Market Overview

Dorel Reports Second Quarter Results

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  • Revenue of US$623.2 million, up 2% from prior year
  • Dorel Sports rebounds from slow start to the year
  • Dorel Juvenile U.S. posts double digit second quarter revenue growth

MONTRÉAL, Aug. 03, 2018 (GLOBE NEWSWIRE) -- Dorel Industries Inc. (TSX:DII) (TSX:DII) today announced results for the second quarter and six months ended June 30, 2018. Second quarter revenue was US$623.2 million, up 2.0% from the same period a year ago. Reported net loss was US$14.8 million or US$0.46 per diluted share, compared to reported net income of US$11.4 million or US$0.35 per diluted share in the second quarter of 2017. Adjusted net income increased 1.7% to US$12.7 million or US$0.39 per diluted share, compared to US$12.4 million or US$0.38 per diluted share last year.

Revenue for the six months was US$1.27 billion, an increase of 0.6% compared to US$1.26 billion last year. Reported net loss was US$10.0 million or US$0.31 per diluted share, compared to reported net income of US$20.3 million or US$0.62 per diluted share a year ago. Removing the impact of the first quarter impairment loss on trade accounts receivable from Toys"R"Us of US$9.4 million after tax, first half adjusted net income decreased to US$27.6 million or US$0.85 per diluted share, compared to US$35.1 million or US$1.08 per diluted share a year ago.

"Across our segments, Dorel Sports rebounded strongly after a tough start to the year, posting solid adjusted results. Dorel Home continued to grow on-line sales and maintained its strong earnings performance. Dorel Juvenile had a disappointing quarter, principally due to a difficult system implementation in Europe that caused us to miss sales. This and the fact that our Chilean business is in the middle of its turnaround plan masked our outstanding performance in the U.S. We overcame the impact of the Toys"R"Us bankruptcy earlier in the year as Dorel Juvenile U.S. had its best year-over-year revenue growth quarter in 9 years. We are encouraged by the markets' reaction to our new bicycle and juvenile products. Sell-through has been good over the past few months and more new products are set to launch through the second half, providing optimism for the balance of the year.

"In a move to strengthen our Board, last month Norm Steinberg was appointed as a new Director. He has a strong track record as a seasoned professional with extensive experience in M&A and in corporate governance, guiding public companies. This knowledge coupled with a proven strategic vision, leadership and legal acumen will complement our existing Board members and will serve all extremely well.  We are delighted to have Norm with us," stated Dorel President & CEO, Martin Schwartz.

The Company is presenting adjusted financial information, excluding impairment loss on intangible assets, restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt, as the Company believes this provides a more meaningful comparison of its core business performance between the periods presented. These announced items are detailed in the attached tables of this press release. Contained within this press release are reconciliations of non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP.

Summary of Financial Information (unaudited)
Second Quarters Ended June 30,
All figures in thousands of US $, except per share amounts
  2018 2017 (1) Change
  $   $ %  
Total revenue 623,244   611,270 2.0 %
           
Net income (loss) (14,768 ) 11,440 (229.1 %)
Per share - Basic (0.46 ) 0.35 (231.4 %)
Per share - Diluted (0.46 ) 0.35 (231.4 %)
           
Adjusted net income 12,656   12,444 1.7 %
Per share - Basic 0.39   0.38 2.6 %
Per share - Diluted 0.39   0.38 2.6 %
Number of shares outstanding –          
Basic weighted average 32,438,446   32,403,980    
Diluted weighted average 32,438,446   32,677,845    
 
Summary of Financial Information (unaudited)
Six Months Ended June 30,
All figures in thousands of US $, except per share amounts
  2018 2017 (1) Change
  $   $ %  
Total revenue 1,265,530   1,257,982 0.6 %
           
Net income (loss) (10,039 ) 20,281 (149.5 %)
Per share - Basic (0.31 ) 0.63 (149.2 %)
Per share - Diluted (0.31 ) 0.62 (150.0 %)
           
Adjusted net income 18,198   35,149 (48.2 %)
Per share - Basic 0.56   1.08 (48.1 %)
Per share - Diluted 0.56   1.08 (48.1 %)
Number of shares outstanding –          
Basic weighted average 32,438,446   32,403,980    
Diluted weighted average 32,438,446   32,675,600    
(1) The Company has initially applied IFRS 15 and IFRS 9 as at December 31, 2017. Under the transition methods chosen, comparative information is not restated.

 

Dorel Home 
All figures in thousands of US $ 
Second Quarters Ended June 30 (unaudited)
  2018 2017 (1) Change 
  $ % of rev.   $ % of rev.   %  
Total revenue 181,296     184,157     (1.6 %)
                 
Gross profit 30,552 16.9 % 32,872 17.8 % (7.1 %)
Operating profit 16,906 9.3 % 16,715 9.1 % 1.1 %
 
All figures in thousands of US $ 
Six Months Ended June 30 (unaudited)
  2018 2017 (1) Change 
  $ % of rev.   $ % of rev.   %  
Total revenue 373,558     388,195     (3.8 %)
                 
Gross profit 64,545 17.3 % 67,444 17.4 % (4.3 %)
Operating profit 33,173 8.9 % 36,480 9.4 % (9.1 %)
(1) The Company has initially applied IFRS 15 and IFRS 9 as at December 31, 2017. Under the transition methods chosen, comparative information is not restated.

Second quarter revenue decreased US$2.9 million, or 1.6%, to US$181.3 million compared with US$184.2 million a year ago. For the six months, revenue was down US$14.6 million, or 3.8%, to US$373.6 million from US$388.2 million in 2017. For the quarter, e-commerce sales accounted for 55% of total segment gross sales compared to 52% a year ago, and increased for the majority of Dorel Home's divisions. Brick and mortar sales were down and this was partially offset by strong direct-to-customer on-line sales.

Operating profit in the second quarter increased slightly to US$16.9 million from US$16.7 million a year ago. The slight increase was explained by reduced operating expenses offset by lower gross profit. For the six months, operating profit decreased US$3.3 million, or 9.1%, to US$33.2 million compared to US$36.5 million in 2017, mainly due to the US$2.1 million impairment loss on trade accounts receivable from Toys"R"Us U.S. recorded in the first quarter of 2018 and lower revenue offset by reduced operating expenses.

Dorel Home is taking steps to further its growth with a number of new opportunities. Most significant is a licensing agreement recently signed with Cosmopolitan magazine, where a special collection, CosmoLiving, developed jointly by Cosmopolitan and Dorel Home, will be available primarily on-line this fall. Cosmopolitan is the world's largest selling young woman's magazine with 36 Global editions, 128 million brand touch points across all platforms globally and over 17 million readers in the U.S.

"We are excited to be partnering with such an immensely strong brand and expect this line will resonate very well with our target customers. This will clearly set us apart from others," noted Dorel Home President, Norman Braunstein. "Cosmopolitan is a champion of fashion and beauty in every form, and with this new line of furniture, beautiful and functional design is at the heart of every piece allowing ‘Cosmo Girls' of all ages to express themselves through home décor inspired by their fun, fearless lifestyles," said Steve Ross, Global Chief Brand Licensing Officer, Hearst.

Dorel Juvenile
All figures in thousands of US $
Second Quarters Ended June 30 (unaudited)
  2018
2017 (1)
Change
  $   % of rev.   $ % of rev.   %  
Total revenue 217,435       218,060     (0.3 %)
                   
Gross profit 56,002   25.8 % 65,130 29.9 % (14.0 %)
Operating profit (loss) (22,425 ) (10.3 %) 7,162 3.3 % (413.1 %)
                   
Adjusted gross profit 56,089   25.8 % 65,207 29.9 % (14.0 %)
Adjusted operating profit 3,610   1.7 % 8,086 3.7 % (55.4 %)
 
All figures in thousands of US $
Six Months Ended June 30 (unaudited)
  2018
2017 (1)
Change
  $   % of rev.   $ % of rev.   %  
Total revenue 460,772       446,718     3.1 %
                   
Gross profit 124,889   27.1 % 135,015 30.2 % (7.5 %)
Operating profit (loss) (19,792 ) (4.3 %) 16,756 3.8 % (218.1 %)
                   
Adjusted gross profit 124,976   27.1 % 136,309 30.5 % (8.3 %)
Adjusted operating profit 7,335   1.6 % 23,428 5.2 % (68.7 %)
(1) The Company has initially applied IFRS 15 and IFRS 9 as at December 31, 2017. Under the transition methods chosen, comparative information is not restated.

Second quarter revenue decreased US$0.6 million, or 0.3%, to US$217.4 million. Excluding the impact of varying foreign exchange rates year-over-year, organic revenue decreased by approximately 2.5%, with the exception of the U.S. and Brazilian markets, both of which posted strong revenue growth. Six month revenue increased US$14.1 million, or 3.1%, to US$460.8 million and organic revenue declined approximately 1.0%.

The U.S. market delivered operating profit above prior year despite the negative impact of the Toys"R"Us bankruptcy earlier in the year. Dorel Juvenile U.S. had its best year-over-year revenue growth for a particular quarter in 9 years, with revenue increasing more than 10%, and year-to-date revenue up by almost 8%. The division effectively replaced lost Toys"R"Us sales at other retailers with strong higher sales to multiple customers.

In Europe, issues with a Warehouse Management System (WMS) implementation resulted in reduced sales of an estimated US$8.0 million with a negative operating profit impact of approximately US$3.5 million. Missed delivery dates resulted in cancelled orders from many customers. These issues are now resolved, but most lost sales will not be recovered in the third quarter. In Chile, the market remains challenged, particularly for the wholesale channel, which continued to pressure pricing in all product categories. This has resulted in further impairment charges on intangible assets of US$24.2 million.

Excluding impairment loss on intangible assets, restructuring and other costs, adjusted operating profit for the second quarter decreased by US$4.5 million, or 55.4%, to US$3.6 million from US$8.1 million a year ago with the majority of the adjusted operating profit decline attributed to the lost sales from the WMS implementation issues. Year-to-date adjusted operating profit declined US$16.1 million, or 68.7%, to US$7.3 million from US$23.4 million, due mainly to lower gross margins and a US$3.8 million impairment loss on trade accounts receivable from Toys"R"Us U.S. recorded in the first quarter.

Dorel Sports
All figures in thousands of US $
Second Quarters Ended June 30 (unaudited)
  2018 2017 (1) Change 
  $   % of rev.   $ % of rev.   %  
Total revenue   224,513         209,053     7.4 %
                   
Gross profit   47,789   21.3 %   48,024 23.0 % (0.5 %)
Operating profit (loss)   (3,282 ) (1.5 %)   4,928 2.4 % (166.6 %)
                   
Adjusted gross profit   49,373   22.0 %   48,119 23.0 % 2.6 %
Adjusted operating profit    7,955   3.5 %   5,661 2.7 % 40.5 %
 
All figures in thousands of US $
Six Months Ended June 30 (unaudited)
  2018 2017 (1) Change 
  $   % of rev.   $ % of rev.   %  
Total revenue   431,200         423,069     1.9 %
                   
Gross profit   93,477   21.7 %   97,012 22.9 % (3.6 %)
Operating profit (loss)   (4,056 ) (0.9 %)   15,042 3.6 % (127.0 %)
                   
Adjusted gross profit   95,061   22.0 %   96,163 22.7 % (1.1 %)
Adjusted operating profit    7,181   1.7 %   15,133 3.6 % (52.5 %)
(1) The Company has initially applied IFRS 15 and IFRS 9 as at December 31, 2017. Under the transition methods chosen, comparative information is not restated.

Dorel Sports had a much better quarter than anticipated, surpassing the expectations indicated in the Company's first quarter results press release.  Second quarter revenue increased US$15.5 million, or 7.4%, to US$224.5 million and by approximately 6.5% after removing the impact of varying foreign exchange rates year-over-year. Six month revenue increased US$8.1 million, or 1.9%, to US$431.2 million which is flat to prior year after removing the impact of varying foreign exchange rates year-over-year.

The segment rebounded from a difficult start to the year with improved second quarter adjusted operating profit versus first quarter. Compared to prior year, second quarter revenue growth was over 10% at both Cycling Sports Group (CSG) and Caloi.  CSG recorded growth in all key regions with good momentum from recent product launches. Caloi continued to grow on new product innovation and was further aided by a gradual improvement in the Brazilian economy. Pacific Cycle experienced a modest revenue decline overall with the negative impact of the Toys"R"Us U.S. liquidation, but revenue to other key customers increased.

Dorel Sports sold its apparel business in the second quarter to Louis Garneau Sports Inc. The transaction resulted in restructuring costs of US$11.2 million of which US$9.2 million was non-cash. The primary components of the restructuring costs were a write-down of the SUGOI trademark and inventory markdowns. This divestiture will allow Dorel Sports to focus on its core strategic businesses of bikes, parts and accessories categories and electric ride-ons.

Second quarter operating loss was US$3.3 million compared to an operating profit of US$4.9 million a year ago due to restructuring costs mentioned above. Excluding restructuring and other costs, adjusted operating profit rose US$2.3 million, or 40.5%, to US$8.0 million from US$5.7 million last year. For the six months, operating loss was US$4.1 million compared to an operating profit of US$15.0 million in 2017. When excluding the US$6.6 million impairment loss on trade accounts receivable from Toys"R"Us U.S. recorded in the first quarter of 2018, adjusted operating profit for the six months was US$13.8 million compared to US$15.1 million a year ago which is mainly explained by the 70 basis points decrease in adjusted gross profit offset by higher revenue.

Other
During the second quarter and six months ended June 30, 2018, the Company's effective tax rates were 35.9% and 44.1%, respectively versus 27.2% and 31.2% for the same periods in the prior year. Excluding income taxes on impairment loss on intangible assets and restructuring and other costs, the Company's second quarter adjusted tax rate was 11.0% in 2018 and 28.4% in 2017. Excluding income taxes on impairment loss on intangible assets, restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt, the adjusted tax rate for the six months was 10.8% in 2018 versus 24.7% in 2017. Variations in the adjusted tax rate year-over-year for the second quarter and six months are explained largely due to changes in the jurisdictions in which the Company generated its income (including the impact related to the U.S. Tax Reform signed into law on December 22, 2017 which reduces the U.S. federal corporate income tax rate from 35% to 21%, effective as of January 1, 2018). The Company is stating that for the full year it expects its annual adjusted tax rate to be between 20% and 25%.

Quarterly dividend
Dorel's Board of Directors declared its regular quarterly dividend of US$0.30 per share on the outstanding number of the Company's Class "A" Multiple Voting Shares, Class "B" Subordinate Voting Shares, Deferred Share Units, cash-settled Restricted Share Units and cash-settled Performance Share Units. The dividend is payable on August 31, 2018 to shareholders of record as at the close of business on August 17, 2018.

Outlook
"As stated after the first quarter, Dorel's overall second half outlook is for higher revenue and improved adjusted operating profit versus prior year. We expect Dorel Home to build off a solid first half and deliver improved revenue and operating profit by the fourth quarter," stated Dorel President & CEO, Martin Schwartz.  

"Dorel Juvenile was on track for revenue growth in the second quarter, but was hurt by the WMS situation in Europe. This is now resolved and we fully expect our European business to rebound strongly. Several new product launches across the segment are creating additional sales momentum that will lead to the segment recording second half revenue and adjusted operating profit growth compared to last year, though the profit improvement will only materialize in the fourth quarter.

"Dorel Sports remains on track to significantly improve earnings over last year. The second quarter was slightly better than expectations and our outlook remains positive with upcoming new products expected to drive improved sales and adjusted operating profit in both the third and fourth quarters.

"In all three of our segments, proposed tariffs recently announced in the U.S. would impact a significant number of our product categories, and is creating business uncertainty. However, our competition will be similarly affected as we will all be required to adjust pricing upwards and higher costs will ultimately be passed on to consumers," concluded Mr. Schwartz.

Conference Call
Dorel Industries Inc. will hold a conference call to discuss these results today, August 3, 2018 at 12:00 P.M. Eastern Time. Interested parties can join the call by dialing 1-877-223-4471. 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 1-800-585-8367 and entering the passcode 5699145 on your phone. This recording will be available on Friday, August 3, 2018 as of 3:00 P.M. until 11:59 P.M. on Friday, August 10, 2018.

Complete condensed consolidated interim financial statements as at June 30, 2018 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, DII.A)) is a global organization, operating three distinct businesses in juvenile products, bicycles 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, Quinny and Tiny Love, complemented by regional brands such as Safety 1st, Bébé Confort, Cosco and Infanti. Dorel Sports brands include Cannondale, Schwinn, GT, Mongoose, Caloi and IronHorse. Dorel Home, with its comprehensive e-commerce platform, markets a wide assortment of domestically produced and imported furniture. Dorel has annual sales of US$2.6 billion and employs approximately 10,000 people in facilities located in 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 risk resulting from the liquidation and reorganization of Toys"R"Us referred to in this press release and the concentration of revenues with 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 loss on intangible assets, restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt incurred in 2018 and 2017, the Company is including in this press release the following non-GAAP financial measures: "adjusted cost of sales", "adjusted gross profit", "adjusted operating profit", "adjusted finance expenses", "adjusted income before income taxes", "adjusted income taxes 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 the tables below are in thousands of US $, except per share amounts)

Reconciliation of non-GAAP financial measures
 
  Second Quarters Ended June 30,
  2018
  2017(1)
  Reported   % of
revenue
  Impairment loss
on intangible assets,
restructuring
and other costs
  Adjusted   % of
revenue
  Reported   % of
revenue
Restructuring
and other costs
  Adjusted   % of
revenue
   $    %    $    $   %    $    %  $    $   %
TOTAL REVENUE   623,244     100.0     -     623,244     100.0     611,270     100.0   -     611,270     100.0
Cost of sales   488,901     78.4     (1,671 )   487,230     78.2     465,244     76.1   (172 )   465,072     76.1
GROSS PROFIT   134,343     21.6     1,671     136,014     21.8     146,026     23.9   172     146,198     23.9
                                     
Selling expenses   58,825     9.4     -     58,825     9.4     58,616     9.6   -     58,616     9.6
General and administrative expenses   46,190     7.4     -     46,190     7.4     55,036     9.0   -     55,036     9.0
Research and development expenses   8,637     1.4     -     8,637     1.4     7,194     1.2   -     7,194     1.2
Impairment loss on trade and other receivables   132     -     -     132     -     858     0.1   -     858     0.1
Restructuring and other costs   11,408     1.8     (11,408 )   -     -     1,485     0.2   (1,485 )   -     -
Impairment loss on intangible assets   24,193     4.0     (24,193 )   -     -     -     -   -     -     -
OPERATING PROFIT (LOSS)   (15,042 )   (2.4 )   37,272     22,230     3.6     22,837     3.8   1,657     24,494     4.0
Finance expenses   8,009     1.3     -     8,009     1.3     7,115     1.2   -     7,115     1.2
INCOME (LOSS) BEFORE INCOME TAXES   (23,051 )   (3.7 )   37,272     14,221     2.3     15,722     2.6   1,657     17,379     2.8
Income taxes expense (recovery)   (8,283 )   (1.3 )   9,848     1,565     0.3     4,282     0.7   653     4,935     0.8
Tax rate 35.9 %         11.0 %     27.2 %       28.4 %  
NET INCOME (LOSS)   (14,768 )   (2.4 )   27,424     12,656     2.0     11,440     1.9   1,004     12,444     2.0
EARNINGS (LOSS) PER SHARE                                    
Basic   (0.46 )       0.85     0.39         0.35       0.03     0.38    
Diluted   (0.46 )       0.85     0.39         0.35       0.03     0.38    
SHARES OUTSTANDING                                    
Basic - weighted average 32,438,446           32,438,446         32,403,980           32,403,980    
Diluted - weighted average 32,438,446           32,721,216         32,677,845           32,677,845    
(1) The Company has initially applied IFRS 15 and IFRS 9 as at December 31, 2017. Under the transition methods chosen, comparative information is not restated. Comparative information has been reclassified due to a new impairment loss line presentation.


Reconciliation of non-GAAP financial measures
 
  Six Months Ended June 30,
  2018
  2017(1)
  Reported   % of
revenue
  Impairment loss
on intangible assets,
restructuring
and other costs
  Adjusted   % of
revenue
  Reported   % of
revenue
Restructuring
and other costs
  Adjusted   % of
revenue
   $    %    $    $   %    $    %  $    $   %
TOTAL REVENUE   1,265,530     100.0     -     1,265,530     100.0     1,257,982     100.0   -     1,257,982     100.0
Cost of sales   982,619     77.6     (1,671 )   980,948     77.5     958,511     76.2   (445 )   958,066     76.2
GROSS PROFIT   282,911     22.4     1,671     284,582     22.5     299,471     23.8   445     299,916     23.8
                                     
Selling expenses   117,788     9.3     -     117,788     9.3     113,278     9.0   -     113,278     9.0
General and administrative expenses   99,410     7.9     -     99,410     7.9     106,542     8.4   -     106,542     8.4
Research and development expenses   18,061     1.4     -     18,061     1.4     14,717     1.2   -     14,717     1.2
Impairment loss on trade and other receivables   13,161     1.0     -     13,161     1.0     1,846     0.1   -     1,846     0.1
Restructuring and other costs   12,500     1.0     (12,500 )   -     -     6,318     0.6   (6,318 )   -     -
Impairment loss on intangible assets   24,193     2.0     (24,193 )   -     -     -     -   -     -     -
OPERATING PROFIT (LOSS)   (2,202 )   (0.2 )   38,364     36,162     2.9     56,770     4.5   6,763     63,533     5.1
Finance expenses   15,770     1.2     -     15,770     1.2     27,303     2.2   (10,475 )   16,828     1.4
INCOME (LOSS) BEFORE INCOME TAXES   (17,972 )   (1.4 )   38,364     20,392     1.7     29,467     2.3   17,238     46,705     3.7
Income taxes expense (recovery)   (7,933 )   (0.6 )   10,127     2,194     0.3     9,186     0.7   2,370     11,556     0.9
Tax rate 44.1 %         10.8 %     31.2 %       24.7 %  
NET INCOME (LOSS)   (10,039 )   (0.8 )   28,237     18,198     1.4     20,281     1.6   14,868     35,149     2.8
EARNINGS (LOSS) PER SHARE                                    
Basic   (0.31 )       0.87     0.56         0.63       0.45     1.08    
Diluted   (0.31 )       0.87     0.56         0.62       0.46     1.08    
SHARES OUTSTANDING                                    
Basic - weighted average 32,438,446           32,438,446         32,403,980           32,403,980    
Diluted - weighted average 32,438,446           32,706,551         32,675,600           32,675,600    
(1) The Company has initially applied IFRS 15 and IFRS 9 as at December 31, 2017. Under the transition methods chosen, comparative information is not restated. Comparative information has been reclassified due to a new impairment loss line presentation.


Dorel Juvenile
Reconciliation of non-GAAP financial measures
 
  Second Quarters Ended June 30,
  2018
  2017(1)
  Reported   % of
revenue
  Impairment loss
on intangible assets,
restructuring
and other costs
  Adjusted   % of
revenue
    Reported % of
revenue
Restructuring
and other costs
  Adjusted % of
revenue
   $   %    $    $   %      $ %  $    $ %
TOTAL REVENUE   217,435     100.0     -     217,435     100.0       218,060   100.0   -     218,060   100.0
Cost of sales   161,433     74.2     (87 )   161,346     74.2       152,930   70.1   (77 )   152,853   70.1
GROSS PROFIT   56,002     25.8     87     56,089     25.8       65,130   29.9   77     65,207   29.9
                                   
Selling expenses   28,606     13.2     -     28,606     13.2       29,140   13.4   -     29,140   13.4
General and administrative expenses   17,902     8.1     -     17,902     8.1       22,368   10.3   -     22,368   10.3
Research and development expenses   6,233     2.9     -     6,233     2.9       5,124   2.3   -     5,124   2.3
Impairment loss on trade and other receivables (reversal)   (262 )   (0.1 )   -     (262 )   (0.1 )     489   0.2   -     489   0.2
Restructuring and other costs   1,755     0.8     (1,755 )   -     -       847   0.4   (847 )   -   -
Impairment loss on intangible assets   24,193     11.2     (24,193 )   -     -       -   -   -     -   -
OPERATING PROFIT (LOSS)   (22,425 )   (10.3 )   26,035     3,610     1.7       7,162   3.3   924     8,086   3.7
 
  Six Months Ended June 30,
  2018
  2017(1)
  Reported   % of
revenue
  Impairment loss
on intangible assets,
restructuring
and other costs
  Adjusted   % of
revenue
    Reported % of
revenue
Restructuring
and other costs
  Adjusted % of
revenue
   $   %    $    $   %      $ %  $    $ %
TOTAL REVENUE   460,772     100.0     -     460,772     100.0       446,718   100.0   -     446,718   100.0
Cost of sales   335,883     72.9     (87 )   335,796     72.9       311,703   69.8   (1,294 )   310,409   69.5
GROSS PROFIT   124,889     27.1     87     124,976     27.1       135,015   30.2   1,294     136,309   30.5
                                   
Selling expenses   59,380     12.9     -     59,380     12.9       57,293   12.8   -     57,293   12.8
General and administrative expenses   41,357     9.0     -     41,357     9.0       44,349   10.0   -     44,349   10.0
Research and development expenses   13,121     2.8     -     13,121     2.8       10,383   2.3   -     10,383   2.3
Impairment loss on trade and other receivables   3,783     0.8     -     3,783     0.8       856   0.2   -     856   0.2
Restructuring and other costs   2,847     0.6     (2,847 )   -     -       5,378   1.1   (5,378 )   -   -
Impairment loss on intangible assets   24,193     5.3     (24,193 )   -     -       -   -   -     -   -
OPERATING PROFIT (LOSS)   (19,792 )   (4.3 )   27,127     7,335     1.6       16,756   3.8   6,672     23,428   5.2
(1) The Company has initially applied IFRS 15 and IFRS 9 as at December 31, 2017. Under the transition methods chosen, comparative information is not restated. Comparative information has been re-classified due to a new impairment loss line presentation.


Dorel Sports
Reconciliation of non-GAAP financial measures
 
  Second Quarters Ended June 30,
  2018   2017(1)
  Reported   % of
revenue
  Restructuring
and other costs
  Adjusted % of
revenue
  Reported % of
revenue
Restructuring
and other costs
  Adjusted % of
revenue
   $   %   $    $ %    $ % $    $ %
TOTAL REVENUE   224,513   100.0   -     224,513 100.0     209,053 100.0 -     209,053 100.0
Cost of sales   176,724   78.7   (1,584 )   175,140 78.0     161,029 77.0 (95 )   160,934 77.0
GROSS PROFIT   47,789   21.3   1,584     49,373 22.0     48,024 23.0 95     48,119 23.0
                               
Selling expenses   23,397   10.4   -     23,397 10.4     22,546 10.8 -     22,546 10.8
General and administrative expenses   16,302   7.3   -     16,302 7.3     18,389 8.8 -     18,389 8.8
Research and development expenses   1,358   0.6   -     1,358 0.6     1,138 0.5 -     1,138 0.5
Impairment loss on trade and other receivables   361   0.2   -     361 0.2     385 0.2 -     385 0.2
Restructuring and other costs   9,653   4.3   (9,653 )   - -     638 0.3 (638 )   - -
OPERATING PROFIT (LOSS)   (3,282 ) (1.5 ) 11,237     7,955 3.5     4,928 2.4 733     5,661 2.7
 
  Six Months Ended June 30,
  2018   2017(1)
  Reported   % of
revenue
  Restructuring
and other costs
  Adjusted % of
revenue
  Reported % of
revenue
Restructuring
and other costs
  Adjusted % of
revenue
   $   %   $    $ %    $ % $    $ %
TOTAL REVENUE   431,200   100.0   -     431,200 100.0     423,069 100.0 -     423,069 100.0
Cost of sales   337,723   78.3   (1,584 )   336,139 78.0     326,057 77.1 849     326,906 77.3
GROSS PROFIT   93,477   21.7   1,584     95,061 22.0     97,012 22.9 (849 )   96,163 22.7
                               
Selling expenses   45,086   10.4   -     45,086 10.4     42,403 10.0 -     42,403 10.0
General and administrative expenses   32,661   7.5   -     32,661 7.5     35,172 8.3 -     35,172 8.3
Research and development expenses   2,807   0.7   -     2,807 0.7     2,490 0.6 -     2,490 0.6
Impairment loss on trade and other receivables   7,326   1.7   -     7,326 1.7     965 0.2 -     965 0.2
Restructuring and other costs   9,653   2.3   (9,653 )   - -     940 0.2 (940 )   - -
OPERATING PROFIT (LOSS)   (4,056 ) (0.9 ) 11,237     7,181 1.7     15,042 3.6 91     15,133 3.6
(1) The Company has initially applied IFRS 15 and IFRS 9 as at December 31, 2017. Under the transition methods chosen, comparative information is not restated. Comparative information has been re-classified due to a new impairment loss line presentation.

CONTACTS:
MaisonBrison Communications
Rick Leckner
(514) 731-0000

Dorel Industries Inc.
Jeffrey Schwartz
(514) 934-3034

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