Dorel Industries Inc. Class A · TSX:DII.A
Dorel Industries Inc. Class A — Investor Day (March 2009)
53 slides from Dorel Industries Inc. Class A's investor day presentation, Mar 25, 2009
Slide 1: Dorel Home Furnishings Investor Day
H O M E F U R D lH Dorel Home Furnishings F i hi N I S H I Investor Day N G March 25 25, 2009 S 1
Slide 2: Dorel Home Furnishings Overview
Dorel Home Furnishings Overview • Introduction H – Chief Operating Officer, Dorel Asia‐ July, 2003 to April, 2007 O M – Corporate Vice President, Dorel Home Furnishings‐ May, 2007 to E M h 2008 March, – Chief Operating Officer, Dorel Home Furnishings‐ April, 2008 to F August, 2008 U – Named Presiden
Slide 3: Today's agenda
Today’s agenda H O M E • Overview of the furniture industry F • Ameriwood U R • Altra Furniture N • Dorel Home Products I S • Dorel Asia H I • Cosco Home & Office N • Closing comments and questions G S 3
Slide 4: Overview of US Furniture Market
Overview of US Furniture Market H O • The US furniture market grew 37% from 2002 to 2007 M • Mass merchants are the fastest growing furniture channel E (30% since 2005) F • Rapidly growing import furniture accounts for 31% of the US U market R N • Wal‐mart has become the US’s largest furniture retai
Slide 5: US Distribution of Retail Furniture
US Distribution of Retail Furniture H O M E F U R N I S H I N G •Furniture stores outsold the other channels combined by a margin of three to one in 2007, but showed below‐average growth since 2005 at 8.7%. S •Mass merchandisers have grown by over 30% since 2005, the fastest out of any channel. •Dep
Slide 6: Manufacturer Sales of Furniture in the US
Manufacturer Sales of Furniture in the US 2007 H O M E F U R N I S H I N G S Source: Mintel Intl. Group, March 2008 6
Slide 7: Leading US Furniture Retailers
Leading US Furniture Retailers 2007 H O M E F U R N I S H I N G S = Current Dorel HF Customer Source: Mintel Intl. Group, March 2008 7
Slide 8: $ Value of US Home Furniture Sales
$ Value of US Home Furniture Sales H O Imports represent 31% with China From 2002 to 2007 the furniture M being 50% of imports market has grown about 37% E 120,000 F U 100,000 R 80,000 N 60,000 I March 2008 S 40 000 40,000 Imports H 20,000 I Dec 2008 0 N G S Source: Mintel Intl. Group, March 2008 8
Slide 9: Where do people buy furniture?
Where do people buy furniture? H O Dorel well positioned M To take advantage g of E Dorell HF sales D l Increasing sales at via internet mass presents a big F opportunity U R N I S H I N G S Based on a survey of 1000 people who have bought furniture in the last year * No data for 2004 Source: Mintel
Slide 10: Furniture purchase by stage in life
Furniture purchase by stage in life H O M E F U R N I S H I N G S Source: Mintel Intl. Group, March 2008 10
Slide 11: RTA
RTA H O M E F U R N I S H I N G S Source: Mintel Intl. Group, March 2008 11
Slide 12: Dorel Home Furnishings Sources
Dorel Home Furnishings Sources H O M E F U R N I S H I N G Dorel is well‐ positioned to capitalize on the growth of imported furniture S while having a substantial North American presence in RTA and low‐cost futon manufacturingg Source: Mintel Intl. Group, March 2008 12
Slide 13: Home Furnishings Cost Environment
Home Furnishings Cost Environment H O Cost Factor Trend vs. 2008 M E R Material: Raw M t i l Steel Lower F Particle Board Lower U R Aluminum Lower N Polyester Lower I S Other Factors: H Canadian Dollar Lower I Freight Rates Lower N G S 13
Slide 14: Home Furnishings Group Strategy: Distribution
Home Furnishings Group Strategy H O • Distribution: M – Addition of Savannah, Georgia distribution facility E – Amalgamation of Fontana, California and Ontario, F California facilities U R – Ability to ship all Import Divisions from common N distribution facilities I S – Reduction of freight costs,
Slide 15: Home Furnishings Group Strategy
Home Furnishings Group Strategy • Joint Sales & Marketing Efforts H – Group participation in trade shows O M – Joint sales presentations where appropriate E – Explore joint opportunities in branding – Joint effort to market to the fast‐growing Hispanic market F U – Geographic eog ap c Expansion pa s
Slide 16: Product concepts
Concept # Mii Zone Collection Black Concept # Gamer Cart Black 2iw 33h 18d exclusive property of Altra Furniture and is delivered-on'the exp "disclosed, reproduced in whole or in part or used by for anyone other than i of Altra Furniture and that no authorization is granted to disclose op,sp AA iWER
Slide 17: Home Furnishings Group Strategy: Strategy on the Environment
Home Furnishings Group Strategy H O M • Strategy on the Environment E – Savannah DC is a Leed (Leadership in Energy and F Environmental Design) facility U – Distribution strategy to include environmental initiatives R N – CARB (California Air Resources Board)‐ Joint efforts to I understand and initi
Slide 18: Packaging
Packaging H O M E F U R N I Product S H I N G S 18
Slide 19: Substrate made without virgin forest material
H O M E F 2009 iintroduction. For t d ti This is substrate made without any virgin forest material, from certified sources. F U R N I S H I N 0% G S 70% Post-production 30% Sawmill Virgin Forest offal residue Material 19
Slide 20: Dorel Home Furnishings Divisions
Dorel Home Furnishings Divisions H O M E F U R N I S H I N G S 20
Slide 21: Home Furnishings Consolidated Financials
Home Furnishings Consolidated Financials H O M E H Home Furnishings F i hi 2004* 2005* 2006* 2007 2008 Sales $543,219 $569,347 $541,938 $422,244 $428,721 F U Gross Profit $ $83,320 $ $73,855 $ $80,267 $ $56,070 $ $54,340 R N Earnings from I Operations $43,300 $23,742 $31,153 $10,083 $9,587 S EBITDA
Slide 22: Ameriwood
Ameriwood H O M E • Location ‐ Wright City City, MO F • Domestic manufacturer of RTA. Main categories U include home office office, entertainment entertainment, bedroom bedroom, R N garage and multi‐purpose storage I S • Manufacturing and distribution facilities– facilities H Cornwall, ON, Tiffin, O
Slide 23: Return to Profitability
Return to Profitability 2003 to 2007 H • The domestic furniture industry underwent substantial downsizing due to the labor O advantage of Chinese imports. M • By early 2007, only two key players in the Ready to Assemble (RTA) Furniture segment E remained: Ameriwood and Sauder. – US Domestic RTA sale
Slide 24: Home Entertainment & Office
Home Entertainment & Office H O M E F U R N I S H I N G S 24
Slide 25: Bookcases/Bedroom
Bookcases/Bedroom H O M E F U R N I S H I N G S 25
Slide 26: Garage & Multi-Purpose Storage
Garage & Multi‐Purpose Storage H O M E F U R N I S H I N G S 26
Slide 27: Altra Furniture
Altra Furniture H O M • Location ‐ Wright City, MO E • Importer of RTA with concentration in home F U entertainment , home office,, commercial office,, and R storage furniture N I p distribution facilities– Ontario, California and • Import S H Savannah, Georgia I N • Main customers‐ mass merchants,
Slide 28: Home Entertainment
Home Entertainment H O M E F U R N I S H I N G S 28
Slide 29: Home Office
Home Office H O M E F U R N I S H I N G S 29
Slide 30: Commercial Office
Commercial Office H O M E F U R N I S H I N G S 30
Slide 31: Storage
Storage 6a.CL (image 2) ARTAL FURNITURE
Slide 32: Dorel Home Products
Dorel Home Products H O M E • Location L i ‐ Montreal, M l QC F • Manufacturer of futons, mattresses, and baby U R mattresses tt N • Importer of futons, accent tables, leisure seating and I S metal bunk beds H I • Import distribution facility– Ontario, California N G • Domestic D ti di distribution
Slide 33: Manufactured Futons / Imported Futons
Manufactured Futons H O M E F U R N I S I Imported d FFutons H I N G S 33
Slide 34: Baby Mattresses
Baby Mattresses H O M E F U R N I Mattresses S H I N G S 34
Slide 35: Accent Tables / Leisure Seating
Accent Tables H O M E F U R N I S Leisure Leis re Seating H I N G S 35
Slide 36: Metal bunk beds and loft beds
Metal bunk beds and loft beds H O M E F U R N I S H I N G S 36
Slide 37: DHP Product Development
DHP Product Development H O M E F U R N I S H I N G S 37
Slide 38: Dorel Asia
Dorel Asia H O • Importer M E – Upholstery U h lt F – Bedroom U – Dining and Kitchen R N – Youth I – Accent S H I N • Import distribution facility– Ontario, California G S • Main customers‐ mass merchants, clubs 38
Slide 39: Dorel Asia Model
Dorel Asia Model H O • Take traditional furniture concepts and redesign to M accommodate mass merchants merchants’ needs E • Fast sourcing model allows quick product development and F placement U R • Efficient distribution and low overhead model N I – Will allow us to continue our strong business at
Slide 40: Upholstery
Upholstery H O M E F U R N I S H I N G S 40
Slide 41: Kitchen/Dining/Bath
Kitchen/Dining/Bath H O M E F U R N I S H I N G S 41
Slide 42: Bedroom
Bedroom H O M E F U R N I S H I N G S 42
Slide 43: Cosco Home & Office
Cosco Home & Office H O M • Location ‐ Columbus, IN E • Imports – folding furniture, step stools, and specialty F U ladders R N • Import distribution facilities – Ontario, California and I Savannah, Georgia g S H • Main customers‐ Mass merchants, clubs, home I N centers, commercial office suppliers,
Slide 44: P joan oh
P joan oh ee At with you every step of the way
Slide 45: Profit Improvement Initiatives
Profit Improvement Initiatives H O • Right size distribution and warehouse footprint M E • Exit royalty contract F U R • Overhead – headcount reduction N I p g • Cut CAPEX spending S H I • Focus on core business N G S • Dramatic SKU reduction 45
Slide 46: Strategic Marketing Focus
Strategic Marketing Focus H O M • Mission: E – To be b the h bbranded d d marketk leader l d ini folding f ldi ffurniture, i step stools and specialty ladders. F U R • Strategy: N – Dominate the real estate at the top 10 customers I – Focus on core customers and core pproduct categories g S H – Empl
Slide 47: Total 2008 Retail Sales of Folding Furniture - $420M
Total 2008 Retail Sales of Folding Furniture ‐ $420M H O Tables and Chairs Including Resin Tables and Chairs Non-Resin – 248M M E F Other, 16% Cosco, 31% Other, 20% U Meco 21% Meco, Cosco 52% Cosco, R Meco, 28% Lifetime, 32% N I S H I Cosco has a 31% market share of Cosco has a 52% market share of N
Slide 48: Climbing Products: Share Estimates
Climbing Products: Share Estimates H O Total 2008 Retail Sales of Step Stools - $199M M E F Stapleton, U 4% Other / PL, PL 17% Cosco, 25% R Rubbermaid, 11% N Werner, 13% Tricam, 28% I Polder, 2% S H I N G Cosco has a 25% market share of S step stools at retail Assumptions: •40% 40% margin i ffrom C
Slide 49: Building Cosco Brand Equity!
Building Cosco Brand Equity! H O M E F U R N I S H I N G S 49
Slide 50: Market-Driven Approach
Market--Driven Approach Market H O M E F U R N I S H I N G S
Slide 51: Specialty Ladders and Hand Trucks
Specialty Ladders and Hand Trucks H O M E F U R N I S H I N G S 51
Slide 52: Recent Wins
Recent Wins H Office Superstore Club O M E F U R N I Discount Chain S H I N G S
Slide 53: In Conclusion: The Dorel Advantage
In Conclusion: The Dorel Advantage H • Diversification O • Domestic manufacturing and import distribution footprint M E • Favorable cost environment • Customer Base: Focus on big box retailers‐ fastest growing F furniture segment. Provide product, sourcing, and logistics U R expertise N • Taking adv