MONTREAL, Quebec – Dorel Inds. Inc. reported an increase in total revenues and net income for the third quarter ended Sept. 30.
Third quarter revenues totaled $753.4 million, up 9.9% from the $685.7 million reported last year, while reported net income was $26.2 million, or 80 cents per diluted share, compared with a net loss of $4.3 million, or 13 cents per diluted share last year.
Adjusted net income was $28.7 million, or $.87 per diluted share, compared to $2.4 million, or $.07 per diluted share a year ago.
For the full nine month period, revenues totaled $2.1 billion, up 3.9% compared with $1.98 billion reported last year. The reported net loss year to date was $20.5 million or 63 cents per diluted share, compared with a net loss of $9.8 million, or 30 cents per diluted share, in 2019.
Year-to-date adjusted net income totaled $30.8 million, or 94 cents per diluted share, compared with $14.5 million or 44 cents per diluted share a year ago.
“All three of our business segments contributed to an excellent quarter for Dorel,” said Martin Schwartz, president and CEO. “In Sports, the second quarter trend of increased demand for bicycles continued and outpaced product availability. In spite of this, the segment was still able to achieve the highest earnings in its history.
“Similarly, Dorel Home had an excellent quarter despite sales being limited by a lack of supply in some of its product categories. Dorel Juvenile improved its earnings and recovered from a first half adjusted operating loss that was due to the negative impact of the COVID-19 pandemic.”
In the Dorel Home segment, third quarter revenues rose 14%, from $212.5 million to $242.2 million, fueled by increases in both e-commerce and traditional brick-and-mortar sales. Strong sales at brick-and-mortar translated into e-commerce sales that were 58% of total segment gross sales compared with 61% a year ago.
The company added that it has seen continued success in its branded sales strategy under the Little Seeds, Cosmo Living and Novogratz brands “continuing their upward trend.” Nine-month revenues totaled $700.3 million, up 11% from the $630.7 million reported last year.
Operating profit in the third quarter totaled $20.9 million, up 33.3% from the $15.7 million reported last year. The company said that warehouse and distribution costs improved from last year, both in terms of dollars and as a percentage of sales. This was due to the overall sales level and efficiencies gained from inventory reductions: Inventory totaled $121.9 million, down $89.6 million from last year’s third quarter and $63.1 million from year-end levels.
The company reported year-to-date operating profit of $49.8 million compared with $44.2 million in 2019. Adjusted operating profit – excluding restricting costs – was $52.5 million, up 18.9% from the $44.1 million reported last year.
In the Dorel Juvenile segment, third quarter revenues were down 7.8%, to $205.6 million, from the $222.9 million reported last year.
During the pandemic, the company said, retail customer stores re-opened in the majority of Dorel Juvenile markets with the exception of certain company-owned retail outlets in Chile and Peru. Lower sales in those markets, the company said, contributed to the overall revenue decline in the quarter. Nine-month revenues totaled $578.4 million, down 14.3% from the $674.7 million reported last year.
Third quarter operating profit in the segment was $7.6 million, compared with an operating loss of $4.6 million last year. Excluding restructuring costs, the company said, adjusted operating profit was $7.5 million, up $4.9 million, or 189.9%.
Reduced expenses partially offset the quarter’s lower revenues, contributing to the year-over-year improvement in third quarter adjusted operating profit. Dorel said it continued its effort “to reduce expenses in people costs and discretionary spending across the segment in order to partially mitigate the continued revenue weakness experienced in the quarter.”
The operating loss for the nine-month period was $39.8 million, compared with $9.3 million a year ago. Adjusted operating profit – excluding a first quarter impairment loss on goodwill of $43.1 million, along with restructuring costs – was $6.6 million, down $9.9 million or 59.9% from last year.
Dorel Sports remained the company’s largest individual business segment with third quarter revenues of $305.6 million and year-to-date revenues of $779.5 million.
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