Dorel Industries Inc. Class A · TSX:DII.A
Dorel Industries Inc. Class A — Q2 2016 Earnings Presentation
34 slides from Dorel Industries Inc. Class A's earnings presentation, August 2016
Slide 1: Investor Presentation: Second Quarter Ended June 30, 2016
Investor Presentation Second Quarter Ended June 30, 2016 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 impairment losses, restructuring and other costs and remeasurement of forward purchase agreement liabilities incurred in both 2016 and 2015, the Company is including in this investor presentation the following non-GAAP financial measures: “adjusted operating profit”, “adjusted net inc
Slide 4: Dorel at a glance
TSX: DII.B DII.A • 3 business segments • Dorel Home Furnishings (2015 revenue - $643 million) • Dorel Juvenile (2015 revenue - $1.04 billion) • Dorel Sports (2015 revenue - $1.00 billion) • $2.7 billion in sales annually • Approximately 10,450 employees • Sales to 100+ countries • Facilities in 25 c
Slide 5: Dorel's Key Brands
Dorel’s Key Brands bébéconfort) COSCO Aiea = VOUQQS cannondale SCHWINN’ Mongoose: Gear CALO/ FURNITURE
Slide 6: Consolidated Q2 results
(in thousands, other than EPS) 2016 2015 Total revenue $ 637,296 $ 669,643 Adjusted net income $ 14,533 $ 16,622 Adjusted EPS (diluted) $ 0.45 $ 0.51 6
Slide 7: Dorel Home Furnishings results
Second Quarter ended June 30 (in thousands) 2016 2015 Total revenue $ 161,800 $ 153,637 Gross profit $ 27,060 $ 20,621 Operating profit $ 13,747 $ 8,685 7
Slide 8: Dorel Home Furnishings highlights
• Another superior quarter of on-line sales to retailers, representing 43% of total segment sales, up from 34% last year, far exceeding reductions in brick & mortar sales. • Most divisions contributed to profits. • Savannah, GA warehouse doubling to support e-commerce growth. 8
Slide 9: Dorel Juvenile results
Second Quarter ended June 30 (in thousands) 2016 2015 Total revenue $ 238,982 $ 264,919 Gross profit $ 74,661 $ 72,989 Adjusted operating profit $ 16,812 $ 15,353 9
Slide 10: Dorel Juvenile strategy
• Overall strategy: great products, diverse brands, own distribution. • Marketing strategy: global overview, local flavor. Recognized global/regional brands. Varying price points. • Global manufacturing plan developed to improve quality, reduce suppliers, identify cost savings. • China: Increasingly
Slide 11: Dorel Juvenile Q2 highlights
• No material net FX impact. • Organic revenue declined approximately 4% after removing impact of varying FX rates YOY and planned reduced third party sales at Dorel Juvenile China. This 4% is mainly due to lower U.S. sales. • Segment benefitted from production efficiencies, prices reflecting FX rea
Slide 12: Dorel Juvenile China transformation
• Transforming segment into more fully integrated operation. • Supplier consolidation – production transfer of certain Dorel products continues to DJ China’s manufacturing facilities. • Manufacturing/key operations now centralized at Zhongshan and Huangshi facilities. • Reduced headcount, revamped Q
Slide 13: Juvenile products
Ges voyoce Angel
Slide 14: Safety 1st Grow and Go 3-in-1 car seat
• Safety 1st gives parents the 3-in-1 convertible car seat that’s built to grow. • From first hospital ride home to school-day car pools, the Grow and Go 3 in 1 car seat gives children a safer/more comfortable ride. • Extended use in each mode, from rear facing to forward to booster. 14
Slide 15: Stella stroller
Stella: the stroller that takes you anywhere 55 cm Fit and agile All-terrain shock Cocooning and Flexible travel absorbing tires protective system 15
Slide 16: Dorel Sports results
Second Quarter ended June 30 (in thousands) 2016 2015 Total revenue $ 236,514 $ 251,087 Gross profit $ 48,841 $ 56,627 Adjusted operating profit $ 5,236 $ 10,655 16
Slide 17: Dorel Sports Q2 highlights
• Organic revenue declined approximately 4.8% after removing impact of varying YOY FX rates. • CSG global revenue declined due to soft and competitive N.A. market. • Cannondale market share up during the first half of 2016. • New restructuring commencing in Q3 estimated at $9.5M pre-tax to simplify
Slide 18: Sports brands and products
cannondale SCHWINN* o CALOI
Slide 19: Recent Cannondale introductions
Recent Cannondale Introductions cannondale SCHWINN’ MunTRax CALO! mongoose «=m fabric essucoi Sombrio eee
Slide 20: Dorel Sports Bike of the Year 2016
Dorel Sports — Bike of the Year 2016 CAAD12 sucoi © Sombrio
Slide 21: 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. 21
Slide 22: 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 • Growing sales of electric ride-on toys. 22
Slide 23: Caloi
3) Caloi • 85% interest • 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 manufacturing plant outside Sout
Slide 24: Income taxes
• During the second quarter and six months, the Company’s effective tax rates were 12.5% and 8.6% compared to prior year’s 8.1% and 15.6% respectively. Excluding income taxes on impairment losses, restructuring and other costs, the adjusted tax rate for the quarter was 23.7% compared to last year’s
Slide 25: Outlook by segment
Overall, all three segments are poised to deliver double digit adjusted earnings growth in the second half versus last year. Dorel Juvenile • While sales growth is challenging in certain markets, improved sales mix, pricing and operational improvements are expected to generate significant earnings i
Slide 26: Why invest in Dorel
• Sustained growth in Home Furnishings 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 o
Slide 27: Appendix
APPENDIX 27
Slide 28: Financial tables (in thousands of U.S. dollars)
(In thousands of U.S dollars, except per share amounts) 28
Slide 29: 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 30: 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 31: Sales by segment 2015 vs 2014
2015 2014 24% 21% 39% 40% 37% 39% DOREL JUVENILE DOREL SPORTS DOREL HOME FURNISHINGS 31
Slide 32: Sales by geography 2015 vs 2014
2015 2014 9% 3% 10% 3% 7% 60% 54% 21% 24% 4% 5% US Canada Europe Other Latin America Asia 32
Slide 33: Sustainability
• 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 34: Dorel
DOREL.