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Dorel Reports Q4 and 2017 Year-End Results

  • Dorel Home posts record on-line sales
  • Dorel Juvenile develops strongest new product pipeline in years
  • Dorel Sports poised for improved 2018

MONTRÉAL, March 08, 2018 (GLOBE NEWSWIRE) -- Dorel Industries Inc. (TSX:DII.B) (TSX:DII.A) today announced results for the fourth quarter and year ended December 30, 2017. Revenue for the fourth quarter was US$677.1 million, up 4.4% from US$648.7 million a year ago. Adjusted net income was US$20.4 million or US$0.62 per diluted share compared to US$7.7 million or US$0.24 per diluted share in the fourth quarter of 2016. Reported net loss for the quarter was US$3.0 million or US$0.09 per diluted share compared to US$5.6 million or US$0.17 per diluted share a year ago.

Revenue for 2017 was US$2.58 billion, compared to US$2.60 billion the previous year. Adjusted net income for the year rose 20.3% to US$70.1 million or US$2.15 per diluted share, compared to US$58.3 million or US$1.79 per diluted share in 2016. Reported net income was US$30.6 million or US$0.94 per diluted share, compared to a reported net loss of US$11.6 million or US$0.36 per diluted share the previous year.

“Dorel’s businesses performed quite well during the fourth quarter and we are encouraged with the advancements made, setting the stage for a positive 2018,” commented Dorel President & CEO, Martin Schwartz. “Dorel Home posted excellent revenue and operating profit, with record on-line sales continuing to drive the segment. Dorel Juvenile is being transformed into a consumer-centric organization through a market-led business with a heavy emphasis on new products. We have the strongest product pipeline in years featuring exciting, innovative products planned to launch over the next 18 months. Dorel Juvenile has also made important progress in e-commerce, with each of its geographic markets projecting growth through 2018. Dorel Sports bounced back from a difficult third quarter despite continuing industry-wide weakness in the global bicycle market. Similar to Dorel Juvenile, Dorel Sports has developed an exciting line-up of new products to be launched through 2018,” concluded Mr. Schwartz.

The Company is presenting adjusted financial information, excluding impairment losses, restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt, 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. 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)
Fourth Quarters Ended December 30,
All figures in thousands of US $, except per share amounts
2017 2016 Change
$ $ %
Total revenue677,052 648,749 4.4%
Net loss(2,992) (5,567)46.3%
Per share - Basic(0.09) (0.17)47.1%
Per share - Diluted(0.09) (0.17)47.1%
Adjusted net income20,410 7,740 163.7%
Per share - Basic0.63 0.24 162.5%
Per share - Diluted0.62(1) 0.24 158.3%
Number of shares outstanding –
Basic weighted average32,426,326 32,373,809
Diluted weighted average32,426,326 32,373,809
Adjusted diluted weighted average35,273,605 32,630,255
(1) As at December 30, 2017, the convertible debentures were included in the calculation of the adjusted diluted earnings per share (“EPS”) by adjusting the adjusted net income attributable to equity holders as well as the adjusted diluted weighted average number of shares outstanding, as these debentures were deemed to be dilutives.


Summary of Financial Information (unaudited)
Years Ended December 30,
All figures in thousands of US $, except per share amounts
2017 2016 Change
$ $ %
Total revenue2,577,668 2,603,185 (1.0%)
Net income (loss)30,583 (11,611)363.4%
Per share - Basic0.94 (0.36)361.1%
Per share - Diluted0.94 (0.36)361.1%
Adjusted net income70,097 58,251 20.3%
Per share - Basic2.16 1.80 20.0%
Per share - Diluted2.15 1.79 20.1%
Number of shares outstanding –
Basic weighted average32,409,551 32,352,953
Diluted weighted average32,665,713 32,352,953


Dorel Home
All figures in thousands of US $
Fourth Quarters Ended December 30 (unaudited)
2017 2016 Change
$
% of rev.
$
% of rev.
%
Total revenue200,975 177,049 13.5%
Gross profit38,698 19.3%29,703 16.8%30.3%
Operating profit21,064 10.5%13,769 7.8%53.0%
All figures in thousands of US $
Years Ended December 30 (unaudited)
2017 2016 Change
$ % of rev. $ % of rev. %
Total revenue790,619 735,247 7.5%
Gross profit141,550 17.9%123,742 16.8%14.4%
Operating profit78,081 9.9%64,180 8.7%21.7%

Fourth quarter revenue rose US$23.9 million, or 13.5%, to US$201.0 million. For the full year, revenue grew US$55.4 million, or 7.5%, to US$790.6 million from US$735.2 million in 2016. On-line sales were the highest ever recorded in the segment’s history as it continued to augment its product platform. For the fourth quarter and the full year, e-commerce sales represented a record 57% and 52% of total segment revenue respectively compared to 51% and 45% for the comparable periods in 2016. This revenue improvement far exceeded small reductions in the brick and mortar channel.

Fourth quarter gross profit was 19.3%, up 250 basis points and for the full year was up 110 basis points to 17.9%. Both the quarter and year-to-date improvements were due to shift of sales to higher margin items throughout the year. Warehouse and distribution costs were slightly higher than last year due to the segment’s additional overall warehouse footprint, higher wage costs and inventory levels brought on by the increased revenue.

Fourth quarter operating profit rose US$7.3 million, or 53.0%, to US$21.1 million from US$13.8 million a year ago. All Dorel Home divisions posted improved operating results. For the full year, operating profit increased US$13.9 million, or 21.7%, to US$78.1 million compared to US$64.2 million in 2016.

Dorel Juvenile
All figures in thousands of US $
Fourth Quarters Ended December 30 (unaudited)
2017 2016
Change
$ % of rev. $ % of rev. %
Total revenue239,306 236,447 1.2%
Gross profit70,645 29.5%71,240 30.1%(0.8%)
Operating loss(13,558)(5.7%)(17,259)(7.3%)21.4%
Adjusted gross profit70,926 29.6%71,240 30.1%(0.4%)
Adjusted operating profit (loss)10,432 4.4%(7,141)(3.0%)246.1%
All figures in thousands of US $
Years Ended December 30 (unaudited)
2017 2016
Change
$ % of rev. $ % of rev. %
Total revenue921,669 928,963 (0.8%)
Gross profit275,261 29.9%290,618 31.3%(5.3%)
Operating profit13,353 1.4%16,760 1.8%(20.3%)
Adjusted gross profit276,836 30.0%290,618 31.3%(4.7%)
Adjusted operating profit45,215 4.9%31,314 3.4%44.4%

Fourth quarter revenue increased US$2.9 million, or 1.2%, to US$239.3 million from US$236.4 million last year. Excluding the positive impact of foreign exchange rates, organic revenue decreased by approximately 2.5%. Declines in traditional brick and mortar were partially offset by gains in market share at on-line retailers. In Latin America, sales increased overall, led by Brazil, but sales were lower in Chile and fell short of both prior year and 2017 expectations. Full year revenue decreased by US$7.3 million, or 0.8%, to US$921.7 million from US$929.0 million in 2016.

Fourth quarter operating loss in 2017 was US$13.6 million compared to US$17.3 million last year. 2017 results include a non-cash impairment loss on goodwill of US$19.9 million, related to certain business units within Latin America. Excluding impairment losses, restructuring and other costs, adjusted operating profit for the quarter was US$10.4 million, compared to an adjusted operating loss of US$7.1 million last year, an improvement of US$17.5 million. 2016 results included a total of US$7.8 million for a one-time write-down of certain deferred development costs and employee severance not included within restructuring expenses. In addition, product liability costs in 2017 are lower than prior year by US$8.7 million. Combined, these amounts account for US$16.5 million of the year-over-year improvement. The remaining improvement in adjusted operating profit of US$1.0 million was due to reduced operating costs, more than offsetting the lower organic revenue and margins in the quarter. Year-to-date operating profit was US$13.4 million, compared to US$16.8 million last year. Adjusted operating profit increased US$13.9 million, or 44.4%, to US$45.2 million, from US$31.3 million a year ago.

The economies of both Chile and Peru have slowed over the past several years, due to lower commodity prices, political uncertainty and changes in consumer behaviour. As such, coupled with stagnant growth expected in Colombia and Panama, projected earnings and cash flow growth were revised resulting in a non-cash impairment loss on goodwill of US$19.9 million, recorded in the fourth quarter of 2017. Dorel Juvenile Chile continues to be the juvenile market leader with the majority market share, a large retail footprint and the number one Infanti brand. The intention is to reduce the retail footprint to focus on the most profitable products and locations, all the while remaining a leading retailer and to invest in e-commerce capabilities to become a leader within the e-commerce sales channel in its categories in Chile, Peru and eventually Colombia.

The revolutionary Maxi-Cosi AxissFix Air, launched in the European market during the fourth quarter of 2017, drew significant attention from opinion and media groups in Europe. The media plan was comprehensive and is expected to bolster the Maxi-Cosi brand. Part of Dorel Juvenile’s success in improving its product pipeline has been strategic sourcing to complement in-house developed product. An example is the new Maxi-Cosi Zelia urban stroller, the first globally compliant stroller for Dorel. Launched in October, with vastly improved time-to-market, only 12 months elapsed from concept to retail stores. Additional key launches are planned for 2018, including a major Safety 1st travel system and a Maxi-Cosi car seat to be manufactured and sold in North America.

Dorel Sports
All figures in thousands of US $
Fourth Quarters Ended December 30 (unaudited)
2017 2016 Change
$% of rev. $ % of rev. %
Total revenue236,771 235,253 0.6%
Gross profit52,10522.0%47,998 20.4%8.6%
Operating profit9,6134.1%4,965 2.1%93.6%
Adjusted gross profit51,38621.7%50,417 21.4%1.9%
Adjusted operating profit9,2523.9%10,153 4.3%(8.9%)
All figures in thousands of US $
Years Ended December 30 (unaudited)
2017 2016 Change
$% of rev. $ % of rev. %
Total revenue865,380 938,975 (7.8%)
Gross profit194,94022.5%196,201 20.9%(0.6%)
Operating profit (loss)24,8312.9%(33,930)(3.6%)173.2%
Adjusted gross profit193,62522.4%201,322 21.4%(3.8%)
Adjusted operating profit24,9722.9%31,538 3.4%(20.8%)

Fourth quarter revenue increased US$1.5 million, or 0.6%, to US$236.8 million from US$235.3 million last year. Excluding the positive impact of foreign exchange rates, organic revenue declined by approximately 1.4%. Full year revenue decreased US$73.6 million, or 7.8%, to US$865.4 million compared to US$939.0 million a year ago. Organic revenue for the full year declined by approximately 11% when removing foreign exchange fluctuations and the change in Cycling Sports Group (CSG) International’s business model for which the revenue recognition transitioned from a licensing model to a distribution platform in the third quarter of 2016.

Despite a continued weak global bike market, Dorel Sports grew its fourth quarter top line thanks to strong performances in CSG’s International business and at Caloi. The segment’s revenue improved considerably from the third quarter despite the continuing challenging global bicycle market, particularly in North America. Sales in CSG decreased slightly due to the competitive environment and a generally soft industry globally at independent bicycle dealers. Several new model year ’18 products were launched, including the revitalized Synapse, Trail and Kids platforms, which are all core pillars of the Cannondale product offering. Sales of these units increased over 50% in the fourth quarter, compared to prior year. Parts and accessories sales also increased as did sales of the new line of Mongoose scooters. Caloi improved its top line due to the on-going stabilization of the Brazilian economy, combined with the success of new product launches of the Caloi and Cannondale brands in Brazil. Inventory remains in a healthy position, finishing the fourth quarter with the lowest level in two years.

Fourth quarter operating profit increased US$4.6 million to US$9.6 million and when excluding restructuring and other costs, adjusted operating profit declined by US$0.9 million to US$9.3 million. For the year, operating profit was US$24.8 million compared to an operating loss a year ago of US$33.9 million. Excluding impairment losses, restructuring and other costs, adjusted operating profit declined by US$6.6 million, or 20.8%, to US$25.0 million. The change in adjusted operating profit for the fourth quarter when compared to 2016 is explained by increased selling expenses offset by improved adjusted gross profit which increased by 30 basis points to 21.7%. For the year, the change in adjusted operating profit is explained by lower revenue, partly offset by improved adjusted gross profit which increased by 100 basis points to 22.4%. This is due to continued inventory management improvement in terms of product mix and pricing actions in key markets.

Other
The Company’s effective tax rate was an expense of 36.3% in 2017 compared to a recovery of 46.2% in 2016. Excluding income taxes on impairment losses, restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt, the Company’s adjusted tax rate was 22.5% in 2017 compared with 7.1% in 2016. The main cause of the year-over-year increase in the adjusted tax rate was changes in the jurisdictions in which the Company generated its income. The overall impact related to tax rate changes in the Company’s various jurisdictions from 2016 to 2017 was a net benefit of US$2.0 million.

The effective tax rate for 2018 is expected to be between 20% and 25%, incorporating the U.S. Tax Reform signed into law on December 22, 2017 that reduces the U.S. federal corporate income tax rate from 35% to 21%, effective January 1, 2018. The U.S. Tax Reform introduces other important changes to U.S. corporate income tax laws, which are not expected to significantly impact the Company in future years.

Outlook
“E-commerce opportunities continue to emerge and Dorel Home is capitalizing on them with its broad product assortment and company-wide logistics expertise. As the leader in supplying on-line retailers, we expect further growth in Dorel Home revenue, with continued operating profit improvement through 2018,” stated Dorel President & CEO, Martin Schwartz.

“Dorel Juvenile has begun to introduce several significant new products and will continue to do so throughout the year. This expanded product portfolio is expected to result in higher revenue and improved adjusted operating profit in 2018. We are forecasting further e-commerce growth for this segment, as we are gaining traction and market share on-line within our product categories. Current first quarter expectations are for lower adjusted operating profit than prior year, with the stated improvements to commence thereafter.

“Driven by new, innovative products across all price points, Dorel Sports is expected to deliver higher sales and better operating profit in 2018. This improvement is expected in all three of our principal channels: mass market, independent bike dealers and sporting goods. While there are less e-commerce sales opportunities within Dorel Sports’ product categories, our focus on compelling on-line content is driving consumer awareness to our brands. As with Dorel Juvenile, the first quarter of 2017 was strong for Dorel Sports, therefore the improved operating profit is expected in the second quarter onward.

“In 2017, we continued to see changes in the traditional retail brick and mortar retail sales channel and our Company-wide strategic focus on e-commerce has allowed us to offset most of these challenges. Should there be a further decline in the financial condition of these at-risk retailers, this could have a short-term negative impact on our overall expectations for the year,” concluded Mr. Schwartz.

Conference Call
Dorel Industries Inc. will hold a conference call to discuss these results today, March 8, 2018 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 https://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 4758868 on your phone. This recording will be available on Thursday, March 8, 2018 as of 4:00 P.M. until 11:59 P.M. on Thursday, March 15, 2018.

Complete consolidated financial statements as at December 30, 2017 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 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 Safety 1st, Quinny, Maxi-Cosi and Tiny Love, complemented by regional brands such as Cosco, Bébé Confort and Infanti. Dorel Sports brands include Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse and SUGOI. 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 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 losses, restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt incurred in 2017 and 2016, 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 expense (recovery)”, “adjusted tax rate”, “adjusted net income”, “adjusted earnings per basic and diluted share” and “adjusted diluted weighted average number of shares outstanding”. 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
Fourth Quarters Ended December 30,
2017 2016
Reported % of
revenue
Impairment losses, restructuring and
other costs
Adjusted % of
revenue
Reported % of
revenue
Restructuring
and other costs
Adjusted % of
revenue
$ % $ $ % $ % $ $ %
TOTAL REVENUE677,052 100.0 - 677,052 100.0 648,749 100.0 - 648,749 100.0
Cost of sales515,604 76.2 438 516,042 76.2 499,808 77.0 (2,419)497,389 76.7
GROSS PROFIT161,448 23.8 (438)161,010 23.8 148,941 23.0 2,419 151,360 23.3
Selling expenses58,929 8.7 - 58,929 8.7 57,730 8.9 - 57,730 8.9
General and administrative expenses60,535 8.9 - 60,535 8.9 69,219 10.7 - 69,219 10.7
Research and development expenses8,039 1.2 - 8,039 1.2 14,463 2.2 - 14,463 2.2
Restructuring and other costs4,138 0.6 (4,138)- - 12,887 2.0 (12,887)- -
Impairment loss on goodwill19,929 2.9 (19,929)- - - - - - -
OPERATING PROFIT (LOSS)9,878 1.5 23,629 33,507 5.0 (5,358)(0.8)15,306 9,948 1.5
Finance expenses8,222 1.3 - 8,222 1.3 11,766 1.8 (2,840)8,926 1.3
INCOME (LOSS) BEFORE INCOME TAXES1,656 0.2 23,629 25,285 3.7 (17,124)(2.6)18,146 1,022 0.2
Income taxes expense (recovery)4,648 0.6 227 4,875 0.7 (11,557)(1.7)4,839 (6,718)(1.0)
Tax rate280.7% 19.3 % 67.5% (657.3%)
NET (LOSS) INCOME(2,992)(0.4)23,402 20,410 3.0 (5,567)(0.9)13,307 7,740 1.2
EARNINGS (LOSS) PER SHARE
Basic(0.09) 0.72 0.63 (0.17) 0.41 0.24
Diluted(0.09) 0.71 0.62(1) (0.17) 0.41 0.24
SHARES OUTSTANDING
Basic - weighted average32,426,326 32,426,326 32,373,809 32,373,809
Diluted - weighted average32,426,326 35,273,605 32,373,809 32,630,255
(1) As at December 30, 2017, the convertible debentures were included in the calculation of the adjusted diluted EPS by adjusting the adjusted net income attributable to equity holders as well as the adjusted diluted weighted average number of shares outstanding, as these debentures were deemed to be dilutives.


Reconciliation of non-GAAP financial measures
Years Ended December 30,
2017 2016
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 REVENUE2,577,668 100.0 - 2,577,668 100.0 2,603,185 100.0 - 2,603,185 100.0
Cost of sales1,965,917 76.3 (260)1,965,657 76.3 1,992,624 76.5 (5,121)1,987,503 76.3
GROSS PROFIT611,751 23.7 260 612,011 23.7 610,561 23.5 5,121 615,682 23.7
Selling expenses233,106 9.0 - 233,106 9.0 230,623 8.9 - 230,623 8.9
General and administrative expenses224,580 8.7 - 224,580 8.7 244,631 9.4 - 244,631 9.4
Research and development expenses31,065 1.2 - 31,065 1.2 39,092 1.5 - 39,092 1.5
Restructuring and other costs11,814 0.5 (11,814)- - 19,560 0.8 (19,560)- -
Impairment losses on goodwill and intangible assets19,929 0.8 (19,929)- - 55,341 2.1 (55,341)- -
OPERATING PROFIT91,257 3.5 32,003 123,260 4.8 21,314 0.8 80,022 101,336 3.9
Finance expenses43,248 1.6 (10,475)32,773 1.3 42,899 1.6 (4,265)38,634 1.5
INCOME (LOSS) BEFORE INCOME TAXES48,009 1.9 42,478 90,487 3.5 (21,585)(0.8)84,287 62,702 2.4
Income taxes expense (recovery)17,426 0.7 2,964 20,390 0.8 (9,974)(0.4)14,425 4,451 0.2
Tax rate36.3% 22.5% 46.2% 7.1%
NET INCOME (LOSS)30,583 1.2 39,514 70,097 2.7 (11,611)(0.4)69,862 58,251 2.2
EARNINGS (LOSS) PER SHARE
Basic0.94 1.22 2.16 (0.36) 2.16 1.80
Diluted0.94 1.21 2.15 (0.36) 2.15 1.79
SHARES OUTSTANDING
Basic - weighted average32,409,551 32,409,551 32,352,953 32,352,953
Diluted - weighted average32,665,713 32,665,713 32,352,953 32,584,489


Details of impairment losses, restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt:
Fourth Quarters Ended December 30, Years Ended December 30,
2017 2016 2017 2016
$ $ $ $
Write-down of long-lived assets- - 368 -
Inventory markdowns (reversals)(239)979 242 3,557
Accelerated depreciation- 57 - 57
Other associated costs- 619 - 619
Recorded within gross profit(239)1,655 610 4,233
Employee severance and termination benefits3,880 3,524 8,098 7,955
Accelerated depreciation62 1,065 62 1,903
Write-down of long-lived assets1,854 8,353 1,854 8,777
Net losses from the remeasurement and disposals of assets held for sale9 107 631 190
Curtailments gain on net pension defined benefit liabilities(1,908)(891) (1,908)(891)
Other associated costs241 430 3,077 586
Recorded within a separate line in the consolidated income statements4,138 12,588 11,814 18,520
Total restructuring costs3,899 14,243 12,424 22,753
Other costs recorded within gross profit(199)764 (350)888
Acquisition-related costs- - - 729
Other costs- 299 - 311
Recorded within a separate line in the consolidated income statements- 299 - 1,040
Total other costs(199)1,063 (350)1,928
Total restructuring and other costs3,700 15,306 12,074 24,681
Impairment losses on goodwill and intangible assets19,929 - 19,929 55,341
Loss on remeasurement of forward purchase agreement liabilities - 2,840 276 4,265
Loss on early extinguishment of long-term debt- - 10,199 -
Total impairment losses, restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt before income taxes (1)23,629 18,146 42,478 84,287
Total impairment losses, restructuring and other costs, remeasurement of forward purchase agreement liabilities and loss on early extinguishment of long-term debt after income taxes23,402 13,307 39,514 69,862
Total impact on diluted earnings (loss) per share(0.71)(0.41) (1.21)(2.15)
(1) Includes non-cash amounts of: 19,707 12,510 22,871 73,199


Dorel Juvenile
Reconciliation of non-GAAP financial measures
Fourth Quarters Ended December 30,
2017
2016
Reported % of
revenue
Impairment losses,
restructuring
and other costs
Adjusted % of
revenue
Reported % of
revenue
Restructuring
and other costs
Adjusted % of
revenue
$ % $ $ % $ % $ $ %
TOTAL REVENUE239,306 100.0 - 239,306 100.0 236,447 100.0 - 236,447 100.0
Cost of sales168,661 70.5 (281)168,380 70.4 165,207 69.9 - 165,207 69.9
GROSS PROFIT70,645 29.5 281 70,926 29.6 71,240 30.1 - 71,240 30.1
Selling expenses29,532 12.3 - 29,532 12.3 31,146 13.2 - 31,146 13.2
General and administrative expenses25,328 10.6 - 25,328 10.6 35,437 14.9 - 35,437 14.9
Research and development expenses5,634 2.3 - 5,634 2.3 11,798 5.0 - 11,798 5.0
Restructuring and other costs3,780 1.6 (3,780)- - 10,118 4.3 (10,118)- -
Impairment loss on goodwill19,929 8.4 (19,929)- - - - - - -
OPERATING PROFIT (LOSS)(13,558)(5.7)23,990 10,432 4.4 (17,259)(7.3)10,118 (7,141)(3.0)
Years Ended December 30,
2017
2016
Reported % of
revenue
Impairment losses,
restructuring
and other costs
Adjusted % of
revenue
Reported % of
revenue
Restructuring
and other costs
Adjusted % of
revenue
$ % $ $ % $ % $ $ %
TOTAL REVENUE921,669 100.0 - 921,669 100.0 928,963 100.0 - 928,963 100.0
Cost of sales646,408 70.1 (1,575)644,833 70.0 638,345 68.7 - 638,345 68.7
GROSS PROFIT275,261 29.9 1,575 276,836 30.0 290,618 31.3 - 290,618 31.3
Selling expenses116,275 12.6 - 116,275 12.6 115,132 12.4 - 115,132 12.4
General and administrative expenses93,453 10.1 - 93,453 10.1 115,447 12.4 - 115,447 12.4
Research and development expenses21,893 2.4 - 21,893 2.4 28,725 3.1 - 28,725 3.1
Restructuring and other costs10,358 1.1 (10,358)- - 14,554 1.6 (14,554)- -
Impairment loss on goodwill19,929 2.3 (19,929)- - - - - - -
OPERATING PROFIT13,353 1.4 31,862 45,215 4.9 16,760 1.8 14,554 31,314 3.4


Dorel Sports
Reconciliation of non-GAAP financial measures
Fourth Quarters Ended December 30,
2017 2016
Reported % of
revenue
Restructuring
and other costs
Adjusted % of
revenue
Reported % of
revenue
Restructuring
and other costs
Adjusted % of
revenue
$ % $ $ % $ % $ $ %
TOTAL REVENUE236,771 100.0 - 236,771 100.0 235,253 100.0 - 235,253 100.0
Cost of sales184,666 78.0 719 185,385 78.3 187,255 79.6 (2,419)184,836 78.6
GROSS PROFIT52,105 22.0 (719)51,386 21.7 47,998 20.4 2,419 50,417 21.4
Selling expenses22,150 9.4 - 22,150 9.4 20,258 8.6 - 20,258 8.6
General and administrative expenses18,611 7.8 - 18,611 7.8 18,270 7.8 - 18,270 7.8
Research and development expenses1,373 0.6 - 1,373 0.6 1,736 0.7 - 1,736 0.7
Restructuring and other costs358 0.1 (358)- - 2,769 1.2 (2,769)- -
OPERATING PROFIT9,613 4.1 (361)9,252 3.9 4,965 2.1 5,188 10,153 4.3
Years Ended December 30,
2017 2016
Reported % of
revenue
Restructuring
and other costs
Adjusted % of
revenue
Reported % of
revenue
Impairment losses,
restructuring and
other costs
Adjusted % of
revenue
$ % $ $ % $ % $ $ %
TOTAL REVENUE865,380 100.0 - 865,380 100.0 938,975 100.0 - 938,975 100.0
Cost of sales670,440 77.5 1,315 671,755 77.6 742,774 79.1 (5,121)737,653 78.6
GROSS PROFIT194,940 22.5 (1,315)193,625 22.4 196,201 20.9 5,121 201,322 21.4
Selling expenses89,197 10.3 - 89,197 10.3 91,247 9.7 - 91,247 9.7
General and administrative expenses74,143 8.6 - 74,143 8.6 71,961 7.6 - 71,961 7.6
Research and development expenses5,313 0.6 - 5,313 0.6 6,576 0.7 - 6,576 0.7
Restructuring and other costs1,456 0.1 (1,456)- - 5,006 0.5 (5,006)- -
Impairment losses on goodwill and intangible assets- - - - - 55,341 6.0 (55,341)- -
OPERATING PROFIT (LOSS)24,831 2.9 141 24,972 2.9 (33,930)(3.6)65,468 31,538 3.4


DOREL INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
ALL FIGURES IN THOUSANDS OF US $
(unaudited)
As at As at
December 30,
2017
December 30,
2016
ASSETS
CURRENT ASSETS
Cash and cash equivalents$36,841 $31,883
Trade and other receivables 429,551 422,118
Inventories 592,136 549,688
Other financial assets 553 4,333
Income taxes receivable 12,035 14,466
Prepaid expenses 26,593 21,040
Other assets 13,747 8,944
1,111,456 1,052,472
Assets held for sale 8,481 20,017
1,119,937 1,072,489
NON-CURRENT ASSETS
Property, plant and equipment 199,026 191,294
Intangible assets 442,626 427,587
Goodwill 438,072 435,790
Deferred tax assets 26,103 39,324
Other financial assets 550 -
Other assets 7,152 6,148
1,113,529 1,100,143
$2,233,466 $2,172,632
LIABILITIES
CURRENT LIABILITIES
Bank indebtedness$58,229 $49,490
Trade and other payables 440,410 428,881
Forward purchase agreement liabilities - 7,500
Other financial liabilities 4,546 569
Income taxes payable 14,338 15,143
Long-term debt 13,667 51,138
Provisions 43,475 63,169
Other liabilities 11,150 14,603
585,815 630,493
NON-CURRENT LIABILITIES
Long-term debt 433,760 355,118
Net pension and post-retirement defined benefit liabilities 35,237 35,206
Deferred tax liabilities 44,449 53,293
Provisions 2,953 1,681
Written put option liabilities 23,464 26,325
Other financial liabilities 1,338 1,115
Other liabilities 11,157 13,302
552,358 486,040
EQUITY
Share capital 203,300 202,400
Contributed surplus 27,557 27,139
Accumulated other comprehensive loss (70,205) (113,840)
Other equity 5,888 3,027
Retained earnings 928,753 937,373
1,095,293 1,056,099
$2,233,466 $2,172,632


DOREL INDUSTRIES INC.
CONSOLIDATED INCOME STATEMENTS
ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS
(unaudited)
Fourth Quarters Ended Years Ended
December 30,
2017
December 30,
2016
December 30,
2017
December 30,
2016
Sales$676,481 $647,559 $2,576,004 $2,596,062
Licensing and commission income 571 1,190 1,664 7,123
TOTAL REVENUE 677,052 648,749 2,577,668 2,603,185
Cost of sales (1) 515,604 499,808 1,965,917 1,992,624
GROSS PROFIT 161,448 148,941 611,751 610,561
Selling expenses 58,929 57,730 233,106 230,623
General and administrative expenses 60,535 69,219 224,580 244,631
Research and development expenses 8,039 14,463 31,065 39,092
Restructuring and other costs (1) 4,138 12,887 11,814 19,560
Impairment losses on goodwill and intangible assets 19,929 - 19,929 55,341
OPERATING PROFIT (LOSS) 9,878 (5,358) 91,257 21,314
Finance expenses 8,222 11,766 43,248 42,899
INCOME (LOSS) BEFORE INCOME TAXES 1,656 (17,124) 48,009 (21,585)
Income taxes expense (recovery) 4,648 (11,557) 17,426 (9,974)
NET INCOME (LOSS)$(2,992) $(5,567) $30,583 $(11,611)
EARNINGS (LOSS) PER SHARE
Basic ($0.09) ($0.17) $0.94 ($0.36)
Diluted ($0.09) ($0.17) $0.94 ($0.36)
SHARES OUTSTANDING
Basic - weighted average 32,426,326 32,373,809 32,409,551 32,352,953
Diluted - weighted average 32,426,326 32,373,809 32,665,713 32,352,953
(1) Restructuring and other costs charged to:
Cost of sales$(438) $2,419 $260 $5,121
Expenses 4,138 12,887 11,814 19,560
$3,700 $15,306 $12,074 $24,681


DOREL INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
ALL FIGURES IN THOUSANDS OF US $
(unaudited)
Fourth Quarters Ended Years Ended
December 30,
2017
December 30,
2016
December 30,
2017
December 30,
2016
NET INCOME (LOSS)$(2,992) $(5,567) $30,583 $(11,611)
OTHER COMPREHENSIVE INCOME (LOSS):
Items that are or may be reclassified subsequently to
net income:
Cumulative translation account:
Net change in unrealized foreign currency gains (losses)
on translation of net investments in foreign
operations, net of tax of nil 1,920 (16,237) 40,342 3,856
Net gains (losses) on hedge of net investments in foreign
operations, net of tax of nil 1,643 (6,816) 12,809 (1,964)
3,563 (23,053) 53,151 1,892
Net changes in cash flow hedges:
Net change in unrealized gains (losses) on derivatives
designated as cash flow hedges (706) 5,418 (9,363) 4,395
Reclassification to net income 62 156 267 608
Reclassification to the related non-financial asset 1,681 (2,768) 1,053 (4,477)
Deferred income taxes (346) (1,138) 1,949 (354)
691 1,668 (6,094) 172
Items that will not be reclassified to net income:
Defined benefit plans:
Remeasurements of the net pension and post-retirement
defined benefit liabilities 108 779 (43) (2,913)
Deferred income taxes (3,426) (465) (3,379) 965
(3,318) 314 (3,422) (1,948)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS) 936 (21,071) 43,635 116
TOTAL COMPREHENSIVE INCOME (LOSS)$(2,056) $(26,638) $74,218 $(11,495)


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, 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
Total comprehensive income:
Net income - - - - - - 30,583 30,583
Other comprehensive income (loss) - - 53,151 (6,094) (3,422) - - 43,635
- - 53,151 (6,094) (3,422) - 30,583 74,218
Reclassification from contributed surplus due to settlement
of deferred share units 900 (1,074) - - - - - (174)
Share-based payments - 1,184 - - - - - 1,184
Remeasurement of written put option liabilities - - - - - 2,861 - 2,861
Dividends on common shares - - - - - - (38,895) (38,895)
Dividends on deferred share units - 308 - - - - (308) -
Balance as at December 30, 2017$203,300 $27,557 $(49,478) $(3,242) $(17,485) $5,888 $928,753 $1,095,293


DOREL INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
ALL FIGURES IN THOUSANDS OF US $
(unaudited)
Fourth Quarters Ended Years Ended
December 30,
2017
December 30,
2016
December 30,
2017
December 30,
2016
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net income (loss)$(2,992) $(5,567) $30,583 $(11,611)
Items not involving cash:
Depreciation and amortization 13,129 13,275 50,145 53,186
Impairment losses on goodwill and intangible assets 19,929 - 19,929 55,341
Unrealized losses (gains) arising on financial assets
and financial liabilities classified as held for trading (492) (215) (394) 197
Share-based payments 154 114 348 484
Defined benefit pension and post-retirement costs 1,399 (74) 4,354 (5,711)
Loss (gain) on disposal of property, plant and equipment 447 67 628 (1,286)
Write-down of deferred development costs - 5,590 - 5,590
Restructuring and other costs (222) 9,670 1,249 13,593
Finance expenses 8,222 11,766 43,248 42,899
Income taxes expense (recovery) 4,648 (11,557) 17,426 (9,974)
Net changes in balances related to operations (1) (19,802) 62,833 (68,900) 75,254
Income taxes paid (3,233) (3,830) (19,594) (20,257)
Income taxes received 4,327 1,301 9,238 9,913
Interest paid (9,875) (12,927) (31,327) (36,200)
Interest received 52 62 461 447
CASH PROVIDED BY OPERATING ACTIVITIES 15,691 70,508 57,394 171,865
FINANCING ACTIVITIES
Bank indebtedness (275) (6,296) 6,927 (8,249)
Increase of long-term debt 15,140 - 217,360 -
Repayments of long-term debt - (53,109) (187,189) (98,749)
Repayments of forward purchase agreement liabilities - - (7,857) (4,414)
Increase of written put option liabilities - - - 673
Financing costs (13) (91) (2,773) (2,173)
Issuance of share capital - 869 - 1,479
Dividends on common shares (9,730) (9,796) (38,895) (38,818)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 5,122 (68,423) (12,427) (150,251)
INVESTING ACTIVITIES
Acquisition of businesses - - - 5,475
Additions to property, plant and equipment (11,941) (6,001) (36,464) (20,014)
Disposals of property, plant and equipment 142 12 390 1,564
Net proceeds from disposals of assets held for sale - 1,347 15,027 5,883
Additions to intangible assets (6,951) (4,061) (21,054) (16,165)
CASH USED IN INVESTING ACTIVITIES (18,750) (8,703) (42,101) (23,257)
Effect of foreign currency exchange rate changes on cash
and cash equivalents 454 (1,398) 2,092 344
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,517 (8,016) 4,958 (1,299)
Cash and cash equivalents, beginning of period 34,324 39,899 31,883 33,182
CASH AND CASH EQUIVALENTS, END OF PERIOD$36,841 $31,883 $36,841 $31,883
(1) Supplemental information on net changes in balances related to operations:
Trade and other receivables$(30,186) $13,508 $4,939 $7,922
Inventories 55,062 28,421 (23,730) 31,823
Other financial assets (5) (568) (629) 693
Prepaid expenses 4,726 1,080 (3,851) (1,064)
Other assets 1,385 (2,336) (4,571) (734)
Trade and other payables (48,670) (570) (13,757) (695)
Net pension and post-retirement defined benefit liabilities (687) (42) (3,833) (3,896)
Provisions, other financial liabilities and other liabilities (1,427) 23,340 (23,468) 41,205
$(19,802) $62,833 $(68,900) $75,254


DOREL INDUSTRIES INC.
SEGMENTED INFORMATION
FOURTH QUARTERS ENDED DECEMBER 30,
ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS
(unaudited)
TotalDorel JuvenileDorel SportsDorel Home
2017 2016 2017 2016 2017 2016 2017 2016
Total revenue$677,052 $648,749 $239,306 $236,447 $236,771 $235,253$200,975$177,049
Cost of sales (1) 515,604 499,808 168,661 165,207 184,666 187,255 162,277 147,346
Gross profit 161,448 148,941 70,645 71,240 52,105 47,998 38,698 29,703
Selling expenses 58,496 57,477 29,532 31,146 22,150 20,258 6,814 6,073
General and administrative expenses 53,727 62,639 25,328 35,437 18,611 18,270 9,788 8,932
Research and development expenses 8,039 14,463 5,634 11,798 1,373 1,736 1,032 929
Restructuring and other costs (1) 4,138 12,887 3,780 10,118 358 2,769 - -
Impairment loss on goodwill 19,929 - 19,929 - - - - -
Operating profit (loss) 17,119 1,475 $(13,558)$(17,259)$9,613 $4,965$21,064$13,769
Finance expenses 8,222 11,766
Corporate expenses 7,241 6,833
Income taxes expense (recovery) 4,648 (11,557)
Net loss$(2,992)$(5,567)
Loss per share
Basic($0.09)($0.17)
Diluted($0.09)($0.17)
Depreciation and amortization included in operating profit (loss)$12,926 $13,057 $9,302 $9,857 $2,855 $2,592$769$608
Write-down of long-lived assets included in operating profit (loss)$1,854 $13,943 $1,854 $13,943 $- $-$-$-
(1) Restructuring and other costs charged to:
Cost of sales$(438)$2,419 $281 $- $(719)$2,419$-$-
Expenses 4,138 12,887 3,780 10,118 358 2,769 - -
$3,700 $15,306 $4,061 $10,118 $(361)$5,188$-$-


DOREL INDUSTRIES INC.
SEGMENTED INFORMATION
YEARS ENDED DECEMBER 30,
ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS
(unaudited)
TotalDorel JuvenileDorel SportsDorel Home
2017 2016 2017 2016 2017 2016 2017 2016
Total revenue$2,577,668$2,603,185 $921,669$928,963$865,380 $938,975 $790,619$735,247
Cost of sales (1) 1,965,917 1,992,624 646,408 638,345 670,440 742,774 649,069 611,505
Gross profit 611,751 610,561 275,261 290,618 194,940 196,201 141,550 123,742
Selling expenses 231,417 229,196 116,275 115,132 89,197 91,247 25,945 22,817
General and administrative expenses 201,261 220,362 93,453 115,447 74,143 71,961 33,665 32,954
Research and development expenses 31,065 39,092 21,893 28,725 5,313 6,576 3,859 3,791
Restructuring and other costs (1) 11,814 19,560 10,358 14,554 1,456 5,006 - -
Impairment losses on goodwill and intangible assets 19,929 55,341 19,929 - - 55,341 - -
Operating profit (loss) 116,265 47,010 $13,353$16,760$24,831 $(33,930)$78,081$64,180
Finance expenses 43,248 42,899
Corporate expenses 25,008 25,696
Income taxes expense (recovery) 17,426 (9,974)
Net income (loss)$30,583$(11,611)
Earnings (loss) per share
Basic$0.94($0.36)
Diluted$0.94($0.36)
Depreciation and amortization included in operating profit (loss)$49,338$52,365 $35,744$37,404$9,748 $11,015 $3,846$3,946
Write-down of long-lived assets included in operating profit (loss)$2,222$14,367 $2,222$14,367$- $- $-$-
(1) Restructuring and other costs charged to:
Cost of sales$260$5,121 $1,575$-$(1,315)$5,121 $-$-
Expenses 11,814 19,560 10,358 14,554 1,456 5,006 - -
$12,074$24,681 $11,933$14,554$141 $10,127 $-$-

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

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

Source: Dorel Industries, Inc.