Dorel Reports Second Quarter Results
- Dorel Home Furnishings continues to deliver strong results - Dorel Juvenile adjusted operating profit increases 9.5% - Dorel Sports announces changes to drive future enhanced profitability
(firmenpresse) - MONTREAL, QUEBEC -- (Marketwired) -- 08/04/16 -- Dorel Industries Inc. (TSX: DII.B)(TSX: DII.A) today announced results for the second quarter and six months ended June 30, 2016. Second quarter revenue was US$637.3 million, down 4.8% from US$669.6 million recorded in the same period a year ago. Adjusted net income was US$14.5 million or US$0.45 per diluted share, compared to adjusted net income of US$16.6 million or US$0.51 per diluted share last year. Reported net loss was US$38.6 million or US$1.19 per diluted share, compared to reported net income of US$16.2 million or US$0.50 per diluted share in the second quarter of 2015.
Revenue for the six months was US$1.28 billion, a decrease of 3.9% compared to US$1.34 billion last year. First half adjusted net income increased to US$34.2 million or US$1.05 per diluted share, compared to adjusted net income of US$28.4 million or US$0.87 per diluted share a year ago. Reported net loss for the period was US$21.9 million or US$0.68 per diluted share, compared to net income of US$27.8 million or US$0.86 per diluted share in the first half of 2015.
As detailed in the table below, the second quarter reported net loss includes impairment losses on goodwill and intangible assets, restructuring and other costs and remeasurement of forward purchase agreement liabilities totaling US$63.2 million pre-tax or US$1.64 per diluted share. Excluding these items, pre-tax adjusted income increased by 5.5% for the quarter to US$19.0 million from US$18.1 million last year.
The Company is presenting adjusted financial information as it believes that excluding these items provides a more meaningful comparison of its core business performance between the periods presented. Contained within this press release are reconciliations of non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP.
"Dorel Home Furnishings continued its consistent strong performance, further building shareholder value with sustained, strong on-line sales growth. Year-to-date the segment has grown revenues by 7%, with operating profit increasing 66%. Dorel Juvenile''s solid operational performance, better than expected results in China and overall pricing reflecting current foreign exchange levels, resulted in the segment''s adjusted operating profit exceeding our prior guidance for the quarter, and improving by almost 10% in earnings. At Dorel Sports we are making the required changes to ensure profitability and we are encouraged as our new model bicycles are being well accepted in the market," commented Martin Schwartz, Dorel President & CEO.
Dorel Juvenile''s second quarter revenue was US$239.0 million, down 9.8% compared with US$264.9 million in 2015. Organic revenue decreased by approximately 4.0% after removing the impact of foreign exchange rate variations and planned reductions in third party sales at Dorel Juvenile China. Six-month revenue was US$492.2 million compared to US$539.6 million in 2015, a decrease of US$47.4 million. Organic revenue, as described above, declined by approximately 2.6%.
Gross profit rose in the second quarter to 31.2% from 27.6% in 2015 and year-to-date to 30.0% from 26.8% last year as pricing now better reflects current foreign exchange rate levels. In addition, the segment benefitted from production efficiencies and favourable purchasing initiatives which more than offset the negative impact on margins of lower sales volumes, principally in Europe and the U.S. Gross profit dollars increased by 2.3% for the second quarter and year-to-date which represented increases of US$1.7 million and US$3.3 million respectively.
Subsequent to the previously reported jury verdict in Marshall, Texas that awarded net damages as Dorel''s portion in a car seat case, the parties have since agreed to a final settlement for an amount of US$19.0 million. As such, an expense of US$7.0 million net of insurance has been recorded in restructuring and other costs in the second quarter to reflect the Company''s net expense as result of the settlement.
Operating profit for the second quarter decreased by US$5.3 million to US$9.5 million from last year due to the car seat settlement. Excluding restructuring and other costs, adjusted operating profit increased to US$16.8 million, or 9.5%. This was due to improved margins and to Dorel Juvenile China''s contribution to improved earnings. Year-to-date, operating profit increased by US$1.2 million to US$25.1 million from the comparable period. Adjusted operating profit increased by US$9.8 million or 38.0% to US$35.4 million. Growth was driven by improved margins and by cost savings generated by the segment''s on-going transformation into a more fully integrated operation.
In 2015, Dorel Juvenile initiated restructuring activities which are now expected to continue into 2017. Excess Chinese facilities are being made available for sale and further opportunities for headcount reductions have been identified, principally in China. The total costs related to these restructuring initiatives are estimated at US$24.5 million, of which US$10.3 million was recorded in 2015 and US$2.5 million in the first half of 2016. The expected remaining costs of US$11.7 million are non-cash losses on the planned disposal of the facilities in China estimated at US$9.0 million and costs of US$2.7 million related to employee severance and termination benefits principally in China. Annualized cost savings of approximately US$9.0 million are anticipated once the restructuring is completed.
Dorel Sports'' second quarter revenue decreased by US$14.6 million or 5.8% to US$236.5 million compared to US$251.1 million last year. After removing the impact of varying year-over-year foreign exchange rates, organic revenue declined by approximately 4.8%. In the independent bicycle dealer (IBD) channel, Cycling Sports Group (CSG) global revenue declined versus prior year amid a soft and competitive North American market. While Cannondale branded bicycles'' market share increased during the first half, continued industry-wide discounting due to excess inventories at the supplier and retailer levels impacted the segment''s profitability. Caloi''s sales declined due to the continued economic challenges in Brazil, including foreign exchange rate pressures.
Year-to-date revenue decreased by US$27.0 million, or 5.6% to US$453.0 million compared to last year''s US$480.0 million. Organic revenue declined by approximately 3.7%, after removing the impact of varying foreign exchange rates year-over-year.
The segment has begun restructuring activities in the third quarter of 2016 which are estimated at US$9.5 million pre-tax, of which US$5.9 million is non-cash, to simplify and focus its business with a view to bolstering the bottom line. The segment''s most significant initiatives are:
In total, all restructuring actions will result in an approximate 4% reduction in Dorel Sports'' global workforce. Annualized savings of US$5.0 million are anticipated, commencing next year. The goal of these activities is to refocus the business to deliver enhanced profitability during all business conditions.
In light of challenging market and highly competitive conditions in the independent bicycle dealer (IBD) channel and foreign exchange pressure, Dorel Sports has recorded a goodwill and intangible assets impairment charge of approximately US$55 million in the second quarter.
As such, the segment reported an operating loss in the second quarter of US$50.0 million compared to an operating profit of US$11.1 million in 2015. Year-to-date, the segment reported an operating loss of US$44.7 million compared to an operating profit of US$22.6 million last year.
Adjusted operating profit for the second quarter decreased to US$5.2 million from US$10.7 million due to a decrease in sales and a 190 basis point reduction in gross profit, which more than offset a 5.1% reduction in operating expenses. Six month adjusted operating profit decreased by US$11.5 million, or 52.5% to US$10.5 million from US$22.0 million in 2015.
"Dorel Sports is taking the necessary steps to maintain its strong position in the face of a continuing tough market. Results have been affected by sustained discounting in North America and the reality of depressed foreign exchange rates, as IBD sales outside the U.S. are significant. Nonetheless, we remain confident and excited about our bicycle business. The recently launched Cannondale Scalpel and Quick models have been well received and are selling at traditional margins. A new e-mountain bike has been introduced in Europe and will be shipped in the fourth quarter and we anticipate excellent reaction. The measures we are taking are expected to benefit the segment going forward," commented Martin Schwartz.
Second quarter revenue increased to US$161.8 million or 5.3% compared with US$153.6 million a year ago. For the first six months, revenue rose to US$337.9 million up US$22.4 million or 7.1% from US$315.5 million in 2015. The segment''s sales to on-line retailers in the second quarter and for the six months continue to drive revenue growth and respectively represented 43.0% and 42.5% of total segment sales compared to 34.0% and 32.5% respectively for the comparable periods in 2015. This growth significantly exceeded reductions in sales through the brick and mortar channel. Due to the e-commerce growth, the segment is increasing its warehouse footprint in Savannah, Georgia.
Operating profit was US$13.7 million for the quarter and US$30.2 million year-to-date representing an increase of 58.3% and 65.7% respectively from the prior year. This was due to increased sales volume and improved mix partly offset by higher operating expenses.
Other
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 7.9% and 20.0% for the first six months compared to 16.2% in 2015. Excluding the impact of impairment losses, the Company has stated that for the full year it expects its annual tax rate to be between 15% and 20%.
Quarterly dividend
Dorel''s Board of Directors declared its regular quarterly dividend of US$0.30 per share on the outstanding number of the Company''s Class A Multiple Voting Shares, Class B Subordinate Voting Shares, Deferred Share Units and cash-settled Performance Share Units. The dividend is payable on September 1, 2016 to shareholders of record as at the close of business on August 18, 2016.
Outlook
"Dorel Juvenile has delivered a strong improvement in earnings thus far this year and we expect this to continue into the second half. While sales growth is challenging in certain markets, improved sales mix, pricing and operational improvements are expected to generate significant earnings increases in the fourth quarter over last year, at a similar pace as reported thus far. Similarly in Home Furnishings, the positive performance for this segment will continue, and the second half will exceed last year," stated Mr. Schwartz."
"At Dorel Sports, we are seeing excess supplier inventory levels within the industry decreasing, therefore the pressure on margins experienced to date is now easing. Our own inventory is at much healthier levels with far fewer prior year models on hand. Based on enthusiastic initial dealer reaction, we are anticipating strong sell through on the model year 2017 line just introduced. This will also benefit margins, and, as such, we foresee adjusted operating profit to be much better than last year in the second half which will be mostly weighted in the fourth quarter."
"Overall, all three of our segments are poised to deliver double digit adjusted earnings growth in the second half versus last year. With the changes we have made, and will continue to make, we are optimistic about our results for the balance of the year," concluded Mr. Schwartz.
Conference Call
Dorel Industries Inc. will hold a conference call to discuss these results today, August 4, 2016 at 1:00 P.M. Eastern Time. Interested parties can join the call by dialing 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 32271381 on your phone. This recording will be available on Thursday, August 4, 2016 as of 4:00 P.M. until 11:59 P.M. on Thursday, August 11, 2016.
Complete condensed consolidated interim financial statements as at June 30, 2016 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 and Tiny Love, complemented by regional brands such as Cosco, Bebe Confort 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 10,450 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 a small number of 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 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 press release the following non-GAAP financial measures: "adjusted operating profit", "adjusted finance expenses", "adjusted income before income taxes", "adjusted income taxes expense", "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 in tables below are in thousands of US$, except per share amounts)
The detail of impairment losses, restructuring and other costs and remeasurement of forward purchase agreement liabilities are presented below:
Contacts:
CONTACTS:
MaisonBrison Communications
Rick Leckner
(514) 731-0000
Dorel Industries Inc.
Jeffrey Schwartz
(514) 934-3034
Themen in dieser Pressemitteilung:
Unternehmensinformation / Kurzprofil:
Datum: 04.08.2016 - 06:18 Uhr
Sprache: Deutsch
News-ID 1450850
Anzahl Zeichen: 3769
contact information:
Contact person:
Town:
MONTREAL, QUEBEC
Phone:
Kategorie:
Toys and Hobbies
Typ of Press Release:
type of sending:
Date of sending:
Anmerkungen:
Diese Pressemitteilung wurde bisher 342 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"Dorel Reports Second Quarter Results
"
steht unter der journalistisch-redaktionellen Verantwortung von
Dorel Industries Inc. (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
