Dorel reports first quarter results

• Bad weather impacts first quarter bicycle sales
• Latin American momentum continues in Juvenile
• On-line sales drive Home Furnishings gains

EXCHANGES
TSX: DII.B, DII.A

MONTREAL, May 9, 2013 /PRNewswire/ - Dorel Industries Inc. (TSX: DII.B, DII.A) today released results for the first quarter ended March 31, 2013. Total revenue dipped 4.3% to US$594.2 million from US$621.1 million a year ago. Net income was US$22.3 million or US$0.70 per diluted share, compared to US$29.1 million or US$0.90 per diluted share in the first quarter of 2012.

"As stated in our year-end results press release issued March 6, 2013, the year is off to a slower start than 2012 as was expected," commented Dorel President and CEO, Martin Schwartz. "In Recreational / Leisure the expected lower quarter was compounded by exceptionally poor weather in both North America and Europe. In the U.S. the March-April period was the second coldest on record and in Europe some regions had the coldest spring in 50 years. Below normal temperatures and persistent rain and snow resulted in a 25% decrease in U.S. bicycle industry sales in March compared to last year and specifically in the IBD channel sales were off over 30%. This was in stark contrast to a year ago when abnormally mild weather in March drove higher POS levels at retail. We remain confident that the decline is a timing issue and still expect the full year earnings to exceed last year.

"As in Recreational / Leisure, operating profit for the quarter in Juvenile was lower than last year. There are challenges in the economy and consumer confidence in our more mature markets, but with controlled spending and enhanced gross margins the impact on earnings was mitigated. Latin America as a whole recorded increased profits as Dorel Chile's revenues grew substantially and Dorel Brazil had its best operating results since 2010. Home Furnishings had one of its best quarters since 2011 as the continued growth in on-line sales helped deliver a substantial increase in earnings. We are a leader in this retail channel in furniture and the results are apparent in the quarter's results."

Juvenile Segment

The Juvenile segment's first quarter overall organic revenue decreased by approximately 7 % after removing the effect of acquisitions and the impact of varying exchange rates year-over-year. In Europe, the comparative quarter of 2012 was particularly strong and the timing of certain deliveries in 2013 will push sales into this year's second quarter. This coupled with difficult economic conditions in certain parts of Europe resulted in Dorel Europe's organic revenue decreasing by approximately 8% versus the first quarter of 2012. In the U.S., operating profit increased due principally to a more favourable product mix.

The Company's stated objective of diversifying its geographic markets remains on track with Latin American revenue growth of approximately 37% versus last year's first quarter.  This was fueled by the opening of new retail stores in Chile and Peru, the contribution of Dorel Colombia and a strong quarter from Dorel Brazil as its broader product line was met with good reaction from retailers.

A number of significant new products are being launched through the second quarter in the U.S. and Europe. Among them is the Safety 1^st Advance Air+ convertible car seat incorporating Dorel Juvenile's Air Protect® Technology and patented foam, which when combined, lessens the impact of forces in a crash and provides superior head to toe side impact protection for children.  Dorel Europe is rolling out the newly designed Maxi-Cosi and Bébé Confort Loola stroller. The Loola has been a highly successful platform and this next generation is expected to retain its strong market position.

Recreational/Leisure Segment

The segment's organic revenue decreased by approximately 8 %, excluding the impact of varying foreign exchange rates, and Recreational/Leisure's 13 consecutive quarters of growth ended due to the timing of deliveries and poor weather which affected both the IBD and mass merchant channels.  The resultant decrease in sales at retail meant that both the IBD and mass channels remained strongly stocked with the Company's products. This is in sharp contrast to the same period a year ago when the warm weather began in the first quarter.

Combined with this year's late spring, which delayed the start of the bicycle selling season, the timing of shipments within the quarter also had a negative impact on results. In the prior year, many new models were shipped in the first quarter whereas in 2013, shipments of the new year product line began in the fourth quarter of 2012. Therefore, the comparative quarter was considerably stronger than the current year's quarter.

Cannondale has launched the 2014 Synapse Carbon Hi-MOD.  Its BallisTec carbon frame is not only remarkably strong and stiff, but is also one of the lightest in the endurance road category at just 950 grams.  Input from Cannondale Pro Cycling riders played a significant role in the development process of the bicycle which is a showcase of next-generation technology.  In reviewing the new Synapse, a UK bicycle publication has termed it "a truly stunning debut - one of the best all-round road machines ever created".

Home Furnishings Segment

The revenue increase in Home Furnishings was derived primarily from imported upholstery and bedding and folding furniture, as well as from the sustained growth in the Internet sales channels. The segment's drop ship vendor program continued to drive on-line sales. In addition, the earnings were aided by a more profitable sales mix and as a result the segment recorded one of its best quarters since 2011.

Over the course of the past several years, the segment has been focused on servicing the Internet retail sales channel and putting into place both the technology and the infrastructure to outperform its competition. Consumer trends in furniture shopping clearly indicate that the Internet is an important channel and home deliveries are becoming an expected part of the shopping experience. Beyond pure Internet retailers, traditional brick and mortar chains are capitalizing on this trend and are looking to Dorel to service its on-line shoppers.

Other
The 2013 first quarter tax rate was 9.6% versus 14.3% in the prior year. The Company has stated that for the full year it expects its annual tax rate to be between 15% and 20%, and despite the lower rate recorded in the first quarter this expectation remains.

Quarterly dividend
The Board of Directors of Dorel 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 and Deferred Share Units. The dividend is payable on June 6, 2013 to shareholders of record as at the close of business on May 23, 2013.

Outlook
"Our results for the first quarter do not reflect our expectations for the full year. In March, when we issued our year-end results, we were aware that the year would have a slow start, but clearly could not have predicted the negative impact of the unusual weather on our bicycle business. Our market share is intact and growing. Both we and our bicycle retailers remain positive about our product offering and fully expect sales to rebound with the improving weather. We have seen some of that rebound already in Europe and certain parts of North America, but weather remains a variable that is beyond our control. Nonetheless, we still believe that our Recreational / Leisure segment will exceed last year's earnings," commented Mr. Schwartz.

In Juvenile our first quarter was as anticipated. The timing of our sales is different from last year, but for the year we have not changed our expectations for improved earnings. In Home Furnishings, we have had a good start to the year and continue to benefit from our solid retail relationships. For the Company as a whole, we expect our key input costs to remain stable in the foreseeable future, and we remain confident  that 2013 will exceed last year's overall results," concluded Mr. Schwartz.

Conference Call
Dorel Industries Inc. will hold a conference call to discuss these results today, May 9, 2013 at 1:00 P.M. Eastern Time. Interested parties can join the call by dialing 1-888-231-8191. The conference call can also be accessed via live webcast at www.dorel.com or www.newswire.ca. If you are unable to call in at this time, you may access a recording of the meeting by calling 1-855-859-2056 and entering the passcode 34730804 on your phone. This recording will be available on Thursday, May 9, 2013 as of 4:00 P.M. until 11:59 P.M. on Thursday, May 16, 2013.

Complete condensed consolidated interim financial statements as at March 31, 2013 will be available on the Company's website, www.dorel.com, and will be available through the SEDAR website.

Profile
Dorel Industries Inc. (TSX: DII.B, DII.A) is a world class juvenile products and bicycle company. Dorel creates style and excitement in equal measure to safety, quality and value. The Company's lifestyle leadership position is pronounced in both its Juvenile and Bicycle categories with an array of trend-setting products.  Dorel's powerfully branded products include Safety 1^st, Quinny, Cosco, Maxi-Cosi and Bébé Confort in Juvenile, as well as Cannondale, Schwinn, GT, Mongoose, IronHorse and SUGOI in Recreational/Leisure.  Dorel's Home Furnishings segment markets a wide assortment of both domestically produced and imported furniture products, principally within North America. Dorel has annual sales of US$2.5 billion and employs 5,400 people in facilities located in twenty-four 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. 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 the Company's expectations expressed in or implied by the forward-looking statements include:  general economic conditions; changes in product costs and supply channel; 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 subject to dividends being declared by the Board of Directors, there can be no certainty that Dorel's 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 MD&A 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 our 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.

Except as otherwise indicated, forward-looking statements do not reflect the potential impact of any non-recurring or other unusual items or of any dispositions, mergers, acquisitions, other business combinations or other transactions that may be announced or that may occur after the date hereof. The financial impact of these transactions and non-recurring and other unusual items can be complex and depends on the facts particular to each of them. Dorel therefore cannot describe the expected impact in a meaningful way or in the same way Dorel presents known risks affecting the business.

SOURCE DOREL INDUSTRIES INC.

WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?

440k+
Newsrooms &
Influencers

9k+
Digital Media
Outlets

270k+
Journalists
Opted In

GET STARTED