Dorel Industries Inc. Class A · TSX:DII.A
Dorel Industries Inc. Class A — Q1 2016 Earnings Presentation
34 slides from Dorel Industries Inc. Class A's earnings presentation, Mar 31, 2016
Slide 1: Investor Presentation First Quarter Ended March 31, 2016
Investor Presentation First Quarter Ended March 31, 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 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 income”, and “adjusted
Slide 4: Dorel at a glance: three business segments
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 results: revenue, adjusted net income, adjusted EPS
(in thousands, other than EPS) 2016 2015 Total revenue $ 645,867 $ 665,489 Adjusted net income $ 19,671 $ 11,799 Adjusted EPS (diluted) $ 0.60 $ 0.36 6
Slide 7: Dorel Home Furnishings: Q1 results
First Quarter ended March 31 (in thousands) 2016 2015 Total revenue $ 176,142 $ 161,865 Gross profit $ 29,522 $ 20,674 Operating profit $ 16,468 $ 9,550 7
Slide 8: Home Furnishings highlights
• Best quarter in many years. • Revenue increased 8.8% or $14.3M. • Increased operating profit 9.3% as a % of revenue. • Another superior quarter of on-line sales to retailers, representing 42% of total segment sales, up from 30% last year, far exceeding reductions in brick & mortar sales. • Investm
Slide 9: Dorel Juvenile: Q1 results
First Quarter ended March 31 (in thousands) 2016 2015 Total revenue $ 253,228 $ 274,695 Gross profit $ 73,033 $ 71,441 Adjusted operating profit $ 18,585 $ 10,292 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. • LATAM: Strong posit
Slide 11: Dorel Juvenile highlights
• No material Q1 net FX impact. • Organic revenue declined approximately 4% after removing impact of varying exchange rates YOY, due mainly to lower U.S. sales and planned reduced third party sales at Dorel Juvenile China. • Adjusted operating profit, excluding restructuring/other costs, rose 80.6%
Slide 12: Juvenile China manufacturing integration
• 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 product image
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: the stroller that takes you anywhere
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: Q1 results
First Quarter ended March 31 (in thousands) 2016 2015 Total revenue $ 216,497 $ 228,929 Gross profit $ 47,498 $ 53,460 Operating profit $ 5,254 $ 11,562 16
Slide 17: Dorel Sports highlights
• Revenue decreased 5.4% to $12.4M. • Organic revenue declined approximately 3% after removing impact of varying YOY FX rates due to: o CSG shipments of MY16 bicycles in December 2015 as opposed to Q1 2016. o Non-recurrence of higher European dealer sales - stocked up in March 2015 in advance of exp
Slide 18: Sports product images
cannondale SCHWINN’
Slide 19: Dorel Sports Bike of the Year 2016
Dorel Sports — Bike of the Year 2016 CAAD12 sucoi © Sombrio
Slide 20: Cycling Sports Group (CSG)
1) Cycling Sports Group (CSG) • IBD Division • Premium Brands • Innovation – continuing focus • CSG sales growing NA • SUGOI – world class cycling, run and triathlon apparel and outdoor gear. Incorporates Cannondale apparel. 20
Slide 21: 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. 21
Slide 22: 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 23: Cash flow and tax rate
• Focus on generating increased cash flow. Coming off positive Q4 2015, cash flow used by operating activities was $5.9M, significantly less than $86.5M used in 2015. The main reasons for the improvement were higher net income and decreased inventory levels compared with an increase during the first
Slide 24: Outlook: Home Furnishings and Juvenile
Overall, strength in Juvenile and Home Furnishing segments should lead Dorel to an improved 2016 performance. Home Furnishings • Dorel line of furniture is extremely well-suited to the e-commerce sales channel. • Capitalizing on operational investments to increasingly capture business. • HF has plac
Slide 25: Outlook: Dorel Sports
Dorel Sports • Pacific Cycle will continue to grow modestly through the year and will surpass 2015 in both sales and earnings. • Despite situation in Brazil, Caloi is on target to meet its earnings objectives, although sales will be down YOY. • Price competition in the IBD sector is making for chall
Slide 26: Investment highlights
• 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 2014 24% 21% 39% 40% 39% 37% DOREL JUVENILE DOREL SPORTS DOREL HOME FURNISHINGS 31
Slide 32: Sales by geography
2015 2014 3% 9% 10% 3% 7% 60% 21% 54% 24% 4% 5% US Canada Europe Other Latin America Asia 32
Slide 33: 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 34: Dorel
DOREL.