2012 - Dorel Industries

I N V E S T O R P R E S E N TAT I O N
THIRD QUARTER
Ended September 30, 2013
Forward-Looking Statement
Except for historical information provided herein, this presentation may contain information and
statements of a forward-looking nature concerning the future performance of Dorel Industries
Inc. These statements are based on suppositions and uncertainties as well as on management's
best possible evaluation of future events. The business of the Company and these forwardlooking statements are subject to a number of risks and uncertainties that could cause actual
results to differ from expected results. Important factors which could cause such differences may
include, without excluding other considerations, increases in raw material costs, particularly for
key input factors such as particle board and resins; increases in ocean freight container costs; the
continued ability to develop product and support brand names; changes to the Company’s
effective income tax rate as a result of changes in the anticipated geographic mix of revenues; the
impact of price pressures exerted by competitors, and settlements for product liability cases
which exceed the Company’s insurance coverage limits. A description of the above mentioned
items and certain additional risk factors are discussed in the Company’s Annual MD&A and
Annual Information Form, filed with the Canadian securities regulatory authorities. The risk
factors outlined in the previously mentioned documents are specifically incorporated herein by
reference. The Company’s business, financial condition, or operating results could be materially
adversely affected if any of these risks and uncertainties were to materialize. Given these risks
and uncertainties, investors should not place undue reliance on forward-looking statements as a
prediction of actual results.
Note: All figures are in US dollars.
2
Dorel Overview
• 3 major segments
• Juvenile products
(2012 revenue - $1.041 billion)
• Bicycles/recreational products (2012 revenue - $928 million)
• Home furnishings
(2012 revenue - $522 million)
• $2.6 billion in sales annually
• 6300 employees
• Sales to 100+ countries
• Operations in more than 24 countries
3
Dorel’s Key Brands
4
Third Quarters Ended September 30
Consolidated
2013
(in thousands, other than EPS)
2012
Total revenue
$ 607,298
$ 613,295
Net income
$ 11,105
$ 19,986
EPS (diluted)
$
$
0.34
0.63
5
Juvenile
Segment
Title
Third Quarters Ended September 30
Zone texte
(in thousands)
2013
2012
Total revenue
$ 238,983
$ 249,126
Gross profit
$
64,911
$
69,080
Operating profit
$
5,027
$
16,889
6
Third Quarter
Title Highlights
Juvenile
• Zone
Operating
profit impacted by pre-tax expense of $8.0
texte
million related to unfavorable U.S. car seat judgment
• Excluding one-time charge, operating profit in North
America improved moderately
• Organic revenue down 6% due to difficult economies
and slower retail environment in certain European and
North American markets
• Latin American sales continued to improve
7
Innovation - Dorel Juvenile USA
Title
Newest North American car seat platform – Elite 80 Air +
by Zone
Saftey
texte1st
• Incorporates new G-cell HX Superior Side Impact technology
developed at Dorel Technical Center with specialists in race car
cockpit crash protection with Air Protect® - side impact
technology
• 3 in 1 car seat for 3 modes of use – infant, convertible and
booster
8
A World Leader in Juvenile
Title
Dorel Juvenile Europe
• Leading
Zone textejuvenile products
• Maxi-Cosi/ Bébé Confort/Quinny car seats and strollers remain
the leading European signature brands to premium price point
market
• Extensive local product development
• E-tailing market expansion
• Extensive new products launched at September Cologne,
Germany juvenile show
• Maxi-Cosi 2way Pearl i-size car seat wins show’s Innovation
Award in World of Travelling Baby category
9
Innovation – Dorel Juvenile
Title
Europe
Kind + Jugend Innovation Award 2013
Zone texte
• Dorel Juvenile is the first car seat manufacturer to offer a
child restraint system which adheres to the new i-Size
European standard for increased child safety
• The 2Way Pearl, a convertible (front and rear facing) car seat
marketed under Dorel’s Maxi-Cosi and Bébé Confort brands
10
Innovation – Dorel Juvenile
Title
Europe
Loola by Maxi-Cosi & Bébé Confort
Zone
texte and mobility: parents and caregivers can clip a
• Total
flexibility
carrycot or a group 0+ car seat
• A versatile light-weight stroller sold throughout Europe
Natural Comfort Bottle
• Easily accepted by baby : developed with experts, tested and
approved by consumers – BPA Free
• The first eco-designed baby bottle on the market
• Made in France, with -20% plastic in it
11
Recreational/Leisure Segment
Third Quarters Ended September 30
(in thousands)
2013
2012
Total revenue
$ 231,591
$ 228,953
Gross profit
$
54,185
$ 55,295
Operating profit
$
14,105
$ 12,516
12
Third Quarter
Recreational/Leisure Highlights
• Revenue increased by 1.2%, operating profit up 12.7%
• Caloi acquisition in Brazil (August 22) aided quarter’s
better performance
• Some market indicators pointing to stabilization in the
bicycle market in months ahead
• CSG sales rebounded slightly due to new model year
introductions
• Sales at Pacific Cycle affected by timing shift which will
move some shipments to Q4
• Cannondale acquired majority ownership of
Cannondale Pro Cycling and Brixia Sports
13
Caloi Acquisition
• Established in 1898. Largest bicycle brand in Latin America. 900
employees
• Acquired 70% interest, Caloi CEO now president of segment’s Brazil
operations
• Caloi’s portfolio encompasses a full range of bicycles, from highperformance to children's models, including mountain bikes, urban,
recreational and road bikes
• Products are distributed across Brazil through a variety of channels, from
mass market to IBD
• Factory in Manaus is largest bicycle plant outside South East Asia,
producing 700,000 units per year
• Brazil will become a production hub for Dorel. Factory to assemble
Cannondale, Schwinn, Mongoose and GT to serve Brazilian and export
markets
14
Recreational/Leisure Segment
Three distinct operating divisions
1) Cycling Sports Group (CSG)
• IBD Division
• Premium Brands
• Growing dealer network
• CSG sales growing rapidly outside
North America
• Innovation – continuing focus
• Building Dorel’s bike business to # 1 position
15
Recreational/Leisure Segment
2) Pacific Cycle
• Mass merchants/sporting goods chains
• Bicycle parts/accessories
• Full service provider – bikes, parts and accessories,
branded apparel
• Brand building has enhanced Schwinn’s
awareness
• 2013 marketing to strengthen Schwinn
and Mongoose brands
16
Recreational/Leisure Segment
3) Apparel Footwear Group (AFG)
• Performance apparel division
incorporates strong SUGOI brand
• New branding opportunities include
Technical Sponsor for Cannondale
Pro Cycling Team and partnership
with Ironman triathlons
17
Home
Furnishings
Segment
Title
Third Quarters Ended September 30
Zone texte
(in thousands)
2013
2012
Total revenue
$ 136,724
$ 135,216
Gross profit
$
15,528
$
15,184
Operating profit
$
5,839
$
5,813
18
Outlook
• Recreational/Leisure rebounded from a disappointing second quarter, and with the
contribution of Caloi, exceeded prior year results in the third quarter. Earnings for
the fourth quarter should exceed prior year. The independent bike dealers channel
is being cautious on pre-season inventory purchases given their experience with
the poor spring 2013 weather.
• Juvenile participated in successful trade shows in Europe and the U.S. and our new
products were well received. Juvenile Latin American business remains on track for
improved earnings this year. Due to challenges in several markets, we have lowered
our expectations for the segment from our previous outlook, and will not exceed
2012 full year earnings.
• In Home Furnishings, we expect that the segment’s solid performance will
continue, though we have tempered our full year expectations somewhat from our
prior outlook.
• Overall it is anticipated that the operating profit for the fourth quarter will
substantially be higher than the third quarter and will set the stage for an improved
2014.
19
Why Invest in Dorel
•
•
•
•
•
•
•
•
A record of successfully integrated acquisitions
A focus on Juvenile and bicycles where Dorel is a key player
Strategically growing Juvenile in Latin America
A portfolio of known, premium brands
Product development capabilities that drive growth
Established customer relationships
Strong annual dividend of $1.20 per share
Consistent generator of cash flow to support acquisitions
20
APPENDIX
21
Financial Performance – 5 Years
(In thousands, except per share amounts)
22
Growth Through Acquisitions
• 1988
Cosco Inc (DJG)
• 1990
Charleswood Corporation
• 1994
Maxi-Miliaan B.V. (Maxi-Cosi)
• 1998
Ameriwood Industries
• 2000
Safety 1st Inc.
• 2001
Quint B.V. (Quinny)
• 2003
Ampa France (Dorel Europe)
23
Growth Through Acquisitions
• 2004
Pacific Cycle
• 2007
IGC Australia
• 2008
Cannondale/SUGOI
• 2008
PTI Sports
• 2009
Baby Art
• 2009
Dorel Brazil - 70% interest
• 2009
Iron Horse Bicycles
24
Growth Through Acquisitions
• 2009
Gemini Bicycles (Australia)
• 2009
Hot Wheels, Circle Bikes (UK)
• 2011
Silfa Group (Chile, Peru, Bolivia, Argentina) - 70% interest
• 2012
Poltrade (Poland)
• 2012
Best Brands Group SA (Panama) and Baby Universe SAS
(Colombia) – 70% interest
• 2013
Caloi (Brazil) – 70% interest
• 2013
Cannondale Pro Cycling and Brixia Sports – majority
interest
25
Total Revenue by Segment
2012
2011
21%
42%
22%
42%
37%
36%
JUVENILE
RECREATIONAL/LEISURE
HOME FURNISHINGS
26
Geographical Distribution of Total
Revenue (by customer)
2011
2012
7%
11%
26%
25%
58%
6%
6%
US
CANADA
EUROPE
61%
OTHER
27
Sustainability Philosophy
• Active in sustainability on several fronts throughout all three
segments
• Dorel Home Products facility is FSC certified
• Cornwall RTA plant recycling for 10 years
• 98% of materials are recycled or sold
• DJG’s sustainability initiatives include zero landfill, water
usage reduced by 98%; high-efficiency lighting systems
• Strict policy in place to ensure sustainable business practices
of suppliers
28