Dorel Industries third quarter revenues increased 43.5%, reaching $428.2 million compared to $298.5 million last year. Third quarter net income was up 50.5% to $28.2 million or 86 cents per share fully diluted compared to $18.8 million or 58 cents per share fully diluted a year ago. For the nine months, revenues increased 45.6% to $1.2 billion from $840.1 million while net income grew 21.5% to $66 million from $54.3 million. Year-to-date earnings per share were $2.00 compared to last year's $1.68 on a fully diluted basis.
Dorel President and CEO, Martin Schwartz, confirmed previous statements
that the second half of 2004 would be stronger than the first six months. “We
have concentrated heavily on exciting new product introductions and low cost
production, producing our best quarter ever. Margins have improved across many
of our product lines although the continuing rise in resin prices has kept
margins from being even higher. The Sting Ray bicycle has continued to perform
beyond expectations and many retailers have predicted that it will be one of
this year's hottest Christmas gift items. We remain encouraged for the balance
of the year and are maintaining our 2004 earnings per share guidance at
US$3.00 to US$3.15.”
Results for the third quarter and nine months ended September 30, 2004
were as follows:
<< ------------------------------------------------------------------------ Summary of Financial Highlights ------------------------------------------------------------------------ Third quarter ended September 30 ------------------------------------------------------------------------ All figures in thousands of US $, except per share amounts 2004 2003 Change % ------------------------------------------------------------------------ Revenue 428,154 298,464 43.5% Net income 28,244 18,767 50.5% Per share - Basic 0.86 0.59 45.8% Per share - Diluted 0.86 0.58 48.3% ------------------------------------------------------------------------ Average number of shares outstanding - diluted weighted average 32,893,018 32,367,940 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Summary of Financial Highlights ------------------------------------------------------------------------ Nine months ended September 30 ------------------------------------------------------------------------ All figures in thousands of US $, except per share amounts 2004 2003 Change % ------------------------------------------------------------------------ Revenue 1,222,912 840,089 45.6% Net income 65,951 54,277 21.5% Per share - Basic 2.02 1.72 17.4% Per share - Diluted 2.00 1.68 19.0% ------------------------------------------------------------------------ Average number of shares outstanding - diluted weighted average 32,913,019 32,329,837 ------------------------------------------------------------------------ >>
Juvenile
Third quarter sales in the Juvenile segment rose 8.7% to US$179.6 million
from US$165.2 million a year ago. Earnings from operations rose 32.6% to
US$18.1 million, compared to US$13.6 million. Nine month sales reached
US$565.3 million, a 13.3% increase from last year's US$499.1 million. Earnings
from operations for the nine months were US$48.3 million, down 3.6% year-over-
year.
Both North America and Europe experienced third quarter sales and
earnings advances. In North America, increased earnings were driven
principally by higher sales volumes and earnings in Canada, as the Canadian
dollar continued to strengthen. In Europe, earnings also rose, mainly as a
result of improvements at Dorel Europe's Northern operations and the effects
of the stronger euro. Many of the changes implemented in Europe since the
beginning of the year have begun to take effect, translating into improved
earnings.
Home Furnishings
Home Furnishings revenues for the third quarter gained 7.1% to reach
US$142.7 million compared to US$133.2 million a year ago. Earnings from
operations declined 17.7% to US$14.1 million from US$17.1 million last year.
For the nine months, revenues were up 16.0% to US$395.7 million from US$341.0
million, while earnings from operations were down 36.7% to US$29.4 million
from US$46.5 million last year.
Earnings from operations more than doubled from the second quarter. Board
prices continue to remain high and reduced the segment's ready-to-assemble
(RTA) operations earnings versus last year. However, as compared to the second
quarter, earnings improved due to higher volumes and improved margins. In
addition, the segment's futon business, Dorel Asia and Cosco Home & Office all
posted significant gains over both last year and the second quarter of 2004.
The new mattress manufacturing equipment installed during the year at the
Montreal futon plant also contributed to the segment's earnings. In addition,
Dorel Asia had its most profitable quarter and for the year is on track for a
50% increase in earnings over last year.
During the third quarter, Cosco Home & Office launched Ability Care
Essentials, a new Dorel consumer products category to address the aging baby-
boomer population. Products will incorporate a wide variety of home healthcare
items in three sectors: mobility, ambulatory and bath safety. Sales of US$25
million are anticipated in the first three years. In addition, Ameriwood
signed a licensing agreement with California Closets, a strong household name
which offers storage solutions for the home and office. Ameriwood will
manufacture and distribute storage systems and related furniture to select
national retailers under licence from California Closets.
Recreational/Leisure
Third quarter revenues reached US$105.8 million while earnings from
operations were US$14.7 million. Year-to-date revenues were US$261.9 million
with earnings from operations of US$33.8 million. The Sting-Ray bicycle is on
track to be the most successful model of 2004 as all retailers continue to
report strong weekly sales.
The Interbike trade show took place in Las Vegas October 6th – 8th and
Pacific Cycle had its most successful show with independent bike dealers
(IBD's) since acquiring the Schwinn and GT brands. In addition, the Sting-Ray
is driving traffic into these stores, further demonstrating the power of the
brand. Show bookings were up 80% over last year.
Special Recognition
On October 20th, Dorel's executive management team, comprising Martin
Schwartz, Jeffrey Schwartz, Alan Schwartz and Jeff Segel were collectively
named as the recipient of the Quebec region Ernst & Young Entrepreneur of the
Year 2004 Award. The group also received one of eight industry category
awards. In their 11th year, the Entrepreneur of the Year awards honour those
who have demonstrated excellence and extraordinary success in areas such as
innovation, financial performance and personal commitment to their businesses
and communities. Dorel executive management now qualifies for the national
award, to be announced tomorrow night in Ottawa.
Outlook
Mr. Schwartz said the Company remains confident that the balance of the
year will live up to expectations. “There have been a series of new product
introductions in all of our divisions, many of which have met with an
enthusiastic response. The juvenile segment's Ride-On vehicles have been
endorsed by major retailers. New models, including a fire truck, are being
introduced in time for Christmas. Schwinn's Sting Ray bicycle is riding a wave
of popularity that has made it the hottest product ever launched by Dorel. It
is on a number of retailers' top Christmas gift lists and will help drive
earnings in the fourth quarter. In Europe, the new BUZZ stroller, one of
several new product launches, has been nominated for product of the year in
the U.K. and baby product of 2005 in the Netherlands.”
<< DOREL INDUSTRIES INC. CONSOLIDATED BALANCE SHEET ALL FIGURES IN THOUSANDS OF US $ As at As at September 30, December 30, 2004 2003 (unaudited) (audited) ASSETS CURRENT ASSETS Cash and cash equivalents 17,800 13,877 Funds held by ceding insurer 9,755 6,803 Accounts receivable 265,538 210,905 Inventories 291,716 207,371 Prepaid expenses 11,831 10,719 Future income taxes 5,541 9,184 ------------------------ 602,181 458,859 CAPITAL ASSETS 157,525 147,837 GOODWILL 658,791 380,535 DEFERRED CHARGES 19,682 18,501 INTANGIBLE ASSETS 86,292 85,448 FUTURE INCOME TAXES 8,151 8,382 OTHER ASSETS 10,270 10,995 ------------------------ 1,542,892 1,110,557 ------------------------ ------------------------ LIABILITIES CURRENT LIABILITIES Bank indebtedness 796 764 Accounts payable and accrued liabilities 351,129 253,145 Income taxes payable 5,263 2,037 Balance of sale payable 7,590 - Current portion of long-term debt 7,552 7,758 ------------------------ 372,330 263,704 ------------------------ LONG-TERM DEBT 532,706 282,421 ------------------------ PENSION OBLIGATION 14,095 13,818 ------------------------ BALANCE OF SALE 15,635 2,314 ------------------------ FUTURE INCOME TAXES 42,211 45,148 ------------------------ OTHER LONG-TERM LIABILITIES 7,305 8,266 ------------------------ SHAREHOLDERS' EQUITY CAPITAL STOCK 159,993 156,274 RETAINED EARNINGS 353,534 287,583 CUMULATIVE TRANSLATION ADJUSTMENT 45,083 51,029 ------------------------ 558,610 494,886 ------------------------ 1,542,892 1,110,557 ------------------------ ------------------------ DOREL INDUSTRIES INC. CONSOLIDATED STATEMENT OF INCOME ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS Third quarter ended Nine months ended ---------------------- ------------------------ September September September September 30, 30, 30, 30, 2004 2003 2004 2003 (unaudited) (unaudited) (unaudited) (unaudited) Sales 422,737 296,835 1,209,370 836,579 Licensing and commission income 5,417 1,629 13,542 3,510 ---------------------- ------------------------ TOTAL REVENUE 428,154 298,464 1,222,912 840,089 ---------------------- ------------------------ EXPENSES Cost of sales 325,794 223,656 934,247 614,589 Operating 51,751 36,456 159,592 111,170 Amortization 8,142 7,459 25,562 21,761 Research and development costs 1,015 2,846 4,691 6,662 Interest on long-term debt 7,472 4,159 21,512 11,472 Other interest 2,473 238 2,988 498 ---------------------- ------------------------ 396,647 274,814 1,148,592 766,152 ---------------------- ------------------------ Income before income taxes 31,507 23,650 74,320 73,937 Income taxes 3,263 4,883 8,369 19,660 ---------------------- ------------------------ NET INCOME 28,244 18,767 65,951 54,277 ---------------------- ------------------------ ---------------------- ------------------------ EARNINGS PER SHARE: Basic 0.86 0.59 2.02 1.72 ---------------------- ------------------------ ---------------------- ------------------------ Diluted 0.86 0.58 2.00 1.68 ---------------------- ------------------------ ---------------------- ------------------------ SHARES OUTSTANDING: Basic - weighted average 32,770,265 31,743,931 32,709,782 31,636,085 ---------------------- ------------------------ ---------------------- ------------------------ Diluted - weighted average 32,893,018 32,367,940 32,913,019 32,329,837 ---------------------- ------------------------ ---------------------- ------------------------
