MONTRÉAL — Dorel Industries Inc. reported a loss of $21.9 million in its third quarter. Juvenile says remained positive, but Dorel's Home division continued to struggle.

Third quarter revenue was $354.2 million, compared to $359.7 million, down 1.5% from the same period a year ago. Reported net loss was $21.9 million or $0.67 per diluted share, compared to $10.4 million or $0.32 per diluted share last year. Adjusted net loss for 2024 was $20.2 million or $0.62 per diluted share as compared to $10.4 million or $0.32 per diluted share last year.

Revenue for the nine months was $1,053.4 million, compared to $1,038.1 million, up 1.5% from the prior year. Reported net loss was $99.0 million or $3.04 per diluted share, compared to $58.6 million or $1.80 per diluted share a year ago. Adjusted net loss for the first nine months of 2024 was $50.7 million or $1.56 per diluted share as compared to $58.6 million or $1.80 per diluted share a year ago.

Dorel Juvenile
Dorel Juvenile identified opportunities to reduce redundancy and improve efficiencies and also initiated headcount reductions in several divisions. For the third quarter and nine months ended September 30, 2024, Dorel Juvenile incurred respectively $0.8 million and $1.9 million of restructuring costs consisting mainly of employee severance and termination benefits, and other associated costs.

Dorel Home
Dorel Home’s restructuring plan is to simplify its management reporting structure by combining several key management positions leading to the elimination of certain redundant roles. This resulted in the reduction of Dorel Home’s overall North American headcount by approximately 5% during the fourth quarter of 2023, which will result in improved operational efficiencies, simplified decision-making processes and reduced costs overall.

For the third quarter and nine months ended September 30, 2024, Dorel Home incurred respectively $1.1 million and $1.3 million of restructuring costs consisting mainly of employee severance and termination benefits, and inventory markdowns.

“Dorel Juvenile earnings again exceeded last year’s comparative quarter, driven by an organic revenue1 increase of over 9%. Impressively, this revenue growth was in all three of our regions; North America, Europe and International. We had several significant customers events in the quarter and the reception to our new product launches in all regions has been very strong, with key deliveries beginning in the quarter. Conversely, Dorel Home faced significant challenges, resulting in a 14% decline in revenue compared to the same period last year. Within our categories, positive momentum in indoor seating, TV stands and step stools were not enough to offset declines in other categories. We continue to drive sales with promotional pricing, which coupled with lower production efficiency meant our gross margins were lower than expected. We initiated substantial cost reduction initiatives in the quarter as we continue to right-size the business to current realities,” stated Dorel President & CEO, Martin Schwartz.

According to the company, there continues to be uncertainty in the macro-economic environment, including continued inflationary pressures, changes in consumer spending habits, exchange rate fluctuations and high interest rates. These events and conditions are making it difficult to assess the future impact on Dorel’s customer base, the end markets we serve as well as the impact on our business, both in the short term and long term. Despite these ongoing risks and uncertainties, Dorel’s focus remains to closely monitor its cash position and control its spending, while managing its inventory levels in line with the unprecedented change in demand behavior.

In addition, the Russia-Ukraine and Israeli-Hamas wars have created and are expected to continue to create further global economic uncertainty. We will continue to monitor the situation closely, but to date we have not experienced any disruptions in our business operations as we do not have significant operations, customers or supplier relationships in Russia, Belarus, Ukraine or Israel. However, it is difficult to predict the broader impact of the conflicts on global economies going forward and their impact on our business.

In light of the continued uncertainty in the macro-economic environment, including the current high inflation and high interest rate environment, the Company initiated a new restructuring plan in the fourth quarter of 2023. The current environment has limited consumers’ purchasing power and forces them to balance household needs and prioritize daily purchases over larger consumer goods items. This is particularly the case in Dorel Home where the furniture industry overall is lower in terms of overall sales but is also impacting Dorel Juvenile where the industry is not growing.

These restructuring initiatives will continue in 2024 as the Company continues to make additional operational improvements and evaluate its cost structure.

On July 8, 2024, in light of challenging economic conditions and the industry’s market trends, Dorel Home halted production at the Tiffin, Ohio facility and issued a 60-day notice to the affected employees. The Tiffin site was repurposed into a distribution center for Dorel Home, allowing the Company to retain some of its employees for these operations, while the Cornwall, Ontario facility is assuming all ready-to-assemble manufacturing duties. Dorel is confident that this change will enhance productivity and reduce the costs of its Ready-to-Assemble production, which will help the Company stay competitive going forward. The shift to the Cornwall facility will maintain customer obligations without interruption, as Cornwall is well-equipped to meet Dorel’s customer service requirements.