Dorel Reports Q4 and 2017 Year-End Results
- Dorel Home posts record on-line sales
- Dorel Juvenile develops strongest new product pipeline in years
- Dorel Sports poised for improved 2018
MONTRÉAL, March 08, 2018 (GLOBE NEWSWIRE) -- Dorel Industries Inc. (TSX:DII.B) (TSX:DII.A) today announced results for the fourth quarter and year ended December 30, 2017. Revenue for the fourth quarter was US$677.1 million, up 4.4% from US$648.7 million a year ago. Adjusted net income was US$20.4 million or US$0.62 per diluted share compared to US$7.7 million or US$0.24 per diluted share in the fourth quarter of 2016. Reported net loss for the quarter was US$3.0 million or US$0.09 per diluted share compared to US$5.6 million or US$0.17 per diluted share a year ago.
Revenue for 2017 was US$2.58 billion, compared to US$2.60 billion the previous year. Adjusted net income for the year rose 20.3% to US$70.1 million or US$2.15 per diluted share, compared to US$58.3 million or US$1.79 per diluted share in 2016. Reported net income was US$30.6 million or US$0.94 per diluted share, compared to a reported net loss of US$11.6 million or US$0.36 per diluted share the previous year.
“Dorel’s businesses performed quite well during the fourth quarter and we are encouraged with the advancements made, setting the stage for a positive 2018,” commented Dorel President & CEO, Martin Schwartz. “Dorel Home posted excellent revenue and operating profit, with record on-line sales continuing to drive the segment. Dorel Juvenile is being transformed into a consumer-centric organization through a market-led business with a heavy emphasis on new products. We have the strongest product pipeline in years featuring exciting, innovative products planned to launch over the next 18 months. Dorel Juvenile has also made important progress in e-commerce, with each of its geographic markets projecting growth through 2018. Dorel Sports bounced back from a difficult third quarter despite continuing industry-wide weakness in the global bicycle market. Similar to Dorel Juvenile, Dorel Sports has developed an exciting line-up of new products to be launched through 2018,” concluded Mr. Schwartz.
The Company is presenting adjusted financial information, excluding impairment losses, 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 previously 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.
| Summary of Financial Information (unaudited) | ||||||
| Fourth Quarters Ended December 30, | ||||||
| All figures in thousands of US $, except per share amounts | ||||||
| 2017 | 2016 | Change | ||||
| $ | $ | % | ||||
| Total revenue | 677,052 | 648,749 | 4.4 | % | ||
| Net loss | (2,992 | ) | (5,567 | ) | 46.3 | % |
| Per share - Basic | (0.09 | ) | (0.17 | ) | 47.1 | % |
| Per share - Diluted | (0.09 | ) | (0.17 | ) | 47.1 | % |
| Adjusted net income | 20,410 | 7,740 | 163.7 | % | ||
| Per share - Basic | 0.63 | 0.24 | 162.5 | % | ||
| Per share - Diluted | 0.62 | (1) | 0.24 | 158.3 | % | |
| Number of shares outstanding – | ||||||
| Basic weighted average | 32,426,326 | 32,373,809 | ||||
| Diluted weighted average | 32,426,326 | 32,373,809 | ||||
| Adjusted diluted weighted average | 35,273,605 | 32,630,255 | ||||
| (1) As at December 30, 2017, the convertible debentures were included in the calculation of the adjusted diluted earnings per share (“EPS”) by adjusting the adjusted net income attributable to equity holders as well as the adjusted diluted weighted average number of shares outstanding, as these debentures were deemed to be dilutives. | ||||||
| Summary of Financial Information (unaudited) | ||||||
| Years Ended December 30, | ||||||
| All figures in thousands of US $, except per share amounts | ||||||
| 2017 | 2016 | Change | ||||
| $ | $ | % | ||||
| Total revenue | 2,577,668 | 2,603,185 | (1.0 | %) | ||
| Net income (loss) | 30,583 | (11,611 | ) | 363.4 | % | |
| Per share - Basic | 0.94 | (0.36 | ) | 361.1 | % | |
| Per share - Diluted | 0.94 | (0.36 | ) | 361.1 | % | |
| Adjusted net income | 70,097 | 58,251 | 20.3 | % | ||
| Per share - Basic | 2.16 | 1.80 | 20.0 | % | ||
| Per share - Diluted | 2.15 | 1.79 | 20.1 | % | ||
| Number of shares outstanding – | ||||||
| Basic weighted average | 32,409,551 | 32,352,953 | ||||
| Diluted weighted average | 32,665,713 | 32,352,953 | ||||
| Dorel Home | |||||||||||||
| All figures in thousands of US $ | |||||||||||||
| Fourth Quarters Ended December 30 (unaudited) | |||||||||||||
| 2017 | 2016 | Change | |||||||||||
| $ |
% of rev. |
$ |
% of rev. |
% | |||||||||
| Total revenue | 200,975 | 177,049 | 13.5 | % | |||||||||
| Gross profit | 38,698 | 19.3 | % | 29,703 | 16.8 | % | 30.3 | % | |||||
| Operating profit | 21,064 | 10.5 | % | 13,769 | 7.8 | % | 53.0 | % | |||||
| All figures in thousands of US $ | |||||||||||||
| Years Ended December 30 (unaudited) | |||||||||||||
| 2017 | 2016 | Change | |||||||||||
| $ | % of rev. | $ | % of rev. | % | |||||||||
| Total revenue | 790,619 | 735,247 | 7.5 | % | |||||||||
| Gross profit | 141,550 | 17.9 | % | 123,742 | 16.8 | % | 14.4 | % | |||||
| Operating profit | 78,081 | 9.9 | % | 64,180 | 8.7 | % | 21.7 | % | |||||
Fourth quarter revenue rose US$23.9 million, or 13.5%, to US$201.0 million. For the full year, revenue grew US$55.4 million, or 7.5%, to US$790.6 million from US$735.2 million in 2016. On-line sales were the highest ever recorded in the segment’s history as it continued to augment its product platform. For the fourth quarter and the full year, e-commerce sales represented a record 57% and 52% of total segment revenue respectively compared to 51% and 45% for the comparable periods in 2016. This revenue improvement far exceeded small reductions in the brick and mortar channel.
Fourth quarter gross profit was 19.3%, up 250 basis points and for the full year was up 110 basis points to 17.9%. Both the quarter and year-to-date improvements were due to shift of sales to higher margin items throughout the year. Warehouse and distribution costs were slightly higher than last year due to the segment’s additional overall warehouse footprint, higher wage costs and inventory levels brought on by the increased revenue.
Fourth quarter operating profit rose US$7.3 million, or 53.0%, to US$21.1 million from US$13.8 million a year ago. All Dorel Home divisions posted improved operating results. For the full year, operating profit increased US$13.9 million, or 21.7%, to US$78.1 million compared to US$64.2 million in 2016.
| Dorel Juvenile | ||||||||||
| All figures in thousands of US $ | ||||||||||
| Fourth Quarters Ended December 30 (unaudited) | ||||||||||
| 2017 | 2016 |
Change | ||||||||
| $ | % of rev. | $ | % of rev. | % | ||||||
| Total revenue | 239,306 | 236,447 | 1.2 | % | ||||||
| Gross profit | 70,645 | 29.5 | % | 71,240 | 30.1 | % | (0.8 | %) | ||
| Operating loss | (13,558 | ) | (5.7 | %) | (17,259 | ) | (7.3 | %) | 21.4 | % |
| Adjusted gross profit | 70,926 | 29.6 | % | 71,240 | 30.1 | % | (0.4 | %) | ||
| Adjusted operating profit (loss) | 10,432 | 4.4 | % | (7,141 | ) | (3.0 | %) | 246.1 | % | |
| All figures in thousands of US $ | ||||||||||
| Years Ended December 30 (unaudited) | ||||||||||
| 2017 | 2016 |
Change | ||||||||
| $ | % of rev. | $ | % of rev. | % | ||||||
| Total revenue | 921,669 | 928,963 | (0.8 | %) | ||||||
| Gross profit | 275,261 | 29.9 | % | 290,618 | 31.3 | % | (5.3 | %) | ||
| Operating profit | 13,353 | 1.4 | % | 16,760 | 1.8 | % | (20.3 | %) | ||
| Adjusted gross profit | 276,836 | 30.0 | % | 290,618 | 31.3 | % | (4.7 | %) | ||
| Adjusted operating profit | 45,215 | 4.9 | % | 31,314 | 3.4 | % | 44.4 | % | ||
Fourth quarter revenue increased US$2.9 million, or 1.2%, to US$239.3 million from US$236.4 million last year. Excluding the positive impact of foreign exchange rates, organic revenue decreased by approximately 2.5%. Declines in traditional brick and mortar were partially offset by gains in market share at on-line retailers. In Latin America, sales increased overall, led by Brazil, but sales were lower in Chile and fell short of both prior year and 2017 expectations. Full year revenue decreased by US$7.3 million, or 0.8%, to US$921.7 million from US$929.0 million in 2016.
Fourth quarter operating loss in 2017 was US$13.6 million compared to US$17.3 million last year. 2017 results include a non-cash impairment loss on goodwill of US$19.9 million, related to certain business units within Latin America. Excluding impairment losses, restructuring and other costs, adjusted operating profit for the quarter was US$10.4 million, compared to an adjusted operating loss of US$7.1 million last year, an improvement of US$17.5 million. 2016 results included a total of US$7.8 million for a one-time write-down of certain deferred development costs and employee severance not included within restructuring expenses. In addition, product liability costs in 2017 are lower than prior year by US$8.7 million. Combined, these amounts account for US$16.5 million of the year-over-year improvement. The remaining improvement in adjusted operating profit of US$1.0 million was due to reduced operating costs, more than offsetting the lower organic revenue and margins in the quarter. Year-to-date operating profit was US$13.4 million, compared to US$16.8 million last year. Adjusted operating profit increased US$13.9 million, or 44.4%, to US$45.2 million, from US$31.3 million a year ago.
The economies of both Chile and Peru have slowed over the past several years, due to lower commodity prices, political uncertainty and changes in consumer behaviour. As such, coupled with stagnant growth expected in Colombia and Panama, projected earnings and cash flow growth were revised resulting in a non-cash impairment loss on goodwill of US$19.9 million, recorded in the fourth quarter of 2017. Dorel Juvenile Chile continues to be the juvenile market leader with the majority market share, a large retail footprint and the number one Infanti brand. The intention is to reduce the retail footprint to focus on the most profitable products and locations, all the while remaining a leading retailer and to invest in e-commerce capabilities to become a leader within the e-commerce sales channel in its categories in Chile, Peru and eventually Colombia.
The revolutionary Maxi-Cosi AxissFix Air, launched in the European market during the fourth quarter of 2017, drew significant attention from opinion and media groups in Europe. The media plan was comprehensive and is expected to bolster the Maxi-Cosi brand. Part of Dorel Juvenile’s success in improving its product pipeline has been strategic sourcing to complement in-house developed product. An example is the new Maxi-Cosi Zelia urban stroller, the first globally compliant stroller for Dorel. Launched in October, with vastly improved time-to-market, only 12 months elapsed from concept to retail stores. Additional key launches are planned for 2018, including a major Safety 1st travel system and a Maxi-Cosi car seat to be manufactured and sold in North America.
| Dorel Sports | |||||||||
| All figures in thousands of US $ | |||||||||
| Fourth Quarters Ended December 30 (unaudited) | |||||||||
| 2017 | 2016 | Change | |||||||
| $ | % of rev. | $ | % of rev. | % | |||||
| Total revenue | 236,771 | 235,253 | 0.6 | % | |||||
| Gross profit | 52,105 | 22.0 | % | 47,998 | 20.4 | % | 8.6 | % | |
| Operating profit | 9,613 | 4.1 | % | 4,965 | 2.1 | % | 93.6 | % | |
| Adjusted gross profit | 51,386 | 21.7 | % | 50,417 | 21.4 | % | 1.9 | % | |
| Adjusted operating profit | 9,252 | 3.9 | % | 10,153 | 4.3 | % | (8.9 | %) | |
| All figures in thousands of US $ | |||||||||
| Years Ended December 30 (unaudited) | |||||||||
| 2017 | 2016 | Change | |||||||
| $ | % of rev. | $ | % of rev. | % | |||||
| Total revenue | 865,380 | 938,975 | (7.8 | %) | |||||
| Gross profit | 194,940 | 22.5 | % | 196,201 | 20.9 | % | (0.6 | %) | |
| Operating profit (loss) | 24,831 | 2.9 | % | (33,930 | ) | (3.6 | %) | 173.2 | % |
| Adjusted gross profit | 193,625 | 22.4 | % | 201,322 | 21.4 | % | (3.8 | %) | |
| Adjusted operating profit | 24,972 | 2.9 | % | 31,538 | 3.4 | % | (20.8 | %) | |
Fourth quarter revenue increased US$1.5 million, or 0.6%, to US$236.8 million from US$235.3 million last year. Excluding the positive impact of foreign exchange rates, organic revenue declined by approximately 1.4%. Full year revenue decreased US$73.6 million, or 7.8%, to US$865.4 million compared to US$939.0 million a year ago. Organic revenue for the full year declined by approximately 11% when removing foreign exchange fluctuations and the change in Cycling Sports Group (CSG) International’s business model for which the revenue recognition transitioned from a licensing model to a distribution platform in the third quarter of 2016.
Despite a continued weak global bike market, Dorel Sports grew its fourth quarter top line thanks to strong performances in CSG’s International business and at Caloi. The segment’s revenue improved considerably from the third quarter despite the continuing challenging global bicycle market, particularly in North America. Sales in CSG decreased slightly due to the competitive environment and a generally soft industry globally at independent bicycle dealers. Several new model year ’18 products were launched, including the revitalized Synapse, Trail and Kids platforms, which are all core pillars of the Cannondale product offering. Sales of these units increased over 50% in the fourth quarter, compared to prior year. Parts and accessories sales also increased as did sales of the new line of Mongoose scooters. Caloi improved its top line due to the on-going stabilization of the Brazilian economy, combined with the success of new product launches of the Caloi and Cannondale brands in Brazil. Inventory remains in a healthy position, finishing the fourth quarter with the lowest level in two years.
Fourth quarter operating profit increased US$4.6 million to US$9.6 million and when excluding restructuring and other costs, adjusted operating profit declined by US$0.9 million to US$9.3 million. For the year, operating profit was US$24.8 million compared to an operating loss a year ago of US$33.9 million. Excluding impairment losses, restructuring and other costs, adjusted operating profit declined by US$6.6 million, or 20.8%, to US$25.0 million. The change in adjusted operating profit for the fourth quarter when compared to 2016 is explained by increased selling expenses offset by improved adjusted gross profit which increased by 30 basis points to 21.7%. For the year, the change in adjusted operating profit is explained by lower revenue, partly offset by improved adjusted gross profit which increased by 100 basis points to 22.4%. This is due to continued inventory management improvement in terms of product mix and pricing actions in key markets.
Other
The Company’s effective tax rate was an expense of 36.3% in 2017 compared to a recovery of 46.2% in 2016. Excluding income taxes on impairment losses, restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt, the Company’s adjusted tax rate was 22.5% in 2017 compared with 7.1% in 2016. The main cause of the year-over-year increase in the adjusted tax rate was changes in the jurisdictions in which the Company generated its income. The overall impact related to tax rate changes in the Company’s various jurisdictions from 2016 to 2017 was a net benefit of US$2.0 million.
The effective tax rate for 2018 is expected to be between 20% and 25%, incorporating the U.S. Tax Reform signed into law on December 22, 2017 that reduces the U.S. federal corporate income tax rate from 35% to 21%, effective January 1, 2018. The U.S. Tax Reform introduces other important changes to U.S. corporate income tax laws, which are not expected to significantly impact the Company in future years.
Outlook
“E-commerce opportunities continue to emerge and Dorel Home is capitalizing on them with its broad product assortment and company-wide logistics expertise. As the leader in supplying on-line retailers, we expect further growth in Dorel Home revenue, with continued operating profit improvement through 2018,” stated Dorel President & CEO, Martin Schwartz.
“Dorel Juvenile has begun to introduce several significant new products and will continue to do so throughout the year. This expanded product portfolio is expected to result in higher revenue and improved adjusted operating profit in 2018. We are forecasting further e-commerce growth for this segment, as we are gaining traction and market share on-line within our product categories. Current first quarter expectations are for lower adjusted operating profit than prior year, with the stated improvements to commence thereafter.
“Driven by new, innovative products across all price points, Dorel Sports is expected to deliver higher sales and better operating profit in 2018. This improvement is expected in all three of our principal channels: mass market, independent bike dealers and sporting goods. While there are less e-commerce sales opportunities within Dorel Sports’ product categories, our focus on compelling on-line content is driving consumer awareness to our brands. As with Dorel Juvenile, the first quarter of 2017 was strong for Dorel Sports, therefore the improved operating profit is expected in the second quarter onward.
“In 2017, we continued to see changes in the traditional retail brick and mortar retail sales channel and our Company-wide strategic focus on e-commerce has allowed us to offset most of these challenges. Should there be a further decline in the financial condition of these at-risk retailers, this could have a short-term negative impact on our overall expectations for the year,” concluded Mr. Schwartz.
Conference Call
Dorel Industries Inc. will hold a conference call to discuss these results today, March 8, 2018 at 1:00 P.M. Eastern Time. Interested parties can join the call by dialling 1-877-223-4471. The conference call can also be accessed via live webcast at https://www.dorel.com. If you are unable to call in at this time, you may access a recording of the meeting by calling 1-800-585-8367 and entering the passcode 4758868 on your phone. This recording will be available on Thursday, March 8, 2018 as of 4:00 P.M. until 11:59 P.M. on Thursday, March 15, 2018.
Complete consolidated financial statements as at December 30, 2017 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) (TSX:DII.A) is a global organization, operating three distinct businesses in juvenile products, bicycles and home products. Dorel's strength lies in the diversity, innovation and quality of its products as well as the superiority of its brands. Dorel Juvenile’s powerfully branded products include global brands Safety 1st, Quinny, Maxi-Cosi and Tiny Love, complemented by regional brands such as Cosco, Bébé Confort and Infanti. Dorel Sports brands include Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse and SUGOI. Dorel Home, with its comprehensive e-commerce platform, markets a wide assortment of domestically produced and imported furniture. Dorel has annual sales of US$2.6 billion and employs approximately 10,000 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, or if any of them do, what benefits Dorel will derive from them. 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 Dorel’s expectations expressed in or implied by the forward-looking statements include: general economic conditions; changes in product costs and supply channels; foreign currency fluctuations; customer and credit risk, including the concentration of revenues with small number of 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 there being no certainty that Dorel’s current 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 Management Discussion and Analysis 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 Dorel’s 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.
Non-GAAP financial measures
As a result of impairment losses, restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt incurred in 2017 and 2016, the Company is including in this press release the following non-GAAP financial measures: “adjusted cost of sales”, “adjusted gross profit”, “adjusted operating profit (loss)”, “adjusted finance expenses”, “adjusted income before income taxes”, “adjusted income taxes expense (recovery)”, “adjusted tax rate”, “adjusted net income”, “adjusted earnings per basic and diluted share” and “adjusted diluted weighted average number of shares outstanding”. The Company believes that this results in a more meaningful comparison of its core business performance between the periods presented. These non-GAAP financial measures do not have a standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other issuers. Contained within this press release are reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP.
(All figures in the tables below are in thousands of US$, except per share amounts)
| Reconciliation of non-GAAP financial measures | ||||||||||||||||||||
| Fourth Quarters Ended December 30, | ||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||
| Reported | % of revenue |
Impairment losses, restructuring and other costs |
Adjusted | % of revenue |
Reported | % of revenue |
Restructuring and other costs |
Adjusted | % of revenue |
|||||||||||
| $ | % | $ | $ | % | $ | % | $ | $ | % | |||||||||||
| TOTAL REVENUE | 677,052 | 100.0 | - | 677,052 | 100.0 | 648,749 | 100.0 | - | 648,749 | 100.0 | ||||||||||
| Cost of sales | 515,604 | 76.2 | 438 | 516,042 | 76.2 | 499,808 | 77.0 | (2,419 | ) | 497,389 | 76.7 | |||||||||
| GROSS PROFIT | 161,448 | 23.8 | (438 | ) | 161,010 | 23.8 | 148,941 | 23.0 | 2,419 | 151,360 | 23.3 | |||||||||
| Selling expenses | 58,929 | 8.7 | - | 58,929 | 8.7 | 57,730 | 8.9 | - | 57,730 | 8.9 | ||||||||||
| General and administrative expenses | 60,535 | 8.9 | - | 60,535 | 8.9 | 69,219 | 10.7 | - | 69,219 | 10.7 | ||||||||||
| Research and development expenses | 8,039 | 1.2 | - | 8,039 | 1.2 | 14,463 | 2.2 | - | 14,463 | 2.2 | ||||||||||
| Restructuring and other costs | 4,138 | 0.6 | (4,138 | ) | - | - | 12,887 | 2.0 | (12,887 | ) | - | - | ||||||||
| Impairment loss on goodwill | 19,929 | 2.9 | (19,929 | ) | - | - | - | - | - | - | - | |||||||||
| OPERATING PROFIT (LOSS) | 9,878 | 1.5 | 23,629 | 33,507 | 5.0 | (5,358 | ) | (0.8 | ) | 15,306 | 9,948 | 1.5 | ||||||||
| Finance expenses | 8,222 | 1.3 | - | 8,222 | 1.3 | 11,766 | 1.8 | (2,840 | ) | 8,926 | 1.3 | |||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | 1,656 | 0.2 | 23,629 | 25,285 | 3.7 | (17,124 | ) | (2.6 | ) | 18,146 | 1,022 | 0.2 | ||||||||
| Income taxes expense (recovery) | 4,648 | 0.6 | 227 | 4,875 | 0.7 | (11,557 | ) | (1.7 | ) | 4,839 | (6,718 | ) | (1.0 | ) | ||||||
| Tax rate | 280.7 | % | 19.3 | % | 67.5 | % | (657.3 | %) | ||||||||||||
| NET (LOSS) INCOME | (2,992 | ) | (0.4 | ) | 23,402 | 20,410 | 3.0 | (5,567 | ) | (0.9 | ) | 13,307 | 7,740 | 1.2 | ||||||
| EARNINGS (LOSS) PER SHARE | ||||||||||||||||||||
| Basic | (0.09 | ) | 0.72 | 0.63 | (0.17 | ) | 0.41 | 0.24 | ||||||||||||
| Diluted | (0.09 | ) | 0.71 | 0.62 | (1) | (0.17 | ) | 0.41 | 0.24 | |||||||||||
| SHARES OUTSTANDING | ||||||||||||||||||||
| Basic - weighted average | 32,426,326 | 32,426,326 | 32,373,809 | 32,373,809 | ||||||||||||||||
| Diluted - weighted average | 32,426,326 | 35,273,605 | 32,373,809 | 32,630,255 | ||||||||||||||||
| (1) As at December 30, 2017, the convertible debentures were included in the calculation of the adjusted diluted EPS by adjusting the adjusted net income attributable to equity holders as well as the adjusted diluted weighted average number of shares outstanding, as these debentures were deemed to be dilutives. | ||||||||||||||||||||
| Reconciliation of non-GAAP financial measures | ||||||||||||||||||||
| Years Ended December 30, | ||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||
| Reported | % of revenue |
Impairment losses, restructuring and other costs |
Adjusted | % of revenue |
Reported | % of revenue |
Impairment losses, restructuring and other costs |
Adjusted | % of revenue |
|||||||||||
| $ | % | $ | $ | % | $ | % | $ | $ | % | |||||||||||
| TOTAL REVENUE | 2,577,668 | 100.0 | - | 2,577,668 | 100.0 | 2,603,185 | 100.0 | - | 2,603,185 | 100.0 | ||||||||||
| Cost of sales | 1,965,917 | 76.3 | (260 | ) | 1,965,657 | 76.3 | 1,992,624 | 76.5 | (5,121 | ) | 1,987,503 | 76.3 | ||||||||
| GROSS PROFIT | 611,751 | 23.7 | 260 | 612,011 | 23.7 | 610,561 | 23.5 | 5,121 | 615,682 | 23.7 | ||||||||||
| Selling expenses | 233,106 | 9.0 | - | 233,106 | 9.0 | 230,623 | 8.9 | - | 230,623 | 8.9 | ||||||||||
| General and administrative expenses | 224,580 | 8.7 | - | 224,580 | 8.7 | 244,631 | 9.4 | - | 244,631 | 9.4 | ||||||||||
| Research and development expenses | 31,065 | 1.2 | - | 31,065 | 1.2 | 39,092 | 1.5 | - | 39,092 | 1.5 | ||||||||||
| Restructuring and other costs | 11,814 | 0.5 | (11,814 | ) | - | - | 19,560 | 0.8 | (19,560 | ) | - | - | ||||||||
| Impairment losses on goodwill and intangible assets | 19,929 | 0.8 | (19,929 | ) | - | - | 55,341 | 2.1 | (55,341 | ) | - | - | ||||||||
| OPERATING PROFIT | 91,257 | 3.5 | 32,003 | 123,260 | 4.8 | 21,314 | 0.8 | 80,022 | 101,336 | 3.9 | ||||||||||
| Finance expenses | 43,248 | 1.6 | (10,475 | ) | 32,773 | 1.3 | 42,899 | 1.6 | (4,265 | ) | 38,634 | 1.5 | ||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | 48,009 | 1.9 | 42,478 | 90,487 | 3.5 | (21,585 | ) | (0.8 | ) | 84,287 | 62,702 | 2.4 | ||||||||
| Income taxes expense (recovery) | 17,426 | 0.7 | 2,964 | 20,390 | 0.8 | (9,974 | ) | (0.4 | ) | 14,425 | 4,451 | 0.2 | ||||||||
| Tax rate | 36.3 | % | 22.5 | % | 46.2 | % | 7.1 | % | ||||||||||||
| NET INCOME (LOSS) | 30,583 | 1.2 | 39,514 | 70,097 | 2.7 | (11,611 | ) | (0.4 | ) | 69,862 | 58,251 | 2.2 | ||||||||
| EARNINGS (LOSS) PER SHARE | ||||||||||||||||||||
| Basic | 0.94 | 1.22 | 2.16 | (0.36 | ) | 2.16 | 1.80 | |||||||||||||
| Diluted | 0.94 | 1.21 | 2.15 | (0.36 | ) | 2.15 | 1.79 | |||||||||||||
| SHARES OUTSTANDING | ||||||||||||||||||||
| Basic - weighted average | 32,409,551 | 32,409,551 | 32,352,953 | 32,352,953 | ||||||||||||||||
| Diluted - weighted average | 32,665,713 | 32,665,713 | 32,352,953 | 32,584,489 | ||||||||||||||||
| Details of impairment losses, restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt: | |||||||||
| Fourth Quarters Ended December 30, | Years Ended December 30, | ||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||
| $ | $ | $ | $ | ||||||
| Write-down of long-lived assets | - | - | 368 | - | |||||
| Inventory markdowns (reversals) | (239 | ) | 979 | 242 | 3,557 | ||||
| Accelerated depreciation | - | 57 | - | 57 | |||||
| Other associated costs | - | 619 | - | 619 | |||||
| Recorded within gross profit | (239 | ) | 1,655 | 610 | 4,233 | ||||
| Employee severance and termination benefits | 3,880 | 3,524 | 8,098 | 7,955 | |||||
| Accelerated depreciation | 62 | 1,065 | 62 | 1,903 | |||||
| Write-down of long-lived assets | 1,854 | 8,353 | 1,854 | 8,777 | |||||
| Net losses from the remeasurement and disposals of assets held for sale | 9 | 107 | 631 | 190 | |||||
| Curtailments gain on net pension defined benefit liabilities | (1,908 | ) | (891 | ) | (1,908 | ) | (891 | ) | |
| Other associated costs | 241 | 430 | 3,077 | 586 | |||||
| Recorded within a separate line in the consolidated income statements | 4,138 | 12,588 | 11,814 | 18,520 | |||||
| Total restructuring costs | 3,899 | 14,243 | 12,424 | 22,753 | |||||
| Other costs recorded within gross profit | (199 | ) | 764 | (350 | ) | 888 | |||
| Acquisition-related costs | - | - | - | 729 | |||||
| Other costs | - | 299 | - | 311 | |||||
| Recorded within a separate line in the consolidated income statements | - | 299 | - | 1,040 | |||||
| Total other costs | (199 | ) | 1,063 | (350 | ) | 1,928 | |||
| Total restructuring and other costs | 3,700 | 15,306 | 12,074 | 24,681 | |||||
| Impairment losses on goodwill and intangible assets | 19,929 | - | 19,929 | 55,341 | |||||
| Loss on remeasurement of forward purchase agreement liabilities | - | 2,840 | 276 | 4,265 | |||||
| Loss on early extinguishment of long-term debt | - | - | 10,199 | - | |||||
| Total impairment losses, restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt before income taxes (1) | 23,629 | 18,146 | 42,478 | 84,287 | |||||
| Total impairment losses, restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt after income taxes | 23,402 | 13,307 | 39,514 | 69,862 | |||||
| Total impact on diluted earnings (loss) per share | (0.71 | ) | (0.41 | ) | (1.21 | ) | (2.15 | ) | |
| (1) Includes non-cash amounts of: | 19,707 | 12,510 | 22,871 | 73,199 | |||||
| Dorel Juvenile | ||||||||||||||||||||
| Reconciliation of non-GAAP financial measures | ||||||||||||||||||||
| Fourth Quarters Ended December 30, | ||||||||||||||||||||
|
2017 |
2016 |
|||||||||||||||||||
| Reported | % of revenue |
Impairment losses, restructuring and other costs |
Adjusted | % of revenue |
Reported | % of revenue |
Restructuring and other costs |
Adjusted | % of revenue |
|||||||||||
| $ | % | $ | $ | % | $ | % | $ | $ | % | |||||||||||
| TOTAL REVENUE | 239,306 | 100.0 | - | 239,306 | 100.0 | 236,447 | 100.0 | - | 236,447 | 100.0 | ||||||||||
| Cost of sales | 168,661 | 70.5 | (281 | ) | 168,380 | 70.4 | 165,207 | 69.9 | - | 165,207 | 69.9 | |||||||||
| GROSS PROFIT | 70,645 | 29.5 | 281 | 70,926 | 29.6 | 71,240 | 30.1 | - | 71,240 | 30.1 | ||||||||||
| Selling expenses | 29,532 | 12.3 | - | 29,532 | 12.3 | 31,146 | 13.2 | - | 31,146 | 13.2 | ||||||||||
| General and administrative expenses | 25,328 | 10.6 | - | 25,328 | 10.6 | 35,437 | 14.9 | - | 35,437 | 14.9 | ||||||||||
| Research and development expenses | 5,634 | 2.3 | - | 5,634 | 2.3 | 11,798 | 5.0 | - | 11,798 | 5.0 | ||||||||||
| Restructuring and other costs | 3,780 | 1.6 | (3,780 | ) | - | - | 10,118 | 4.3 | (10,118 | ) | - | - | ||||||||
| Impairment loss on goodwill | 19,929 | 8.4 | (19,929 | ) | - | - | - | - | - | - | - | |||||||||
| OPERATING PROFIT (LOSS) | (13,558 | ) | (5.7 | ) | 23,990 | 10,432 | 4.4 | (17,259 | ) | (7.3 | ) | 10,118 | (7,141 | ) | (3.0 | ) | ||||
| Years Ended December 30, | ||||||||||||||||||||
|
2017 |
2016 |
|||||||||||||||||||
| Reported | % of revenue |
Impairment losses, restructuring and other costs |
Adjusted | % of revenue |
Reported | % of revenue |
Restructuring and other costs |
Adjusted | % of revenue |
|||||||||||
| $ | % | $ | $ | % | $ | % | $ | $ | % | |||||||||||
| TOTAL REVENUE | 921,669 | 100.0 | - | 921,669 | 100.0 | 928,963 | 100.0 | - | 928,963 | 100.0 | ||||||||||
| Cost of sales | 646,408 | 70.1 | (1,575 | ) | 644,833 | 70.0 | 638,345 | 68.7 | - | 638,345 | 68.7 | |||||||||
| GROSS PROFIT | 275,261 | 29.9 | 1,575 | 276,836 | 30.0 | 290,618 | 31.3 | - | 290,618 | 31.3 | ||||||||||
| Selling expenses | 116,275 | 12.6 | - | 116,275 | 12.6 | 115,132 | 12.4 | - | 115,132 | 12.4 | ||||||||||
| General and administrative expenses | 93,453 | 10.1 | - | 93,453 | 10.1 | 115,447 | 12.4 | - | 115,447 | 12.4 | ||||||||||
| Research and development expenses | 21,893 | 2.4 | - | 21,893 | 2.4 | 28,725 | 3.1 | - | 28,725 | 3.1 | ||||||||||
| Restructuring and other costs | 10,358 | 1.1 | (10,358 | ) | - | - | 14,554 | 1.6 | (14,554 | ) | - | - | ||||||||
| Impairment loss on goodwill | 19,929 | 2.3 | (19,929 | ) | - | - | - | - | - | - | - | |||||||||
| OPERATING PROFIT | 13,353 | 1.4 | 31,862 | 45,215 | 4.9 | 16,760 | 1.8 | 14,554 | 31,314 | 3.4 | ||||||||||
| Dorel Sports | ||||||||||||||||||||
| Reconciliation of non-GAAP financial measures | ||||||||||||||||||||
| Fourth Quarters Ended December 30, | ||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||
| Reported | % of revenue |
Restructuring and other costs |
Adjusted | % of revenue |
Reported | % of revenue |
Restructuring and other costs |
Adjusted | % of revenue |
|||||||||||
| $ | % | $ | $ | % | $ | % | $ | $ | % | |||||||||||
| TOTAL REVENUE | 236,771 | 100.0 | - | 236,771 | 100.0 | 235,253 | 100.0 | - | 235,253 | 100.0 | ||||||||||
| Cost of sales | 184,666 | 78.0 | 719 | 185,385 | 78.3 | 187,255 | 79.6 | (2,419 | ) | 184,836 | 78.6 | |||||||||
| GROSS PROFIT | 52,105 | 22.0 | (719 | ) | 51,386 | 21.7 | 47,998 | 20.4 | 2,419 | 50,417 | 21.4 | |||||||||
| Selling expenses | 22,150 | 9.4 | - | 22,150 | 9.4 | 20,258 | 8.6 | - | 20,258 | 8.6 | ||||||||||
| General and administrative expenses | 18,611 | 7.8 | - | 18,611 | 7.8 | 18,270 | 7.8 | - | 18,270 | 7.8 | ||||||||||
| Research and development expenses | 1,373 | 0.6 | - | 1,373 | 0.6 | 1,736 | 0.7 | - | 1,736 | 0.7 | ||||||||||
| Restructuring and other costs | 358 | 0.1 | (358 | ) | - | - | 2,769 | 1.2 | (2,769 | ) | - | - | ||||||||
| OPERATING PROFIT | 9,613 | 4.1 | (361 | ) | 9,252 | 3.9 | 4,965 | 2.1 | 5,188 | 10,153 | 4.3 | |||||||||
| Years Ended December 30, | ||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||
| Reported | % of revenue |
Restructuring and other costs |
Adjusted | % of revenue |
Reported | % of revenue |
Impairment losses, restructuring and other costs |
Adjusted | % of revenue |
|||||||||||
| $ | % | $ | $ | % | $ | % | $ | $ | % | |||||||||||
| TOTAL REVENUE | 865,380 | 100.0 | - | 865,380 | 100.0 | 938,975 | 100.0 | - | 938,975 | 100.0 | ||||||||||
| Cost of sales | 670,440 | 77.5 | 1,315 | 671,755 | 77.6 | 742,774 | 79.1 | (5,121 | ) | 737,653 | 78.6 | |||||||||
| GROSS PROFIT | 194,940 | 22.5 | (1,315 | ) | 193,625 | 22.4 | 196,201 | 20.9 | 5,121 | 201,322 | 21.4 | |||||||||
| Selling expenses | 89,197 | 10.3 | - | 89,197 | 10.3 | 91,247 | 9.7 | - | 91,247 | 9.7 | ||||||||||
| General and administrative expenses | 74,143 | 8.6 | - | 74,143 | 8.6 | 71,961 | 7.6 | - | 71,961 | 7.6 | ||||||||||
| Research and development expenses | 5,313 | 0.6 | - | 5,313 | 0.6 | 6,576 | 0.7 | - | 6,576 | 0.7 | ||||||||||
| Restructuring and other costs | 1,456 | 0.1 | (1,456 | ) | - | - | 5,006 | 0.5 | (5,006 | ) | - | - | ||||||||
| Impairment losses on goodwill and intangible assets | - | - | - | - | - | 55,341 | 6.0 | (55,341 | ) | - | - | |||||||||
| OPERATING PROFIT (LOSS) | 24,831 | 2.9 | 141 | 24,972 | 2.9 | (33,930 | ) | (3.6 | ) | 65,468 | 31,538 | 3.4 | ||||||||
| DOREL INDUSTRIES INC. | ||||||
| CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||||||
| ALL FIGURES IN THOUSANDS OF US $ | ||||||
| (unaudited) | ||||||
| As at | As at | |||||
|
December 30, 2017 |
December 30, 2016 |
|||||
| ASSETS | ||||||
| CURRENT ASSETS | ||||||
| Cash and cash equivalents | $ | 36,841 | $ | 31,883 | ||
| Trade and other receivables | 429,551 | 422,118 | ||||
| Inventories | 592,136 | 549,688 | ||||
| Other financial assets | 553 | 4,333 | ||||
| Income taxes receivable | 12,035 | 14,466 | ||||
| Prepaid expenses | 26,593 | 21,040 | ||||
| Other assets | 13,747 | 8,944 | ||||
| 1,111,456 | 1,052,472 | |||||
| Assets held for sale | 8,481 | 20,017 | ||||
| 1,119,937 | 1,072,489 | |||||
| NON-CURRENT ASSETS | ||||||
| Property, plant and equipment | 199,026 | 191,294 | ||||
| Intangible assets | 442,626 | 427,587 | ||||
| Goodwill | 438,072 | 435,790 | ||||
| Deferred tax assets | 26,103 | 39,324 | ||||
| Other financial assets | 550 | - | ||||
| Other assets | 7,152 | 6,148 | ||||
| 1,113,529 | 1,100,143 | |||||
| $ | 2,233,466 | $ | 2,172,632 | |||
| LIABILITIES | ||||||
| CURRENT LIABILITIES | ||||||
| Bank indebtedness | $ | 58,229 | $ | 49,490 | ||
| Trade and other payables | 440,410 | 428,881 | ||||
| Forward purchase agreement liabilities | - | 7,500 | ||||
| Other financial liabilities | 4,546 | 569 | ||||
| Income taxes payable | 14,338 | 15,143 | ||||
| Long-term debt | 13,667 | 51,138 | ||||
| Provisions | 43,475 | 63,169 | ||||
| Other liabilities | 11,150 | 14,603 | ||||
| 585,815 | 630,493 | |||||
| NON-CURRENT LIABILITIES | ||||||
| Long-term debt | 433,760 | 355,118 | ||||
| Net pension and post-retirement defined benefit liabilities | 35,237 | 35,206 | ||||
| Deferred tax liabilities | 44,449 | 53,293 | ||||
| Provisions | 2,953 | 1,681 | ||||
| Written put option liabilities | 23,464 | 26,325 | ||||
| Other financial liabilities | 1,338 | 1,115 | ||||
| Other liabilities | 11,157 | 13,302 | ||||
| 552,358 | 486,040 | |||||
| EQUITY | ||||||
| Share capital | 203,300 | 202,400 | ||||
| Contributed surplus | 27,557 | 27,139 | ||||
| Accumulated other comprehensive loss | (70,205 | ) | (113,840 | ) | ||
| Other equity | 5,888 | 3,027 | ||||
| Retained earnings | 928,753 | 937,373 | ||||
| 1,095,293 | 1,056,099 | |||||
| $ | 2,233,466 | $ | 2,172,632 | |||
| DOREL INDUSTRIES INC. | ||||||||||||||
| CONSOLIDATED INCOME STATEMENTS | ||||||||||||||
| ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS | ||||||||||||||
| (unaudited) | ||||||||||||||
| Fourth Quarters Ended | Years Ended | |||||||||||||
|
December 30, 2017 |
December 30, 2016 |
December 30, 2017 |
December 30, 2016 |
|||||||||||
| Sales | $ | 676,481 | $ | 647,559 | $ | 2,576,004 | $ | 2,596,062 | ||||||
| Licensing and commission income | 571 | 1,190 | 1,664 | 7,123 | ||||||||||
| TOTAL REVENUE | 677,052 | 648,749 | 2,577,668 | 2,603,185 | ||||||||||
| Cost of sales (1) | 515,604 | 499,808 | 1,965,917 | 1,992,624 | ||||||||||
| GROSS PROFIT | 161,448 | 148,941 | 611,751 | 610,561 | ||||||||||
| Selling expenses | 58,929 | 57,730 | 233,106 | 230,623 | ||||||||||
| General and administrative expenses | 60,535 | 69,219 | 224,580 | 244,631 | ||||||||||
| Research and development expenses | 8,039 | 14,463 | 31,065 | 39,092 | ||||||||||
| Restructuring and other costs (1) | 4,138 | 12,887 | 11,814 | 19,560 | ||||||||||
| Impairment losses on goodwill and intangible assets | 19,929 | - | 19,929 | 55,341 | ||||||||||
| OPERATING PROFIT (LOSS) | 9,878 | (5,358 | ) | 91,257 | 21,314 | |||||||||
| Finance expenses | 8,222 | 11,766 | 43,248 | 42,899 | ||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | 1,656 | (17,124 | ) | 48,009 | (21,585 | ) | ||||||||
| Income taxes expense (recovery) | 4,648 | (11,557 | ) | 17,426 | (9,974 | ) | ||||||||
| NET INCOME (LOSS) | $ | (2,992 | ) | $ | (5,567 | ) | $ | 30,583 | $ | (11,611 | ) | |||
| EARNINGS (LOSS) PER SHARE | ||||||||||||||
| Basic | ($0.09 | ) | ($0.17 | ) | $0.94 | ($0.36 | ) | |||||||
| Diluted | ($0.09 | ) | ($0.17 | ) | $0.94 | ($0.36 | ) | |||||||
| SHARES OUTSTANDING | ||||||||||||||
| Basic - weighted average | 32,426,326 | 32,373,809 | 32,409,551 | 32,352,953 | ||||||||||
| Diluted - weighted average | 32,426,326 | 32,373,809 | 32,665,713 | 32,352,953 | ||||||||||
| (1) Restructuring and other costs charged to: | ||||||||||||||
| Cost of sales | $ | (438 | ) | $ | 2,419 | $ | 260 | $ | 5,121 | |||||
| Expenses | 4,138 | 12,887 | 11,814 | 19,560 | ||||||||||
| $ | 3,700 | $ | 15,306 | $ | 12,074 | $ | 24,681 | |||||||
| DOREL INDUSTRIES INC. | |||||||||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||||||||||
| ALL FIGURES IN THOUSANDS OF US $ | |||||||||||||||
| (unaudited) | |||||||||||||||
| Fourth Quarters Ended | Years Ended | ||||||||||||||
|
December 30, 2017 |
December 30, 2016 |
December 30, 2017 |
December 30, 2016 |
||||||||||||
| NET INCOME (LOSS) | $ | (2,992 | ) | $ | (5,567 | ) | $ | 30,583 | $ | (11,611 | ) | ||||
| OTHER COMPREHENSIVE INCOME (LOSS): | |||||||||||||||
| Items that are or may be reclassified subsequently to | |||||||||||||||
| net income: | |||||||||||||||
| Cumulative translation account: | |||||||||||||||
| Net change in unrealized foreign currency gains (losses) | |||||||||||||||
| on translation of net investments in foreign | |||||||||||||||
| operations, net of tax of nil | 1,920 | (16,237 | ) | 40,342 | 3,856 | ||||||||||
| Net gains (losses) on hedge of net investments in foreign | |||||||||||||||
| operations, net of tax of nil | 1,643 | (6,816 | ) | 12,809 | (1,964 | ) | |||||||||
| 3,563 | (23,053 | ) | 53,151 | 1,892 | |||||||||||
| Net changes in cash flow hedges: | |||||||||||||||
| Net change in unrealized gains (losses) on derivatives | |||||||||||||||
| designated as cash flow hedges | (706 | ) | 5,418 | (9,363 | ) | 4,395 | |||||||||
| Reclassification to net income | 62 | 156 | 267 | 608 | |||||||||||
| Reclassification to the related non-financial asset | 1,681 | (2,768 | ) | 1,053 | (4,477 | ) | |||||||||
| Deferred income taxes | (346 | ) | (1,138 | ) | 1,949 | (354 | ) | ||||||||
| 691 | 1,668 | (6,094 | ) | 172 | |||||||||||
| Items that will not be reclassified to net income: | |||||||||||||||
| Defined benefit plans: | |||||||||||||||
| Remeasurements of the net pension and post-retirement | |||||||||||||||
| defined benefit liabilities | 108 | 779 | (43 | ) | (2,913 | ) | |||||||||
| Deferred income taxes | (3,426 | ) | (465 | ) | (3,379 | ) | 965 | ||||||||
| (3,318 | ) | 314 | (3,422 | ) | (1,948 | ) | |||||||||
| TOTAL OTHER COMPREHENSIVE INCOME (LOSS) | 936 | (21,071 | ) | 43,635 | 116 | ||||||||||
| TOTAL COMPREHENSIVE INCOME (LOSS) | $ | (2,056 | ) | $ | (26,638 | ) | $ | 74,218 | $ | (11,495 | ) | ||||
| DOREL INDUSTRIES INC. | |||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | |||||||||||||||||||||||||||||
| ALL FIGURES IN THOUSANDS OF US $ | |||||||||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||||||||
| Attributable to equity holders of the Company | |||||||||||||||||||||||||||||
| Accumulated other | |||||||||||||||||||||||||||||
| comprehensive income (loss) | |||||||||||||||||||||||||||||
| Share Capital | Contributed Surplus | Cumulative Translation Account | Cash Flow Hedges | Defined Benefit Plans | Other Equity | Retained Earnings | Total Equity | ||||||||||||||||||||||
| Balance as at December 30, 2015 | $ | 200,277 | $ | 26,480 | $ | (104,521 | ) | $ | 2,680 | $ | (12,115 | ) | $ | 1,527 | $ | 988,069 | $ | 1,102,397 | |||||||||||
| Total comprehensive loss: | |||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | (11,611 | ) | (11,611 | ) | |||||||||||||||||||
| Other comprehensive income (loss) | - | - | 1,892 | 172 | (1,948 | ) | - | - | 116 | ||||||||||||||||||||
| - | - | 1,892 | 172 | (1,948 | ) | - | (11,611 | ) | (11,495 | ) | |||||||||||||||||||
| Issued under stock option plan | 1,534 | - | - | - | - | - | - | 1,534 | |||||||||||||||||||||
| Reclassification from contributed surplus due to exercise | |||||||||||||||||||||||||||||
| of stock options | 385 | (385 | ) | - | - | - | - | - | - | ||||||||||||||||||||
| Reclassification from contributed surplus due to settlement | |||||||||||||||||||||||||||||
| of deferred share units | 204 | (420 | ) | - | - | - | - | - | (216 | ) | |||||||||||||||||||
| Share-based payments | - | 1,197 | - | - | - | - | - | 1,197 | |||||||||||||||||||||
| Remeasurement of written put option liabilities | - | - | - | - | - | 1,500 | - | 1,500 | |||||||||||||||||||||
| Dividends on common shares | - | - | - | - | - | - | (38,818 | ) | (38,818 | ) | |||||||||||||||||||
| Dividends on deferred share units | - | 267 | - | - | - | - | (267 | ) | - | ||||||||||||||||||||
| Balance as at December 30, 2016 | $ | 202,400 | $ | 27,139 | $ | (102,629 | ) | $ | 2,852 | $ | (14,063 | ) | $ | 3,027 | $ | 937,373 | $ | 1,056,099 | |||||||||||
| Total comprehensive income: | |||||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | 30,583 | 30,583 | |||||||||||||||||||||
| Other comprehensive income (loss) | - | - | 53,151 | (6,094 | ) | (3,422 | ) | - | - | 43,635 | |||||||||||||||||||
| - | - | 53,151 | (6,094 | ) | (3,422 | ) | - | 30,583 | 74,218 | ||||||||||||||||||||
| Reclassification from contributed surplus due to settlement | |||||||||||||||||||||||||||||
| of deferred share units | 900 | (1,074 | ) | - | - | - | - | - | (174 | ) | |||||||||||||||||||
| Share-based payments | - | 1,184 | - | - | - | - | - | 1,184 | |||||||||||||||||||||
| Remeasurement of written put option liabilities | - | - | - | - | - | 2,861 | - | 2,861 | |||||||||||||||||||||
| Dividends on common shares | - | - | - | - | - | - | (38,895 | ) | (38,895 | ) | |||||||||||||||||||
| Dividends on deferred share units | - | 308 | - | - | - | - | (308 | ) | - | ||||||||||||||||||||
| Balance as at December 30, 2017 | $ | 203,300 | $ | 27,557 | $ | (49,478 | ) | $ | (3,242 | ) | $ | (17,485 | ) | $ | 5,888 | $ | 928,753 | $ | 1,095,293 | ||||||||||
| DOREL INDUSTRIES INC. | |||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
| ALL FIGURES IN THOUSANDS OF US $ | |||||||||||||||
| (unaudited) | |||||||||||||||
| Fourth Quarters Ended | Years Ended | ||||||||||||||
|
December 30, 2017 |
December 30, 2016 |
December 30, 2017 |
December 30, 2016 |
||||||||||||
| CASH PROVIDED BY (USED IN): | |||||||||||||||
| OPERATING ACTIVITIES | |||||||||||||||
| Net income (loss) | $ | (2,992 | ) | $ | (5,567 | ) | $ | 30,583 | $ | (11,611 | ) | ||||
| Items not involving cash: | |||||||||||||||
| Depreciation and amortization | 13,129 | 13,275 | 50,145 | 53,186 | |||||||||||
| Impairment losses on goodwill and intangible assets | 19,929 | - | 19,929 | 55,341 | |||||||||||
| Unrealized losses (gains) arising on financial assets | |||||||||||||||
| and financial liabilities classified as held for trading | (492 | ) | (215 | ) | (394 | ) | 197 | ||||||||
| Share-based payments | 154 | 114 | 348 | 484 | |||||||||||
| Defined benefit pension and post-retirement costs | 1,399 | (74 | ) | 4,354 | (5,711 | ) | |||||||||
| Loss (gain) on disposal of property, plant and equipment | 447 | 67 | 628 | (1,286 | ) | ||||||||||
| Write-down of deferred development costs | - | 5,590 | - | 5,590 | |||||||||||
| Restructuring and other costs | (222 | ) | 9,670 | 1,249 | 13,593 | ||||||||||
| Finance expenses | 8,222 | 11,766 | 43,248 | 42,899 | |||||||||||
| Income taxes expense (recovery) | 4,648 | (11,557 | ) | 17,426 | (9,974 | ) | |||||||||
| Net changes in balances related to operations (1) | (19,802 | ) | 62,833 | (68,900 | ) | 75,254 | |||||||||
| Income taxes paid | (3,233 | ) | (3,830 | ) | (19,594 | ) | (20,257 | ) | |||||||
| Income taxes received | 4,327 | 1,301 | 9,238 | 9,913 | |||||||||||
| Interest paid | (9,875 | ) | (12,927 | ) | (31,327 | ) | (36,200 | ) | |||||||
| Interest received | 52 | 62 | 461 | 447 | |||||||||||
| CASH PROVIDED BY OPERATING ACTIVITIES | 15,691 | 70,508 | 57,394 | 171,865 | |||||||||||
| FINANCING ACTIVITIES | |||||||||||||||
| Bank indebtedness | (275 | ) | (6,296 | ) | 6,927 | (8,249 | ) | ||||||||
| Increase of long-term debt | 15,140 | - | 217,360 | - | |||||||||||
| Repayments of long-term debt | - | (53,109 | ) | (187,189 | ) | (98,749 | ) | ||||||||
| Repayments of forward purchase agreement liabilities | - | - | (7,857 | ) | (4,414 | ) | |||||||||
| Increase of written put option liabilities | - | - | - | 673 | |||||||||||
| Financing costs | (13 | ) | (91 | ) | (2,773 | ) | (2,173 | ) | |||||||
| Issuance of share capital | - | 869 | - | 1,479 | |||||||||||
| Dividends on common shares | (9,730 | ) | (9,796 | ) | (38,895 | ) | (38,818 | ) | |||||||
| CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 5,122 | (68,423 | ) | (12,427 | ) | (150,251 | ) | ||||||||
| INVESTING ACTIVITIES | |||||||||||||||
| Acquisition of businesses | - | - | - | 5,475 | |||||||||||
| Additions to property, plant and equipment | (11,941 | ) | (6,001 | ) | (36,464 | ) | (20,014 | ) | |||||||
| Disposals of property, plant and equipment | 142 | 12 | 390 | 1,564 | |||||||||||
| Net proceeds from disposals of assets held for sale | - | 1,347 | 15,027 | 5,883 | |||||||||||
| Additions to intangible assets | (6,951 | ) | (4,061 | ) | (21,054 | ) | (16,165 | ) | |||||||
| CASH USED IN INVESTING ACTIVITIES | (18,750 | ) | (8,703 | ) | (42,101 | ) | (23,257 | ) | |||||||
| Effect of foreign currency exchange rate changes on cash | |||||||||||||||
| and cash equivalents | 454 | (1,398 | ) | 2,092 | 344 | ||||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 2,517 | (8,016 | ) | 4,958 | (1,299 | ) | |||||||||
| Cash and cash equivalents, beginning of period | 34,324 | 39,899 | 31,883 | 33,182 | |||||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 36,841 | $ | 31,883 | $ | 36,841 | $ | 31,883 | |||||||
| (1) Supplemental information on net changes in balances related to operations: | |||||||||||||||
| Trade and other receivables | $ | (30,186 | ) | $ | 13,508 | $ | 4,939 | $ | 7,922 | ||||||
| Inventories | 55,062 | 28,421 | (23,730 | ) | 31,823 | ||||||||||
| Other financial assets | (5 | ) | (568 | ) | (629 | ) | 693 | ||||||||
| Prepaid expenses | 4,726 | 1,080 | (3,851 | ) | (1,064 | ) | |||||||||
| Other assets | 1,385 | (2,336 | ) | (4,571 | ) | (734 | ) | ||||||||
| Trade and other payables | (48,670 | ) | (570 | ) | (13,757 | ) | (695 | ) | |||||||
| Net pension and post-retirement defined benefit liabilities | (687 | ) | (42 | ) | (3,833 | ) | (3,896 | ) | |||||||
| Provisions, other financial liabilities and other liabilities | (1,427 | ) | 23,340 | (23,468 | ) | 41,205 | |||||||||
| $ | (19,802 | ) | $ | 62,833 | $ | (68,900 | ) | $ | 75,254 | ||||||
| DOREL INDUSTRIES INC. | ||||||||||||||||||||||
| SEGMENTED INFORMATION | ||||||||||||||||||||||
| FOURTH QUARTERS ENDED DECEMBER 30, | ||||||||||||||||||||||
| ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS | ||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||
| Total | Dorel Juvenile | Dorel Sports | Dorel Home | |||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
| Total revenue | $ | 677,052 | $ | 648,749 | $ | 239,306 | $ | 236,447 | $ | 236,771 | $ | 235,253 | $ | 200,975 | $ | 177,049 | ||||||
| Cost of sales (1) | 515,604 | 499,808 | 168,661 | 165,207 | 184,666 | 187,255 | 162,277 | 147,346 | ||||||||||||||
| Gross profit | 161,448 | 148,941 | 70,645 | 71,240 | 52,105 | 47,998 | 38,698 | 29,703 | ||||||||||||||
| Selling expenses | 58,496 | 57,477 | 29,532 | 31,146 | 22,150 | 20,258 | 6,814 | 6,073 | ||||||||||||||
| General and administrative expenses | 53,727 | 62,639 | 25,328 | 35,437 | 18,611 | 18,270 | 9,788 | 8,932 | ||||||||||||||
| Research and development expenses | 8,039 | 14,463 | 5,634 | 11,798 | 1,373 | 1,736 | 1,032 | 929 | ||||||||||||||
| Restructuring and other costs (1) | 4,138 | 12,887 | 3,780 | 10,118 | 358 | 2,769 | - | - | ||||||||||||||
| Impairment loss on goodwill | 19,929 | - | 19,929 | - | - | - | - | - | ||||||||||||||
| Operating profit (loss) | 17,119 | 1,475 | $ | (13,558 | ) | $ | (17,259 | ) | $ | 9,613 | $ | 4,965 | $ | 21,064 | $ | 13,769 | ||||||
| Finance expenses | 8,222 | 11,766 | ||||||||||||||||||||
| Corporate expenses | 7,241 | 6,833 | ||||||||||||||||||||
| Income taxes expense (recovery) | 4,648 | (11,557 | ) | |||||||||||||||||||
| Net loss | $ | (2,992 | ) | $ | (5,567 | ) | ||||||||||||||||
| Loss per share | ||||||||||||||||||||||
| Basic | ($ | 0.09 | ) | ($ | 0.17 | ) | ||||||||||||||||
| Diluted | ($ | 0.09 | ) | ($ | 0.17 | ) | ||||||||||||||||
| Depreciation and amortization included in operating profit (loss) | $ | 12,926 | $ | 13,057 | $ | 9,302 | $ | 9,857 | $ | 2,855 | $ | 2,592 | $ | 769 | $ | 608 | ||||||
| Write-down of long-lived assets included in operating profit (loss) | $ | 1,854 | $ | 13,943 | $ | 1,854 | $ | 13,943 | $ | - | $ | - | $ | - | $ | - | ||||||
| (1) Restructuring and other costs charged to: | ||||||||||||||||||||||
| Cost of sales | $ | (438 | ) | $ | 2,419 | $ | 281 | $ | - | $ | (719 | ) | $ | 2,419 | $ | - | $ | - | ||||
| Expenses | 4,138 | 12,887 | 3,780 | 10,118 | 358 | 2,769 | - | - | ||||||||||||||
| $ | 3,700 | $ | 15,306 | $ | 4,061 | $ | 10,118 | $ | (361 | ) | $ | 5,188 | $ | - | $ | - | ||||||
| DOREL INDUSTRIES INC. | ||||||||||||||||||||
| SEGMENTED INFORMATION | ||||||||||||||||||||
| YEARS ENDED DECEMBER 30, | ||||||||||||||||||||
| ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| Total | Dorel Juvenile | Dorel Sports | Dorel Home | |||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Total revenue | $ | 2,577,668 | $ | 2,603,185 | $ | 921,669 | $ | 928,963 | $ | 865,380 | $ | 938,975 | $ | 790,619 | $ | 735,247 | ||||
| Cost of sales (1) | 1,965,917 | 1,992,624 | 646,408 | 638,345 | 670,440 | 742,774 | 649,069 | 611,505 | ||||||||||||
| Gross profit | 611,751 | 610,561 | 275,261 | 290,618 | 194,940 | 196,201 | 141,550 | 123,742 | ||||||||||||
| Selling expenses | 231,417 | 229,196 | 116,275 | 115,132 | 89,197 | 91,247 | 25,945 | 22,817 | ||||||||||||
| General and administrative expenses | 201,261 | 220,362 | 93,453 | 115,447 | 74,143 | 71,961 | 33,665 | 32,954 | ||||||||||||
| Research and development expenses | 31,065 | 39,092 | 21,893 | 28,725 | 5,313 | 6,576 | 3,859 | 3,791 | ||||||||||||
| Restructuring and other costs (1) | 11,814 | 19,560 | 10,358 | 14,554 | 1,456 | 5,006 | - | - | ||||||||||||
| Impairment losses on goodwill and intangible assets | 19,929 | 55,341 | 19,929 | - | - | 55,341 | - | - | ||||||||||||
| Operating profit (loss) | 116,265 | 47,010 | $ | 13,353 | $ | 16,760 | $ | 24,831 | $ | (33,930 | ) | $ | 78,081 | $ | 64,180 | |||||
| Finance expenses | 43,248 | 42,899 | ||||||||||||||||||
| Corporate expenses | 25,008 | 25,696 | ||||||||||||||||||
| Income taxes expense (recovery) | 17,426 | (9,974 | ) | |||||||||||||||||
| Net income (loss) | $ | 30,583 | $ | (11,611 | ) | |||||||||||||||
| Earnings (loss) per share | ||||||||||||||||||||
| Basic | $ | 0.94 | ($ | 0.36 | ) | |||||||||||||||
| Diluted | $ | 0.94 | ($ | 0.36 | ) | |||||||||||||||
| Depreciation and amortization included in operating profit (loss) | $ | 49,338 | $ | 52,365 | $ | 35,744 | $ | 37,404 | $ | 9,748 | $ | 11,015 | $ | 3,846 | $ | 3,946 | ||||
| Write-down of long-lived assets included in operating profit (loss) | $ | 2,222 | $ | 14,367 | $ | 2,222 | $ | 14,367 | $ | - | $ | - | $ | - | $ | - | ||||
| (1) Restructuring and other costs charged to: | ||||||||||||||||||||
| Cost of sales | $ | 260 | $ | 5,121 | $ | 1,575 | $ | - | $ | (1,315 | ) | $ | 5,121 | $ | - | $ | - | |||
| Expenses | 11,814 | 19,560 | 10,358 | 14,554 | 1,456 | 5,006 | - | - | ||||||||||||
| $ | 12,074 | $ | 24,681 | $ | 11,933 | $ | 14,554 | $ | 141 | $ | 10,127 | $ | - | $ | - | |||||
CONTACTS:
MaisonBrison Communications
Rick Leckner
(514) 731-0000
Dorel Industries Inc.
Jeffrey Schwartz
(514) 934-3034
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