Dorel Reports Fourth Quarter and 2023 Year-End Results

Dorel Juvenile’s turnaround continues; posts best quarter in more than 5 years

Lower furniture industry sales dampen Dorel Home results

Dorel Industries Inc. announced results for the fourth quarter and the year ended December 30, 2023.

Fourth quarter revenue from continuing operations was US$350.7 million, up 3.1%, from US$340.3 million a year ago. Reported net loss from continuing operations for the quarter was US$3.8 million or US$0.12 per diluted share compared to US$41.4million or US$1.27 per diluted share a year ago. Adjusted net income¹ from continuing operations was US$0.2 million or US$0.01 per diluted share compared to an adjusted net loss¹ from continuing operations of US$39.8 million or US$1.22 per diluted share for the fourth quarter a year ago.

Revenue for the full year from continuing operations was US$1.39 billion, down 11.6%, from US$1.57 billion the previous year. Reported net loss from continuing operations was US$62.4 million or US$1.92 per diluted share compared to US$118.9 million or US$3.65 per diluted share a year ago. Adjusted net loss¹ from continuing operations for the year was US$58.4 million or US$1.79 per diluted share, compared to US$111.0 million or US$3.41 per diluted share in 2022.

“Dorel Juvenile continued its trend of quarter-over-quarter earnings improvement in 2023 and delivered its best quarterly adjusted operating profit since the first quarter of 2017. We are gaining market share in our major markets and for the year, revenues grew 2.4% versus the prior year with an adjusted earnings turnaround of almost US$59.0 million. We are well on our way to getting Juvenile back on a solid footing. Dorel Home’s fourth quarter was disappointing as the furniture market did not rebound as anticipated. Online sales decreased considerably from last year’s levels, but on the bright side, in-store sales were up. In response to the difficult environment we are operating in, we initiated a new cost-reduction program, mostly at Dorel Home which, going forward, will result in annual savings,” stated Dorel President & CEO, Martin Schwartz.

Fourth quarter revenue was US$212.0 million, up US$23.1 million or 12.2%, from US$188.9 million last year. Organic revenue¹ increased 9.3% year-over-year after removing the impact of varying foreign exchange rates. The U.S. and European markets again posted double digit organic revenue increases. All divisions, with the exception of Chile, also recorded sales improvements. Dorel Juvenile’s successful new product launches in 2023, such as the Maxi-Cosi 360 Family car seat featuring Dorel’s SlideTech^TM innovation in Europe and Maxi-Cosi Emme 360^TM and the Safety 1st Grow and Go^TM 3-in-1 convertible car seat in North America, are driving further market share gains in its major markets. Full year revenue increased to US$829.8 million, up US$19.6 million, or 2.4%, from US$810.2 million the prior year.

Fourth quarter operating profit was US$11.3 million, compared to an operating loss of US$23.5 million a year ago, a major turnaround from the period a year ago, as well as a significant improvement over the last three sequential quarters this year. Excluding restructuring costs, adjusted operating profit¹ was US$12.9 million, compared to an adjusted operating loss¹ of US$21.9 million in the fourth quarter last year. Fourth quarter gross profit was 1420 basis points better than prior year, driven by the combination of improved pricing, lower input costs as well as sales of higher margin products. Full year operating profit was US$6.4 million compared to an operating loss of US$59.1 million in 2022. Adjusted operating profit¹ was US$8.0 million, compared to last year’s adjusted operating loss¹ of US$50.7 million.

New Segment President

Rafael Camarano has been named President & CEO of Dorel Juvenile. He joined the Company 15 years ago with the founding of Dorel Brazil and has a wealth of experience in the industry across the entirety of operations. Most recently Rafael served as President of Dorel Juvenile’s International divisions. His strategic foresight and ability to identify and capitalize on emerging opportunities have been instrumental in making Dorel the market leader in Brazil and improving operations in all divisions within his scope. Rafael’s appointment will ensure a seamless transition and an uninterrupted path on the segment’s current strategic direction.

Revenue for the fourth quarter was US$138.6 million, down US$12.7 million, or 8.4%, from US$151.3 million last year. The current high inflation and interest environment continued to constrain consumer spending on home furnishings, contributing to the revenue decline. According to industry statistics, 2023 overall consumer sales were flat, but sales of furniture in particular decreased 7.5%. Year-over-year Internet gross sales declined by 19.4%, while total store gross sales increased 15.6%. An encouraging sign that retailers’ inventories are coming down was an increase in replenishment orders. For the full year, revenue was US$559.0 million, down US$201.1 million, or 26.5%.

Fourth quarter operating loss was US$12.8 million compared to US$18.3 million last year. Adjusted operating loss¹ for the quarter was US$9.8 million versus US$18.3 million a year ago. Reduced costs of freight, raw materials, warehousing, and distribution helped lower the operating loss. Inventories were reduced by US$31.2 million from a year ago. For the full year, the operating loss was US$40.2 million, compared to US$18.5 million a year ago. Adjusted operating loss¹ for the full year was US$37.3 million, compared to US$18.5 million in 2022.

Other

The continued uncertainty in the macro-economic environment, including the current high inflation and high interest rate environment has limited consumers’ purchasing power prompting them to balance household needs and prioritize daily necessities over larger items. This is particularly the case at Dorel Home where furniture industry sales are lower than those for other consumer goods. This is also affecting Dorel Juvenile where the industry is not growing. In light of this, the Company initiated a restructuring plan in the fourth quarter resulting in US$4.5 million of restructuring costs, the majority in the Home segment. This initial round of cost reductions is expected to generate US$6.5 million in annual savings. These initiatives will continue in 2024 as the Company continues to make additional operational improvements and evaluate its cost structure.

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About Dorel Industries Inc.

Dorel Industries Inc. (TSX: DII.B, DII.A) is a global organization, operating two distinct businesses in juvenile products and home products. Dorel’s strength lies in the diversity, innovation and quality of its products as well as the superiority of its brands. Dorel Juvenile’s powerfully branded products include global brands Maxi-Cosi, Safety 1st and Tiny Love, complemented by regional brands such as BebeConfort, Cosco, Mother’s Choice and Infanti. Dorel Home, with its comprehensive e-commerce platform, markets a wide assortment of domestically produced and imported furniture. Dorel has annual sales of US$1.4 billion and employs approximately 3,900 people in facilities located in twenty-two countries worldwide.

Contact:

Jeffrey Schwartz – Media Contact – (514) 934-3034

Source: Dorel Industries Inc.