Dorel Industries Inc. Class A · TSX:DII.A
Dorel Industries Inc. Class A — Q1 2017 Earnings Presentation
36 slides from Dorel Industries Inc. Class A's earnings presentation, May 2017
Slide 1: First Quarter Ended March 31, 2017
First Quarter Ended March 31, 2017 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 restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt incurred in both 2017 and 2016, the Company is including in this investor presentation the following non-GAAP financial measures: “adjusted cost of
Slide 4: Dorel at a glance: three business segments
TSX: DII.B DII.A • 3 business segments • Dorel Home (2016 revenue - $735 million) • Dorel Juvenile (2016 revenue - $929 million) • Dorel Sports (2016 revenue - $939 million) • $2.6 billion in sales annually • Approximately 10,000 employees • Sales to 100+ countries • Facilities in over 25 countries
Slide 5: Dorel's Key Brands
Dorel’s Key Brands ©wmaxicosr SafetyYG Quinny’ Tiny Love) © vereconfor’ cosco (eng voyage Angel cannondale SCHWINN’ Mun TrRax CALO/ mongoose «=m fabric | ssucoi dHp Sats Armeiyood Altna i Mfoeds DOREL F FURNITURE Living MOVING THE NEEDLE
Slide 6: Total revenue, adjusted net income, adjusted EPS
(in thousands, other than EPS) 2017 2016 Total revenue $ 646,712 $ 645,867 Adjusted net income $ 22,705 $ 19,671 Adjusted EPS (diluted) $ 0.69* $ 0.60 * As at March 31, 2017, the convertible debentures were included in the calculation of the adjusted diluted EPS by adjusting the adjusted net income
Slide 7: Dorel Home first quarter results
First Quarter ended March 31 2017 2016 (in thousands) Restated* Total revenue $ 204,038 $ 187,471 Gross profit $ 34,572 $ 31,738 Operating profit $ 19,765 $ 17,643 * During the fourth quarter of 2016, the Company changed its internal organization and the composition of its reportable segments. The d
Slide 8: Dorel Home first quarter highlights
First quarter revenue represented 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
Slide 9: Dorel Home
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Slide 10: Dorel Juvenile first quarter results
First Quarter ended March 31 2017 2016 (in thousands) Restated* Total revenue $ 228,658 $ 241,899 Adjusted gross profit $ 71,102 $ 70,817 Adjusted operating profit $ 15,342 $ 17,410 * During the fourth quarter of 2016, the Company changed its internal organization and the composition of its reportab
Slide 11: Dorel Juvenile strategy
Over-riding strategy: Diverse, known brands; exciting, quality products; Company-owned distribution. Dorel Juvenile re-aligning operations to be more agile and drive profitable sales growth with a more market-focused approach to better react to juvenile industry trends. With a view to allocati
Slide 12: Dorel Juvenile quarter highlights and China factory
Revenue decline 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
Slide 13: Dorel Juvenile China
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Slide 14: Safety 1st onBoard 35 LT infant car seat
• Safety 1st brings together the latest pediatric knowledge and advanced engineering to create the new onBoard 35 LT infant car seat. • Superior fit, as advised by pediatricians, helps create a safer ride for children from 4 to 35lbs. • Advanced engineering also helps control the weight of the seat,
Slide 15: Quinny Zapp X
QUINNY ZAPP X ONE STROLLER, ENDLESS POSSIBILITIES ZAPP FLEX PLUS ZAPP FLEX ZAPP XPRESS MEET THE ALL NEW ZAPP X • Completely modular, compact and comfortable. • Perfect from birth with Lux carrycot, Maxi-Cosi car seat or from-birth cocoon. • Fully customisable to create your own one-of-a-kind Zapp X.
Slide 16: Infanti textile and shoe line
• Infanti’s textile and shoe line is a product of our promise to have a complete and cross category brand, which allows parents to find all their infants’ needs in one place. • We present a whole range of very colourful, trendy and high quality options to dress the little ones. Starting from birth -
Slide 17: Dorel Sports first quarter results
First Quarter ended March 31 (in thousands) 2017 2016 Total revenue $ 214,016 $ 216,497 Adjusted gross profit $ 48,044 $ 47,498 Adjusted operating profit $ 9,472 $ 5,226 17
Slide 18: Dorel Sports quarter highlights
Organic revenue declined approximately 9.9% when removing foreign exchange fluctuations and the change in Cycling Sports Group (CSG) International’s business model. Part of the revenue shortfall in the mass channel was due to unfavourable North American weather and a shift in Easter holiday sale
Slide 19: SuperSix EVO Hi-MOD, CAADX
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Slide 20: SuperX, Moterra
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Slide 21: Dorel Sports Bike of the Year 2016
Dorel Sports 0 Bike of the Year 2016 CAAD12
Slide 22: Cycling Sports Group (CSG)
1) Cycling Sports Group (CSG) • IBD Division • Premium Brands • Innovation – continuing focus • SUGOI – world class cycling, run and triathlon apparel and outdoor gear. Incorporates Cannondale apparel. 22
Slide 23: Pacific Cycle
2) Pacific Cycle • Mass merchants/sporting goods channel • Full service provider – bikes, parts & accessories, branded apparel • Brand building has enhanced Schwinn/Mongoose awareness • Electric ride-on toys. 23
Slide 24: Caloi
3) Caloi • 100% interest (effective March 2017) • Largest bicycle brand in LATAM and leader in Brazilian market • Portfolio includes full range of bicycles, from high- performance to children’s mountain bikes, urban, recreational and road bikes • Caloi’s factory in Manaus is largest bicycle manufact
Slide 25: Credit Agreement
Credit Agreement Effective March 24, 2017, the Company amended its Credit Agreement with respect to its revolving bank loans and secured a term loan of $200.0 million with the same maturity date as its revolving bank loans. Net proceeds from the term loan were used to repay its Series “B” and “C” Se
Slide 26: Taxes
Taxes During the first quarter, 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
Slide 27: Outlook
At year end, Dorel stated that all three segments were positioned to improve earnings in 2017. 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 due to the challenges at the China factory. This is bein
Slide 28: Investment highlights
• Sustained growth in Dorel Home with a proven e-commerce growth model. • Strategically growing Dorel Juvenile and Dorel Sports in global markets. • A diverse portfolio of known, premium brands. • Product development that drives growth. • Established customer relationships. • Annual dividend of $1.2
Slide 29: Appendix
APPENDIX MOVING THE NEEDLE
Slide 30: Financial tables (in thousands of U.S. dollars)
(In thousands of U.S. dollars, except per share data) 30
Slide 31: 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 32: 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 33: Revenue by segment 2016 vs 2015
2016 2015 28% 24% 36% 39% 36% 37% DOREL JUVENILE DOREL SPORTS DOREL HOME FURNISHINGS 33
Slide 34: Revenue by region 2016 vs 2015
2016 2015 2% 3% 9% 9% 3% 3% 62% 60% 21% 21% 3% 4% US Canada Europe Other Latin America Asia 34
Slide 35: 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%; hig
Slide 36: www.dorel.com