Dorel Industries Inc. reported revenue for the third quarter ended September 30, 2005 of $423.3 million, down slightly from $433.8 million a year ago with strong revenue growth in the juvenile segment partially offset the lower sales of Sting-Ray bicycles. Adjusted net earnings for the quarter, excluding restructuring costs incurred on the previously announced Ameriwood ready-to-assemble furniture plant shutdown, were $25.6 million or 78 cents per diluted share. Unadjusted net earnings were $19.8 million or 60 cents per diluted share compared to $28 million or 85 cents per diluted share earned in the same quarter last year.
Nine month revenue increased by 7.3% to $1.3 billion from last year's revenue of $1.2 billion for the corresponding period. Adjusted earnings for the nine months grew 14.1% to $74.6 million or $2.27 per share compared to $65.4 million or $1.99 per share a year ago. On an unadjusted basis, year- to-date earnings were up 5.2% to $68.8 million or $2.09 per diluted share compared with $65.4 million or $1.99 per diluted share a year ago.
Recreational/Leisure Segment
Third quarter Recreational/Leisure revenue decreased 33.7% to $70.8 million compared to last year's $106.8 million. Earnings from operations dropped 57.4% to $6.3 million from $14.7 million. For the nine months, revenue was unchanged from last year at $264.5 million. Nine month earnings from operations were down 16% to $28.4 million from $33.8 million last year. Included in the 2005 year-to-date revenue is $12.3 million from an extra month's sales. Sales increases occurred in several product categories and brands. However, Sting-Ray sales in the first nine months of 2004 far exceeded those in 2005, more than offsetting any increases.
Mr. Schwartz said that progress is being made in a number of areas in addition to the RTA furniture division. “Operating costs are running lower than last year principally due to reduced product liability costs as well as other cost containment measures. We are pleased with the third quarter $23 million reduction in overall inventories. Work will continue to bring inventory levels down,” stated Mr. Schwartz.
“It will still take the balance of this year to correct the RTA furniture issues; as well, last year's unprecedented fourth quarter sales of Sting-Ray bicycles will not be repeated this year. Despite our strong nine month performance, full year 2005 after-tax adjusted earnings will likely be lower than those recorded in 2004, although fiscal 2005 adjusted pre-tax earnings should be above last year. Continued success in Europe is expected to contribute to the Juvenile Segment's overall progress as will new listings in North America and several new product introductions,” concluded Mr. Schwartz.
DOREL INDUSTRIES INC.
CONSOLIDATED STATEMENT OF INCOME
ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS
Third quarter ended Nine months ended
----------------------------- --------------------------
September 30, September 30, September 30, September 30,
2005 2004 2005 2004
(unaudited) (unaudited) (unaudited) (unaudited)
Sales $ 418,835 $ 428,422 $ 1,314,640 $ 1,226,460
Licensing and
commission income 4,494 5,417 15,967 13,543
------------ ------------ ------------ ------------
TOTAL REVENUE 423,329 433,839 1,330,607 1,240,003
------------ ------------ ------------ ------------
EXPENSES
Cost of sales 327,335 331,479 1,028,236 951,632
Operating 47,624 51,751 155,416 159,593
Depreciation and
amortization 10,308 8,568 29,758 26,844
Research and
development costs 1,560 1,015 6,212 4,691
Restructuring costs 6,432 - 6,432 -
Interest on
long-term debt 7,426 7,472 22,172 21,217
Other interest 478 2,473 1,072 2,987
------------ ------------ ------------ ------------
401,163 402,758 1,249,298 1,166,964
------------ ------------ ------------ ------------
Income before income
taxes 22,166 31,081 81,309 73,039
Income taxes 2,340 3,035 12,533 7,685
------------ ------------ ------------ ------------
NET INCOME $ 19,826 $ 28,046 $ 68,776 $ 65,354
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
EARNINGS PER SHARE
Basic $ 0.60 $ 0.86 $ 2.09 $ 2.00
---- ---- ---- ----
---- ---- ---- ----
Diluted $ 0.60 $ 0.85 $ 2.09 $ 1.99
