WASHINGTON: Dorel Industries Inc. reported total revenue was US$646.7 million compared to US$645.9 million a year ago. Adjusted net income for the quarter increased 15.4 company to US$22.7 million or US 69 cents per diluted share from US$19.7 million, or US 60 cents per diluted share in 2016. Reported net income decreased to US$8.8 million, or US27 cents per diluted share, compared to US$16.7 million or US51 cents per diluted share last year.
“Dorel’s adjusted operating profit improved by over 15 percent versus last year’s first quarter when excluding restructuring and other costs within our income statement. Of our three business segments, Dorel Home was again a standout with revenues increasing 9 percent and operating profit approaching 10 percent of revenues. Dorel Sports also improved earnings from prior year, leveraging better margins and its more efficient cost structure. Dorel Juvenile is benefitting from its strategic direction on improving gross margins, but faced challenges at its China facility with a large ramp up on new products and labour shortages around the Chinese New Year which delayed some scheduled launches. In our smaller Juvenile markets, Brazil and Australia performed exceptionally well and are now recognized as industry leaders. At the corporate level, with the support of our lenders, we successfully re-negotiated our credit facilities. This resulted in a first quarter pre-tax expense of US$10.2 million, or US 30 cents per diluted share, related to the extinguishment of existing debt. This change will allow for better management of our long-term capital needs and will decrease our financing costs going-forward. Interest costs are expected to be reduced by approximately US$4 million through the balance of 2017 and will continue annually going forward,” stated Martin Schwartz, Dorel President & CEO.
The company is presenting adjusted financial information, excluding restructuring and other costs, re-measurement 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. First quarter revenue rose US$16.6 million, or 8.8 percent to US$204 million, representing the best quarter in the segment’s history. Growth was driven by increased sales to on-line retailers in all divisions, representing 46 percent of total segment sales compared to 42 percent in the first quarter of 2016. Brick and mortar sales remained flat compared with last year’s first quarter. Gross profit, at 16.9 percent, remained comparable to last year’s first quarter as improved margins from increased on-line sales were offset by higher input and warehousing costs. Operating profit for the quarter was also a record, at US$19.8 million, up 12 percent from US$17.6 million a year ago, driven by higher sales volumes, slightly offset by a modest increase in selling expenses in line with the sales growth.
