slide 20: Dorel Home Furnishings second quarter financials
Second Quarters Ended June 30 (in thousands) 2015 2014 Total revenue $ 153,637 $ 118,260 Gross profit $ 20,621 $ 15,812 Operating profit $ 8,685 $ 5,254 20
Slide 21: Dorel Home Furnishings Q2 results commentary
Revenue increased by US$35.4M or 29.9% to US$153.6M from US$118.3M. 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. Operating profit rose US$3.4M
Slide 22: Outlook
General 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. Dorel Juvenile The segment is ahead of plan to be breakeven by Q4 at Dorel Juvenile China and we see furth
Slide 23: Investment highlights
• A record of successfully integrated acquisitions • A focus on Juvenile and bicycles where Dorel is a key player • Strategically growing Dorel Juvenile and Dorel Sports segments in global markets • A portfolio of known, premium brands • Product development capabilities that drive growth • Establish
Slide 24: Appendix
APPENDIX 24
Slide 25: In thousands of U.S. dollars, except per share amounts
(In thousands of U.S dollars, except per share amounts) 25
Slide 26: Acquisition history 1988-2009
• 1988 Cosco Inc (DJG) • 1990 Charleswood Corporation • 1994 Maxi-Miliaan B.V. (Maxi-Cosi) • 1998 Ameriwood Industries • 2000 Safety 1st Inc. • 2001 Quint B.V. (Quinny) • 2003 Ampa France (Dorel Europe) • 2004 Pacific Cycle • 2007 IGC Australia • 2008 Cannondale/SUGOI • 2008 PTI Sports • 2009 Baby A
Slide 27: Acquisition history 2009-2014
• 2009 Dorel Brazil • 2009 Iron Horse Bicycles • 2009 Gemini Bicycles (Australia) • 2009 Hot Wheels, Circle Bikes (UK) • 2011 Silfa Group (Chile, Peru, Bolivia, Argentina) - 70% interest • 2012 Poltrade (Poland) • 2012 Best Brands Group SA (Panama) and Baby Universe SAS (Colombia) – 70% interest • 2
Slide 28: Revenue by segment 2014 and 2013
2014 2013 21% 21% 40% 41% 38% 39% DOREL JUVENILE DOREL SPORTS DOREL HOME FURNISHINGS 28
Slide 29: Revenue by region 2014 and 2013
2014 2013 8% 10% 6% 7% 24% 24% 54% 56% 6% 5% US Canada Europe Other Latin America 29
Slide 30: Sustainability initiatives
• Active in sustainability on several fronts throughout all three segments • Dorel Home Products facility is FSC certified • Cornwall RTA plant recycling for 10 years • 98% of materials are recycled or sold • DJG’s sustainability initiatives include zero landfill, water usage reduced by 98%; high-ef