I N V E S T O R P R E S E N T A T I O N S E C O N D Q U A R T E R E n d e d J u n e 3 0,

Transcription

1 I N V E S T O R P R E S E N T A T I O N S E C O N D Q U A R T E R E n d e d J u n e 3 0,

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 forwardlooking 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 3 major segments Juvenile products (2012 revenue - $1.041 billion) Bicycles/recreational products (2012 revenue - $928 million) Home furnishings $2.5 billion in sales annually 5400 employees Sales to 100+ countries Operations in 24 countries (2012 revenue - $522 million) 3

4 Dorel s Key Brands 4

5 Second Quarters Ended June 30 Consolidated (in thousands, other than EPS) Total revenue $ 600,449 $ 633,711 Net income $ 13,224 $ 30,345 EPS (diluted) $ 0.41 $

6 Juvenile Segment Title Second Quarters Ended June 30 Zone texte (in thousands) Total revenue $ 243,412 $ 254,781 Gross profit $ 68,761 $ 69,391 Operating profit $ 15,811 $ 17,118 6

7 Second Quarter Juvenile Title Highlights Zone Quarter texte affected by reduced profitability in Europe due to challenging economy Operating profit decreased 7.6% year-over-year Latin American revenue growth fueled by new store openings. Dorel now operates 76 stores in Peru and Chile New products being launched at juvenile show in Cologne, Germany in September 2013 Dorel Juvenile Group (DJG) USA exited some lowmargin SKUs 7

8 A World Leader in Juvenile Title Innovation in North America Newest car seat platform Elite 80 Air + Zone texte 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 Title Zone texte Latest Development in Car Seat Safety Elite 80 Air + 9

10 A World Leader in Juvenile Title Dorel Europe Leading juvenile products Zone texte Maxi-Cosi/ Bébé Confort/Quinny car seats and strollers remain the leading European signature brands to premium price point market Extensive local product development Safety 1 st, addressing mid-price point channel, has grown steadily in brand recognition and sales E-tailing market expansion Strong and impressive new product introductions set for September Cologne, Germany juvenile show 10

11 Innovation - Europe Title Zone texte Maxi-Cosi to release new 2 way Family Concept child car seat in September. The first-ever seat of its kind, providing state-of-the-art i-size rear-facing safety for children from birth to about 4 years 11

12 Recreational/Leisure Segment Title Second Quarters Ended June 30 Zone texte (in thousands) Total revenue $ 238,174 $ 251,911 Gross profit $ 54,550 $ 63,183 Operating profit $ 3,681 $ 21,606 12

13 Second Quarter Recreational/Leisure Title Highlights Total Zone texte revenue decreased 5.5%, operating profit down 83% Due to continued poor weather and industry discounting Unfavourable FX rates also depressed gross profit One-time charge of approximately $2 million recorded for severance as a result of restructuring 13

14 Strategic and Comprehensive Title Portfolio Zone texte 14

15 Recreational/Leisure Segment Title Three distinct operating divisions Zone texte 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 15

16 Recreational/Leisure Segment Title 2) Pacific Cycle Zone texte 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 target Schwinn and Mongoose 16

17 Recreational/Leisure Segment Title 3) Apparel Footwear Group (AFG) Zone texte Performance apparel division incorporates strong SUGOI brand New branding opportunities include Technical Sponsor for Cannondale Pro Cycling Team and partnership with Ironman triathlons 17

18 Home Furnishings Segment Title Second Quarters Ended June 30 Zone texte (in thousands) Total revenue $ 118,863 $ 127,019 Gross profit $ 17,145 $ 16,574 Operating profit $ 7,201 $ 6,694 18

19 Outlook As we had announced on June 13, 2013 the Recreational / Leisure segment results were still being severely impacted by the weather and this was being compounded by competitor discounting in an attempt to reduce industry-wide inventory backlogs. While discounting is continuing, Dorel s situation will improve as the year progresses. With our strong product portfolio and superior brands, along with the restructuring actions that we have taken, we expect to recover accordingly. Some of this recovery will be in the third quarter and our earnings for the period are expected to be close to prior year levels. As we head into the fall, we are confident that in the fourth quarter, we will return to improved profitability versus the prior year and for the second half we expect Recreational / Leisure earnings will increase over last year. In Juvenile we expect improvement in the fourth quarter. We have several significant new product introductions scheduled and we will be unveiling several of these at the upcoming Juvenile show in September in Cologne, Germany. Others are also due in North America near the end of the year. In Latin America, growth in earnings will be weighted to the fourth quarter with a strong Christmas retail season anticipated with our expanding number of retail locations in Chile and Peru. For the year we now expect Juvenile earnings to be flat with In Home Furnishings, we expect that segment s solid performance to continue and its operating profit for 2013 is anticipated to exceed last year s results. 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 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) 2004 Pacific Cycle 2007 IGC Australia 2008 Cannondale/SUGOI 23

24 Growth Through Acquisitions PTI Sports Baby Art Dorel Brazil - 70% interest Iron Horse Bicycles Gemini Bicycles (Australia) 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 24

25 Total Revenue by Segment % 42% 22% 42% 37% 36% JUVENILE RECREATIONAL/LEISURE HOME FURNISHINGS 25

26 Geographical Distribution of Total Revenue (by customer) % 11% 26% 7% 6% 58% 6% 61% US CANADA EUROPE OTHER 26

27 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 27