Dorel Industries Inc. third quarter revenue was $440.1 million, up
slightly from $436.3 million last year. Net income for the three months
was $26.4 million or 79 cents per diluted share, compared to $25.1
million, or 76 cents, a year ago.
Dorel continued to strengthen
its position in its Juvenile and Recreational/Leisure segments and
registered significant progress in Home Furnishings as it pursued the
segments program of cost reductions and capacity adjustments,
particularly in the ready-to-assemble furniture division.
Included
are the costs associated with the previously announced restructuring
activities at both Dorel Europe and Ameriwood. Adjusted net income,
excluding these costs, for the third quarter was US$27.0 million or
$0.81 per diluted share versus $25.1 million or $0.76 per diluted share
in 2006.
Revenue for the nine months was $1.35 billion, up from
the $1.32 billion a year ago. Year-to-date net income was $65.1 million
or $1.96 per diluted share, compared to last years $67.2 million or
$2.04 per diluted share. 2007 adjusted nine month net income was $76.1
million or $2.29 per diluted share, compared to 2006 nine month
adjusted net income of $67.7 million or $2.06 per diluted share.
“We
are very pleased with the most recent quarter and are particularly
encouraged that our Juvenile segment is maintaining the overall growth
pattern of the past three years. Since 2004, Juvenile segment revenues
have grown each year at an average of almost 9%. Earnings improvement
has been equally impressive, as illustrated by our 2006 three year
compound annual growth rate of 14%, a figure which we will improve upon
in 2007. Dorel has become a strong global juvenile player and this
segment represents the most significant part of our business. Thus far
this year it has accounted for 53% of our revenues and 66% of our
adjusted earnings from operations. Similarly the Recreational/Leisure
segment has grown over last year and has surpassed Home Furnishings in
its contribution to the bottom line,” commented Dorel President and CEO
Martin Schwartz.
Revenue at Dorel Europe increased 13.4% for the
quarter and 18.5% year-to-date. Organic revenue growth in Europe,
excluding the benefit of the stronger Euro, was 5.2% in the quarter and
9.8% year-to-date. Dorel Juvenile Group (DJG) USAs revenues declined
2% in the quarter and are 10% behind last years nine month sales
levels. Quarter-over quarter, DJGs revenues are up 6% as consumers
were exposed to new product introductions. Dorel Distribution Canada
continues to have a strong year, running at a growth rate of
approximately 25%. Dorel Australia, the Companys newest division, was
profitable during the quarter and management is pleased with the
progress being made in preparing to sell Dorels complete set of brands
through this division in 2008.
“More and more, our juvenile
brands and products are being recognized and appreciated by consumers
worldwide. This is allowing us
to steadily grow our business in many
markets, particularly in Europe. Our divisions participated in a number
of major juvenile shows
during the third quarter and in all instances reaction to our products was excellent,” stated Mr. Schwartz.
Recreational/Leisure Segment
Pacific
Cycles third quarter revenue was up 2.3% to $81.3 million from $79.4
million a year ago. Earnings from operations declined 10% to $6.0
million from $6.6 million. For the nine months, revenue totaled $288.9
million, up 9.6% from $263.8 million last year, while earnings from
operations rose 35.2% to $27.1 million, compared to $20.1 million last
year.
The year-to-date progress underlines the benefits of
Pacifics strategy of strong and exclusive branding. The segment has
broadened its product lines in 2007; nonetheless the majority of the
revenue growth this year is due to an improvement in its core bicycle
business with sales increasing to both new and existing customers in
the mass merchant and independent bicycle dealer (IBD) network.
Additional dealers continue to join the IBD network, an endorsement of
Pacifics decision to dedicate its GT line exclusively to this channel.
Despite
the continuing slowdown in the US housing industry, all Home Furnishing
divisions posted higher sales in the third quarter of 2007 versus the
second. Quarter-over-quarter revenue growth was 15.6% and sequential
adjusted earnings from operations improvement was 64.1%. Other than
Dorel Asia, which posted a moderate earnings decline, all divisions
posted earnings improvements in the third quarter as compared to the
second. Ameriwoods restructuring program is creating meaningful
results, contributing to the segments profitability improvement.
