MONTREAL, QUÉBEC–(Marketwired – March 9, 2017) – Dorel Industries Inc. (TSX:DII.B)(TSX:DII.A) today announced results for the fourth quarter and year ended December 30, 2016. Revenue for the fourth quarter was US$648.7 million down 3.0% from US$668.9 million a year ago. Adjusted net income for the fourth quarter was US$7.7 million or US$0.24 per diluted share compared to adjusted net income of US$14.1 million or US$0.43 per diluted share in the fourth quarter of 2015. Reported net loss for the quarter was US$5.6 million or US$0.17 per diluted share compared to reported net income of US$6.6 million or US$0.20 per diluted share a year ago.
Revenue for the full year was US$2.60 billion, down 3.0% from US$2.68 billion the previous year. Adjusted net income for the year rose slightly to US$58.3 million or US$1.79 per diluted share compared to adjusted net income of US$58.0 million or US$1.78 per diluted share in 2015. Reported net loss was US$11.6 million or US$0.36 per diluted share, compared to reported net income of US$25.7 million or US$0.79 per diluted share the previous year.
The Company is presenting adjusted financial information, excluding impairment losses on goodwill and intangible assets, restructuring and other costs and remeasurement of forward purchase agreement liabilities, 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. The fourth quarter reported net loss included restructuring and other costs and loss on remeasurement of forward purchase agreement liabilities totaling US$18.1 million pre-tax or US$0.41 per diluted share. Excluding these items, adjusted income before income taxes was US$1.0 million compared to US$11.0 million a year ago. Contained within this press release are reconciliations of non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP.
The Company strengthened its statement of financial position throughout the year with cash provided by operating activities generating US$171.9 million, compared to US$78.7 million last year. Lowering inventory levels has been a prime focus, contributing to the improved cash flow. Year-over-year, the Company’s net debt position (defined as long-term debt and bank indebtedness less cash and cash equivalents) has been reduced by approximately US$96.0 million. As a result, the indebtedness to adjusted EBITDA ratio improved to 2.28 from 3.06 in 2015 as detailed in the attached tables of this press release.
“Our management teams successfully navigated through challenging conditions in several markets in 2016. I am pleased with the results achieved across our business units. There was notable progress in inventory control and cash flow management. As such, we are considerably less leveraged than a year ago. It was another breakout year for Dorel Home and the segment has evolved from a traditional furniture company to one that understands today’s marketplace with a best-in-class technological distribution platform for home products. Dorel Juvenile is changing to become more proactive in responding to industry trends, returning to its entrepreneurial origins. Management is simplifying the organization, concentrating on projects that generate profitable short-term revenue and materially accelerating our time to market. Despite the reduced top line at Dorel Sports, efforts at mitigating the headwinds in bikes were successful as fourth quarter adjusted operating profit increased almost 11%,” stated Martin Schwartz, Dorel President and CEO.
| Summary of Financial Information (unaudited) | ||||||
| Fourth Quarters Ended December 30 | ||||||
| All figures in thousands of US $, except per share amounts | ||||||
| 2016 | 2015 | Change | ||||
| $ | $ | % | ||||
| Total revenue | 648,749 | 668,938 | (3.0 | %) | ||
| Net income (loss) | (5,567 | ) | 6,614 | (184.2 | %) | |
| Per share – Basic | (0.17 | ) | 0.20 | (185.0 | %) | |
| Per share – Diluted | (0.17 | ) | 0.20 | (185.0 | %) | |
| Adjusted net income | 7,740 | 14,116 | (45.2 | %) | ||
| Per share – Basic | 0.24 | 0.44 | (45.5 | %) | ||
| Per share – Diluted | 0.24 | 0.43 | (44.2 | %) | ||
| Number of shares outstanding – | ||||||
| Basic weighted average | 32,373,809 | 32,332,643 | ||||
| Diluted weighted average | 32,373,809 | 32,545,163 | ||||
| Summary of Financial Information (unaudited) | ||||||
| Years Ended December 30 | ||||||
| All figures in thousands of US $, except per share amounts | ||||||
| 2016 | 2015 | Change | ||||
| $ | $ | % | ||||
| Total revenue | 2,603,185 | 2,683,357 | (3.0 | %) | ||
| Net income (loss) | (11,611 | ) | 25,704 | (145.2 | %) | |
| Per share – Basic | (0.36 | ) | 0.80 | (145.0 | %) | |
| Per share – Diluted | (0.36 | ) | 0.79 | (145.6 | %) | |
| Adjusted net income | 58,251 | 58,005 | 0.4 | % | ||
| Per share – Basic | 1.80 | 1.79 | 0.6 | % | ||
| Per share – Diluted | 1.79 | 1.78 | 0.6 | % | ||
| Number of shares outstanding – | ||||||
| Basic weighted average | 32,352,953 | 32,324,569 | ||||
| Diluted weighted average | 32,352,953 | 32,527,632 | ||||
Dorel Home
| All figures in thousands of US $ | ||||||||
| Fourth Quarters Ended December 30 (unaudited) | ||||||||
| 2016 | 2015 Restated* |
Change | ||||||
| $ | % of rev. | $ | % of rev. | % | ||||
| Total revenue | 177,049 | 173,848 | 1.8 | % | ||||
| Gross profit | 29,703 | 16.8 | % | 25,976 | 14.9 | % | 14.3 | % |
| Operating profit | 13,769 | 7.8 | % | 11,134 | 6.4 | % | 23.7 | % |
| All figures in thousands of US $ | ||||||||
| Years Ended December 30 (unaudited) | ||||||||
| 2016 | 2015 Restated* |
Change | ||||||
| $ | % of rev. | $ | % of rev. | % | ||||
| Total revenue | 735,247 | 685,805 | 7.2 | % | ||||
| Gross profit | 123,742 | 16.8 | % | 94,509 | 13.8 | % | 30.9 | % |
| Operating profit | 64,180 | 8.7 | % | 42,474 | 6.2 | % | 51.1 | % |
| * During the fourth quarter of 2016, the Company changed its internal organization and the composition of its reportable segments. The design, sourcing, manufacturing, distribution and retail of the children’s furniture was transferred from Dorel Juvenile to Dorel Home. Accordingly, the Company has restated the segmented information for the fourth quarter and year ended December 30, 2015. |
Dorel Home fourth quarter revenue increased US$3.2 million, or 1.8% to US$177.0 million, representing the highest quarter in the segment’s history. Full year revenue grew US$49.4 million, or 7.2% to US$735.2 million. The segment experienced growth in almost all product categories and posted another record quarter and full year of sales to on-line retailers, representing respectively 51% and 45% of total segment sales compared to 44% and 37% in 2015. This improvement far exceeded reductions in the brick and mortar channel.
For both periods, gross profit rose to 16.8%, an improvement of 190 basis points for the quarter and 300 basis points for the year, led by e-commerce growth throughout the year.
Fourth quarter operating profit rose US$2.6 million, or 23.7% and for the full year grew substantially by US$21.7 million, or 51.1%, mainly driven by higher e-commerce sales at improved margins. This was partly offset by higher information technology and administrative costs to support the segment’s growth in e-commerce.
The segment has been rebranded as Dorel Home in view of its broadened product range and its evolution from a traditional furniture company to one offering today’s marketplace a best-in-class technological distribution platform for home products in today’s omni-channel marketplace.
Dorel Juvenile
| All figures in thousands of US $ | ||||||||
| Fourth Quarters Ended December 30 (unaudited) | ||||||||
| 2016 | 2015 Restated* |
Change | ||||||
| $ | % of rev. | $ | % of rev. | % | ||||
| Total revenue | 236,447 | 241,396 | (2.1 | %) | ||||
| Gross profit | 71,240 | 30.1 | % | 71,857 | 29.8 | % | (0.9 | %) |
| Operating profit (loss) | (17,259) | (7.3 | %) | 1,395 | 0.6 | % | (1,337.2 | %) |
| Adjusted gross profit | 71,240 | 30.1 | % | 72,220 | 29.9 | % | (1.4 | %) |
| Adjusted operating profit (loss) | (7,141) | (3.0 | %) | 8,560 | 3.5 | % | (183.4 | %) |
| All figures in thousands of US $ | ||||||||
| Years Ended December 30 (unaudited) | ||||||||
| 2016 | 2015 Restated* |
Change | ||||||
| $ | % of rev. | $ | % of rev. | % | ||||
| Total revenue | 928,963 | 997,343 | (6.9 | %) | ||||
| Gross profit | 290,618 | 31.3 | % | 274,650 | 27.5 | % | 5.8 | % |
| Operating profit | 16,760 | 1.8 | % | 25,144 | 2.5 | % | (33.3 | %) |
| Adjusted gross profit | 290,618 | 31.3 | % | 275,880 | 27.7 | % | 5.3 | % |
| Adjusted operating profit | 31,314 | 3.4 | % | 39,074 | 3.9 | % | (19.9 | %) |
| * During the fourth quarter of 2016, the Company changed its internal organization and the composition of its reportable segments. The design, sourcing, manufacturing, distribution and retail of the children’s furniture was transferred from Dorel Juvenile to Dorel Home. Accordingly, the Company has restated the segmented information for the fourth quarter and year ended December 30, 2015. |
Fourth quarter revenue declined by US$4.9 million, or 2.1% to US$236.4 million. Revenue was essentially flat with the prior year after removing the impact of varying exchange rates year-over-year and planned reductions in third party sales at Dorel Juvenile China. Full year revenue declined US$68.4 million, or 6.9% to US$929.0 million with organic revenue decreasing by approximately 1.5%. Lower 2016 sales in the U.S. and European markets were partly offset by growth in Canada and Latin America.
As a global player, Dorel Juvenile is re-aligning operations to be more agile and drive profitable sales growth with a more market-focused approach to better react to juvenile industry trends. Central to this change is allocating resources that create the greatest return. Overheads are being reduced and savings re-purposed to needed improvement in digital capabilities and enhanced brand support. The ability to develop and bring meaningful products to market faster is being improved by decreasing complexity, and maximizing our best-in-class product development and manufacturing capabilities.
In the fourth quarter, cost saving and cash generating opportunities were identified that resulted in US$10.1 million being recorded as restructuring and other costs. Of this amount, US$8.8 million was for a non-cash charge for the write-down of long-lived assets, with the majority of the balance being employee severance and termination benefits. Further restructuring is planned for 2017 with the consolidation of the Asian-based product development team in China and additional headcount reduction opportunities overall. In addition, certain licensed third party brands used in North America will be exited to allow for additional energy and financial resources to be dedicated to Dorel owned brands. Total future costs are estimated to be US$7.6 million. As a result of the restructuring initiatives initiated in 2015, the segment now expects to realize annualized cost savings of approximately US$13.0 million once the restructuring actions are completed in 2017. Dorel anticipates re-investing a significant portion of these savings to drive Dorel Juvenile’s future revenues and earnings.
Included in general and administrative expenses in the fourth quarter were abnormally high product liability costs of US$10.2 million. This was also the case for the full year, as product liability costs increased by US$23.6 million due to several settlements and associated legal costs. The five-year average for these costs prior to 2016 was US$7.5 million and going forward, management expects product liability costs will return to no more than these average levels. Unusual amounts for the cancellation of product development projects, which did not meet the segment’s new growth criteria, resulted in the write-down of certain deferred development costs. This, combined with expenses for employee severance not included within restructuring expenses, totaled US$7.8 million for the fourth quarter. Excluding these three items from earnings for the quarter, the segment’s adjusted operating profit exceeded prior year. The after tax impact of these items represented US$12.0 million for the fourth quarter.
Fourth quarter operating loss was US$17.3 million compared to an operating profit of US$1.4 million a year ago. Excluding restructuring and other costs, adjusted operating loss for the quarter amounted to US$7.1 million compared to last year’s adjusted operating profit of US$8.6 million. Full year operating profit declined US$8.4 million to US$16.8 million from last year. Excluding restructuring and other costs, adjusted operating profit decreased US$7.8 million to US$31.3 million. This decline was partly offset by higher margins, cost containment and increased savings from the segment’s restructuring activities.
Dorel Sports
| All figures in thousands of US $ | ||||||||
| Fourth Quarters Ended December 30 (unaudited) | ||||||||
| 2016 | 2015 | Change | ||||||
| $ | % of rev. | $ | % of rev. | % | ||||
| Total revenue | 235,253 | 253,694 | (7.3 | %) | ||||
| Gross profit | 47,998 | 20.4 | % | 51,298 | 20.2 | % | (6.4 | %) |
| Operating profit | 4,965 | 2.1 | % | 8,423 | 3.3 | % | (41.1 | %) |
| Adjusted gross profit | 50,417 | 21.4 | % | 51,298 | 20.2 | % | (1.7 | %) |
| Adjusted operating profit | 10,153 | 4.3 | % | 9,165 | 3.6 | % | 10.8 | % |
| All figures in thousands of US $ | ||||||||
| Years Ended December 30 (unaudited) | ||||||||
| 2016 | 2015 | Change | ||||||
| $ | % of rev. | $ | % of rev. | % | ||||
| Total revenue | 938,975 | 1,000,209 | (6.1 | %) | ||||
| Gross profit | 196,201 | 20.9 | % | 212,339 | 21.2 | % | (7.6 | %) |
| Operating profit (loss) | (33,930) | (3.6 | %) | 10,895 | 1.1 | % | (411.4 | %) |
| Adjusted gross profit | 201,322 | 21.4 | % | 214,851 | 21.5 | % | (6.3 | %) |
| Adjusted operating profit | 31,538 | 3.4 | % | 42,007 | 4.2 | % | (24.9 | %) |
Fourth quarter revenue decreased US$18.4 million, or 7.3% to US$235.3 million. Organic revenue declined approximately 14.6% when removing currency rate fluctuations and the revenue gross-up generated by the transition of Cycling Sports Group (CSG) International business from a licensing model to a distribution platform. Since this year’s third quarter, CSG International’s shipments have been recognized as net sales and associated expenses in cost of sales. Previously these were recognized on a net basis in licensing and commission income.
The quarter’s revenue decline was due primarily to the change in North American CSG dealers’ purchasing habits to reduce their inventory prior to the cycling season which is expected to move fourth quarter orders to the first half of 2017. CSG inventories are now at appropriate levels. December 2016 Bicycle Products Supplier Association (BPSA) data indicates U.S. supplier inventories are down 24.0% and retailer inventory levels down 6.3%.
Full year revenue declined US$61.2 million, or 6.1% to US$939.0 million and organic revenue declined by approximately 8.4% when removing currency rate fluctuations and the above-mentioned revenue recognition change impact. The main causes were the change in dealers’ purchasing patterns, industry-wide discounting due to excess inventories at suppliers and retailers during the first half of 2016 and a generally soft global bike market overall.
Fourth quarter operating profit declined US$3.5 million to US$5.0 million and adjusted operating profit increased US$1.0 million, or 10.8% to US$10.2 million when excluding restructuring and other costs. Margin improvements and cost controls offset the reduced sales impact to exceed the prior year’s fourth quarter.
Year-to-date operating loss was US$33.9 million compared to an operating profit of US$10.9 million in 2015. Excluding impairment losses, restructuring and other costs, adjusted operating profit declined US$10.5 million, or 24.9% to US$31.5 million mainly from lower demand and reduced margins from discounting during the first half of 2016. Pacific Cycle had a good year, in part, due to improved supply chain efficiencies. Strategic pricing, cost controls as well as a better product mix allowed Caloi to increase its profitability.
Commencing this year, restructuring actions are expected to result in annualized savings of US$5.0 million. The goal is to refocus the business to deliver enhanced profitability during all business conditions.
Other
The Company’s effective tax rates were recoveries of 46.2% in 2016 compared to (11.9)% in 2015. Excluding income taxes on impairment losses, restructuring and other costs and remeasurement of forward purchase agreement liabilities in both 2016 and 2015, the Company’s adjusted tax rate were expenses of 7.1% and 3.6% respectively. The main causes of the variations were changes in the jurisdictions in which the Company generated its income and the recognition in 2015 of tax benefits as a result of a foreign reorganization.
Outlook
“As we enter 2017, all three of our business segments are positioned to improve earnings. Dorel Home had an exceptional 2016 and we remain bullish on their prospects. The on-going shift from traditional mass market brick and mortar sales to e-commerce has allowed this segment to improve its earnings significantly over the past two years. Given the continual growth of the e-commerce channel, we expect a further increase in earnings, but at a slower pace,” stated Martin Schwartz, Dorel President & CEO.
“Dorel Juvenile’s earnings are expected to improve in 2017 as last year’s exceptionally high costs of product liability are unlikely to be repeated. We anticipate the changes put in place by Management to deliver improvements in speeding product to market and driving sales, while also controlling costs, should translate into improved earnings. Rising commodity prices, currency and the shrinking U.S. brick and mortar channels are a risk for the segment, but we are well positioned to manage these challenges as they arise.
“Dorel Sports worked throughout 2016 to position itself for a rebound in earnings in 2017. Excess inventories in the industry have been reduced and thus rampant discounting should not be repeated. Improvements made in cost control and supply chain management are expected to contribute to the operating profit, helping to offset any sales softness, should this occur. It is early in the year and visibility for the full year is difficult, but we are confident in the direction of the segment,” concluded Mr. Schwartz.
Conference Call
Dorel Industries Inc. will hold a conference call to discuss these results today, March 9, 2017 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 http://www.dorel.com/eng/events. 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 51942662 on your phone. This recording will be available on Thursday, March 9, 2017 as of 4:00 P.M. until 11:59 P.M. on Thursday, March 16, 2017.
Complete consolidated financial statements as at December 30, 2016 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 world class juvenile products and bicycle company. The Company’s safety and lifestyle leadership is pronounced in both its Juvenile and Bicycle categories with an array of trend-setting, innovative products. Dorel Juvenile’s powerfully branded products include global juvenile brands Safety 1st, Quinny, Maxi-Cosi and Tiny Love, complemented by regional brands such as Cosco, Bébé Confort and Infanti. In Dorel Sports, brands include Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse and SUGOI. Dorel Home markets include a wide assortment of both domestically produced and imported furniture products, principally within North America. Dorel Industries Inc. has annual sales of US$2.6 billion and employs approximately 10,000 people in facilities located in over 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 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; 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 and remeasurement of forward purchase agreement liabilities incurred in both 2016 and 2015, 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 (recovery) expense”, “adjusted tax rate”, “adjusted net income”, and “adjusted earnings per basic and diluted share”. 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 tables below are in thousands of US$, except per share amounts)
| Reconciliation of non-GAAP financial measures | ||||||||||||||||||||
| Fourth Quarters Ended December 30, | ||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||
| Reported | % of revenue |
Restructuring and other costs |
Adjusted | % of revenue |
Reported | % of revenue |
Restructuring and other costs |
Adjusted | % of revenue |
|||||||||||
| $ | % | $ | $ | % | $ | % | $ | $ | % | |||||||||||
| TOTAL REVENUE | 648,749 | 100.0 | – | 648,749 | 100.0 | 668,938 | 100.0 | – | 668,938 | 100.0 | ||||||||||
| Cost of sales | 499,808 | 77.0 | (2,419 | ) | 497,389 | 76.7 | 519,807 | 77.7 | (363 | ) | 519,444 | 77.7 | ||||||||
| GROSS PROFIT | 148,941 | 23.0 | 2,419 | 151,360 | 23.3 | 149,131 | 22.3 | 363 | 149,494 | 22.3 | ||||||||||
| Selling expenses | 57,730 | 8.9 | – | 57,730 | 8.9 | 60,578 | 9.1 | – | 60,578 | 9.1 | ||||||||||
| General and administrative expenses | 69,219 | 10.7 | – | 69,219 | 10.7 | 54,650 | 8.1 | – | 54,650 | 8.1 | ||||||||||
| Research and development expenses | 14,463 | 2.2 | – | 14,463 | 2.2 | 10,554 | 1.6 | – | 10,554 | 1.6 | ||||||||||
| Restructuring and other costs | 12,887 | 2.0 | (12,887 | ) | – | – | 7,544 | 1.1 | (7,544 | ) | – | – | ||||||||
| OPERATING PROFIT (LOSS) | (5,358 | ) | (0.8 | ) | 15,306 | 9,948 | 1.5 | 15,805 | 2.4 | 7,907 | 23,712 | 3.5 | ||||||||
| Finance expenses | 11,766 | 1.8 | (2,840 | ) | 8,926 | 1.3 | 14,814 | 2.3 | (2,069 | ) | 12,745 | 1.9 | ||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | (17,124 | ) | (2.6 | ) | 18,146 | 1,022 | 0.2 | 991 | 0.1 | 9,976 | 10,967 | 1.6 | ||||||||
| Income taxes (recovery) expense | (11,557 | ) | (1.7 | ) | 4,839 | (6,718 | ) | (1.0 | ) | (5,623 | ) | (0.9 | ) | 2,474 | (3,149 | ) | (0.5 | ) | ||
| Tax rate | 67.5 | % | – | – | (657.3 | %) | – | (567.4 | %) | – | – | (28.7 | %) | – | ||||||
| NET INCOME (LOSS) | (5,567 | ) | (0.9 | ) | 13,307 | 7,740 | 1.2 | 6,614 | 1.0 | 7,502 | 14,116 | 2.1 | ||||||||
| EARNINGS (LOSS) PER SHARE | ||||||||||||||||||||
| Basic | (0.17 | ) | 0.41 | 0.24 | 0.20 | 0.24 | 0.44 | |||||||||||||
| Diluted | (0.17 | ) | 0.41 | 0.24 | 0.20 | 0.23 | 0.43 | |||||||||||||
| SHARES OUTSTANDING | ||||||||||||||||||||
| Basic – weighted average | 32,373,809 | 32,373,809 | 32,332,643 | 32,332,643 | ||||||||||||||||
| Diluted – weighted average | 32,373,809 | 32,630,255 | 32,545,163 | 32,545,163 | ||||||||||||||||
| Reconciliation of non-GAAP financial measures | ||||||||||||||||||
| Years Ended December 30, | ||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||
| 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 | 2,603,185 | 100.0 | – | 2,603,185 | 100.0 | 2,683,357 | 100.0 | – | 2,683,357 | 100.0 | ||||||||
| Cost of sales | 1,992,624 | 76.5 | (5,121 | ) | 1,987,503 | 76.3 | 2,101,859 | 78.3 | (3,742 | ) | 2,098,117 | 78.2 | ||||||
| GROSS PROFIT | 610,561 | 23.5 | 5,121 | 615,682 | 23.7 | 581,498 | 21.7 | 3,742 | 585,240 | 21.8 | ||||||||
| Selling expenses | 230,623 | 8.9 | – | 230,623 | 8.9 | 235,030 | 8.8 | – | 235,030 | 8.8 | ||||||||
| General and administrative expenses | 244,631 | 9.4 | – | 244,631 | 9.4 | 209,330 | 7.8 | – | 209,330 | 7.8 | ||||||||
| Research and development expenses | 39,092 | 1.5 | – | 39,092 | 1.5 | 37,595 | 1.4 | – | 37,595 | 1.4 | ||||||||
| Restructuring and other costs | 19,560 | 0.8 | (19,560 | ) | – | – | 14,790 | 0.5 | (14,790 | ) | – | – | ||||||
| Impairment losses on goodwill and intangible assets | 55,341 | 2.1 | (55,341 | ) | – | – | 26,510 | 1.0 | (26,510 | ) | – | – | ||||||
| OPERATING PROFIT | 21,314 | 0.8 | 80,022 | 101,336 | 3.9 | 58,243 | 2.2 | 45,042 | 103,285 | 3.8 | ||||||||
| Finance expenses | 42,899 | 1.6 | (4,265 | ) | 38,634 | 1.5 | 35,277 | 1.3 | 7,810 | 43,087 | 1.5 | |||||||
| INCOME (LOSS) BEFORE INCOME TAXES | (21,585 | ) | (0.8 | ) | 84,287 | 62,702 | 2.4 | 22,966 | 0.9 | 37,232 | 60,198 | 2.3 | ||||||
| Income taxes (recovery) expense | (9,974 | ) | (0.4 | ) | 14,425 | 4,451 | 0.2 | (2,738 | ) | (0.1 | ) | 4,931 | 2,193 | 0.1 | ||||
| Tax rate | 46.2 | % | – | – | 7.1 | % | – | (11.9 | %) | – | – | 3.6 | % | – | ||||
| NET INCOME (LOSS) | (11,611 | ) | (0.4 | ) | 69,862 | 58,251 | 2.2 | 25,704 | 1.0 | 32,301 | 58,005 | 2.2 | ||||||
| EARNINGS (LOSS) PER SHARE | ||||||||||||||||||
| Basic | (0.36 | ) | 2.16 | 1.80 | 0.80 | 0.99 | 1.79 | |||||||||||
| Diluted | (0.36 | ) | 2.15 | 1.79 | 0.79 | 0.99 | 1.78 | |||||||||||
| SHARES OUTSTANDING | ||||||||||||||||||
| Basic – weighted average | 32,352,953 | 32,352,953 | 32,324,569 | 32,324,569 | ||||||||||||||
| Diluted – weighted average | 32,352,953 | 32,584,489 | 32,527,632 | 32,527,632 | ||||||||||||||
Details of impairment losses, restructuring and other costs and remeasurement of forward purchase agreement liabilities:
| Fourth Quarters Ended December 30, | Years Ended December 30, | |||||||
| 2016 | 2015 | 2016 | 2015 | |||||
| $ | $ | $ | $ | |||||
| Accelerated depreciation | 57 | – | 57 | – | ||||
| Inventory markdowns | 979 | 363 | 3,557 | 3,742 | ||||
| Other associated costs | 619 | – | 619 | – | ||||
| Recorded within gross profit | 1,655 | 363 | 4,233 | 3,742 | ||||
| Employee severance and termination benefits | 3,524 | 3,839 | 7,955 | 6,815 | ||||
| Accelerated depreciation | 1,065 | – | 1,903 | – | ||||
| Write-down of long-lived assets | 8,353 | 2,196 | 8,777 | 3,196 | ||||
| Losses from the remeasurement and disposals of assets held for sale | 107 | – | 190 | – | ||||
| Curtailments gain on net pension defined benefit liabilities | (891 | ) | (326 | ) | (891 | ) | (326 | ) |
| Other associated costs | 430 | 1,016 | 586 | 1,451 | ||||
| Recorded within a separate line in the consolidated income statements | 12,588 | 6,725 | 18,520 | 11,136 | ||||
| Total restructuring costs | 14,243 | 7,088 | 22,753 | 14,878 | ||||
| Other costs recorded within gross profit | 764 | – | 888 | – | ||||
| Acquisition-related costs | – | 819 | 729 | 3,654 | ||||
| Other costs | 299 | – | 311 | – | ||||
| Recorded within a separate line in the consolidated income statements | 299 | 819 | 1,040 | 3,654 | ||||
| Total other costs | 1,063 | 819 | 1,928 | 3,654 | ||||
| Total restructuring and other costs | 15,306 | 7,907 | 24,681 | 18,532 | ||||
| Impairment losses on goodwill and intangible assets | – | – | 55,341 | 26,510 | ||||
| Loss (gain) on remeasurement of forward purchase agreement liabilities | 2,840 | 2,069 | 4,265 | (7,810 | ) | |||
| Total impairment losses, restructuring and other costs and remeasurement of forward purchase agreement liabilities before income taxes (1) | 18,146 | 9,976 | 84,287 | 37,232 | ||||
| Total impairment losses, restructuring and other costs and remeasurement of forward purchase agreement liabilities after income taxes | 13,307 | 7,502 | 69,862 | 32,301 | ||||
| Total impact on diluted earnings (loss) per share | (0.41 | ) | (0.23 | ) | (2.15 | ) | (0.99 | ) |
| (1) Includes non-cash amounts of: | 12,510 | 4,302 | 73,199 | 25,312 | ||||
Dorel Juvenile
| Reconciliation of non-GAAP financial measures | |||||||||||||||
| Fourth Quarters Ended December 30, | |||||||||||||||
| 2016 | 2015 Restated* |
||||||||||||||
| Reported | % of revenue |
Restructuring and other costs |
Adjusted | % of revenue |
Reported | % of revenue |
Restructuring and other costs |
Adjusted | % of revenue |
||||||
| $ | % | $ | $ | % | $ | % | $ | $ | % | ||||||
| TOTAL REVENUE | 236,447 | 100.0 | – | 236,447 | 100.0 | 241,396 | 100.0 | – | 241,396 | 100.0 | |||||
| Cost of sales | 165,207 | 69.9 | – | 165,207 | 69.9 | 169,539 | 70.2 | (363 | ) | 169,176 | 70.1 | ||||
| GROSS PROFIT | 71,240 | 30.1 | – | 71,240 | 30.1 | 71,857 | 29.8 | 363 | 72,220 | 29.9 | |||||
| Selling expenses | 31,146 | 13.2 | – | 31,146 | 13.2 | 30,855 | 12.8 | – | 30,855 | 12.8 | |||||
| General and administrative expenses | 35,437 | 14.9 | – | 35,437 | 14.9 | 24,950 | 10.3 | – | 24,950 | 10.3 | |||||
| Research and development expenses | 11,798 | 5.0 | – | 11,798 | 5.0 | 7,855 | 3.3 | – | 7,855 | 3.3 | |||||
| Restructuring and other costs | 10,118 | 4.3 | (10,118 | ) | – | – | 6,802 | 2.8 | (6,802 | ) | – | – | |||
| OPERATING PROFIT (LOSS) | (17,259 | ) | (7.3) | 10,118 | (7,141 | ) | (3.0 | ) | 1,395 | 0.6 | 7,165 | 8,560 | 3.5 | ||
| Years Ended December 30, | |||||||||||||||
| 2016 | 2015 Restated* |
||||||||||||||
| Reported | % of revenue |
Restructuring and other costs |
Adjusted | % of revenue |
Reported | % of revenue |
Restructuring and other costs |
Adjusted | % of revenue |
||||||
| $ | % | $ | $ | % | $ | % | $ | $ | % | ||||||
| TOTAL REVENUE | 928,963 | 100.0 | – | 928,963 | 100.0 | 997,343 | 100.0 | – | 997,343 | 100.0 | |||||
| Cost of sales | 638,345 | 68.7 | – | 638,345 | 68.7 | 722,693 | 72.5 | (1,230 | ) | 721,463 | 72.3 | ||||
| GROSS PROFIT | 290,618 | 31.3 | – | 290,618 | 31.3 | 274,650 | 27.5 | 1,230 | 275,880 | 27.7 | |||||
| Selling expenses | 115,132 | 12.4 | – | 115,132 | 12.4 | 114,511 | 11.5 | – | 114,511 | 11.5 | |||||
| General and administrative expenses | 115,447 | 12.4 | – | 115,447 | 12.4 | 94,857 | 9.5 | – | 94,857 | 9.5 | |||||
| Research and development expenses | 28,725 | 3.1 | – | 28,725 | 3.1 | 27,438 | 2.8 | – | 27,438 | 2.8 | |||||
| Restructuring and other costs | 14,554 | 1.6 | (14,554 | ) | – | – | 12,700 | 1.2 | (12,700 | ) | – | – | |||
| OPERATING PROFIT | 16,760 | 1.8 | 14,554 | 31,314 | 3.4 | 25,144 | 2.5 | 13,930 | 39,074 | 3.9 | |||||
| * During the fourth quarter of 2016, the Company changed its internal organization and the composition of its reportable segments. The design, sourcing, manufacturing, distribution and retail of the children’s furniture was transferred from Dorel Juvenile to Dorel Home. Accordingly, the Company has restated the segmented information for the fourth quarter and year ended December 30, 2015. |
Dorel Sports
| Reconciliation of non-GAAP financial measures | ||||||||||||||
| Fourth Quarters Ended December 30, | ||||||||||||||
| 2016 | 2015 | |||||||||||||
| Reported | % of revenue |
Restructuring and other costs |
Adjusted | % of revenue |
Reported | % of revenue |
Restructuring and other costs |
Adjusted | % of revenue |
|||||
| $ | % | $ | $ | % | $ | % | $ | $ | % | |||||
| TOTAL REVENUE | 235,253 | 100.0 | – | 235,253 | 100.0 | 253,694 | 100.0 | – | 253,694 | 100.0 | ||||
| Cost of sales | 187,255 | 79.6 | (2,419 | ) | 184,836 | 78.6 | 202,396 | 79.8 | – | 202,396 | 79.8 | |||
| GROSS PROFIT | 47,998 | 20.4 | 2,419 | 50,417 | 21.4 | 51,298 | 20.2 | – | 51,298 | 20.2 | ||||
| Selling expenses | 20,258 | 8.6 | – | 20,258 | 8.6 | 24,226 | 9.5 | – | 24,226 | 9.5 | ||||
| General and administrative expenses | 18,270 | 7.8 | – | 18,270 | 7.8 | 16,145 | 6.4 | – | 16,145 | 6.4 | ||||
| Research and development expenses | 1,736 | 0.7 | – | 1,736 | 0.7 | 1,762 | 0.7 | – | 1,762 | 0.7 | ||||
| Restructuring and other costs | 2,769 | 1.2 | (2,769 | ) | – | – | 742 | 0.3 | (742 | ) | – | – | ||
| – | – | – | – | |||||||||||
| OPERATING PROFIT | 4,965 | 2.1 | 5,188 | 10,153 | 4.3 | 8,423 | 3.3 | 742 | 9,165 | 3.6 | ||||
| Years Ended December 30, | ||||||||||||||
| 2016 | 2015 | |||||||||||||
| 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 | 938,975 | 100.0 | – | 938,975 | 100.0 | 1,000,209 | 100.0 | – | 1,000,209 | 100.0 | ||||
| Cost of sales | 742,774 | 79.1 | (5,121 | ) | 737,653 | 78.6 | 787,870 | 78.8 | (2,512 | ) | 785,358 | 78.5 | ||
| GROSS PROFIT | 196,201 | 20.9 | 5,121 | 201,322 | 21.4 | 212,339 | 21.2 | 2,512 | 214,851 | 21.5 | ||||
| Selling expenses | 91,247 | 9.7 | – | 91,247 | 9.7 | 98,819 | 9.9 | – | 98,819 | 9.9 | ||||
| General and administrative expenses | 71,961 | 7.6 | – | 71,961 | 7.6 | 67,611 | 6.8 | – | 67,611 | 6.8 | ||||
| Research and development expenses | 6,576 | 0.7 | – | 6,576 | 0.7 | 6,414 | 0.6 | – | 6,414 | 0.6 | ||||
| Restructuring and other costs | 5,006 | 0.5 | (5,006 | ) | – | – | 2,090 | 0.2 | (2,090 | ) | – | – | ||
| Impairment losses on goodwill and intangible assets | 55,341 | 6.0 | (55,341 | ) | – | – | 26,510 | 2.6 | (26,510 | ) | – | – | ||
| – | – | – | – | |||||||||||
| OPERATING PROFIT (LOSS) | (33,930 | ) | (3.6) | 65,468 | 31,538 | 3.4 | 10,895 | 1.1 | 31,112 | 42,007 | 4.2 | |||
| The indebtedness to adjusted EBITDA ratio as at December 30, 2016 and 2015 were as follows: | ||
| December 30, | ||
| 2016 | 2015 | |
| $ | $ | |
| Bank indebtedness | 49,490 | 54,471 |
| Face value of long-term debt [excluding convertible debentures] | 292,707 | 386,448 |
| Guarantees | 22,733 | 34,056 |
| Written put option and forward purchase agreement liabilities (1) | 22,645 | 22,034 |
| Indebtedness | 387,575 | 497,009 |
| (1) Based on current earnings level | ||
| For the trailing four quarters ended December 30, |
||
| 2016 | 2015 | |
| $ | $ | |
| Net income (loss) | (11,611) | 25,704 |
| Finance expenses | 42,899 | 35,277 |
| Income taxes recovery | (9,974) | (2,738) |
| Depreciation and amortization | 53,186 | 58,801 |
| Write-down of deferred development costs | 5,590 | – |
| Impairment losses on goodwill and intangible assets | 55,341 | 26,510 |
| Restructuring and other costs | 24,681 | 18,532 |
| Unpaid product liability costs related to judgments | 9,550 | – |
| Stock option plan expense | 86 | 139 |
| Adjusted EBITDA | 169,748 | 162,225 |
| Indebtedness to adjusted EBITDA ratio | 2.28:1 | 3.06:1 |
| For the purpose of the calculation of the ratio indebtedness / adjusted EBITDA, the written put option and forward purchase agreement liabilities are based on current earnings level as opposed to the fair value, which is a function of earnings levels in future periods, and is reflected in the consolidated financial statements. |
| DOREL INDUSTRIES INC. | ||||||||
| CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||||||||
| ALL FIGURES IN THOUSANDS OF US $ | ||||||||
| (unaudited) | ||||||||
| as at | as at | |||||||
| December 30, 2016 | December 30, 2015 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 31,883 | $ | 33,182 | ||||
| Trade and other receivables | 431,062 | 447,345 | ||||||
| Inventories | 549,688 | 584,986 | ||||||
| Other financial assets | 4,333 | 4,467 | ||||||
| Income taxes receivable | 14,466 | 12,985 | ||||||
| Prepaid expenses | 21,040 | 20,234 | ||||||
| 1,052,472 | 1,103,199 | |||||||
| Assets held for sale | 20,017 | 11,265 | ||||||
| 1,072,489 | 1,114,464 | |||||||
| NON-CURRENT ASSETS | ||||||||
| Property, plant and equipment | 191,294 | 206,542 | ||||||
| Intangible assets | 427,587 | 465,447 | ||||||
| Goodwill | 435,790 | 476,330 | ||||||
| Deferred tax assets | 39,324 | 37,258 | ||||||
| Other assets | 6,148 | 4,904 | ||||||
| 1,100,143 | 1,190,481 | |||||||
| $ | 2,172,632 | $ | 2,304,945 | |||||
| LIABILITIES | ||||||||
| CURRENT LIABILITIES | ||||||||
| Bank indebtedness | $ | 49,490 | $ | 54,471 | ||||
| Trade and other payables | 437,009 | 434,178 | ||||||
| Written put option and forward purchase agreement liabilities | 7,500 | 4,104 | ||||||
| Other financial liabilities | 569 | 895 | ||||||
| Deferred revenue | 6,475 | – | ||||||
| Income taxes payable | 15,143 | 15,590 | ||||||
| Long-term debt | 51,138 | 32,857 | ||||||
| Provisions | 63,169 | 34,267 | ||||||
| 630,493 | 576,362 | |||||||
| NON-CURRENT LIABILITIES | ||||||||
| Long-term debt | 355,118 | 465,732 | ||||||
| Net pension and post-retirement defined benefit liabilities | 35,206 | 43,058 | ||||||
| Deferred tax liabilities | 53,293 | 72,447 | ||||||
| Provisions | 1,681 | 1,702 | ||||||
| Written put option and forward purchase agreement liabilities | 26,325 | 30,788 | ||||||
| Other financial liabilities | 1,115 | 1,890 | ||||||
| Other long-term liabilities | 13,302 | 10,569 | ||||||
| 486,040 | 626,186 | |||||||
| EQUITY | ||||||||
| Share capital | 202,400 | 200,277 | ||||||
| Contributed surplus | 27,139 | 26,480 | ||||||
| Accumulated other comprehensive loss | (113,840 | ) | (113,956 | ) | ||||
| Other equity | 3,027 | 1,527 | ||||||
| Retained earnings | 937,373 | 988,069 | ||||||
| 1,056,099 | 1,102,397 | |||||||
| $ | 2,172,632 | $ | 2,304,945 | |||||
| DOREL INDUSTRIES INC. | |||||||||||||
| CONSOLIDATED INCOME STATEMENTS | |||||||||||||
| ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS | |||||||||||||
| (unaudited) | |||||||||||||
| Fourth Quarters Ended | Years Ended | ||||||||||||
| December 30, 2016 | December 30, 2015 | December 30, 2016 | December 30, 2015 | ||||||||||
| Sales | $ | 647,559 | $ | 664,399 | $ | 2,596,062 | $ | 2,668,918 | |||||
| Licensing and commission income | 1,190 | 4,539 | 7,123 | 14,439 | |||||||||
| TOTAL REVENUE | 648,749 | 668,938 | 2,603,185 | 2,683,357 | |||||||||
| Cost of sales (1) | 499,808 | 519,807 | 1,992,624 | 2,101,859 | |||||||||
| GROSS PROFIT | 148,941 | 149,131 | 610,561 | 581,498 | |||||||||
| Selling expenses | 57,730 | 60,578 | 230,623 | 235,030 | |||||||||
| General and administrative expenses | 69,219 | 54,650 | 244,631 | 209,330 | |||||||||
| Research and development expenses | 14,463 | 10,554 | 39,092 | 37,595 | |||||||||
| Restructuring and other costs (1) | 12,887 | 7,544 | 19,560 | 14,790 | |||||||||
| Impairment losses on goodwill and | |||||||||||||
| intangible assets | – | – | 55,341 | 26,510 | |||||||||
| OPERATING PROFIT (LOSS) | (5,358 | ) | 15,805 | 21,314 | 58,243 | ||||||||
| Finance expenses | 11,766 | 14,814 | 42,899 | 35,277 | |||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | (17,124 | ) | 991 | (21,585 | ) | 22,966 | |||||||
| Income taxes recovery | (11,557 | ) | (5,623 | ) | (9,974 | ) | (2,738 | ) | |||||
| NET INCOME (LOSS) | $ | (5,567 | ) | $ | 6,614 | $ | (11,611 | ) | $ | 25,704 | |||
| EARNINGS (LOSS) PER SHARE | |||||||||||||
| Basic | $ | (0.17 | ) | $ | 0.20 | $ | (0.36 | ) | $ | 0.80 | |||
| Diluted | $ | (0.17 | ) | $ | 0.20 | $ | (0.36 | ) | $ | 0.79 | |||
| SHARES OUTSTANDING | |||||||||||||
| Basic – weighted average | 32,373,809 | 32,332,643 | 32,352,953 | 32,324,569 | |||||||||
| Diluted – weighted average | 32,373,809 | 32,545,163 | 32,352,953 | 32,527,632 | |||||||||
| (1)Restructuring and other costs charged to: | |||||||||||||
| Cost of sales | $ | 2,419 | $ | 363 | $ | 5,121 | $ | 3,742 | |||||
| Expenses | 12,887 | 7,544 | 19,560 | 14,790 | |||||||||
| $ | 15,306 | $ | 7,907 | $ | 24,681 | $ | 18,532 | ||||||
| DOREL INDUSTRIES INC. | |||||||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | |||||||||||||
| ALL FIGURES IN THOUSANDS OF US $ | |||||||||||||
| (unaudited) | |||||||||||||
| Fourth Quarters Ended | Years Ended | ||||||||||||
| December 30, 2016 | December 30, 2015 | December 30, 2016 | December 30, 2015 | ||||||||||
| NET INCOME (LOSS) | $ | (5,567 | ) | $ | 6,614 | $ | (11,611 | ) | $ | 25,704 | |||
| 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 | (16,237 | ) | (8,602 | ) | 3,856 | (80,464 | ) | ||||||
| Net gains (losses) on hedge of net investments in | |||||||||||||
| foreign operations, net of tax of nil | (6,816 | ) | (3,523 | ) | (1,964 | ) | (15,215 | ) | |||||
| (23,053 | ) | (12,125 | ) | 1,892 | (95,679 | ) | |||||||
| Net changes in cash flow hedges: | |||||||||||||
| Net change in unrealized gains (losses) on derivatives | |||||||||||||
| designated as cash flow hedges | 5,418 | 3,774 | 4,395 | 5,264 | |||||||||
| Reclassification to income | 156 | 170 | 608 | 978 | |||||||||
| Reclassification to the related non-financial asset | (2,768 | ) | (510 | ) | (4,477 | ) | (5,894 | ) | |||||
| Deferred income taxes | (1,138 | ) | (1,108 | ) | (354 | ) | 152 | ||||||
| 1,668 | 2,326 | 172 | 500 | ||||||||||
| Items that will not be reclassified to net income: | |||||||||||||
| Defined benefit plans: | |||||||||||||
| Remeasurements of the net pension and post-retirement | |||||||||||||
| defined benefit liabilities | 779 | 2,700 | (2,913 | ) | 2,791 | ||||||||
| Deferred income taxes | (465 | ) | (959 | ) | 965 | (989 | ) | ||||||
| 314 | 1,741 | (1,948 | ) | 1,802 | |||||||||
| TOTAL OTHER COMPREHENSIVE INCOME (LOSS) | (21,071 | ) | (8,058 | ) | 116 | (93,377 | ) | ||||||
| TOTAL COMPREHENSIVE LOSS | $ | (26,638 | ) | $ | (1,444 | ) | $ | (11,495 | ) | $ | (67,673 | ) | |
| 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, 2014 | $ | 199,927 | $ | 25,691 | $ | (8,842 | ) | $ | 2,180 | $ | (13,917 | ) | $ | 579 | $ | 1,001,366 | $ | 1,206,984 | ||||
| Total comprehensive loss: | ||||||||||||||||||||||
| Net income | – | – | – | – | – | – | 25,704 | 25,704 | ||||||||||||||
| Other comprehensive income (loss) | – | – | (95,679 | ) | 500 | 1,802 | – | – | (93,377 | ) | ||||||||||||
| – | – | (95,679 | ) | 500 | 1,802 | – | 25,704 | (67,673 | ) | |||||||||||||
| Issued under stock option plan | 219 | – | – | – | – | – | – | 219 | ||||||||||||||
| Reclassification from contributed surplus due to exercise | ||||||||||||||||||||||
| of stock options | 70 | (70 | ) | – | – | – | – | – | – | |||||||||||||
| Reclassification from contributed surplus due to settlement | ||||||||||||||||||||||
| of deferred share units | 61 | (101 | ) | – | – | – | – | – | (40 | ) | ||||||||||||
| Share-based payments | – | 730 | – | – | – | – | – | 730 | ||||||||||||||
| Remeasurement of written put option liabilities | – | – | – | – | – | 948 | – | 948 | ||||||||||||||
| Dividends on common shares | – | – | – | – | – | – | (38,771 | ) | (38,771 | ) | ||||||||||||
| Dividends on deferred share units | – | 230 | – | – | – | – | (230 | ) | – | |||||||||||||
| 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 | ||||
| DOREL INDUSTRIES INC. | |||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
| ALL FIGURES IN THOUSANDS OF US $ | |||||||||||||
| (unaudited) | |||||||||||||
| Fourth Quarters Ended | Years Ended | ||||||||||||
| December 30, 2016 |
December 30, 2015 |
December 30, 2016 |
December 30, 2015 |
||||||||||
| CASH PROVIDED BY (USED IN): | |||||||||||||
| OPERATING ACTIVITIES | |||||||||||||
| Net income (loss) | $ | (5,567 | ) | $ | 6,614 | $ | (11,611 | ) | $ | 25,704 | |||
| Items not involving cash: | |||||||||||||
| Depreciation and amortization | 13,275 | 15,109 | 53,186 | 58,801 | |||||||||
| Impairment losses on goodwill and intangible assets | – | – | 55,341 | 26,510 | |||||||||
| Unrealized losses (gains) arising on financial assets | |||||||||||||
| and financial liabilities classified as held for trading | (215 | ) | 143 | 197 | (214 | ) | |||||||
| Share-based payments | 114 | 95 | 484 | 389 | |||||||||
| Defined benefit pension and post-retirement costs | (74 | ) | 1,671 | (5,711 | ) | 4,119 | |||||||
| Loss (gain) on disposal of property, plant and equipment | 67 | 747 | (1,286 | ) | 1,474 | ||||||||
| Write-down of deferred development costs | 5,590 | – | 5,590 | – | |||||||||
| Restructuring and other costs | 9,670 | 2,233 | 13,593 | 6,612 | |||||||||
| Finance expenses | 11,766 | 14,814 | 42,899 | 35,277 | |||||||||
| Income taxes recovery | (11,557 | ) | (5,623 | ) | (9,974 | ) | (2,738 | ) | |||||
| Net changes in balances related to operations | 62,833 | 59,672 | 75,254 | (34,407 | ) | ||||||||
| Income taxes paid | (3,830 | ) | (1,753 | ) | (20,257 | ) | (15,678 | ) | |||||
| Income taxes received | 1,301 | 104 | 9,913 | 7,204 | |||||||||
| Interest paid | (12,927 | ) | (23,089 | ) | (36,200 | ) | (34,683 | ) | |||||
| Interest received | 62 | 88 | 447 | 346 | |||||||||
| CASH PROVIDED BY OPERATING ACTIVITIES | 70,508 | 70,825 | 171,865 | 78,716 | |||||||||
| FINANCING ACTIVITIES | |||||||||||||
| Bank indebtedness | (6,296 | ) | (4,998 | ) | (8,249 | ) | 40,312 | ||||||
| Increase of long-term debt | – | – | – | 32,107 | |||||||||
| Repayments of long-term debt | (53,109 | ) | (41,623 | ) | (98,749 | ) | (64,134 | ) | |||||
| Repayments of forward purchase agreement liabilities | – | – | (4,414 | ) | – | ||||||||
| Increase of written put option liabilities | – | – | 673 | 525 | |||||||||
| Financing costs | (91 | ) | (342 | ) | (2,173 | ) | (2,205 | ) | |||||
| Issuance of share capital | 869 | 219 | 1,479 | 219 | |||||||||
| Dividends on common shares | (9,796 | ) | (9,681 | ) | (38,818 | ) | (38,771 | ) | |||||
| CASH USED IN FINANCING ACTIVITIES | (68,423 | ) | (56,425 | ) | (150,251 | ) | (31,947 | ) | |||||
| INVESTING ACTIVITIES | |||||||||||||
| Acquisition of businesses | – | (590 | ) | 5,475 | (2,326 | ) | |||||||
| Additions to property, plant and equipment | (6,001 | ) | (9,692 | ) | (20,014 | ) | (34,309 | ) | |||||
| Disposals of property, plant and equipment | 12 | 417 | 1,564 | 974 | |||||||||
| Net proceeds from disposals of assets held for sale | 1,347 | – | 5,883 | – | |||||||||
| Additions to intangible assets | (4,061 | ) | (4,253 | ) | (16,165 | ) | (17,744 | ) | |||||
| CASH USED IN INVESTING ACTIVITIES | (8,703 | ) | (14,118 | ) | (23,257 | ) | (53,405 | ) | |||||
| Effect of foreign currency exchange rate changes on cashand cash equivalents | (1,398 | ) | (1,801 | ) | 344 | (7,283 | ) | ||||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (8,016 | ) | (1,519 | ) | (1,299 | ) | (13,919 | ) | |||||
| Cash and cash equivalents, beginning of period | 39,899 | 34,701 | 33,182 | 47,101 | |||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 31,883 | $ | 33,182 | $ | 31,883 | $ | 33,182 | |||||
| Supplemental information on net changes in balances related to operations: | |||||||||||||
| Trade and other receivables | $ | 10,783 | $ | 271 | $ | 7,351 | $ | 2,194 | |||||
| Inventories | 28,421 | 92,127 | 31,823 | 6,491 | |||||||||
| Other financial assets | (568 | ) | (482 | ) | 693 | (333 | ) | ||||||
| Prepaid expenses | 1,080 | 14,247 | (1,064 | ) | 3,777 | ||||||||
| Other assets | 389 | 175 | (163 | ) | (391 | ) | |||||||
| Trade and other payables | 2,689 | (45,840 | ) | 3,241 | (38,378 | ) | |||||||
| Net pension and post-retirement defined benefit liabilities | (42 | ) | (525 | ) | (3,896 | ) | (3,181 | ) | |||||
| Provisions, other financial liabilities, deferred revenue andother long-term liabilities | 20,081 | (301 | ) | 37,269 | (4,586 | ) | |||||||
| $ | 62,833 | $ | 59,672 | $ | 75,254 | $ | (34,407 | ) | |||||
| 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 | |||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Restated* | Restated* | |||||||||||||||||||
| Total revenue | $ | 648,749 | $ | 668,938 | $ | 236,447 | $ | 241,396 | $ | 235,253 | $ | 253,694 | $ | 177,049 | $ | 173,848 | ||||
| Cost of sales (1) | 499,808 | 519,807 | 165,207 | 169,539 | 187,255 | 202,396 | 147,346 | 147,872 | ||||||||||||
| Gross profit | 148,941 | 149,131 | 71,240 | 71,857 | 47,998 | 51,298 | 29,703 | 25,976 | ||||||||||||
| Selling expenses | 57,477 | 60,196 | 31,146 | 30,855 | 20,258 | 24,226 | 6,073 | 5,115 | ||||||||||||
| General and administrative expenses | 62,639 | 49,885 | 35,437 | 24,950 | 18,270 | 16,145 | 8,932 | 8,790 | ||||||||||||
| Research and development expenses | 14,463 | 10,554 | 11,798 | 7,855 | 1,736 | 1,762 | 929 | 937 | ||||||||||||
| Restructuring and other costs (1) | 12,887 | 7,544 | 10,118 | 6,802 | 2,769 | 742 | – | – | ||||||||||||
| Operating profit (loss) | 1,475 | 20,952 | $ | (17,259 | ) | $ | 1,395 | $ | 4,965 | $ | 8,423 | $ | 13,769 | $ | 11,134 | |||||
| Finance expenses | 11,766 | 14,814 | ||||||||||||||||||
| Corporate expenses | 6,833 | 5,147 | ||||||||||||||||||
| Income taxes recovery | (11,557 | ) | (5,623 | ) | ||||||||||||||||
| Net income (loss) | $ | (5,567 | ) | $ | 6,614 | |||||||||||||||
| Earnings (loss) per share | ||||||||||||||||||||
| Basic | $ | (0.17 | ) | $ | 0.20 | |||||||||||||||
| Diluted | $ | (0.17 | ) | $ | 0.20 | |||||||||||||||
| Depreciation and amortization included in operating profit (loss) | $ | 13,057 | $ | 14,925 | $ | 9,857 | $ | 10,998 | $ | 2,592 | $ | 3,187 | $ | 608 | $ | 740 | ||||
| Write-down of long-lived assets included in operating profit (loss) | $ | 13,943 | $ | 2,196 | $ | 13,943 | $ | 1,942 | $ | – | $ | 254 | $ | – | $ | – | ||||
| (1)Restructuring and other costs charged to: | ||||||||||||||||||||
| Cost of sales | $ | 2,419 | $ | 363 | $ | – | $ | 363 | $ | 2,419 | $ | – | $ | – | $ | – | ||||
| Expenses | 12,887 | 7,544 | 10,118 | 6,802 | 2,769 | 742 | – | – | ||||||||||||
| $ | 15,306 | $ | 7,907 | $ | 10,118 | $ | 7,165 | $ | 5,188 | $ | 742 | $ | – | $ | – | |||||
| * During the fourth quarter of 2016, the Company changed its internal organization and the composition of its reportable segments. The design, sourcing, manufacturing, distribution and retail of the children’s furniture was transferred from Dorel Juvenile to Dorel Home. Accordingly, the Company has restated the segmented information for the fourth quarter ended December 30, 2015. |
| 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 | |||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Restated* | Restated* | |||||||||||||||||||
| Total revenue | $ | 2,603,185 | $ | 2,683,357 | $ | 928,963 | $ | 997,343 | $ | 938,975 | $ | 1,000,209 | $ | 735,247 | $ | 685,805 | ||||
| Cost of sales (1) | 1,992,624 | 2,101,859 | 638,345 | 722,693 | 742,774 | 787,870 | 611,505 | 591,296 | ||||||||||||
| Gross profit | 610,561 | 581,498 | 290,618 | 274,650 | 196,201 | 212,339 | 123,742 | 94,509 | ||||||||||||
| Selling expenses | 229,196 | 232,413 | 115,132 | 114,511 | 91,247 | 98,819 | 22,817 | 19,083 | ||||||||||||
| General and administrative expenses | 220,362 | 191,677 | 115,447 | 94,857 | 71,961 | 67,611 | 32,954 | 29,209 | ||||||||||||
| Research and development expenses | 39,092 | 37,595 | 28,725 | 27,438 | 6,576 | 6,414 | 3,791 | 3,743 | ||||||||||||
| Restructuring and other costs (1) | 19,560 | 14,790 | 14,554 | 12,700 | 5,006 | 2,090 | – | – | ||||||||||||
| Impairment losses on goodwill and intangible assets | 55,341 | 26,510 | – | – | 55,341 | 26,510 | – | – | ||||||||||||
| Operating profit (loss) | 47,010 | 78,513 | $ | 16,760 | $ | 25,144 | $ | (33,930 | ) | $ | 10,895 | $ | 64,180 | $ | 42,474 | |||||
| Finance expenses | 42,899 | 35,277 | ||||||||||||||||||
| Corporate expenses | 25,696 | 20,270 | ||||||||||||||||||
| Income taxes recovery | (9,974 | ) | (2,738 | ) | ||||||||||||||||
| Net income (loss) | $ | (11,611 | ) | $ | 25,704 | |||||||||||||||
| Earnings (loss) per share | ||||||||||||||||||||
| Basic | $ | (0.36 | ) | $ | 0.80 | |||||||||||||||
| Diluted | $ | (0.36 | ) | $ | 0.79 | |||||||||||||||
| Depreciation and amortization included in operating profit (loss) | $ | 52,365 | $ | 58,262 | $ | 37,404 | $ | 40,900 | $ | 11,015 | $ | 13,130 | $ | 3,946 | $ | 4,232 | ||||
| Write-down of long-lived assets included in operating profit (loss) | $ | 14,367 | $ | 3,196 | $ | 14,367 | $ | 1,992 | $ | – | $ | 1,204 | $ | – | $ | – | ||||
| (1)Restructuring and other costs charged to: | ||||||||||||||||||||
| Cost of sales | $ | 5,121 | $ | 3,742 | $ | – | $ | 1,230 | $ | 5,121 | $ | 2,512 | $ | – | $ | – | ||||
| Expenses | 19,560 | 14,790 | 14,554 | 12,700 | 5,006 | 2,090 | – | – | ||||||||||||
| $ | 24,681 | $ | 18,532 | $ | 14,554 | $ | 13,930 | $ | 10,127 | $ | 4,602 | $ | – | $ | – | |||||
| * During the fourth quarter of 2016, the Company changed its internal organization and the composition of its reportable segments. The design, sourcing, manufacturing, distribution and retail of the children’s furniture was transferred from Dorel Juvenile to Dorel Home. Accordingly, the Company has restated the segmented information for the year ended December 30, 2015. |
Rick Leckner
(514) 731-0000
Dorel Industries Inc.
Jeffrey Schwartz
(514) 934-3034