Mr. Martin Schwartz reports

DOREL REPORTS THIRD QUARTER 2023 RESULTS

Dorel Industries Inc. has released results for the third quarter and nine months ended Sept. 30, 2023. All monetary amounts are in U.S. dollars unless otherwise stated.

Third quarter revenue was $359.7-million, down 3.9 per cent from $374.1-million last year. Reported and adjusted net loss from continuing operations was $10.4-million or 32 cents per diluted share, compared with $36.7-million or $1.13 per diluted share last year. Adjusted net loss from continuing operations was $34.7-million or $1.07 per diluted share last year.

Nine-month revenue from continuing operations was $1,038-million, a decrease of 15.6 per cent compared with $1,230-million last year. Reported and adjusted net loss from continuing operations year to date was $58.6-million or $1.80 per diluted share, compared with $77.6-million or $2.38 per diluted share last year. Adjusted net loss from continuing operations was $71.2-million or $2.19 per diluted share last year.

"We are pleased with the progress of our Dorel Juvenile segment as they delivered double-digit revenue growth and an impressive turnaround in earnings. We are clearly seeing our products winning and delivering market share gains in an industry that was down versus the prior year. Dorel Home revenues continued to grow, improving sequentially with positive indicators at brick-and-mortar. Given the challenges for consumer products companies overall, our two segments are navigating positively, though we recognize the need for further improvement. There is far less retailer inventory and our own inventory levels are at their lowest in two years. The vast majority of all the high-cost inventory from last year has been sold, contributing to improving margins throughout 2023," stated Dorel president and chief executive officer Martin Schwartz.

The third quarter maintained its quarter-over-quarter improvement. Revenue was $206-million, an increase of $19.3-million or 10.3 per cent versus 2022's comparable period. Organic revenue increased by 6.4 per cent after removing the impact of varying foreign exchange rates year-over-year. The U.S. and European markets were primarily responsible for the growth, both posting double-digit organic gains, slightly offset by sales shortfalls in Brazil and Chile. The 360 Pro Family line contributed to the revenue gains in Europe. Additional new Maxi-Cosi products were unveiled at the September Cologne, Germany, juvenile products trade fair which resulted in a record number of orders for Dorel Juvenile. The segment continued to gain market share in its various geographies, despite a generally challenging environment where consumers remain selective with their spending and retailers are cautiously reordering. Nine-month revenue was $617.7-million, down $3.5-million or 0.6 per cent from last year.

Reported and adjusted operating profit for the quarter was $3.2-million compared with last year's reported and adjusted operating loss of $18.4-million and $16.2-million, respectively. The weaker euro versus the U.S. dollar tempered the quarter's operating profit more so than during the first half of the current year, although the impact was far less than last year when the U.S. dollar hit a 10-year high. Gross profit increased both year-over-year and quarter-over-quarter driven by lower input costs, improved pricing and favourable foreign exchange. Planned inventory reduction initiatives were also successful with the majority of the higher-cost inventory now sold. Year-to-date reported and adjusted operating loss was $4.9-million compared with a reported and adjusted operating loss of $35.6-million and $28.8-million, respectively, a year ago.

Revenue for the third quarter was $153.7-million, down $33.7-million or 18 per cent compared with the third quarter a year ago. However, on a sequential basis, revenue has increased for the third consecutive quarter. Despite an overall softness in the market, there are positive trends in the brick-and-mortar channel. The fall High Point Market was a success with Dorel Home's customers enthusiastic about the new product introductions. Nine-month revenue was $420.3-million, a decrease of $188.4-million or 31 per cent.

Operating loss for the third quarter was $3.6-million compared with $8-million last year, an improvement of $4.4-million. Gross margins increased versus prior year and are up over both the first and second quarters of this year. The improvement resulted partly from reductions in freight and material costs. Warehouse and distribution costs are also down. Inventory management resulted in a year-over-year reduction of $54.7-million from last year and were down $38.3-million from the fourth quarter of 2022. Nine-month operating loss was $27.4-million, compared with $200,000 a year ago.

Other

Cash provided by operations was positive in the quarter and year to date totalled $62.1-million with inventory reductions being the biggest contributor. A portion of this cash was used to reduce debt. In addition, Dorel continues discussions with prospective lenders on providing additional financing to further improve liquidity and finance future growth.

Outlook

"Our outlook at the end of the second quarter for continued quarter-over-quarter earnings improvement was valid for the third quarter and remains so going forward. At Dorel Juvenile, market share data confirms that we are gaining sales at the expense of the competition with our new, innovative product that is resonating well with consumers. While we are concerned by the economic environment in which we are operating, we remain focused on bringing winning products to the marketplace, partnering with our retail customers and investing in e-commerce to ensure that the progress so far this year continues for the balance of 2023 and in to 2024," commented Mr. Schwartz.

"While the results at Dorel Home are less positive, sales are improving across the year, and we are narrowing our losses. We are operating in a challenging environment, slowing the pace of our turnaround, but we expect to deliver an operating profit as soon as the fourth quarter of this year, setting the table for a much better performance in 2024," concluded Mr. Schwartz.

Conference call

Dorel Industries will hold a conference call to discuss these results on Friday, Nov. 3, 2023, at 1 p.m. Eastern Time. Interested parties can join the call by dialling 1-800-319-4610. The conference call can also be accessed via live webcast on Dorel's website. If you are unable to call in at this time, you may access a recording of the meeting by calling 1-800-319-6413 and entering the passcode 0382 on your phone. This recording will be available on Friday, Nov. 3, 2023, as of 4:30 p.m. until 11:59 p.m. on Friday, Nov. 10, 2023.

Condensed consolidated interim financial statements as at Sept. 30, 2023, will be available on the company's website and will be available through the SEDAR+ website.

About Dorel Industries Inc.

Dorel Industries 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 $1.6-billion and employs approximately 4,000 people in facilities located in 22 countries worldwide.

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