- Dorel Juvenile reports strong results with significant revenue growth
- Dorel Home underperforms as the furniture industry remains difficult
MONTRÉAL, Nov. 14, 2024 (GLOBE NEWSWIRE) -- Dorel Industries Inc. (TSX: DII.B, DII.A) today announced its financial results for the third quarter and nine months ended September 30, 2024.
Third quarter revenue was US$354.2 million, compared to US$359.7 million, down 1.5% from the same period a year ago. Reported net loss was US$21.9 million or US$0.67 per diluted share, compared to US$10.4 million or US$0.32 per diluted share last year. Adjusted net loss1 for 2024 was US$20.2 million or US$0.62 per diluted share as compared to US$10.4 million or US$0.32 per diluted share last year.
Revenue for the nine months was US$1,053.4 million, compared to US$1,038.1 million, up 1.5% from the prior year. Reported net loss was US$99.0 million or US$3.04 per diluted share, compared to US$58.6 million or US$1.80 per diluted share a year ago. Adjusted net loss1 for the first nine months of 2024 was US$50.7 million or US$1.56 per diluted share as compared to US$58.6 million or US$1.80 per diluted share a year ago.
"Dorel Juvenile earnings again exceeded last year's comparative quarter, driven by an organic revenue1 increase of over 9%. Impressively, this revenue growth was in all three of our regions; North America, Europe and International. We had several significant customers events in the quarter and the reception to our new product launches in all regions has been very strong, with key deliveries beginning in the quarter. Conversely, Dorel Home faced significant challenges, resulting in a 14% decline in revenue compared to the same period last year. Within our categories, positive momentum in indoor seating, TV stands and step stools were not enough to offset declines in other categories. We continue to drive sales with promotional pricing, which coupled with lower production efficiency meant our gross margins were lower than expected. We initiated substantial cost reduction initiatives in the quarter as we continue to right-size the business to current realities," stated Dorel President & CEO, Martin Schwartz.
____________________
1 This is a non-GAAP financial ratio or measure with no standardized meaning prescribed by IFRS and therefore is unlikely to be comparable to similar measures presented by other issuers. Refer to the section "Definition and reconciliation of non-GAAP financial ratios and measures" in this press release.
| Summary of Financial Information (unaudited) | |||||||
| Third Quarters Ended September 30, | |||||||
| All figures in thousands of US $, except per share amounts | |||||||
| 2024 | 2023 | Change | |||||
| $ | $ | % | |||||
| Revenue | 354,220 | 359,661 | (1.5) | % | |||
| Net loss | (21,900 | ) | (10,360 | ) | 111.4 | % | |
| Per share - Basic | (0.67 | ) | (0.32 | ) | 109.4 | % | |
| Per share - Diluted | (0.67 | ) | (0.32 | ) | 109.4 | % | |
| Adjusted net loss (1) | (20,206 | ) | (10,360 | ) | 95.0 | % | |
| Per share - Diluted (1) | (0.62 | ) | (0.32 | ) | 93.8 | % | |
| Number of shares outstanding - | |||||||
| Basic weighted average | 32,583,148 | 32,540,167 | |||||
| Diluted weighted average | 32,583,148 | 32,540,167 | |||||
| (1) This is a non-GAAP financial ratio or measure with no standardized meaning prescribed by IFRS and therefore is unlikely to be comparable to similar measures presented by other issuers. Refer to the section "Definition and reconciliation of non-GAAP financial ratios and measures" in this press release. | |||||||
| Summary of Financial Information (unaudited) | |||||||
| Nine Months Ended September 30, | |||||||
| All figures in thousands of US $, except per share amounts | |||||||
| 2024 | 2023 | Change | |||||
| $ | $ | % | |||||
| Revenue | 1,053,369 | 1,038,069 | 1.5 | % | |||
| Net loss | (98,950 | ) | (58,593 | ) | 68.9 | % | |
| Per share - Basic | (3.04 | ) | (1.80 | ) | 68.9 | % | |
| Per share - Diluted | (3.04 | ) | (1.80 | ) | 68.9 | % | |
| Adjusted net loss (1) | (50,658 | ) | (58,593 | ) | (13.5) | % | |
| Per share - Diluted (1) | (1.56 | ) | (1.80 | ) | (13.3) | % | |
| Number of shares outstanding - | |||||||
| Basic weighted average | 32,565,816 | 32,538,473 | |||||
| Diluted weighted average | 32,565,816 | 32,538,473 | |||||
| (1) This is a non-GAAP financial ratio or measure with no standardized meaning prescribed by IFRS and therefore is unlikely to be comparable to similar measures presented by other issuers. Refer to the section "Definition and reconciliation of non-GAAP financial ratios and measures" in this press release. | |||||||
| Dorel Juvenile | |||||||||
| All figures in thousands of US $ | |||||||||
| Third Quarters Ended September 30 (unaudited) | |||||||||
| 2024 | 2023 | Change | |||||||
| $ | % of rev. | $ | % of rev. | % | |||||
| Revenue | 222,098 | 205,957 | 7.8 | % | |||||
| Gross profit | 62,761 | 28.3% | 55,024 | 26.7% | 14.1 | % | |||
| Operating profit | 7,192 | 3,186 | 125.7 | % | |||||
| Adjusted operating profit (1) | 7,940 | 3,186 | 149.2 | % | |||||
| (1) This is a non-GAAP financial ratio or measure with no standardized meaning prescribed by IFRS and therefore is unlikely to be comparable to similar measures presented by other issuers. Refer to the section "Definition and reconciliation of non-GAAP financial ratios and measures" in this press release. | |||||||||
| All figures in thousands of US $ | |||||||||
| Nine Months Ended September 30 (unaudited) | |||||||||
| 2024 | 2023 | Change | |||||||
| $ | % of rev. | $ | % of rev. | % | |||||
| Revenue | 651,222 | 617,743 | 5.4 | % | |||||
| Gross profit | 180,885 | 27.8% | 154,753 | 25.1% | 16.9 | % | |||
| Operating profit (loss) | 14,012 | (4,888 | ) | n.m. | |||||
| Adjusted operating profit (loss) (1) | 15,937 | (4,888 | ) | n.m. | |||||
| n.m. = not meaningful | |||||||||
| (1) This is a non-GAAP financial ratio or measure with no standardized meaning prescribed by IFRS and therefore is unlikely to be comparable to similar measures presented by other issuers. Refer to the section "Definition and reconciliation of non-GAAP financial ratios and measures" in this press release. | |||||||||
For the third quarter of 2024, Dorel Juvenile reported revenue of US$222.1 million, marking a 7.8% increase compared to the same period last year. Excluding the impact of foreign exchange rate fluctuations year over year, organic revenue1 growth was 9.2%. This growth was driven by strong performances in the key markets of Brazil, the United States and Europe. The trends of the first half continued in terms of brand and product mix, but from a channel perspective e-commerce was the principal driver of the increase after a lower-than-expected start to the year.
Reported operating profit for the quarter was US$7.2 million compared to US$3.2 million the prior year and adjusted operating profit1 for the quarter was US$7.9 million, a US$4.7 million improvement over 2023. Gross margins were helped by a slightly weaker U.S. dollar and lower input costs versus the prior year, which more than offset higher supply chain costs in 2024. This resulted in a 160 basis point increase in gross margins. As anticipated, contrary to the first half of the year, Europe was the principal contributor to the earnings improvement as its new products began to ship in more meaningful quantities, a trend that is expected to continue for the balance of the year.
| Dorel Home | |||||||||
| All figures in thousands of US $ | |||||||||
| Third Quarters Ended September 30 (unaudited) | |||||||||
| 2024 | 2023 | Change | |||||||
| $ | % of rev. | $ | % of rev. | % | |||||
| Revenue | 132,122 | 153,704 | (14.0) | % | |||||
| Gross profit | 2,809 | 2.1% | 10,971 | 7.1% | (74.4) | % | |||
| Operating loss | (13,177 | ) | (3,562 | ) | 269.9 | % | |||
| Adjusted gross profit (1) | 3,547 | 2.7% | 10,971 | 7.1% | (67.7) | % | |||
| Adjusted operating loss (1) | (12,039 | ) | (3,562 | ) | 238.0 | % | |||
| (1) This is a non-GAAP financial ratio or measure with no standardized meaning prescribed by IFRS and therefore is unlikely to be comparable to similar measures presented by other issuers. Refer to the section "Definition and reconciliation of non-GAAP financial ratios and measures" in this press release. | |||||||||
| All figures in thousands of US $ | |||||||||
| Nine Months Ended September 30 (unaudited) | |||||||||
| 2024 | 2023 | Change | |||||||
| $ | % of rev. | $ | % of rev. | % | |||||
| Revenue | 402,147 | 420,326 | (4.3) | % | |||||
| Gross profit | 19,103 | 4.8% | 18,190 | 4.3% | 5.0 | % | |||
| Operating loss | (70,380 | ) | (27,431 | ) | 156.6 | % | |||
| Adjusted gross profit (1) | 19,841 | 4.9% | 18,190 | 4.3% | 9.1 | % | |||
| Adjusted operating loss (1) | (23,755 | ) | (27,431 | ) | (13.4) | % | |||
| (1) This is a non-GAAP financial ratio or measure with no standardized meaning prescribed by IFRS and therefore is unlikely to be comparable to similar measures presented by other issuers. Refer to the section "Definition and reconciliation of non-GAAP financial ratios and measures" in this press release. | |||||||||
In the third quarter of 2024, Dorel Home recorded a 14.0% decrease in revenue compared to the same period last year. This decline was primarily due to lower sales in several categories, including fireplaces, futons, dressers, indoor tables, and utility storage. However, the Company saw strong sales in indoor seating, TV stands, and step stools, which helped to partially offset the overall revenue decline. On a sequential basis, brick-and-mortar sales increased slightly from second quarter and Cosco Home & Office continues to deliver increased sales and strong profitability, both significant positives for the segment.
Gross margin for the quarter decreased by 500 basis points compared to the prior year, mainly due to increased promotional pricing and lower volume efficiency due to decreased production levels at the Company's ready-to-assemble (RTA) plants. Additionally, margins were negatively impacted by costs related to the closure of the Tiffin, Ohio RTA plant initiated in the third quarter. Inventories are down US$32.3 million from the third quarter of 2023 as the Company reduced new purchases and depleted inventory on-hand through increased promotional pricing. Operating expenses increased due to an impairment charge related to a customer bankruptcy filing, partially offset by lower selling expenses. Consequently, the operating loss increased by 269.9%, or US$9.6 million, from the prior year quarter.
During the quarter, the closure of the RTA manufacturing facility, located in Tiffin, Ohio and the transfer of production to Cornwall, Ontario was initiated and thus far successfully executed. This resulted in one-time charges of US$2.6 million in cost of sales and restructuring charges of US$1.1 million. Of this amount, US$3.3 million was non-cash and relate to accelerated depreciation of machinery and equipment and inventory write-downs. This transition to one efficient and profitable facility for domestic RTA furniture production will provide improved earnings going forward and is a key part of the segment's right-sizing activities.
Outlook
"As we look ahead, Dorel Juvenile remains committed to driving sustainable growth through strategic investments in product innovation, continued market share gains and operational efficiency. We anticipate continued strong performance in our key markets, supported by our robust e-commerce channels and successful partnerships with key suppliers and retailers. Despite potential challenges from currency fluctuations and container costs, we are confident in our ability to navigate these headwinds and deliver sequential earnings improvement for the fourth quarter," commented Dorel President & CEO, Martin Schwartz.
"Dorel Home is on a path to reduce its costs and match its footprint to current revenue expectations, which are substantially lower than our peak years of 2020 and 2021. We have expanded our restructuring plan announced at the end of 2023 with the consolidation of our RTA facilities in the third quarter and will be initiating other aggressive actions by the end of the year to right-size the business. We acknowledge that we are operating within a challenging industry, but we believe we can operate profitably with our dual sourcing business model of efficient domestic production coupled with overseas imports. With our recent success at major brick-and-mortar retailers and traditional leadership in e-commerce, we will focus on key profitable categories and targeted promotional activities. We remain confident in our ability to adapt to market conditions and deliver value to our shareholders," concluded Mr. Schwartz.
Conference Call
Dorel Industries Inc. will hold a conference call to discuss these results on Thursday, November 14, 2024 at 1:00 PM Eastern Time. Interested parties can join the call by dialing 1-844-763-8274. The conference call can also be accessed via live webcast at http://www.dorel.com. If you are unable to call in at this time, you may access a recording of the meeting by calling 1-855-669-9658 and entering the passcode 1819669 on your phone. This recording will be available on Thursday, November 14, 2024 as of 4:30 PM until 11:59 PM on Thursday, November 21, 2024.
Condensed consolidated interim financial statements as at September 30, 2024 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, DII.A) is a global organization, operating two distinct businesses in juvenile products 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 Maxi-Cosi, Safety 1st and Tiny Love, complemented by regional brands such as BebeConfort, Cosco, Mother's Choice and Infanti. Dorel Home, with its comprehensive e-commerce platform, markets a wide assortment of domestically produced and imported furniture. Dorel has annual sales of US$1.4 billion and employs approximately 3,900 people in facilities located in twenty-two 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, the Company 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, including statements regarding the impact of the macro-economic environment, including inflationary pressures, changes in consumer spending, exchange rate fluctuations and increases in interest rates on the Company's business, financial position and operations, and are based on several assumptions which give rise to the possibility that actual results could differ materially from the Company'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, the Company cannot guarantee that any forward-looking statement will materialize, or if any of them do, what benefits the Company 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 the Company'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 the Company believed were reasonable on the day it made the forward-looking statements. Factors that could cause actual results to differ materially from the Company's expectations expressed in or implied by the forward-looking statements include:
- general economic and financial conditions, including those resulting from the current high inflationary environment;
- changes in applicable laws or regulations;
- changes in product costs and supply channels, including disruption of the Company's supply chain resulting from the macro-economic environment;
- foreign currency fluctuations, including high levels of volatility in foreign currencies with respect to the US dollar reflecting uncertainties related to the macro-economic environment;
- customer and credit risk, including the concentration of revenues with a 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;
- outbreak of public health crises, such as the COVID-19 pandemic, that could adversely affect global economies and financial markets, resulting in an economic downturn which could be for a prolonged period of time and have a material adverse effect on the demand for the Company's products and on its business, financial condition and results of operations;
- the effect of international conflicts on the Company's sales, including the ongoing Russia-Ukraine war and the Israeli-Hamas war;
- continued access to capital resources, including compliance by the Company with all of the covenants under its ABL facility and term loan facility, and the related costs of borrowing, all of which may be adversely impacted by the macro-economic environment;
- failures related to information technology systems;
- changes in assumptions in the valuation of goodwill and other intangible assets and any future decline in market capitalization;
- there being no certainty that the Company will declare any dividend in the future;
- increased exposure to cybersecurity risks as a result of remote work by the Company's employees;
- the Company's ability to protect its current and future technologies and products and to defend its intellectual property rights;
- potential damage to the Company's reputation; and
- the effect of climate change on the Company.
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 the Company's annual MD&A and Annual Information Form filed with the applicable Canadian securities regulatory authorities. The risk factors set out in the previously mentioned documents are expressly incorporated by reference herein in their entirety.
The Company cautions readers that the risks described above are not the only ones that could impact it. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial may also have a material adverse effect on the Company'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.
All figures in the tables below are in thousands of US $, except per share amounts.
| Consolidated Results | |||||||||||||||||
| Third Quarters Ended | Nine Months Ended | ||||||||||||||||
| Sep 30, | Sep 30, | Variation | Sep 30, | Sep 30, | Variation | ||||||||||||
| 2024 | 2023 | $ | % | 2024 | 2023 | $ | % | ||||||||||
| Revenue | 354,220 | 359,661 | (5,441 | ) | (1.5) | % | 1,053,369 | 1,038,069 | 15,300 | 1.5 | % | ||||||
| Cost of sales | 288,650 | 293,666 | (5,016 | ) | (1.7) | % | 853,381 | 865,126 | (11,745 | ) | (1.4) | % | |||||
| Gross profit | 65,570 | 65,995 | (425 | ) | (0.6) | % | 199,988 | 172,943 | 27,045 | 15.6 | % | ||||||
| Adjusted gross profit (1) | 66,308 | 65,995 | 313 | 0.5 | % | 200,726 | 172,943 | 27,783 | 16.1 | % | |||||||
| Selling expenses | 30,801 | 32,222 | (1,421 | ) | (4.4) | % | 95,903 | 95,838 | 65 | 0.1 | % | ||||||
| General and administrative expenses | 36,552 | 31,424 | 5,128 | 16.3 | % | 104,234 | 103,051 | 1,183 | 1.1 | % | |||||||
| Research and development expenses | 6,135 | 6,113 | 22 | 0.4 | % | 17,852 | 18,557 | (705 | ) | (3.8) | % | ||||||
| Impairment loss (reversal) on trade accounts receivable | 2,002 | (53 | ) | 2,055 | n.m. | 2,222 | 280 | 1,942 | n.m. | ||||||||
| Restructuring costs | 1,148 | - | 1,148 | 100.0 | % | 2,510 | - | 2,510 | 100.0 | % | |||||||
| Impairment loss on goodwill | - | - | - | n/a | 45,302 | - | 45,302 | 100.0 | % | ||||||||
| Operating loss | (11,068 | ) | (3,711 | ) | 7,357 | 198.2 | % | (68,035 | ) | (44,783 | ) | 23,252 | 51.9 | % | |||
| Adjusted operating loss (1) | (9,182 | ) | (3,711 | ) | 5,471 | 147.4 | % | (19,485 | ) | (44,783 | ) | (25,298 | ) | (56.5) | % | ||
| Finance expenses | 10,220 | 6,464 | 3,756 | 58.1 | % | 28,862 | 18,763 | 10,099 | 53.8 | % | |||||||
| Loss before income taxes | (21,288 | ) | (10,175 | ) | 11,113 | 109.2 | % | (96,897 | ) | (63,546 | ) | 33,351 | 52.5 | % | |||
| Income taxes expense (recovery) | 612 | 185 | 427 | 230.8 | % | 2,053 | (4,953 | ) | 7,006 | n.m. | |||||||
| Net loss | (21,900 | ) | (10,360 | ) | 11,540 | 111.4 | % | (98,950 | ) | (58,593 | ) | 40,357 | 68.9 | % | |||
| Adjusted net loss (1) | (20,206 | ) | (10,360 | ) | 9,846 | 95.0 | % | (50,658 | ) | (58,593 | ) | (7,935 | ) | (13.5) | % | ||
| Basic loss per share | (0.67 | ) | (0.32 | ) | 0.35 | 109.4 | % | (3.04 | ) | (1.80 | ) | 1.24 | 68.9 | % | |||
| Diluted loss per share | (0.67 | ) | (0.32 | ) | 0.35 | 109.4 | % | (3.04 | ) | (1.80 | ) | 1.24 | 68.9 | % | |||
| Adjusted diluted loss per share (1) | (0.62 | ) | (0.32 | ) | 0.30 | 93.8 | % | (1.56 | ) | (1.80 | ) | (0.24 | ) | (13.3) | % | ||
| Weighted average number of shares - Basic | 32,583,148 | 32,540,167 | n/a | n/a | 32,565,816 | 32,538,473 | n/a | n/a | |||||||||
| Weighted average number of shares - Diluted | 32,583,148 | 32,540,167 | n/a | n/a | 32,565,816 | 32,538,473 | n/a | n/a | |||||||||
| Gross margin (2) | 18.5 | % | 18.3 | % | n/a | 20 bp | 19.0 | % | 16.7 | % | n/a | 230 bp | |||||
| Adjusted gross margin (1) | 18.7 | % | 18.3 | % | n/a | 40 bp | 19.1 | % | 16.7 | % | n/a | 240 bp | |||||
| Selling expenses as a percentage of revenue (3) | 8.7 | % | 9.0 | % | n/a | (30) bp | 9.1 | % | 9.2 | % | n/a | (10) bp | |||||
| General and administrative expenses as a percentage of revenue (4) | 10.3 | % | 8.7 | % | n/a | 160 bp | 9.9 | % | 9.9 | % | n/a | - bp | |||||
| n.m. = not meaningful | |||||||||||||||||
| n/a = not applicable | |||||||||||||||||
| bp = basis point | |||||||||||||||||
| (1) This is a non-GAAP financial ratio or measure with no standardized meaning prescribed by IFRS and therefore is unlikely to be comparable to similar measures presented by other issuers. Refer to the section "Definition and reconciliation of non-GAAP financial ratios and measures" in this press release. | |||||||||||||||||
| (2) Gross margin is defined as gross profit divided by revenue. | |||||||||||||||||
| (3) Selling expenses as a percentage of revenue is defined as selling expenses divided by revenue. | |||||||||||||||||
| (4) General and administrative expenses as a percentage of revenue is defined as general and administrative expenses divided by revenue. | |||||||||||||||||
| Dorel Juvenile | |||||||||||||||||
| Third Quarters Ended | Nine Months Ended | ||||||||||||||||
| Sep 30, | Sep 30, | Variation | Sep 30, | Sep 30, | Variation | ||||||||||||
| 2024 | 2023 | $ | % | 2024 | 2023 | $ | % | ||||||||||
| Revenue | 222,098 | 205,957 | 16,141 | 7.8 | % | 651,222 | 617,743 | 33,479 | 5.4 | % | |||||||
| Cost of sales | 159,337 | 150,933 | 8,404 | 5.6 | % | 470,337 | 462,990 | 7,347 | 1.6 | % | |||||||
| Gross profit | 62,761 | 55,024 | 7,737 | 14.1 | % | 180,885 | 154,753 | 26,132 | 16.9 | % | |||||||
| Selling expenses | 25,375 | 26,008 | (633 | ) | (2.4) | % | 79,412 | 76,897 | 2,515 | 3.3 | % | ||||||
| General and administrative expenses | 24,367 | 21,095 | 3,272 | 15.5 | % | 71,177 | 67,830 | 3,347 | 4.9 | % | |||||||
| Research and development expenses | 4,915 | 4,835 | 80 | 1.7 | % | 14,047 | 14,656 | (609 | ) | (4.2) | % | ||||||
| Impairment loss (reversal) on trade accounts receivable | 164 | (100 | ) | 264 | n.m. | 312 | 258 | 54 | 20.9 | % | |||||||
| Restructuring costs | 748 | - | 748 | 100.0 | % | 1,925 | - | 1,925 | 100.0 | % | |||||||
| Operating profit (loss) | 7,192 | 3,186 | 4,006 | 125.7 | % | 14,012 | (4,888 | ) | 18,900 | n.m. | |||||||
| Adjusted operating profit (loss) (1) | 7,940 | 3,186 | 4,754 | 149.2 | % | 15,937 | (4,888 | ) | 20,825 | n.m. | |||||||
| Gross margin (2) | 28.3 | % | 26.7 | % | n/a | 160 bp | 27.8 | % | 25.1 | % | n/a | 270 bp | |||||
| Selling expenses as a percentage of revenue (3) | 11.4 | % | 12.6 | % | n/a | (120) bp | 12.2 | % | 12.4 | % | n/a | (20) bp | |||||
| General and administrative expenses as a percentage of revenue (4) | 11.0 | % | 10.2 | % | n/a | 80 bp | 10.9 | % | 11.0 | % | n/a | (10) bp | |||||
| n.m. = not meaningful | |||||||||||||||||
| n/a = not applicable | |||||||||||||||||
| bp = basis point | |||||||||||||||||
| (1) This is a non-GAAP financial ratio or measure with no standardized meaning prescribed by IFRS and therefore is unlikely to be comparable to similar measures presented by other issuers. Refer to the section "Definition and reconciliation of non-GAAP financial ratios and measures" in this press release. | |||||||||||||||||
| (2) Gross margin is defined as gross profit divided by revenue. | |||||||||||||||||
| (3) Selling expenses as a percentage of revenue is defined as selling expenses divided by revenue. | |||||||||||||||||
| (4) General and administrative expenses as a percentage of revenue is defined as general and administrative expenses divided by revenue. | |||||||||||||||||
| Dorel Home | |||||||||||||||||
| Third Quarters Ended | Nine Months Ended | ||||||||||||||||
| Sep 30, | Sep 30, | Variation | Sep 30, | Sep 30, | Variation | ||||||||||||
| 2024 | 2023 | $ | % | 2024 | 2023 | $ | % | ||||||||||
| Revenue | 132,122 | 153,704 | (21,582 | ) | (14.0) | % | 402,147 | 420,326 | (18,179 | ) | (4.3) | % | |||||
| Cost of sales | 129,313 | 142,733 | (13,420 | ) | (9.4) | % | 383,044 | 402,136 | (19,092 | ) | (4.7) | % | |||||
| Gross profit | 2,809 | 10,971 | (8,162 | ) | (74.4) | % | 19,103 | 18,190 | 913 | 5.0 | % | ||||||
| Adjusted gross profit (1) | 3,547 | 10,971 | (7,424 | ) | (67.7) | % | 19,841 | 18,190 | 1,651 | 9.1 | % | ||||||
| Selling expenses | 5,426 | 6,214 | (788 | ) | (12.7) | % | 16,491 | 18,941 | (2,450 | ) | (12.9) | % | |||||
| General and administrative expenses | 7,102 | 6,994 | 108 | 1.5 | % | 21,390 | 22,757 | (1,367 | ) | (6.0) | % | ||||||
| Research and development expenses | 1,220 | 1,278 | (58 | ) | (4.5) | % | 3,805 | 3,901 | (96 | ) | (2.5) | % | |||||
| Impairment loss on trade accounts receivable | 1,838 | 47 | 1,791 | n.m. | 1,910 | 22 | 1,888 | n.m. | |||||||||
| Restructuring costs | 400 | - | 400 | 100.0 | % | 585 | - | 585 | 100.0 | % | |||||||
| Impairment loss on goodwill | - | - | - | n/a | 45,302 | - | 45,302 | 100.0 | % | ||||||||
| Operating loss | (13,177 | ) | (3,562 | ) | 9,615 | 269.9 | % | (70,380 | ) | (27,431 | ) | 42,949 | 156.6 | % | |||
| Adjusted operating loss (1) | (12,039 | ) | (3,562 | ) | 8,477 | 238.0 | % | (23,755 | ) | (27,431 | ) | (3,676 | ) | (13.4) | % | ||
| Gross margin (2) | 2.1 | % | 7.1 | % | n/a | (500) bp | 4.8 | % | 4.3 | % | n/a | 50 bp | |||||
| Adjusted gross margin (1) | 2.7 | % | 7.1 | % | n/a | (440) bp | 4.9 | % | 4.3 | % | n/a | 60 bp | |||||
| Selling expenses as a percentage of revenue (3) | 4.1 | % | 4.0 | % | n/a | 10 bp | 4.1 | % | 4.5 | % | n/a | (40) bp | |||||
| General and administrative expenses as a percentage of revenue (4) | 5.4 | % | 4.6 | % | n/a | 80 bp | 5.3 | % | 5.4 | % | n/a | (10) bp | |||||
| n.m. = not meaningful | |||||||||||||||||
| n/a = not applicable | |||||||||||||||||
| bp = basis point | |||||||||||||||||
| (1) This is a non-GAAP financial ratio or measure with no standardized meaning prescribed by IFRS and therefore is unlikely to be comparable to similar measures presented by other issuers. Refer to the section "Definition and reconciliation of non-GAAP financial ratios and measures" in this press release. | |||||||||||||||||
| (2) Gross margin is defined as gross profit divided by revenue. | |||||||||||||||||
| (3) Selling expenses as a percentage of revenue is defined as selling expenses divided by revenue. | |||||||||||||||||
| (4) General and administrative expenses as a percentage of revenue is defined as general and administrative expenses divided by revenue. | |||||||||||||||||
Definition and Reconciliation of Non-GAAP Financial Ratios and Measures
Dorel presents in this press release certain non-GAAP financial ratios and measures, as described below. These non-GAAP financial ratios and measures do not have a standardized meaning prescribed by IFRS and therefore are unlikely to be comparable to similar measures presented by other issuers. These non-GAAP financial ratios and measures should not be considered in isolation or as a substitute for a measure prepared in accordance with IFRS. Contained within this press release are reconciliations of the non-GAAP financial ratios and measures to the most directly comparable financial measures calculated in accordance with IFRS.
Dorel believes that the non-GAAP financial ratios and measures used in this press release provide investors with additional information to analyze its results and to measure its financial performance by excluding the variation caused by certain items that Dorel believes do not reflect its core business performance and provides better comparability between the periods presented. Excluding these items does not imply they are necessarily non-recurring. The non-GAAP financial measures are also used by management to assess Dorel's financial performance and to make operating and strategic decisions.
Adjustments to non-GAAP financial ratios and measures
As noted above, certain of our non-GAAP financial measures and ratios exclude the variation caused by certain adjustments that affect the comparability of Dorel's financial results and could potentially distort the analysis of trends in its business performance. Adjustments which impact more than one non-GAAP financial ratio and measure are explained below.
Restructuring costs
Restructuring costs are comprised of costs directly related to significant exit activities, including the sale of manufacturing facilities, closure of businesses, reorganization, optimization, transformation, and consolidation to improve the competitive position of the Company in the marketplace and to reduce costs and bring efficiencies, and acquisition-related costs in connection with business acquisitions. Restructuring costs are included as an adjustment of adjusted gross profit, adjusted gross margin, adjusted operating profit (loss), adjusted net income (loss) and adjusted diluted earnings (loss) per share. Restructuring costs were respectively US$1.9 million and US$3.2 million for the third quarter and nine months ended September 30, 2024 (none in 2023). Refer to the section "Impairment loss on goodwill and restructuring costs" in the MD&A for more details.
Impairment loss on goodwill
Impairment loss on goodwill is included as an adjustment of adjusted operating profit (loss), adjusted net income (loss) and adjusted diluted earnings (loss) per share. Impairment loss on goodwill was respectively nil and US$45.3 million for the third quarter and nine months ended September 30, 2024 (none in 2023). Refer to the section "Impairment loss on goodwill and restructuring costs" in the MD&A for more details.
Adjusted gross profit and adjusted gross margin
Adjusted gross profit is calculated as gross profit excluding the impact of restructuring costs. Adjusted gross margin is a non-GAAP ratio and is calculated as adjusted gross profit divided by revenue. Dorel uses adjusted gross profit and adjusted gross margin to measure its performance from one period to the next, without the variation caused by the impacts of the items described above. Dorel also uses adjusted gross profit and adjusted gross margin on a segment basis to measure its performance at the segment level. Dorel excludes this item because it affects the comparability of its financial results and could potentially distort the analysis of trends in its business performance. Certain investors and analysts use the adjusted gross profit and adjusted gross margin to measure the business performance of the Company as a whole and at the segment level from one period to the next, without the variation caused by the impact of the restructuring costs. Excluding this item does not imply it is necessarily non-recurring. These ratios and measures do not have any standardized meanings prescribed by IFRS and are therefore unlikely to be comparable to a similar measure presented by other companies.
| Third Quarters Ended | Nine Months Ended | ||||||||
| Sep 30, | Sep 30, | Sep 30, | Sep 30, | ||||||
| 2024 | 2023 | 2024 | 2023 | ||||||
| Gross profit | 65,570 | 65,995 | 199,988 | 172,943 | |||||
| Adjustment for: | |||||||||
| Restructuring costs recorded within gross profit | 738 | - | 738 | - | |||||
| Adjusted gross profit | 66,308 | 65,995 | 200,726 | 172,943 | |||||
| Adjusted gross margin (1) | 18.7 | % | 18.3 | % | 19.1 | % | 16.7 | % | |
| (1) This is a non-GAAP financial ratio and it is calculated as adjusted gross profit divided by revenue. | |||||||||
| Third Quarters Ended | Nine Months Ended | ||||||||
| Sep 30, | Sep 30, | Sep 30, | Sep 30, | ||||||
| Dorel Home | 2024 | 2023 | 2024 | 2023 | |||||
| Gross profit | 2,809 | 10,971 | 19,103 | 18,190 | |||||
| Adjustment for: | |||||||||
| Restructuring costs recorded within gross profit | 738 | - | 738 | - | |||||
| Adjusted gross profit | 3,547 | 10,971 | 19,841 | 18,190 | |||||
| Adjusted gross margin (1) | 2.7 | % | 7.1 | % | 4.9 | % | 4.3 | % | |
| (1) This is a non-GAAP financial ratio and it is calculated as adjusted gross profit divided by revenue. | |||||||||
| Adjusted operating profit (loss) Adjusted operating profit (loss) is calculated as operating profit (loss) excluding the impact of restructuring costs. Adjusted operating profit (loss) also excludes impairment loss on goodwill. Management uses adjusted operating profit (loss) to measure its performance from one period to the next, without the variation caused by the impacts of the items described above. Dorel also uses adjusted operating profit (loss) on a segment basis to measure its performance at the segment level. Dorel excludes these items because they affect the comparability of its financial results and could potentially distort the analysis of trends in its business performance. Certain investors and analysts use the adjusted operating profit (loss) to measure the business performance of the Company as a whole and at the segment level from one period to the next, without the variation caused by the impact of the restructuring costs and impairment loss on goodwill. Excluding these items does not imply they are necessarily non-recurring. This measure does not have any standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to a similar measure presented by other companies. | |||||||||
| Third Quarters Ended | Nine Months Ended | ||||||||
| Sep 30, | Sep 30, | Sep 30, | Sep 30, | ||||||
| 2024 | 2023 | 2024 | 2023 | ||||||
| Operating loss | (11,068 | ) | (3,711 | ) | (68,035 | ) | (44,783 | ) | |
| Adjustment for: | |||||||||
| Total restructuring costs | 1,886 | - | 3,248 | - | |||||
| Impairment loss on goodwill | - | - | 45,302 | - | |||||
| Adjusted operating loss | (9,182 | ) | (3,711 | ) | (19,485 | ) | (44,783 | ) | |
| Third Quarters Ended | Nine Months Ended | ||||||||
| Sep 30, | Sep 30, | Sep 30, | Sep 30, | ||||||
| Dorel Juvenile | 2024 | 2023 | 2024 | 2023 | |||||
| Operating profit (loss) | 7,192 | 3,186 | 14,012 | (4,888 | ) | ||||
| Adjustment for: | |||||||||
| Restructuring costs | 748 | - | 1,925 | - | |||||
| Adjusted operating profit (loss) | 7,940 | 3,186 | 15,937 | (4,888 | ) | ||||
| Third Quarters Ended | Nine Months Ended | ||||||||
| Sep 30, | Sep 30, | Sep 30, | Sep 30, | ||||||
| Dorel Home | 2024 | 2023 | 2024 | 2023 | |||||
| Operating loss | (13,177 | ) | (3,562 | ) | (70,380 | ) | (27,431 | ) | |
| Adjustment for: | |||||||||
| Restructuring costs | 1,138 | - | 1,323 | - | |||||
| Impairment loss on goodwill | - | - | 45,302 | - | |||||
| Adjusted operating loss | (12,039 | ) | (3,562 | ) | (23,755 | ) | (27,431 | ) | |
| Adjusted net income (loss) and adjusted diluted earnings (loss) per share Adjusted net income (loss) is calculated as net income (loss) excluding the impact of restructuring costs and impairment loss on goodwill, as well as income taxes expense (recovery) relating to the adjustments above. Adjusted diluted earnings (loss) per share is a non-GAAP ratio and is calculated as adjusted net income (loss) divided by the weighted average number of diluted shares. Management uses adjusted net income (loss) and adjusted diluted earnings (loss) per share to measure its performance from one period to the next, without the variation caused by the impacts of the items described above. Dorel excludes these items because they affect the comparability of its financial results and could potentially distort the analysis of trends in its business performance. Certain investors and analysts use the adjusted net income (loss) and adjusted diluted earnings (loss) per share to measure the business performance of the Company from one period to the next. Excluding these items does not imply they are necessarily non-recurring. These measures do not have any standardized meanings prescribed by IFRS and are therefore unlikely to be comparable to a similar measure presented by other companies. | |||||||||
| Third Quarters Ended | Nine Months Ended | ||||||||
| Sep 30, | Sep 30, | Sep 30, | Sep 30, | ||||||
| 2024 | 2023 | 2024 | 2023 | ||||||
| Net loss | (21,900 | ) | (10,360 | ) | (98,950 | ) | (58,593 | ) | |
| Adjustment for: | |||||||||
| Total restructuring costs | 1,886 | - | 3,248 | - | |||||
| Impairment loss on goodwill | - | - | 45,302 | - | |||||
| Income taxes recovery relating to the above-noted adjustments | (192 | ) | - | (258 | ) | - | |||
| Adjusted net loss | (20,206 | ) | (10,360 | ) | (50,658 | ) | (58,593 | ) | |
| Basic loss per share | (0.67 | ) | (0.32 | ) | (3.04 | ) | (1.80 | ) | |
| Diluted loss per share | (0.67 | ) | (0.32 | ) | (3.04 | ) | (1.80 | ) | |
| Adjusted diluted loss per share (1) | (0.62 | ) | (0.32 | ) | (1.56 | ) | (1.80 | ) | |
| (1) This is a non-GAAP financial ratio and it is calculated as adjusted net income (loss) divided by weighted average number of diluted shares. | |||||||||
Organic revenue growth (decline) and adjusted organic revenue growth (decline)
Organic revenue growth (decline) is calculated as revenue growth (decline) compared to the previous period, excluding the impact of varying foreign exchange rates. Adjusted organic revenue growth (decline) is calculated as revenue growth (decline) compared to the previous period, excluding the impact of varying foreign exchange rates and the impact of the acquired businesses for the first year of operation and the sale of divisions. Management uses organic revenue growth (decline) and adjusted organic revenue growth (decline) to measure its performance from one period to the next, without the variation caused by the impacts of the items described above. Dorel excludes these items because they affect the comparability of its financial results and could potentially distort the analysis of trends in its business performance. Certain investors and analysts use organic revenue growth (decline) and adjusted organic revenue growth (decline) to measure the business performance of the Company as a whole and at the segment level from one period to the next. Excluding these items does not imply they are necessarily non-recurring. These measures do not have any standardized meanings prescribed by IFRS and are therefore unlikely to be comparable to a similar measure presented by other companies.
| Third Quarters Ended September 30, | ||||||||||||||||||||||||||
| Consolidated | Dorel Juvenile | Dorel Home | ||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||
| $ | % | $ | % | $ | % | $ | % | $ | % | $ | % | |||||||||||||||
| Revenue of the period | 354,220 | 359,661 | 222,098 | 205,957 | 132,122 | 153,704 | ||||||||||||||||||||
| Revenue of the comparative period | (359,661 | ) | (374,143 | ) | (205,957 | ) | (186,695 | ) | (153,704 | ) | (187,448 | ) | ||||||||||||||
| Revenue (decline) growth | (5,441 | ) | (1.5 | ) | (14,482 | ) | (3.9 | ) | 16,141 | 7.8 | 19,262 | 10.3 | (21,582 | ) | (14.0 | ) | (33,744 | ) | (18.0 | ) | ||||||
| Impact of varying foreign exchange rates | 2,838 | 0.8 | (7,651 | ) | (2.0 | ) | 2,869 | 1.4 | (7,256 | ) | (3.9 | ) | (31 | ) | (0.1 | ) | (395 | ) | (0.2 | ) | ||||||
| Organic revenue (decline) growth (1) | (2,603 | ) | (0.7 | ) | (22,133 | ) | (5.9 | ) | 19,010 | 9.2 | 12,006 | 6.4 | (21,613 | ) | (14.1 | ) | (34,139 | ) | (18.2 | ) | ||||||
| (1) This is a non-GAAP financial ratio or measure with no standardized meaning prescribed by IFRS and therefore is unlikely to be comparable to similar measures presented by other issuers. Refer to the section "Definition and reconciliation of non-GAAP financial ratios and measures" in this press release. | ||||||||||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| Consolidated | Dorel Juvenile | Dorel Home | ||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||
| $ | % | $ | % | $ | % | $ | % | $ | % | $ | % | |||||||||||||||
| Revenue of the period | 1,053,369 | 1,038,069 | 651,222 | 617,743 | 402,147 | 420,326 | ||||||||||||||||||||
| Revenue of the comparative period | (1,038,069 | ) | (1,230,013 | ) | (617,743 | ) | (621,268 | ) | (420,326 | ) | (608,745 | ) | ||||||||||||||
| Revenue growth (decline) | 15,300 | 1.5 | (191,944 | ) | (15.6 | ) | 33,479 | 5.4 | (3,525 | ) | (0.6 | ) | (18,179 | ) | (4.3 | ) | (188,419 | ) | (31.0 | ) | ||||||
| Impact of varying foreign exchange rates | 5,450 | 0.5 | (4,140 | ) | (0.3 | ) | 5,540 | 0.9 | (4,483 | ) | (0.7 | ) | (90 | ) | - | 343 | 0.1 | |||||||||
| Organic revenue growth (decline) (1) | 20,750 | 2.0 | (196,084 | ) | (15.9 | ) | 39,019 | 6.3 | (8,008 | ) | (1.3 | ) | (18,269 | ) | (4.3 | ) | (188,076 | ) | (30.9 | ) | ||||||
| (1) This is a non-GAAP financial ratio or measure with no standardized meaning prescribed by IFRS and therefore is unlikely to be comparable to similar measures presented by other issuers. Refer to the section "Definition and reconciliation of non-GAAP financial ratios and measures" in this press release. | ||||||||||||||||||||||||||
CONTACTS:
Dorel Industries Inc.
John Paikopoulos
(514) 934-3034
Dorel Industries Inc.
Jeffrey Schwartz
(514) 934-3034
