I N V E S T O R P R E S E N T A T I O N F I R S T Q U A R T E R E n d e d M a r c h 3 1,

Transcription

1 I N V E S T O R P R E S E N T A T I O N F I R S T Q U A R T E R E n d e d M a r c h 3 1,

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 forwardlooking statements as a prediction of actual results. Note: All figures are in US dollars. 2

3 Dorel Overview 3 major segments Juvenile products (2013 revenue - $993 million) Bicycles/recreational products (2013 revenue - $919 million) Home furnishings $2.4 billion in sales annually Approximately 6,400 employees Sales to 100+ countries Facilities located in 25 countries (2013 revenue - $524 million) 3

4 Dorel s Key Brands 4

5 First Quarters Ended March 31 Consolidated (in thousands, other than EPS) Total revenue $ 647,701 $ 594,168 Net income $ 24,800 $ 22,316 EPS (diluted) $ 0.77 $

6 Juvenile Segment First Quarters Ended March 31 (in thousands) Total revenue $ 269,232 $ 255,233 Gross profit $ 76,414 $ 74,506 Operating profit $ 19,580 $ 17,932 6

7 First Quarter Juvenile Highlights Operating profit higher than anticipated, up 9.2%, as segment benefited from strong Dorel Juvenile USA performance Sales growth continued in Latin America in local currencies but operating profit suffered due to currency FX also affected Canada and Australia Quarter includes Tiny Love acquisition in early January Subsequent to end of Q1, Infanti brand was purchased for Brazil market and will positively impact earnings in the year 7

8 Innovation - Dorel Juvenile USA Newest North American car seat platform Elite 80 Air + by Safety 1 st Incorporates new G-cell HX Superior Side Impact technology developed at Dorel Technical Center with specialists in race car cockpit crash protection with Air Protect - side impact technology 3 in 1 car seat for 3 modes of use infant, convertible and booster 8

9 A World Leader in Juvenile Dorel Juvenile Europe Leading juvenile products Maxi-Cosi/ Bébé Confort/Quinny car seats and strollers remain the leading European signature brands to premium price point market Extensive local product development E-tailing market expansion Extensive new products launched at September Cologne, Germany juvenile show 9

10 Innovation Dorel Juvenile Europe Loola by Maxi-Cosi & Bébé Confort Total flexibility and mobility: parents and caregivers can clip a carrycot or a group 0+ car seat A versatile light-weight stroller sold throughout Europe Natural Comfort Bottle Easily accepted by baby : developed with experts, tested and approved by consumers BPA Free The first eco-designed baby bottle on the market Made in France, with -20% plastic in it 10

11 Recreational/Leisure Segment First Quarters Ended March 31 (in thousands) Total revenue $ 240,348 $ 203,514 Gross profit $ 60,442 $ 51,289 Operating profit $ 16,311 $ 9,541 11

12 First Quarter Recreational/Leisure Highlights Segment rebounded strongly with operating profit up 71% Cannondale Sports Group Europe and UK did very well due to early spring Organic revenue up 8% Q1 includes restructuring charge of US$0.5 million as part of announced plan to enhance competitiveness. Additional US$2.6 million to be taken throughout

13 Recreational/Leisure Segment Three distinct operating divisions 1) Cycling Sports Group (CSG) IBD Division Premium Brands Growing dealer network CSG sales growing rapidly outside North America Innovation continuing focus Building Dorel s bike business to # 1 position 13

14 Recreational/Leisure Segment 2) 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 2013 marketing to strengthen Schwinn and Mongoose brands 14

15 Recreational/Leisure Segment Caloi Acquisition August 2013 Established in Largest bicycle brand in Latin America. 900 employees Acquired 70% interest, Caloi CEO now President of segment s Brazil operations Products are distributed across Brazil through a variety of channels, from mass market to IBD Factory in Manaus is largest bicycle plant outside South East Asia Brazil now a production hub for Dorel. Factory assembling Cannondale, Schwinn, Mongoose and GT to serve Brazilian and export markets Manaus expected 2014 production 820,000 units Q1 slowest quarter. Operating results slightly negative. Q2 on track 15

16 Recreational/Leisure Segment 3) Apparel Footwear Group (AFG) Performance apparel division incorporates strong SUGOI brand New branding opportunities include Technical Sponsor for Cannondale Pro Cycling Team and partnership with Ironman triathlons 16

17 Home Furnishings Segment First Quarters Ended March 31 (in thousands) Total revenue $ 138,121 $ 135,421 Gross profit $ 18,092 $ 18,080 Operating profit $ 8,070 $ 7,948 17

18 First Quarter Home Furnishings Highlights Internet and drop-ship vendor sales did extremely well, offsetting decrease at brick and mortar stores Sales to Internet-only accounts increased significantly Dorel Home Products and Cosco Home & Office both performed well 18

19 Outlook Recreational/Leisure Good start to the year, particularly in Europe. For full year, the rebound is expected to continue not just in Europe but also in North America in both the IBD and mass channels. Second half will see the full benefit of the Caloi acquisition, providing confidence about a return to much higher levels of profitability. Juvenile Expected earnings growth of at least 10% for the year in Currency pressures in most markets have eased somewhat and we are rolling out new products that are being introduced over the course of the year to drive earnings improvements. Home Furnishings 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. 19

20 Why Invest in Dorel A record of successfully integrated acquisitions A focus on Juvenile and bicycles where Dorel is a key player Strategically growing Juvenile and Recreational/Leisure in Latin America A portfolio of known, premium brands Product development capabilities that drive growth Established customer relationships Strong annual dividend of $1.20 per share Consistent generator of cash flow to support acquisitions 20

21 APPENDIX 21

22 Financial Performance 5 Years (In thousands, except per share amounts) 22

23 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) 23

24 Growth Through Acquisitions Pacific Cycle IGC Australia Cannondale/SUGOI PTI Sports Baby Art Dorel Brazil - 70% interest Iron Horse Bicycles Gemini Bicycles (Australia) 24

25 Growth Through Acquisitions 2009 Hot Wheels, Circle Bikes (UK) 2011 Silfa Group (Chile, Peru, Bolivia, Argentina) - 70% interest Poltrade (Poland) Best Brands Group SA (Panama) and Baby Universe SAS (Colombia) 70% interest Caloi (Brazil) 70% interest Cannondale Pro Cycling and Brixia Sports majority interest Tiny Love Ltd. Right to sell Infanti brand in Brazilian market 25

26 Total Revenue by Segment % 41% 21% 42% 38% 37% JUVENILE RECREATIONAL/LEISURE HOME FURNISHINGS 26

27 Geographical Distribution of Total Revenue (by customer) % 8% 11% 24% 56% 25% 58% 6% 6% US Canada Europe Other Latin America 27

28 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 28