Investor Presentation

Investor Presentation
August 2009
FORWARD-LOOKING 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.
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 forwardlooking statements as a prediction of actual results.
Note: All figures are in US dollars.
2
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 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)
2009
Dorel Brazil
2009
Iron Horse Bicycles (assets)
(
)
2009
Gemini Bicycles (assets)
REVENUE BY SEGMENT
2008
21%
49%
30%
JUVENILE
RECREATIONAL/LEISURE
HOME FURNISHINGS
5
GEOGRAPHIC DISTRIBUTION OF SALES
2008
7%
66%
27%
NORTH AMERICA
EUROPE
OTHER
6
MANAGING THE ECONOMIC DOWNTURN
Q2 2009
ƒ Surpassed internal forecasts
ƒ Significant MTM issue in Juvenile accounted for
EPS (US$0
(US$0.27)
27)
ƒ EPS excluding MTM adjustments – US$1.01
ƒ Overall, businesses performing well; high-end bike sales
down
ƒ Exciting new product introductions
7
A WORLD LEADER IN JUVENILE
World’s largest Juvenile Products Company in our categories.
Consistent growth:
ƒ 9% average annual growth
ƒ 13% earnings from operations CAGR
ƒ 2008 – most successful year
– revenues – US$1.1 billion
– earnings from operations – US$126.8 million
8
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
Air Protect™ - developed by DJG and Kettering University
ƒ Revolutionary
Revolutionary, ground
ground-breaking
breaking
safety feature designed to protect
children in side impact collisions
ƒ Release of air shields child at most
vulnerable area – the head
ƒ Initial
I iti l exclusivity
l i it att BRU/TRU
BRU/TRU;
additional retailers late Q4
10
A WORLD LEADER IN JUVENILE
Dorel Europe
ƒ A major player – close to US$500 million in sales
ƒ Strong brands
chains, boutiques
boutiques,
ƒ Majority of sales to Juvenile product chains
independents
ƒ Building mass merchant relationships
ƒ General softness; no loss of market shares
11
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
12
NO 1 TIGEX/NUK
NO
2
DOREL
Belgium Portugal Switzerland Netherlands Germany
Company estimates
UK
INNOVATION – EUROPE
Quinny Senzz – designed by Dorel Europe
ƒ Lightweight
Lightweight, compact
compact, easy to
maneuver
ƒ Features a one-hand,, flat one-piece
p
fold. Like a full-feature stroller
ƒ Naturally shaped seat reclines for
th child’s
the
hild’ seating
ti comfort
f t
13
RECREATIONAL/LEISURE
Two distinct operating divisions
Cycling Sports Group (CSG)
ƒ IBD Division
ƒ Premium Brands
ƒ Growing European distribution
ƒ Focusing on breakthrough technology
ƒ Build Dorel’s bike business to # 1 position
14
RECREATIONAL/LEISURE
Worldwide Centers of Excellence Strategy
/ markets
ƒ Evolve as gglobal innovation leader in R/L
ƒ 5 Centers of Excellence around the world
ƒ Expansion of Bethel, CT into world-class Innovation Center
for all R/L brands
ƒ Bedford, PA to test and assemble
g Taiwan Center
ƒ Manufacturingg of frames at new Taichung,
of Excellence
15
RECREATIONAL/LEISURE
Pacific Cycle
ƒ Mass merchants/sporting goods chains
ƒ Bicycle parts/accessories (PTI)
one-stop
stop shop for buyers
ƒ Provides one
ƒ Non-bike platform of products
16
RECREATIONAL/LEISURE
Latest Acquisitions
ƒ Assets of Iron Horse Bicycles
ƒ Best known for downhill/extreme trail bikes
ƒ Adds highly recognized brand to R/L portfolio
ƒ Targeting Sporting Goods channel
Australia s Gemini Bicycles
ƒ Assets of Australia’s
ƒ Creating new division: Cycling Sports Group, Australia
17
GROWING HOME FURNISHINGS – MUCH IMPROVED
ƒ Ameriwood – solidly profitable
ƒ Sales of RTA increasing
ƒ Increased RTA capacity
ƒ Futons performing well
ƒ Working to improve
Cosco Home & Office
will grow
further
ƒ Home Furnishings
g segment
g
g
18
REINFORCED MANAGEMENT
ƒ New Senior Management Structure as of Q3 2008
ƒ Added
Add d 3 new posts
t off SSegmentt P
President
id t
ƒ Dedicated to maximizing opportunities in their businesses
ƒ Results clearly evident
19
PROVEN CORPORATE STRATEGY
ƒ Recession resistant products
products right price points,
points right time
ƒ Right products,
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
20
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
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
21
SUSTAINABILITY INITIATIVES
ƒ DHP: 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
non-virgin
virgin wood
ƒ Ameriwood:
1. All saw dust, scrap, wood chips are recycled and returned to
suppliers’ manufacturing processes
suppliers
2. Over 500 tons of scrap metal is recycled annually
ƒ LEED Gold Certified distribution facility reduces carbon
f
foot-print
with
h two coast d
distribution
b
system
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 are equipped with light sensors to eliminate
entire areas being lit needlessly
22
FULL YEAR – 2008
(in millions of US$
US$, other than EPS)
Revenue
Net income
EPS (diluted)
Pre-tax income
23
2008
2007
$ 2,181.9 $ 1,813.7
112.9
87.5
3.38
2.63
132.0
106.6
SIX MONTHS – 2009
3 months
(in millions of US$, other than EPS)
Revenue
Net income
EPS (diluted)
2009
$ 551.1
551 1
24.8
0.74
2008
$ 593.7
593 7
31.3
0.94
2009
$ 1,076.4
52.8
1.58
2008
$ 1,149.8
66.5
1.99
6 months
(in millions of US$, other than EPS)
Revenue
Net income
EPS (diluted)
24
OUTLOOK
ƒ Solid H2
ƒ Continued growth at DJG
ƒ Challenges through H2 in Recreational/Leisure but
increased IBD bike sales (2010)
ƒ Europe to remain soft
ƒ Cash flow of at least US$150 million
25
WHY INVEST IN DOREL?
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
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 strategy off the
h right
i h products
d
and
d varied
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 off a quarterly
t l dividend
di id d
26
QUESTION & ANSWER PERIOD
27