Dorel Reports Significant First Quarter Improvement

• Recreational/Leisure rebounds
• Recreational/Leisure Interim President & CEO confirmed as segment President & CEO
• Juvenile posts strong quarter; led by DJ USA

EXCHANGES
TSX: DII.B, DII.A

MONTREAL, May 8, 2014 /PRNewswire/ - Dorel Industries Inc. (TSX: DII.B, DII.A) today released results for the first quarter ended March 31, 2014. Total revenue increased 9% to US$647.7 million from US$594.2 million a year ago. Net income was US$24.8 million, up 11.1%, or US$0.77 per diluted share, compared to US$22.3 million or US$0.70 per diluted share in the first quarter of 2013.

"All three Dorel business segments improved during the first quarter, with the most dramatic gains in our Recreational/Leisure segment," stated Dorel President and CEO, Martin Schwartz. "Sales rebounded at both Cannondale Sports Group (CSG) and Pacific Cycle as the global bicycle market strengthened. Coupled with management's intense restructuring efforts and other cost containment initiatives, operating profit in the segment was up 71% over last year's first quarter. The recovery in CSG was driven by a strong performance in Europe and the UK due to an early start to spring abroad. The integration of our Caloi acquisition is going well but that business is very seasonal so the first quarter segment operating results were slightly negative with Caloi profitability only beginning in the second quarter."

Accordingly, Dorel has decided to promote Peter Woods from Interim Group President & CEO to Group President & CEO, Recreational/Leisure segment.

"We are also encouraged that the Juvenile segment is now moving in the right direction, as results for the first quarter exceeded prior year. Dorel Juvenile USA has had a good start to the year with a considerable increase in operating earnings. As announced in March, currency took a toll on many of our other markets and it had been expected that the first quarter would be slightly below prior year. However, the strong U.S. performance more than offset the foreign exchange fallout and the segment's operating profit surpassed last year by 9.2%. Home Furnishings was up modestly with sales through the Internet channel and its drop ship vendor programs growing significantly year-over-year, compensating for a drop in sales to brick and mortar stores."

Juvenile Segment

Operating results for the first quarter of 2014 include a full quarter of results from newly acquired Tiny Love. After removing the effect of these acquired sales, and the impact of varying exchange rates year-over-year, the organic revenue increase in the quarter was approximately 3%. Operating profit for the period was higher than previously issued expectations as the segment benefited from a particularly strong performance at Dorel Juvenile USA where gross margins slightly improved and operating costs were well contained. Sales growth in Latin America continued in local currencies but operating profit suffered due to currency, partially offsetting the gains in the US business. This was also the case in Canada and Australia. The exception was Dorel Juvenile Europe where the Euro and the GBP held steady against the US dollar.

Subsequent to the quarter end, Dorel Juvenile strengthened its position in Latin America by acquiring the popular Infanti brand for the Brazilian marketplace. Dorel already owns the Infanti brand in Chile, Peru, Bolivia, Argentina, Colombia and most Central American and Caribbean countries. Infanti products include car seats, strollers, cribs and other accessories, and are highly regarded in the mid-price point categories in which it competes. The acquisition will allow, Dorel to better reach the middle class consumer, the fastest growing segment in Brazil. Expectations are that Infanti product will first ship to customers in the second quarter, and will positively impact earnings in the year.

Recreational/Leisure Segment

First quarter Recreational/Leisure revenue rebounded strongly as the global bicycle market begins to bounce back. In particular, Cannondale Sports Group (CSG) Europe and UK did very well due to spring's early arrival abroad and favourable exchange rates. Organic revenue increased by approximately 8%, after removing the effect of acquisitions and excluding the impact of varying foreign exchange rates. Included in the first quarter is a restructuring charge of US$0.5 million as part of the segment's overall plan to enhance its competitiveness. It is expected that an additional US$2.6 million will be taken in restructuring charges through 2014.

Home Furnishings Segment

In Home Furnishings, Internet and drop-ship vendor sales did extremely well, making up for a sales decrease at brick and mortar stores. While a large part of on-line sales originates in support of the traditional retailers, sales to Internet only accounts increased significantly in Q1. Dorel Home Products and Cosco Home & Office both performed well with higher revenue and sales of higher valued items.

Other
Finance expenses increased by US$4.8 million to US$9.3 million from US$4.5 million in 2013 principally as a result of the Caloi acquisition in the second half of 2013. In addition, corporate expenses include a net unrealized foreign exchange loss on put option liabilities, related to business acquisitions, totalling US$1.7 million. Of this amount, a loss of US$2.7 million pertains to Caloi. The 2014 first quarter tax rate was 16.8% versus 9.6% in the prior year, resulting in additional income tax expense in the quarter. The Company expects its annual tax rate for the full year to be between 15% and 20%.

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 5, 2014 to shareholders of record as at the close of business on May 22, 2014.

Outlook
"We have had a strong first quarter as all our segments exceeded prior year earnings. In Recreational/Leisure, we have had a good start to the year, particularly in Europe. As we look to the full year, we believe the rebound will continue not just in Europe but also in North America in both the IBD and mass channels. In the second half we are also going to see the full benefit of our Caloi acquisition, so we remain confident about our return to much higher levels of profitability.

"In Juvenile, we had announced an expected earnings growth of at least 10% for the year in 2014. After the first quarter we remain confident of this expectation. Currency pressures in most markets have eased somewhat and we are rolling out new products over the course of the year to drive earnings improvements.

"In Home Furnishings, we still expect moderate growth in sales and earnings for the year, but due to timing the second quarter will likely be below prior year as the second quarter in 2013 was particularly strong," concluded Mr. Schwartz.

Conference Call
Dorel Industries Inc. will hold a conference call to discuss these results today, May 8, 2014 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 29435273 on your phone. This recording will be available on Thursday, May 8, 2014 as of 4:00 P.M. until 11:59 P.M. on Thursday, May 15, 2014.

Complete condensed consolidated interim financial statements as at March 31, 2014 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 global juvenile brands Safety 1^st, Quinny, Maxi-Cosi, Bébé Confort and Tiny Love, complemented by regional brands such as Cosco and Infanti. In Recreational/Leisure, brands include Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse and SUGOI.  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$2.4 billion and employs approximately 6,400 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. 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