Dorel Industries reported sales of its Pacific Cycle division to mass merchants were stronger than expected in the third quarter, but said it had to delay orders for new Cannondale models due to supply constraints. Q3 orders for Cannondales 2008 models were up over last year, but the business did not earn a profit due to the normal seasonality of the business and delays in shipping 2009 models.
Sales of the Dorels Recreational/Leisure segment doubled to $162.3 million thanks to the acquisition of Cannondale, Sugoi and PTI Sports since February of last year and double-digit organic growth in the Pacific Cycle business. Cannondale has become the core of the segments new Cannondale Sports Group (CSG), which makes higher-end product for Independent Bike Dealers, or IBDs. Parts and accessories distributor PTI Sports was absorbed by Pacific Cycle, which makes Pacific, Roadmaster, Dyno, Schwinn, Mongoose and private label models for the mass merchant channel.
Gross margins jumped 400 basis points to 23.3% of revenues, attributable to CSGs higher margins. Earnings from operations rose 23.6% to $7.4 million, or 4.5% of revenue for the quarter, compared to 7.4% of revenue in the same period a year ago. Earnings from operations for the first three quarters rose to $40 million from $27.1 million for the same period a year ago
