- Revenue increases 22% to US$556 million - Net income improves 26% to US$35 million - Dorel Europe posts best quarter ever - Cannondale/SUGOi acquisition boosts Recreational/Leisure segment EXCHANGES TSX: DII.B, DII.A
MONTREAL, April 30 /CNW Telbec/ - Dorel Industries Inc. (TSX: DII.B DII.A) today released strong results for the first quarter ended March 31, 2008. Total revenue for the period increased 22.0% to US$556.0 million from US$455.7 million last year. First quarter 2008 revenue includes two months of revenue from the February 4, 2008 acquisition of the Cannondale Bicycle Corporation and SUGOi Performance Apparel. Net income for the first quarter was US$35.1 million or US$1.05 per diluted share, up 25.7% from US$27.9 million or US$0.85 per diluted share in 2007. First quarter 2008 pre-tax earnings rose 43.8% to US$42.5 million from US$29.5 million in the first quarter a year ago.
"The first quarter performance clearly indicates that Dorel has the right combination of products and price points for consumers at the right time. In light of the difficult economy in the United States, we are seeing consumers shopping more at mass merchants where Dorel has traditionally been strong. In Europe, where conditions remain better, consumers continue to seek higher-end products, and Dorel's European operations enjoy a solid position in this market. It is also satisfying to report that we have turned the corner in our ready-to-assemble furniture business. Notwithstanding this strong start, it is unclear what the balance of the year will bring due to the weak economy in the U.S. and the current increasing cost environment," said Dorel CEO and President, Martin Schwartz.
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Summary of Financial Highlights
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First Quarters Ended March 31
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All figures in thousands of US $, except per share amounts
Change
2008 2007 %
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Revenues 556,034 455,669 22.0%
Net income 35,133 27,939 25.7%
Per share - Basic 1.05 0.85 23.5%
Per share - Diluted 1.05 0.85 23.5%
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Average number of shares
outstanding -
diluted weighted average 33,397,803 32,990,690
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Segmented Information
Effective January 2008, Dorel has re-classified certain Dorel Asia figures
to the Juvenile segment from the Home Furnishings segment. To allow for better
year-over-year comparability, prior year comparative segmented revenues of
$17.1 million and earnings from operations of $2.4 million have been
reclassified.
Juvenile
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First Quarters Ended March 31
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2008 2007
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% of % of Change
$ rev. $ rev. %
Revenues 317,579 100.0% 264,400 100.0% 20.1%
Gross Profit 94,979 29.9% 82,304 31.1% 15.4%
Earnings from operations 37,229 11.7% 34,323 13.0% 8.5%
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Dorel Europe had its best quarter ever with record sales and earnings.
Gains came in virtually all of the Company's European markets and were
particularly strong in Germany and France. Driven by DJG USA, where sales were
up across almost all product categories, revenue in North America increased by
almost 20%. Due to the timing of the settlement of some product liability
cases, the related costs in the quarter were US$5.2 million higher than in the
first quarter of 2007. Despite this increase, the Company remains on track
with its current full year product liability budget.
Recreational/Leisure
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First Quarters Ended March 31
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2008 2007
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% of % of Change
$ rev. $ rev. %
Revenues(x) 136,144 100.0% 87,889 100.0% 54.9%
Gross Profit 34,626 24.9% 17,070 19.4% 102.8%
Earnings from operations 14,909 10.7% 7,227 8.2% 106.3%
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(x) - 2008 revenue figure excludes Inter-segment sales of US$2.7 million
The segment experienced strong sell-through in advance of the busy spring
season. This was particularly the case at the Pacific Cycle division with its
mass merchant customers. The addition of Cannondale and SUGOi in Dorel's new
Independent Bicycle Dealers (IBD) division contributed significantly to first
quarter results. The significant gross margin increase was due mainly to the
contribution of higher margins on Cannondale bicycles and SUGOi clothing.
However, the improved earnings percentage of 10.7% versus 8.2% in the prior
year was not due solely to Cannondale, but rather resulted from both Pacific
and the newly acquired businesses.
Home Furnishings
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First Quarters Ended March 31
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2008 2007
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% of % of Change
$ rev. $ rev. %
Revenues(x) 102,311 100.0% 103,380 100.0% -1.0%
Gross Profit 12,516 12.0% 11,793 11.2% 6.1%
Earnings (loss) from
operations 1,586 1.5% (22) 0.0% n/a
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(x) - 2008 revenue figure excludes Inter-segment sales of US$2.3 million
(2007; US$2.1 million)
The earnings improvement in the quarter was due principally to improved
results at Ameriwood. Concentrating principally on domestically produced RTA
furniture, Ameriwood posted its fourth successive profitable quarter. With a
greatly reduced manufacturing footprint, its two remaining plants are running
efficiently and it has gained back the confidence of its customers.
Considerable new product is in the pipeline, including items with mid to high
price points. The Segment's remaining businesses posted combined results that
were similar to those of the prior year.
Other
The Board of Directors of Dorel declared its regular quarterly dividend of
US$0.125 per share on the outstanding number of the Company's Class A Multiple
Voting Shares, Class B Subordinate Voting Shares and Deferred Share Units. The
dividend is payable on May 26, 2008 to shareholders of record as at the close
of business on May 12, 2008.
Outlook
Rising commodity prices are affecting the majority of the Company's
operating divisions. In particular high crude oil prices, and their impact on
freight and resin costs, as well as increases in steel and other metals, both
domestically and in the Orient, are challenges to the Company maintaining the
same level of profitability. In addition, the costs of finished goods sourced
in China are being affected by the weakening of the U.S. dollar versus the
Chinese RMB.
"To offset these increases we are taking action on pricing, but there is a
timing lag that is unavoidable. In addition to pricing opportunities, the
focus remains on improving productivity, containing costs and developing new
products that improve margins. Our diversity of product and price points
should help to position the Company well within our segments in the current
environment. However, these economic and cost uncertainties will likely
continue through the balance of 2008 and may mitigate the strong start to the
year," concluded Mr. Schwartz.
Conference Call
Dorel Industries Inc. will hold a conference call to discuss these results
today, April 30, 2008 at 1:00 P.M. Eastern Time. Interested parties can join
the call by dialling 1-800-594-3615. The conference call can also be accessed
via live webcast at www.dorel.com , www.newswire.ca or www.q1234.com. If you
are unable to call in at this time, you may access a tape recording of the
meeting by calling 1-877-289-8525 and entering the passcode 21270003(number sign) on your
phone. This tape recording will be available on Wednesday, April 30, 2008 as
of 3:00 P.M. until 11:59 P.M. on Wednesday, May 7, 2008.
Complete financial statements will be available on the Company's website,
www.dorel.com, and will be available through the SEDAR websites.
Profile
Dorel Industries Inc. (TSX: DII.B, DII.A) is a world class juvenile
products and bicycle company. Established in 1962, Dorel creates style and
excitement in equal measure to safety, quality and value. The Company's
lifestyle leadership position is pronounced in both its Juvenile and bicycle
categories with an array of trend-setting products. In the Juvenile segment,
Dorel's powerfully branded products such as Quinny, Maxi-Cosi, Safety 1st and
Bebe Confort have shown the way to safety, originality and fashion. Similarly,
its highly popular brands such as Cannondale, Schwinn, GT, Mongoose and Sugoi
have made Dorel a principal player with both independent bicycle dealers and
mass merchants. Dorel's Home Furnishings segment markets a wide assortment of
furniture products, both domestically produced and imported. The Company
exerts relentless innovation and marketing flair across all of its divisions.
Dorel is a $2 billion company with forty-six hundred employees, facilities in
seventeen countries, and sales worldwide.
US operations include Dorel Juvenile Group USA; the Cannondale Sports
Group; Pacific Cycle; Ameriwood Industries which produces ready-to-assemble
furniture; Altra Furniture; and Cosco Home & Office. In Canada, Dorel operates
Dorel Distribution Canada, Dorel Home Products and Sugoi. Abroad, operations
include Dorel Europe and IGC in Australia, a manufacturer and distributor of
juvenile products. Dorel Asia sources and imports home furnishings products.
Dorel China has eight offices which oversee the sourcing, engineering and
logistics of the Company's Asian supplier chain.
Caution Concerning Forward-Looking Statements
Except for historical information provided herein, this press release may
contain information and statements of a forward-looking nature concerning the
future performance of Dorel Industries Inc. These statements are based on
suppositions and uncertainties as well as on management's best possible
evaluation of future events. The business of the Company and these
forward-looking statements are subject to a number of risks and uncertainties
that could cause actual results to differ from expected results. Important
factors which could cause such differences may include, without excluding
other considerations, increases in raw material costs, particularly for key
input factors such as particle board and resins; increases in ocean freight
container costs; failure of new products to meet demand expectations; changes
to the Company's effective income tax rate as a result of changes in the
anticipated geographic mix of revenues; the impact of price pressures exerted
by competitors, and settlements for product liability cases which exceed the
Company's insurance coverage limits. A description of the above mentioned
items and certain additional risk factors are discussed in the Company's
Annual MD&A and Annual Information Form, filed with the securities regulatory
authorities in Canada and the U.S. The risk factors outlined in the previously
mentioned documents are specifically incorporated herein by reference. The
Company's business, financial condition, or operating results could be
materially adversely affected if any of these risks and uncertainties were to
materialize. Given these risks and uncertainties, investors should not place
undue reliance on forward-looking statements as a prediction of actual
results.
DOREL INDUSTRIES INC.
CONSOLIDATED BALANCE SHEETS
ALL FIGURES IN THOUSANDS OF US $
as at as at
March December
31, 2008 30, 2007
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(unaudited) (audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 29,578 $ 22,513
Accounts receivable 415,885 286,924
Income taxes receivable 7,860 6,519
Inventories 379,067 322,332
Prepaid expenses 17,586 10,538
Future income taxes 44,789 35,228
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894,765 684,054
PROPERTY, PLANT AND EQUIPMENT 149,151 140,362
INTANGIBLE ASSETS 284,937 276,383
GOODWILL 618,157 525,235
OTHER ASSETS 37,750 31,870
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$ 1,984,760 $ 1,657,904
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LIABILITIES
CURRENT LIABILITIES
Bank indebtedness $ 5,090 $ 5,836
Accounts payable and accrued liabilities 380,540 325,938
Income taxes payable 30,855 25,532
Future Income Taxes 257 136
Current portion of long-term debt 7,846 62,906
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424,588 420,348
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LONG-TERM DEBT 444,555 192,385
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PENSION & POST-RETIREMENT BENEFIT OBLIGATIONS 21,115 20,942
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FUTURE INCOME TAXES 84,513 79,635
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OTHER LONG-TERM LIABILITIES 9,748 6,848
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SHAREHOLDERS' EQUITY
CAPITAL STOCK 177,271 177,271
CONTRIBUTED SURPLUS 13,104 11,623
RETAINED EARNINGS 672,932 641,981
ACCUMULATED OTHER COMPREHENSIVE INCOME 136,934 106,871
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809,866 748,852
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1,000,241 937,746
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$ 1,984,760 $ 1,657,904
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DOREL INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF INCOME
ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS
Three Months Ended
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March 31, March 31,
2008 2007
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(unaudited) (unaudited)
Sales $ 551,033 $ 450,159
Licensing and commission income 5,001 5,510
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TOTAL REVENUE 556,034 455,669
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EXPENSES
Cost of sales 413,913 344,502
Selling, general and administrative expenses 80,429 60,819
Depreciation and amortization 11,086 9,544
Research and development costs 2,713 2,608
Restructuring costs 823 2,126
Interest on long-term debt 4,705 6,548
Other interest (97) -
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513,572 426,147
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Income before income taxes 42,462 29,522
Income taxes 7,329 1,583
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NET INCOME $ 35,133 $ 27,939
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EARNINGS PER SHARE
Basic $ 1.05 $ 0.85
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Diluted $ 1.05 $ 0.85
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SHARES OUTSTANDING
Basic - weighted average 33,397,192 32,951,162
Diluted - weighted average 33,397,803 32,990,690
DOREL INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
ALL FIGURES IN THOUSANDS OF US $
Three Months Ended
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March 31, March 31,
2008 2007
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(unaudited) (unaudited)
NET INCOME $ 35,133 $ 27,939
OTHER COMPREHENSIVE INCOME:
Net change in unrealized foreign
currency gains on translation of net
investments in self-sustaining foreign
operations, net of tax of nil 30,063 3,475
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COMPREHENSIVE INCOME $ 65,196 $ 31,414
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DOREL INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
ALL FIGURES IN THOUSANDS OF US $
Three Months Ended
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March 31, March 31,
2008 2007
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(unaudited) (unaudited)
CAPITAL STOCK
Balance, beginning of period $ 177,271 $ 162,555
Issued under stock option plan - 14,716
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Balance, end of period 177,271 177,271
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CONTRIBUTED SURPLUS
Balance, beginning of period 11,623 6,061
Stock-based compensation 1,481 824
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Balance, end of period 13,104 6,885
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RETAINED EARNINGS
Balance, beginning of period 641,981 567,020
Net income 35,133 27,939
Dividends on common shares (4,179) (4,177)
Dividends on deferred share units (3) -
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Balance, end of period 672,932 590,782
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ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance, beginning of period 106,871 63,886
Other comprehensive income 30,063 3,475
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Balance, end of period 136,934 67,361
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TOTAL SHAREHOLDERS' EQUITY $ 1,000,241 $ 842,299
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DOREL INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
ALL FIGURES IN THOUSANDS OF US $
Three Months Ended
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March 31, March 31,
2008 2007
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(unaudited) (unaudited)
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net income $ 35,133 $ 27,939
Items not involving cash:
Depreciation and amortization 11,086 9,544
Amortization of deferred financing costs 59 42
Future income taxes (3,671) (3,198)
Stock based compensation 1,481 824
Pension and post-retirement defined benefit
plan 31 750
Restructuring activities (684) 2,114
Loss (gain) on disposal of property, plant
and equipment 20 (9)
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43,455 38,006
Net changes in non-cash balances related
to operations:
Accounts receivable (69,540) (18,688)
Inventories 16,673 8,531
Prepaid expenses 763 (1,715)
Accounts payable, accruals and other
liabilities 15,810 (35,968)
Income taxes 3,217 1,599
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(33,077) (46,241)
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CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 10,378 (8,235)
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FINANCING ACTIVITIES
Bank indebtedness (1,010) 1,297
Repayments of long-term debt (55,156) (6,584)
Increase of long-term debt 252,175 -
Dividends on common shares (4,179) -
Issuance of capital stock - 14,698
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CASH PROVIDED BY FINANCING ACTIVITIES 191,830 9,411
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INVESTING ACTIVITIES
Acquisition of subsidiary companies (186,812) (2,170)
Additions to property, plant and equipment
- net (5,281) (4,167)
Deferred development costs (4,401) (2,317)
Intangible assets (233) (118)
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CASH USED IN INVESTING ACTIVITIES (196,727) (8,772)
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Effect of exchange rate changes on cash and
cash equivalents 1,584 181
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NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 7,065 (7,415)
Cash and cash equivalents, beginning of period 22,513 25,925
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 29,578 $ 18,510
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DOREL INDUSTRIES INC.
INDUSTRY SEGMENTED INFORMATION
FOR THE FIRST QUARTERS ENDED MARCH 31
ALL FIGURES IN THOUSANDS OF US $
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Total Juvenile
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2008 2007 2008 2007
(unaudited) (unaudited) (unaudited) (unaudited)
Sales to customers $ 556,034 $ 455,669 $ 317,579 $ 264,400
Inter-segment sales - - - -
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Total Revenue 556,034 455,669 317,579 264,400
Cost of sales 413,913 344,502 222,600 182,096
Selling, general and
administrative 73,795 55,382 47,007 36,526
Depreciation and
amortization 11,066 9,523 8,002 7,411
Research and development
costs 2,713 2,608 1,966 1,918
Restructuring costs 823 2,126 775 2,126
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Earnings (loss) from
Operations 53,724 41,528 $ 37,229 $ 34,323
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Interest 4,608 6,548
Corporate expenses 6,654 5,458
Income taxes 7,329 1,583
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Net income $ 35,133 $ 27,939
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Earnings per Share
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Basic $ 1.05 $ 0.85
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Diluted $ 1.05 $ 0.85
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Recreational / Leisure Home Furnishings
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2008 2007 2008 2007
(unaudited) (unaudited) (unaudited) (unaudited)
Sales to customers $ 136,144 $ 87,889 $ 102,311 $ 103,380
Inter-segment sales 2,717 - 2,311 2,059
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Total Revenue 138,861 87,889 104,622 105,439
Cost of sales 104,235 70,819 92,106 93,646
Selling, general and
administrative 18,167 9,336 8,621 9,520
Depreciation and
amortization 1,550 507 1,514 1,605
Research and development
costs - - 747 690
Restructuring costs - - 48 -
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Earnings (loss) from
Operations $ 14,909 $ 7,227 $ 1,586 $ (22)
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Eliminations
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2008 2007
(unaudited) (unaudited)
Sales to customers $ - $ -
Inter-segment sales (5,028) (2,059)
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Total Revenue (5,028) (2,059)
Cost of sales (5,028) (2,059)
Selling, general and
administrative - -
Depreciation and
amortization - -
Research and development
costs - -
Restructuring costs - -
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Earnings (loss) from
Operations $ - $ -
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