Dorel Reports Year-End and Q4 Results
-Full year adjusted revenue up 10% -Dorel Sports posts strong rebound -Dorel Juvenile concludes Lerado Juvenile acquisition
(firmenpresse) - MONTREAL, QUEBEC -- (Marketwired) -- 03/16/15 -- Dorel Industries Inc. (TSX: DII.B)(TSX: DII.A) today announced results for the fourth quarter and full year ended December 30, 2014. Adjusted revenue for the fourth quarter was US$701.6 million up 10.7% from US$633.5 million a year ago. Adjusted net income for the fourth quarter was US$11.0 million or US$0.34 per diluted share compared to adjusted net income of US$12.1 million or US$0.38 per diluted share in the fourth quarter of 2013. Reported net loss for the quarter was US$80.7 million or US$2.50 per diluted share compared to reported net income of US$11.0 million or US$0.34 per diluted share a year ago.
Adjusted revenue for the full year was US$2.7 billion, up 10.0% from last year''s US$2.4 billion. Adjusted net income for the year was US$84.0 million or US$2.59 per diluted share compared to adjusted net income of US$70.6 million or US$2.19 per diluted share in 2013. Reported net loss was US$21.3 million or US$0.66 per diluted share, compared to reported net income of US$57.7 million or US$1.79 per diluted share a year ago.
As detailed in the table below, the reported net loss includes impairment losses on goodwill and trademarks, restructuring and other costs totalling US$105.2 million or US$3.25 per diluted share and US$12.9 million or US$0.40 per diluted share for the years 2014 and 2013 respectively. As such, the Company is presenting adjusted financial information as it believes that excluding these items is a more meaningful comparison of its core business performance between the periods presented.
"Overall performance in 2014 was better than the previous year. This is a tribute to our executive teams in all three segments as we maintained a strict focus on the businesses even while planning the future of the Juvenile segment and rebuilding Dorel Sports. The fourth quarter Lerado acquisition is a major initiative to improve Dorel Juvenile''s long-term profitability, shift to a more vertically integrated business model and broaden its global footprint. Lerado will allow Dorel to better service our existing customers and provide a base from which to expand the segment''s business in China and other parts of Asia," stated Martin Schwartz, Dorel President & CEO.
"Results for Dorel Sports were strong as the segment recovered from a disappointing 2013. The revitalized management team delivered solid earnings as it refocused on its strong brands and successful new product introductions.
"Dorel Home Furnishings maintained its push in the Internet sales channel and drop ship vendor programs to post significant progress. For the first time in many quarters there was also an increase in Home Furnishings sales to the brick and mortar channel," concluded Mr. Schwartz.
Dorel Juvenile
Fourth quarter
Dorel Juvenile adjusted revenue increased 13.5% compared to the same quarter a year ago. Excluding the impact of foreign exchange and business acquisitions, the organic revenue increase was approximately 5% led by the United States, Brazil and Australia. All major divisions saw their currencies weaken significantly against the strong U.S. dollar in the quarter, a situation which was particularly pronounced in the Euro region. This amounted to a foreign exchange loss of approximately US$5 million and was the main cause of the operating profit decline from prior year. The fourth quarter of 2014 also includes operating losses of US$1.6 million pertaining to Lerado Juvenile results as well as start-up operations in Mexico.
With the closing of the Lerado transaction in early November, intensified effort has gone into the transition to and integration of the new Asian facilities. Production of certain products was transferred from third party suppliers to the new Company-owned facilities which required new product designs and moulds. Therefore, the segment recorded charges related to write-off of capitalized R&D costs, tooling and moulds, as well as other associated costs.
This realignment prompted a re-assessment of Dorel Juvenile''s global operations. As a result, assumptions on future earnings and cash flow growth have changed and growth in earnings is now expected to come from the new Asian-based operations as opposed to the North American and Australian markets and as such goodwill impairment losses of US$82.7 million were recorded.
In Europe the Company has made a strategic decision to focus on the Maxi-Cosi and Quinny brands and profits are expected to be driven by these brands as opposed to other brands acquired as part of the 2003 Ampa France business acquisition. As a result, the Company has recorded an impairment loss of US$43.1 million before tax, allocated to the trademarks based on reduced future profitability and cash flow for the Bebe Confort, Monbebe, Babideal and Baby Relax brands.
Full year
Excluding the impact of foreign exchange and acquisitions, organic revenue increased by approximately 3% from prior year. The main drivers of the increased revenue were Latin America and North America while revenues in Europe were stable. Dorel Asia Juvenile has had rejuvenated growth in the sale of wooden cribs and other wooden juvenile furniture products, particularly in higher margin items.
The weakening of major currencies versus the U.S. dollar resulted in a net negative impact in operating profit of approximately US$10 million for the full year. The 2014 full year operating losses pertaining to Lerado Juvenile results as well as start-up operations in Mexico amounts to US$2.0 million.
Dorel Sports
Fourth quarter
Dorel Sports delivered its fourth consecutive quarter of growth. Revenues increased US$14.6 million or 6% in the quarter and adjusted operating profit improved by 45.2%. The organic sales increase, excluding the impact of foreign exchange and acquisitions was approximately 8%. Pacific Cycle led the sales growth with sales to mass merchants increasing in both bicycles and electric ride-ons. Caloi''s sales increased and in local currency operating profit increased by double digits versus prior year. This growth was driven by the Cannondale and GT business launched in Brazil during the year.
The segment was challenged by the unfavourable effect of the drastically appreciated US dollar against all major foreign currencies. The net negative impact was approximately US$4 million for Dorel Sports. Also in the quarter, Dorel Sports began operations in Chile, which resulted in costs of US$0.4 million in connection with the start-up.
Full year
The organic sales increase after removing the impact of foreign exchange and acquisitions was approximately 8%. The increase was in both the IBD and the mass merchant distribution channels, driven partly by improved weather conditions with a rebound in the global bike market when compared with prior year. Overseas markets in the IBD channel, particularly in Europe and Asia continued to contribute to the organic sales increase. Further highlights were strong shipments of Pacific Cycle''s battery powered ride-ons and improved sales in Canada.
The adjusted operating profit improvement was at all major divisions, led by a strong turn around in the IBD sales channel. This along with strong sales growth at all other major distribution channels and improved operating efficiencies contributed to better earnings. For the year, the net negative impact of adverse foreign exchange rates was approximately US$3 million.
Dorel Home Furnishings
Fourth quarter
In the fourth quarter, Dorel Home Furnishing revenues increased by 14.2%. All divisions showed increases over last year''s fourth quarter. Dorel Home Products (DHP) had the strongest growth while Cosco Home & Office also did well. The import division of Ameriwood/Altra also recorded gains in the quarter, particularly through the Internet channel.
Full year
The organic sales increase after removing the impact of foreign exchange rate variations was approximately 6%. The revenue increase was primarily from DHP and Cosco furniture product categories. The segment posted another record year of sales through the Internet sales channel which offset full year reductions in sales to brick and mortar stores. Dorel Home Furnishings continues its expansion into the Internet sales channel which now represents 30% of revenue compared to 20% in 2013. The majority of the segment''s divisions showed significantly improved operating results.
Other
Non-cash gains of US$30.8 million and US$25.7 million respectively are included in 2014 fourth quarter and year-end finance expenses. These gains are related to the remeasurement of the forward purchase agreement liabilities with regards to certain past business acquisitions. The diluted earnings per share impact is US$0.95 in the quarter and US$0.80 year-to-date. In 2013, the remeasurement of the forward purchase agreement liabilities generated a total non-cash gain of US$6.2 million in the quarter and US$2.4 million for the full year. This equated to a fully diluted EPS impact of US$0.19 in the quarter and US$0.08 year-to-date.
In 2014, the Company''s effective tax rate was 28.9% compared to 8.0% in 2013. Excluding the income taxes on impairment losses on goodwill and trademarks, restructuring and other costs, the Company''s adjusted effective tax rate was 13.4% and 15.8% for 2014 and 2013 respectively.
Outlook
"Over the last decade Dorel has truly become a global company, particularly in the Dorel Juvenile and Dorel Sports segments. Today, just over half of our net income is derived from outside North America. We believe this is the right long-term vision for the growth of the Company. However, the recent meteoric rise in the value of the US dollar has significantly reduced our margins in our markets outside the US. This difficult situation is expected to impact us for at least the first half of 2015. We are working to adjust to these new exchange rates, which is made more challenging by continued currency rate fluctuations. Until we see some stability in the currency market, our visibility on earnings will remain difficult," stated Martin Schwartz, Dorel President & CEO.
"On the positive side we are experiencing sales and profitability growth in the United States in all segments due to renewed strength with our mass-market customers and on-going success in the Internet sales channel.
In Dorel Juvenile we are making progress to integrate our Lerado acquisition and this will remain a priority for the year. As we have stated, Lerado will not be accretive to earnings in the first year of operations.
For Dorel Sports we believe that the second half of the year will see growth in the independent bicycle dealer (IBD) channel. This expectation is based on the planned introduction in July of our innovative new bicycle model year line-up, as well as a stabilization of margins in our markets outside of the US. In addition, we anticipate another solid year in our mass market bike business.
In Dorel Home Furnishings, we are optimistic as we start the year. Demand is increasing and the weak Canadian dollar will benefit the segment''s Canadian operations," concluded Mr. Schwartz.
Conference Call
Dorel Industries Inc. will hold a conference call to discuss these results today, March 16, 2015 at 1:00 P.M. Eastern Time. Interested parties can join the call by dialling 1-877-223-4471. The conference call can also be accessed via live webcast at . If you are unable to call in at this time, you may access a recording of the meeting by calling 1-800-585-8367 and entering the passcode 68790568 on your phone. This recording will be available on Monday, March 16, 2015 as of 4:00 P.M. until 11:59 P.M. on Monday, March 23, 2015.
Complete financial statements will be available on the Company''s website, , and will be available through the SEDAR website.
Profile
Dorel Industries Inc. (TSX: DII.B)(TSX: DII.A) is a world class juvenile products and bicycle company. The Company''s safety and lifestyle leadership is pronounced in both its Juvenile and Bicycle categories with an array of trend-setting, innovative products. Dorel Juvenile''s powerfully branded products include global juvenile brands Safety 1st, Quinny, Maxi-Cosi, Bebe Confort and Tiny Love, complemented by regional brands such as Cosco and Infanti. In Dorel Sports, brands include Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse and SUGOI. Dorel Home Furnishings markets a wide assortment of both domestically produced and imported furniture products, principally within North America. Dorel Industries Inc. has annual sales of US$2.7 billion and employs approximately 11,500 people in facilities located in twenty-five countries worldwide.
Caution Regarding Forward Looking Statements
Certain statements included in this press release may constitute "forward-looking statements" within the meaning of applicable Canadian securities legislation. Except as may be required by Canadian securities laws, Dorel does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements, by their very nature, are subject to numerous risks and uncertainties and are based on several assumptions which give rise to the possibility that actual results could differ materially from Dorel''s expectations expressed in or implied by such forward-looking statements and that the objectives, plans, strategic priorities and business outlook may not be achieved. As a result, Dorel cannot guarantee that any forward-looking statement will materialize, or if any of them do, what benefits Dorel will derive from them. Forward-looking statements are provided in this press release for the purpose of giving information about Management''s current expectations and plans and allowing investors and others to get a better understanding of Dorel''s operating environment. However, readers are cautioned that it may not be appropriate to use such forward-looking statements for any other purpose.
Forward-looking statements made in this press release are based on a number of assumptions that Dorel believed were reasonable on the day it made the forward-looking statements. Factors that could cause actual results to differ materially from Dorel''s expectations expressed in or implied by the forward-looking statements include: general economic conditions; changes in product costs and supply channels; foreign currency fluctuations; customer and credit risk, including the concentration of revenues with few customers; costs associated with product liability; changes in income tax legislation or the interpretation or application of those rules; the continued ability to develop products and support brand names; changes in the regulatory environment; continued access to capital resources and the related costs of borrowing; changes in assumptions in the valuation of goodwill and other intangible assets; and there being no certainty that Dorel''s current dividend policy will be maintained. These and other risk factors that could cause actual results to differ materially from expectations expressed in or implied by the forward-looking statements are discussed in Dorel''s annual Management Discussion and Analysis and Annual Information Form filed with the applicable Canadian securities regulatory authorities. The risk factors outlined in the previously- mentioned documents are specifically incorporated herein by reference.
Dorel cautions readers that the risks described above are not the only ones that could impact it. Additional risks and uncertainties not currently known to Dorel or that Dorel currently deems to be immaterial may also have a material adverse effect on Dorel''s business, financial condition or results of operations. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.
Non-GAAP measures
As a result of the restructuring costs incurred in both 2014 and 2013, as well as impairment losses on goodwill and trademarks and other costs recorded, the Company is including in this press release the following non-GAAP financial measures: "total adjusted revenue", "adjusted gross profit", "adjusted selling expenses", "adjusted general and administrative expenses", "adjusted research and development expenses", "adjusted operating profit", "adjusted income before income taxes", "adjusted income taxes", "adjusted net income", and "adjusted earnings per basic and diluted share". The Company believes that this results in a more meaningful comparison of its core business performance between the periods presented. These non-GAAP financial measures do not have a standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other issuers. Contained within this press release are reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP.
(All figures are in thousands of USD, except per share amounts)
Contacts:
MaisonBrison Communications
Rick Leckner
(514) 731-0000
Dorel Industries Inc.
Jeffrey Schwartz
(514) 934-3034
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Datum: 16.03.2015 - 08:03 Uhr
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