uncertainties, investors should not place undue reliance on forward looking statements as a prediction of actual results.

Transcription

1 INVESTOR PRESENTATION SECOND QUARTER August 2012

2 Forward Looking Statement Except for historical information provided herein, this presentation may contain information and statements of a forward looking nature concerning the future performance of Dorel Industries Inc. These statements are based on suppositions and uncertainties as well as on management's best possible evaluation of future events. The business of the Company and these forward looking statements are subject to a number of risks and uncertainties that could cause actual results to differ from expected results. Important factors which could cause such differences may include, without excluding other considerations, increases in raw material costs, particularly for key input factors such as particle board and resins; increases in ocean freight container costs; the continued ability to develop product and support brand names; changes to the Company s effective income tax rate as a result of changes in the anticipated geographic mix of revenues; the impact of price pressures exerted by competitors, and settlements for product liability cases which exceed the Company s insurance coverage limits. A description of the above mentioned items and certain additional risk factors are discussed in the Company s Annual MD&A and Annual Information Form, filed with the Canadian securities regulatory authorities. The risk factors outlined in the previously mentioned documents are specifically incorporated herein by reference. The Company s business, financial condition, or operating results could be materially adversely affected if any of these risks and uncertainties were to materialize. Given these risks and uncertainties, investors should not place undue reliance on forward looking statements as a prediction of actual results. Note: All figures are in US dollars. 2

3 Dorel Overview Marking 50 years of operations 3 major segments Juvenile products (2011 revenue US$980 million) Bicycles/recreational products (2011 revenue US$862 million) Home furnishings $2.4 billion in sales annually 5000 employees Sales to 100+ countries Operations in 22 countries (2011 revenue US$522 million) 3

4 Dorel s Key Brands 4

5 Dividend Increase The Board of Directors of Dorel declared an increase in the Company s quarterly dividend to US$0.30 from US$0.15 on the Class A Multiple Voting Shares, Class B Subordinate Voting Shares and Deferred Share Units (DSU) of the Company The first increased dividend amount of US$0.30 per share and DSU will be py payable on September 6 th, 2012 to shareholders of record at the close of business on August 23 rd,

6 Second Quarters Ended June 30 Consolidated (in thousands of US$, other than EPS) Ttl Total revenue $ 633,711 $ 619,010 Net income 30,345 22,993 EPS (diluted)

7 Juvenile Segment Second Quarters Ended June 30 (in thousands of US$) Total revenue $ 254,781 $ 243,965 Gross profit 69,391 61,736 Operating profit 17,118 14,855 7

8 Second Quarter Juvenile Highlights Positive momentum of Q maintained Largest factor in earnings improvement DJG USA; revenue up approximately 5%, margins benefitted from more stable costs Earnings increase would have been almost 40% if currencies had been consistent year over year Dorel Chile s hl wholesale l & retail operations contributed positively to profit Dorel Europe improved earnings when expressed in Euros International brands Quinny & Maxi Cosi performing well in U.S. 8

9 Penetrating New Markets Program of tuck in acquisitions to strategically expandglobal juvenile footprint Partnering with established local operators Brazil Q Chile, Peru, Argentina, Bolivia Q Poltrade Q

10 A World Leader in Juvenile Innovation in North tha America New G cell HX Superior Side Impact technology developed at Dorel Technical Center with specialists in race car cockpit crash protection Air Protect side impact technology FlexTech Energy Management System internal truss design which absorbs and mitigates crash forces Tiny Fit System removable insert providing better fit for smaller babies 10

11 A World Leader in Juvenile Latest Development in Car Seat Safety Maxi Cosi Prezi 11

12 A World Leader in Juvenile Dorel Europe A major player over $450 million in sales annually Strong brands Traditionally sales made to Juvenile product chains, boutiques, independents Building mass merchant relationships; products successfully introduced in mid price point categories, eg. Safety 1 st Maintaining market share in difficult economic environment 12

13 Innovation Europe QUINNY MOODD The ultra modern stroller that automatically unfolds. QUINNY YEZZ Features high performance plastic frame and parachute fabric seat. Weighs only 5 kg. Easily foldable to a compact package and can be carried on your back. Recipient of several awards. 13

14 Recreational/Leisure Segment Second Quarters Ended June 30 (in thousands of US$) Total revenue $ 251,911 $ 249,094 Gross profit 63,183 60,592 Operating profit 21,606 21,274 14

15 Second Quarter Recreational/Leisure Highlights Revenue/operating profit grew marginally Euro decline vs USD negatively impacted revenue by approximately 2% Certain mass merchant customers reduced orders to lower inventory Cycling Sports Group gross margin dollars reduced by approximately US$2.5 million due to Euro decline 50% of CSG revenue outside U.S. Apparel division (SUGOI) continuing to improve Cannondale s sponsorship of pro cycling team continues to highlight brand 15

16 Strategic and Comprehensive Portfolio 16

17 Recreational/Leisure Segment Three distinct operating divisions Cycling Sports Group (CSG) IBD Division Premium Brands Growing dealer network CSG sales growing rapidly outside tid North America Innovation continuing focus Building Dorel s bike business to # 1 position 17

18 Recreational/Leisure Segment Pacific Cycle Mass merchants/sporting goods chains Bicycle parts/accessories Full service provider bikes, parts and accessories, branded apparel Brand building has enhanced Schwinn s awareness 2012 marketing to target Mongoose 18

19 Recreational/Leisure Segment Apparel Footwear Group (AFG) Performance apparel division i i incorporates strong SUGOIbrand New management team in place Division was a positive contributor in H1 to earnings Turnaround on track 19

20 Home Furnishings Segment Second Quarters Ended June 30 (in thousands of US$) Total revenue $ 127,019 $ 125,951 Gross profit 16,574 15,603 Operating profit 6,694 6,267 20

21 Outlook Pre tax earnings for the second half of the year are expected to be higher than last year, driven by advances in the Juvenile segment. Significant progress in North America and a greater contribution from Latin America will ensure that Dorel improves upon the disappointing third quarter in2011. Recreational eat a / Leisure e remains on track to exceed last year s record earnings, whereas it is expected that Home Furnishings operating profit will be slightly below last year s levels. A significant tax recovery in last year s third quarter will not re occur this year.the2012taxrateisexpectedtoremaininthe15%to20%range. Input costs should remain relatively stable in the foreseeable future, however exchange rates can be volatile and are difficult to predict. Dorel s pre tax income improvement expected for the balance of the year assumes exchange rates similar to those of today, but a further decline in currencies, especially the Euro, could negatively impact future earnings. 21

22 Why Invest in Dorel? A record of successfully integrated acquisitions A focus on Juvenileand Bikes where Dorel lisa key player Strategically growing Juvenile with tuck in acquisitions A portfolio of known, premium brands Product development capabilities that drive growth Established customer relationships A 4% yield quarterly dividend (US$1.20/year/share) Strong generator of cash flow to support acquisitions 22

23 APPENDIX 23

24 Financial Performance 5 Years (In thousands of U.S. dollars, except per share amounts) 24

25 Growth Through Acquisitions 1988 Cosco Inc (DJG) 1990 Charleswood Corporation 1994 Maxi Miliaan B.V. (Maxi Cosi) 1998 Ameriwood Industries 2000 Safety 1 st Inc Quint B.V. (Quinny) 2003 Ampa France (Dorel Europe) 2004 Pacific Cycle 2007 IGC Australia (55% interest) 25

26 Growth Through Acquisitions 2008 Cannondale/SUGOI 2008 PTI Sports 2009 Baby Art 2009 Dorel Brazil (70% interest) 2009 Iron Horse Bicycles 2009 Gemini Bicycles (Australia) 2009 Hot Wheels, Circle Bikes (UK) 2011 Silfa Group (Chile, Peru, Bolivia, Argentina; 70% interest) 2012 Poltrade (Poland) 26

27 Total Revenue by Segment % 42% 22% 45% 36% 33% JUVENILE RECREATIONAL/LEISURE HOME FURNISHINGS 27

28 Geographical Distribution of Total Revenue (by customer) % 26% 7% 7% 26% 61% 6% 61% US CANADA EUROPE OTHER 28

29 Sustainability Philosophy Active in sustainability on several fronts throughout all three segments Dorel Home Products facility is FSC certified Cornwall RTA plant recycling for 10 years 98% of materials are recycled or sold DJG s sustainability initiatives include zero landfill, water usage reduced by 98%; high efficiency lighting systems Strict policy in place to ensure sustainable business practices of suppliers 29