2008 - Dorel Industries

Investor Presentation
June 2009
FORWARD­LOOKING STATEMENTS
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'ss best possible evaluation of future events.
management
events The business of the Company and
these forward‐looking 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; failure of new products to meet demand expectations; 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,
Form filed with the securities regulatory authorities in
Canada and the U.S. 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
forward‐looking
looking statements as a prediction of actual results.
Note: All figures are in US dollars.
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AT A GLANCE
3
DIVISIONS
PRODUCT RANGE
DOREL EUROPE
DOREL JUVENILE GROUP USA
DOREL DISTRIBUTION CANADA
IGC DOREL PTY (AUSTRALIA)
DOREL BRAZIL
Š Children’s car seats
Š Strollers Š High chairs Š Playpens Š Toddler beds
Š Early learning/infant
health/safety aids
Š Cribs, dressers
CYCLING SPORTS GROUP
PACIFIC CYCLE
SUGOI
Š Bicycles Š Fitness apparel
Š Jogging strollers
Š Swing sets Š Ride‐on toys
Š Others recreational
products
AMERIWOOD
COSCO HOME & OFFICE
DOREL ASIA
DOREL ASIA
DOREL HOME PRODUCTS
ALTRA FURNITURE
ŠReady‐to‐assemble
furniture
Š Metal folding furniture
Š Step stools Š Ladders
Š Futons ŠBunk beds
Š Upholstery
OUR PREMIUM BRAND
RECENT ACQUISITIONS
4
2003
Ampa France (Dorel Europe)
2004
Pacific Cycle
2007
IGC Australia (55% interest)
2008
Cannondale/SUGOI
2008
PTI Sports (assets)
PTI Sports (assets)
2009
Dorel Brazil
REVENUE BY SEGMENT
2008
20%
51%
29%
JUVENILE
RECREATIONAL/LEISURE
HOME FURNISHINGS
5
GEOGRAPHIC DISTRIBUTION OF SALES
2008
7%
66%
27%
NORTH AMERICA
EUROPE
OTHER
6
MANAGING THE ECONOMIC DOWNTURN
2008
ƒ Retailer destocking
ƒ Consumer confidence
ƒ
ƒ
ƒ
ƒ
7
Q1 2009
ƒ Inventories reduced $90 million
ƒ Dorel excels in OPP/MPP
Dorel’s point‐of‐sales levels firm
Escalating input costs
ƒ Stable
FX fluctuations a factor particularly in Juvenile
FX fluctuations a factor, particularly
in Juvenile segment
Best year ever (despite Q4)
A WORLD LEADER IN JUVENILE
World’s largest Juvenile Products Company in our categories.
Consistent growth:
Consistent growth:
ƒ 9% average annual growth
14% earnings from operations CAGR
ƒ 14% earnings from operations CAGR
ƒ 2008 – most successful year
– revenues – $1.1 billion
– earnings from operations – $128.2 million
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A WORLD LEADER IN JUVENILE
DOREL NORTH AMERICA in the Market
Booster Car Seats
Convertible Car Seats
Infant Car Seats
Strollers
Walkers
High Chairs
NO 1
DOREL
DOREL
Graco
DOREL
DOREL
Graco
NO
2
Graco
Evenflo
Evenflo
Graco
Evenflo
DOREL
NO
3
Evenflo
Britax
Baby Trend
McLaren/Kolkraft
Fisher Price
Fisher Price
Playards
Travel Systems
Bassinets
Swings
Bath Seats
Bath Tubs
NO 1
Graco
Graco
Graco
Fisher Price
DOREL
Fisher Price
NO 2
DOREL
DOREL
Kolkraft
Graco
DOREL
NO 3
Evenflo
Evenflo
Delta
Kids II
RC2
Bath Accessories
Bedrails
Feeding Booster Seat
Potties
Bouncers
Diaper Pails
NO
1
Munchkins
Summer
DOREL
DOREL
Kids II
Playtex
NO
2
Sassy
RC2
Fisher Price
Fisher Price
Fisher Price
Baby Trend
NO 3
Kids II
DOREL
Summer
RC2
Summer
DOREL
Gates
Homesafety
Travel Safety
Infant Health
Monitors
Feeding
NO 1
Evenflo
DOREL
Fisher Price
DOREL
DOREL
Playtex
NO 2
RC2
Kidco
Munchkin
RC2
Summer
Evenflo
Northstates
Private Label
DOREL
Summer
Fisher Price
Avent
NO
3
Infant Carriers
NO 1
Evenflo
NO 2
Infantino
NO 3
Baby Bjorn
Company estimates
9
INNOVATION – NORTH AMERICA
ƒ New Safety 1st collection introduced May 1
products use bamboo and bio plastic
p
ƒ Eco‐conscious p
ƒ In Wal‐Mart now, later in Target and BRU
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A WORLD LEADER IN JUVENILE
Dorel Europe
A major player – close to $500 million in sales
close to $500 million in sales
ƒ A major player
ƒ Strong brands
Majority of sales to Juvenile product chains, boutiques,
of sales to Juvenile product chains boutiques
ƒ Majority
independents
ƒ Building mass merchant relationships
ƒ General softness; no loss of market shares
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A WORLD LEADER IN JUVENILE
DOREL EUROPE in the Market
France
Spain
Italy
NO 1
DOREL
PLAY/JANE
CHICCO
DOREL
CHICCO
CHICCO
DOREL
HAUCK
GRACO
NO 2
CHICCO
DOREL
PEG
PERICLES
DOREL
DOREL
BUGABOO
HARTAN
M&P
PEG
CHICCO
CAM
BUGABOO
BEBECAR
BUGABOO
MUTSY
DOREL
MACLAREN
DOREL
PLAY/JANE
CHICCO
DOREL
CHICCO
DOREL
DOREL
RÖMER
BRITAX
TEAM‐TEX
DOREL
DOREL
RÖMER
DOREL
RÖMER
RÖMER
DOREL
DOREL
3
RÖMER
CHICCO
CAM
CHICCO
BEBECAR
RECARO
TEAM‐TEX
RECARO
GRACO
Furniture NO 1
CHICCO
JANE
CHICCO
CHICCO
CHICCO
CHICCO
CHICCO
HAUCK
M&P
NO 2
DOREL
CHICCO
CAM
DOREL
DOREL
STOKKE
TOPMARK
GRACO
CHICCO
CHICCO
CHICCO
AVENT
CHICO
AVENT
AVENT
NUK
AVENT
JANE
AVENT
CHICCO
AVENT
BIBI
DIFRAX
AVENT
JACKEL
S ll
Strollers
NO
3
Carseats NO 1
NO 2
NO
Small
Nursery
Product
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NO 1 TIGEX/NUK
NO
2
DOREL
Belgium Portugal Switzerland Netherlands Germany
Company estimates
UK
INNOVATION – EUROPE
Mila – designed by Dorel Europe
ƒ
ƒ
ƒ
ƒ
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Patented 3D folding – no need to bend
Stands upright once folded
Weighs 7 kg – easy to transport
Ergonomically designed seat – child
always correctly seated
always correctly seated
RECREATIONAL/LEISURE
Two distinct operating divisions
Cycling Sports Group (CSG)
Cycling Sports Group (CSG)
ƒ IBD Division
Premium Brands
ƒ Premium Brands
ƒ Growing European distribution
Focusing on breakthrough technology
ƒ Focusing on breakthrough technology
ƒ Build Dorel’s bike business to # 1 position
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RECREATIONAL/LEISURE
Worldwide Centers of Excellence Strategy
g
/
ƒ Evolve as global innovation leader in R/L markets
ƒ 5 Centers of Excellence around the world
ƒ Expansion of Bethel, CT into world‐class Innovation Center for all R/L brands
for all R/L brands
ƒ Bedford, PA to test and assemble
g
ƒ Manufacturingg of frames at new Taichung, Taiwan Center
of Excellence
15
RECREATIONAL/LEISURE
Pacific Cycle
Mass merchants/sporting goods chains
ƒ Mass merchants/sporting goods chains
ƒ Bicycle parts/accessories (PTI)
Provides one‐stop
stop shop for buyers
shop for buyers
ƒ Provides one
ƒ Non‐bike platform of products
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GROWING HOME FURNISHINGS – MUCH IMPROVED
ƒ Q1 2009 – best quarter since Q4 2007
ƒ Ameriwood – solidly profitable
ƒ Sales of RTA increasing
ƒ Increased RTA capacity
ƒ Futons performing well
ƒ Working to improve
Cosco Home & Office
ƒ Home Furnishings segment will grow further
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REINFORCED MANAGEMENT
ƒ New Senior Management Structure as of Q3 2008
ƒ Added 3 new posts of Segment President
Add d 3
t fS
t P id t
ƒ Dedicated to maximizing opportunities in their businesses
ƒ Results clearly evident
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PROVEN CORPORATE STRATEGY
ƒ Recession resistant products
Right products right price points, right time
points right time
ƒ Right products, right price
ƒ North American consumers are shopping more at mass merchants
ƒ Ensuring market flexibility in Europe, building relationships with mass merchants
ƒ Investing heavily in product innovation
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SUSTAINABILITY PHILOSOPHY
ƒ Active in sustainability on several fronts throughout all
three segments
ƒ By nature of large volume of units sold, Dorel’s eco‐conscious programs make an important contribution by reducing their environmental impact
environmental impact
ƒ Despite goal of keeping prices to consumers low, Dorel intends to remain proactive in its sustainability initiatives
ƒ Strict policy in place to ensure sustainable business practices of suppliers
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SUSTAINABILITY INITIATIVES
ƒ DHP:
DHP: the first company supplying the mass market retail the first company supplying the mass market retail
segment with a futon made from 100% FSC certified wood
ƒ Altra Furniture: uses Bamboo in some furniture;
Smart Program ‐ 100% non
Smart Program 100% non‐virgin
virgin wood
wood
ƒ Ameriwood: 1. All saw dust, scrap, wood chips are recycled and returned to suppliers’ manufacturing processes
suppliers
manufacturing processes
2. Over 500 tons of scrap metal is recycled annually
ƒ LEED Gold Certified distribution facility reduces carbon f
foot‐print with two coast distribution system
h
d
b
ƒ Safety 1st Nature Next Collection features products made from eco‐conscious materials
ƒ Car seats in bags have saved countless tons of corrugated, transportation/storage costs
ƒ Warehouses
Warehouses are equipped with light sensors to eliminate are equipped with light sensors to eliminate
entire areas being lit needlessly
21
FULL YEAR – 2008 (in millions of US$ other than EPS)
(in millions of US$, other
Revenue
2007
$ 2,181.9 $ 1,813.7
Net income
112.9 87.5
EPS (diluted)
3.38
2.63
Pre‐tax income
22
2008
132.0
106.6
Q1 –– 2009 Q1 (in millions of US$, other
(in
millions of US$ other than EPS)
Revenue
Net income
Net income
EPS (diluted)
23
2009
$ 525.2 28.0
28.0 0.84
2008
$ 556.0
35.1
1.05
OUTLOOK
ƒ North American Juvenile & Home Furnishings
expected to remain strong
ƒ Europe to stay soft
ƒ Mix in bikes to be affected by sales of more
lower‐priced units
ƒ FX to affect Juvenile
ƒ Cash flow of at least $150 million
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WHY INVEST IN DOREL?
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
A consistent record of successful
A
consistent record of successful acquisitions
A focus on Juvenile and Bikes where Dorel is a key player
A strong performance in Home Furnishings
A portfolio of known, premium brands
Product development capabilities that drive growth
A
A strategy
of the right products
f h i h
d
and varied
d i d price
i points
i
Dedicated quality control/customer service by solid
Asian presence
ƒ Established customer relationships
ƒ Strong cash flow
ƒ Payment
P
t of a quarterly
f
t l dividend
di id d
25
QUESTION & & A
ANSWER PERIOD
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