dorel q2'10 ir web.ppt · first halfhalf 2010 2010 ((endedended junejune 30)30) 3 months (2nd...

INVESTOR PRESENTATIONINVESTOR PRESENTATIONSecond Quarter 2010

ForwardForward‐‐Looking StatementsLooking StatementsExcept for historical information provided herein, this presentation may containinformation and statements of a forward‐looking nature concerning the futureperformance of Dorel Industries Inc. These statements are based on suppositionsand uncertainties as well as on management's best possible evaluation of futureand uncertainties as well as on management s best possible evaluation of futureevents. The business of the Company and these forward‐looking statements aresubject to a number of risks and uncertainties that could cause actual results todiffer from expected results. Important factors which could cause such differencesmay include, without excluding other considerations, increases in raw material costs,may include, without excluding other considerations, increases in raw material costs,particularly for key input factors such as particle board and resins; increases in oceanfreight container costs; failure of new products to meet demand expectations;changes to the Company’s effective income tax rate as a result of changes in theanticipated geographic mix of revenues; the impact of price pressures exerted byanticipated geographic mix of revenues; the impact of price pressures exerted bycompetitors, and settlements for product liability cases which exceed the Company’sinsurance coverage limits. A description of the above mentioned items and certainadditional risk factors are discussed in the Company’s Annual MD&A and AnnualInformation Form, filed with the Canadian securities regulatory authorities. The risko at o o , ed t t e Ca ad a secu t es egu ato y aut o t es e sfactors outlined in the previously mentioned documents are specifically incorporatedherein by reference. The Company’s business, financial condition, or operatingresults could be materially adversely affected if any of these risks and uncertaintieswere to materialize. Given these risks and uncertainties, investors should not place, pundue reliance on forward‐looking statements as a prediction of actual results.

Note: All figures are in US dollars.

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AtAt a a GlanceGlance

DIVISIONS PRODUCT RANGE OUR PREMIUM BRANDS

DOREL EUROPEDOREL JUVENILE GROUP USA

Children’s car seatsStrollers High chairs

DOREL DISTRIBUTION CANADAIGC DOREL PTY (AUSTRALIA)DOREL BRAZIL

Play yards Toddler bedsEarly learning/infanthealth/safety aidsSwings/stationary activity centres

CYCLING SPORTS GROUP (CSG)PACIFIC CYCLEAPPAREL & FOOTWEAR GROUP(AFG)

Bicycles Performance apparelJogging strollers Swing sets Ride‐on toys

AMERIWOODCOSCO HOME & OFFICEDOREL ASIA

Ready‐to‐assemble furnitureFolding chairs and tablesStep stools LaddersDOREL ASIA

DOREL HOME PRODUCTSALTRA FURNITURE

Step stools LaddersFutons Bunk bedsUpholstered furniture

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First First HalfHalf 2010 2010 ((endedended JuneJune 30)30)

3 months (2nd quarter)

(in millions of US$, other than EPS) 2010 2009Revenue $ 607,695 $ 551,123Net income 35,131 24,764 EPS (diluted) 1.05 0.74

6 months

(in millions of US$ other than EPS) 2010 2009(in millions of US$, other than EPS) 2010 2009Revenue $ 1,204.0 $ 1,076.4Net income 72,498 52,793 EPS (dil t d) 2 18 1 58

4EPS (diluted) 2.18 1.58

Second Quarter Second Quarter Juvenile HighlightsJuvenile Highlights• Revenue: +6% to $259.8 M

• Earnings from operations: +53% to $25.6 M compared to $16.7 M in 2009 is $29.4 M excluding non‐cash mark‐to‐market lossescash mark to market losses

• First half revenues: +9% to $545.6 M; earnings from operations: +29% to $58.4 M

• First half organic growth: 8%

• North America accounted for 2/3 of growth, Brazil the balancebalance

• DJG has maintained a steady pipeline of new products and is seen as reliable supplier by its customerspp y

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Juvenile SegmentJuvenile Segment

Years Ended December 30

2009 2008Revenues $ 995,014 $ 1,073,722Gross Profit 274,497 309,680Earnings from operations* 92,534 126,837

*Includes out of period F/X (losses)/gains (12,600) 8,900Excluding F/X effect $ 105,134 $ 117,937

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A World Leader In A World Leader In JuvenileJuvenile

World’s largest Juvenile Products Company in our categories.

Consistent growth:

5% average annual growth

6% earnings from operations CAGR

Intense product development = pipeline of new products

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Innovation Innovation –– NorthNorth AmericaAmericaAi P t t™ d l d b DJG d K tt iAir Protect™ - developed by DJG and Kettering University

• Revolutionary, ground‐breaking safety feature designed to protect children in side impact collisions

TM l f l h• Air ProtectTM platform evolving with 6

new seats to be introduced from now

through end of 2011through end of 2011

• European version introduced –Maxi‐Cosi Rodi

RUMI ‐ high back booster

Combination car seat 8

A World Leader In A World Leader In JuvenileJuvenile

Dorel Europe

• A major player – close to US$450 million in sales • Strong brands• Traditionally sales to Juvenile product chains,Traditionally sales to Juvenile product chains, boutiques, independents

• Building mass merchant relationships; Introducing products in lower to mid price point categories egproducts in lower to mid‐price point categories, eg. Safety 1st – mid‐price

• Strong new product introductions • General softness in consumer spending• FX to impact earnings

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Innovation Innovation –– EuropeEurope

Maxi-Cosi FamilyFixRevolutionary in car seat

f t & iUses IsoFix attachment for top‐rate safety

safety & convenience

top ate sa ety

Only one base required for two consecutive age car

( 3 5 ld)seats (up to 3.5 years old)

Light/sound confirmation of correct installationcorrect installation

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Second Quarter Second Quarter //Recreational/Leisure HighlightsRecreational/Leisure Highlights

• Revenue: +8% to $214.9 M• Earnings from operations: +7% to $17.1 M• First half revenues: +10% to $396.6 M; earnings from

operations: +24% to $32.2 M• Organic growth: 5%• CSG sales up considerably with excellent demand for elite

racing bikes such as the Cannondale SuperSixg p• Further expansion of Independent Bike Dealers network• Schwinn POS levels strong, bolstered by major ad campaign• Pacific Cycle hindered by lack of supply due to ocean• Pacific Cycle hindered by lack of supply due to ocean

container shortage• New AFG facility up and running

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RecreationalRecreational//LeisureLeisure SegmentSegment


2009 2008Revenues $ 681,366 $ 656,613Gross Profit 153,739 150,804Earnings from operations 39,837 41,874

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Strategic and Comprehensive PortfolioStrategic and Comprehensive Portfolio

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RecreationalRecreational//LeisureLeisure

Three distinct operating divisions

Cycling Sports Group (CSG)Cycling Sports Group (CSG)

IBD Division

Premium BrandsPremium Brands

Growing dealer network

Growing European distributionGrowing European distribution

Focusing on breakthrough technology

Building Dorel’s bike business to # 1 positionBuilding Dorel s bike business to # 1 position

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Pacific Cycle

Mass merchants/sporting goods chainsMass merchants/sporting goods chains

Bicycle parts/accessories (PTI)

Full service provider – bikes parts and accessoriesFull service provider bikes, parts and accessories,

branded apparel

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Apparel Footwear Group (AFG)

Growing performance apparel division incorporates SUGOIGrowing performance apparel division incorporates SUGOI, Cannondale, GT, Schwinn, IronHorse and Mongoose lines

New 70,000 sq. ft. Vancouver facility

New high speed equipment

Focus – custom apparel

Objective – triple business in 5 years

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Worldwide Centers of Excellence Strategy

Evolve as global innovation leader in R/L marketsg /

5 Centers of Excellence around the world

New talent recruited, structure simplified around brands to be more consumer drivenbe more consumer‐driven

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Second Quarter Second Quarter Home Furnishings HighlightsHome Furnishings Highlights• Revenue: +24% to $133.0 M

• Earnings from operations: +46% to $11.3 M

• First half revenues: +21% to $261.9 M; earnings from operations: +82% to $22 0 Moperations: +82% to $22.0 M

• Gains led by Cosco Home & Office, division produced solid earnings improvementg p

• Business was solid at Ameriwood with new introductions and continuing efficient operations

• Segment’s POS levels sustained as consumers attracted by value‐oriented furniture

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Home Home FurnishingsFurnishings SegmentSegment


2009 2008Revenues $ 463,734 $ 451,545Gross Profit 77,308 50,915Earnings from operations 36,696 7,964

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GrowingGrowing Home Home FurnishingsFurnishings ––Much Much ImprovedImproved

Ameriwood – solidly profitableAmeriwood solidly profitable

Increased RTA capacity

Hi hl f l i fHighly successful execution of turnaround at Cosco Home & Office (metal folding furniture, step stools)step stools)

Solid earnings improvement

Focus on reasonably priced furniture sold at mass merchants

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2010 Outlook2010 Outlook

Record six month results have set the stage for a solid year.y

Revenues expected to continue to exceed prior year levels, however pace of earnings will not be maintained i Q3 d t J il t h llin Q3 due to Juvenile segment challenges.

Q2 margins somewhat affected by rising commodity and freight costs, although impact was moderate.g , g p

Q3 earnings will be further affected by these costs, as well as by impact of FX rates.

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2010 Outlook 2010 Outlook ((cont’dcont’d))

Rising commodity prices expected to ease, but it will take current quarter to work through existing inventory purchased at higher prices.

Expected easing of these headwinds in Q4. Juvenile will be introducing new products which will provide some pricing reliefintroducing new products which will provide some pricing relief and a better mix of sales. This plus more stable commodity costs expected to improve margins moving into New Year.

Recreational/Leisure and Home Furnishings segments are poisedRecreational/Leisure and Home Furnishings segments are poised to perform well during the second half.

Focus and investments being maintained on innovative, value‐added products.

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APPENDIXAPPENDIX

Full Full YearYear –– 2009 2009

(in millions of US$ other than EPS) 2009 2008(in millions of US$, other than EPS) 2009 2008Revenue $ 2,140.1 $ 2,181.9Pre-tax income 128.3 132.0Net income 107.2 112.9EPS (diluted) 3.21(1) 3.38(2)

(1) Includes after-tax out of period F/X loss of $0.30 / diluted shares(2) Includes after-tax out of period F/X gain of $0.22 / diluted sharesIncludes after tax out of period F/X gain of $0.22 / diluted shares

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RecentRecent AcquisitionsAcquisitions2003 Ampa France (Dorel France)

2004 Pacific Cycle

2007 IGC Australia (55% interest)

2008 Cannondale/SUGOI

2008 PTI Sports

2009 Baby Art (Hoppop Brand)2009 Baby Art (Hoppop Brand)

2009 Dorel Brazil (70% interest)

2009 IronHorse Bicycles2009 IronHorse Bicycles

2009 Gemini Bicycles (Australia)

2009 Hot Wheels Circle Bikes (UK)2009 Hot Wheels, Circle Bikes (UK)25

Revenue by SegmentRevenue by Segment

2009 2008

22%

49%30%

21%

32%

22%46%

JUVENILE RECREATIONAL/LEISURE HOME FURNISHINGS/

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GeographicGeographic Distribution of SalesDistribution of Sales(by (by customercustomer))

2009 2008

27%

4%

29%

2%

63%6% 6% 63%

US CANADA EUROPE OTHER

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ProvenProven CorporateCorporate StrategyStrategy

Recession resistant products

Right products right price points right timeRight products, right price points, right time

North American consumers are shopping more at mass merchants

Ensuring market flexibility in Europe, building relationships with mass merchants

Investing heavily in product innovation

Known brands

Generate strong cash flow

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SustainabilitySustainability PhilosophyPhilosophy

Active in sustainability on several fronts throughout allthree segments

By nature of large volume of units sold, Dorel’s eco‐conscious programs make an important contribution by reducing their environmental impactenvironmental impact

Despite goal of keeping prices to consumers low, Dorel intends to remain proactive in its sustainability initiatives

Strict policy in place to ensure sustainable business practices of suppliers

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SustainabilitySustainability InitiativesInitiativesDHP: the first company supplying the mass market retail segment with a futon made from 100% FSC certified wood

Altra Furniture: uses Bamboo in some furniture;Altra Furniture: uses Bamboo in some furniture;Smart Program ‐ 100% non‐virgin wood

Ameriwood:

1. All saw dust, scrap, wood chips are recycled and returned to suppliers’ manufacturing processes

2. Over 500 tons of scrap metal is recycled annually

LEED Gold Certified distribution facility reduces carbon foot‐print with two coast distribution system

Safety 1st Nature Next Collection features products made y pfrom eco‐conscious materials

Warehouses are equipped with light sensors to eliminate entire areas being lit needlesslyg y

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WhyWhy InvestInvest in in DorelDorel??

A consistent record of successful acquisitions

A focus on Juvenile and Bikes where Dorel is a key playerA focus on Juvenile and Bikes where Dorel is a key player

Strong performance in Home Furnishings

A portfolio of known, premium brands

Product development capabilities that drive growth

A strategy of the right products and varied price points

Dedicated quality control/customer service by solidDedicated quality control/customer service by solid Asian presence

Established customer relationships

Strong cash flow

Payment of a quarterly dividend

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Question & Answer PeriodQuestion & Answer PeriodQuestion & Answer PeriodQuestion & Answer Period

QUESTION & ANSWER PERIODQUESTION & ANSWER PERIOD

Notes

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dorel q2'10 ir web.ppt · first halfhalf 2010 2010 ((endedended junejune 30)30) 3 months (2nd...

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