Dorel Reports Third Quarter Results
Montreal, Quebec - 11/2/2018
Dorel Industries Inc. (TSX: DII.B, DII.A) today announced results for the third quarter and nine months ended September 30, 2018. Third quarter revenue was US$670.4 million, up 4.3% from US$642.6 million. Reported net income was US$9.6 million or US$0.29 per diluted share, compared to US$13.3 million or US$0.41 per diluted share last year. Adjusted net income was US$11.0 million or US$0.34 per diluted share, compared to US$14.5 million or US$0.44 per diluted share a year ago.
For the nine months, revenue was US$1.94 billion, an increase of 1.9% compared to US$1.90 billion last year. Reported net loss year-to-date was US$0.4 million or US$0.01 per diluted share, compared to a reported net income of US$33.6 million or US$1.03 per diluted share in 2017. Year-to-date adjusted net income was US$29.2 million or US$0.89 per diluted share, compared to US$49.7 million or US$1.52 per diluted share a year ago. Removing the impact of the 2018 first quarter impairment loss on trade accounts receivable from Toys“R”Us U.S. of US$9.4 million after tax, the year-to-date adjusted net income was US$38.6 million or US$1.18 per diluted share, compared to US$49.7 million or US$1.52 per diluted share a year ago.
“While we were pleased with the significant progress at Dorel Sports and the top line success at Dorel Home, Dorel Juvenile had a disappointing quarter. The combination of new model bicycles and strict cost containment resulted in substantial gains at Dorel Sports. With the sale of SUGOI, the segment was able to focus solely on the bicycle business. Dorel Home’s e-commerce business continued to account for a growing share of revenues, more than compensating for lost brick and mortar sales. Several factors caused lower gross margins at Dorel Juvenile, which significantly affected earnings and steps are underway to correct this situation. Our new product pipeline for our major markets, both launched and in progress, is the best it has been in recent memory and is expected to reverse the negative trend of the past two quarters.
“A substantial number of our imports from China into the U.S. are now subject to new 10% U.S. tariffs, which primarily affect our Dorel Home and Dorel Sports segments. We have informed our customers of the impending price increase necessitated by these tariffs. The rate of imposition is currently scheduled to increase to 25% on January 1, 2019 and at that level, these increases could impact consumer demand in the longer term,” stated Dorel President & CEO, Martin Schwartz.
The Company is presenting adjusted financial information, excluding impairment loss on intangible assets, restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt, as it believes this provides a more meaningful comparison of its core business performance between the periods presented. These announced items are detailed in the attached tables of this press release. Contained within this press release are reconciliations of non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP.
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