Dorel Industries reported its Dorel Sports segment posted its ninth consecutive quarter of revenue growth as well as another record profit.
Dorel Sports brands include Cannondale, Schwinn, GT, Mongoose, Caloi, and IronHorse.
Revenue in the segment was US$317.3 million, an increase of US$31.7 million, or 11.1 percent, from last year. Excluding the impact of varying foreign exchange rates, organic revenue1 improved by 8.5 percent. Despite supply constraints and shortages of bike components, revenue at all three divisions increased with Cycling Sports Group (CSG) and Caloi making the greatest percentage gains. Demand remains strong for high-end bicycles with Cannondale gravel and E-bikes being popular. Similarly, in the mass channel, demand was strong but was again limited by supply constraints and low retailer in-stock levels. Six-month revenue increased to US$587.7 million, up US$113.8 million, or 24.0 percent, from the prior year.
Second-quarter gross margin in the segment improved due to pricing, limited discounting and a favorable foreign exchange rate impact. Operating profit, both reported and adjusted, was US$31.7 million compared to US$26.8 million and US$27.1 million respectively last year. CSG and Caloi were the main drivers of the operating profit improvement with Caloi reversing last year’s high operating profit loss with a modest operating profit. Six-month operating profit, both reported and adjusted, was US$53.5 million compared to US$26.2 million and US$26.6 million respectively a year ago.
Companywide, second-quarter revenue was US$765.0 million, compared to US$724.0 million, up 5.7 percent from the same period a year ago. The reported net income was US$22.2 million or US$0.67 per diluted share, compared to US$11.1 million or US$0.34 per diluted share last year. Adjusted net income1 was US$23.0 million or US$0.70 per diluted share, compared to US$15.6 million or US$0.48 per diluted share last year.
Revenue for the six months was US$1.5 billion compared to US$1.3 billion, up 13.0 percent from the prior year. The reported net income was US$25.0 million or US$0.76 per diluted share, compared to a reported net loss of US$46.7 million or US$1.44 per diluted share a year ago. First-half adjusted net income1 rose sharply to US$35.2 million or US$1.07 per diluted share, compared to US$2.0 million or US$0.06 per diluted share last year.
In its two other segments, revenue for the second quarter at Dorel Home was US$236.8 million, a decrease of US$23.9 million, or 9.2 percent, versus last year’s second quarter, which was the best for Dorel Home, caused by widespread COVID-19 lockdowns which prompted increased purchases for the home.
Second-quarter revenue at Dorel Juvenile increased to US$210.9 million, up US$33.2 million, or 18.7 percent, from last year.
“Given the continuing chaotic supply chain environment, we are very pleased with the second-quarter performance of our businesses. We are reporting substantially improved earnings while dealing with record increases in container freight rates and higher product costs in many categories. Demand for our products remained robust, but we were not able to fully satisfy consumer needs due to inventory shortages from a lack of ocean container availability. Dorel Sports had a remarkable quarter, again achieving record sales and earnings. Demand for bikes shows no signs of slowing and Cannondale’s models remain extremely popular in all markets. There has been continued improvement at Dorel Juvenile with gains in all geographies as consumers responded well to new products. Europe’s progress was limited only by COVID-19-related issues. Dorel Home revenue was significantly reduced as container issues were compounded by COVID-19 shutdowns at suppliers in Vietnam and Malaysia. The segment still promises to be a solid performer as these conditions ease,” commented Dorel President & CEO, Martin Schwartz.
“As in many industries, the uncertainty of supply is as acute as it has ever been. The demand for container freight continues to push up costs and is hindering our ability to meet the continuing strong consumer demand for our products. In addition, virus outbreaks in various parts of the world and even labor availability for Dorel and our stakeholders are risks with which we are contending. Our ability to successfully manage these issues with our vendor and retailer partners will be vital to our ability to deliver a strong second half,” commented Schwartz.
Photo courtesy Dorel Sports/Cannondale