- Dorel Home operations to be substantially reduced in size
- Dorel Juvenile earnings continue to improve year-over-year
- Dorel working on new financing arrangements to replace current debt structure
MONTREAL, June 30, 2025 (GLOBE NEWSWIRE) -- Dorel Industries Inc. (TSX: DII.B, DII.A) is providing a business update on its on-going operations as promised in its first quarter financial results press release issued on May 12, 2025.
The Company is announcing a strategic shift in its operations with a significant reduction in the size of its Home segment which is expected to return the segment to profitability in 2026. These changes will be facilitated by a reduced product line focusing on profitable categories and the elimination of the domestic manufacturing operations based in Cornwall, Ontario.
As described in the first quarter earnings release, Dorel Home initiated a new round of restructuring in the second quarter founded upon the reduction of the size of the organization and its ability to merge the sales, marketing and product development organization into the successful Cosco division. A limited number of high-performing Dorel Home import SKUs will be transferred to the Cosco portfolio, focused on categories and customers driving the highest contribution with the least added complexity.
Cosco has delivered consistent earnings and positive cash flow within the Home segment since 2010, including the period in which it was led by Troy Franks, current CEO of Dorel Home. The organization is built on a market-driven, customer centric approach that delivers innovative products with exceptional consumer value. For over 90 years, Cosco has been a trusted household brand known for reliable performance and quality.
An additional contributor to improved earnings is the consolidation of certain Dorel Home back-office functions with the Juvenile North America operations based in Columbus, Indiana which will provide further synergies for Dorel overall.
The decision to cease all Dorel Home manufacturing operations in North America was made after a further extensive review of on-going operations, supported by external consulting firm EY-Parthenon. This decision will result in substantial savings based on a smaller footprint and workforce and eliminate the losses from the domestic operation. It is expected that the wind-down of these operations will be complete by the end of the third quarter to minimize future losses and satisfy customer obligations.
The Home segment is also actively working on exiting product categories that are now considered non-core, including a plan to significantly reduce inventory by the end of the year. This will also allow for the reduction of the current distribution footprint that is now too large for the new streamlined Home operations. The Company will be exiting from existing warehouses based on their scheduled lease termination dates this year. For facilities with longer termination dates, the Company is exploring sub-leasing opportunities which it is believed can be realized in the new year once the desired footprint is achieved.
The reduction in size and simplification of the Home segment will eliminate the negative cash flow from these operations and facilitate focus on the Juvenile segment which continues on its path of increasing sales and earnings. The segment's global footprint, with market leading divisions in Europe, Latin America and Australia, combined with domestic manufacturing operations in the United States makes Dorel Juvenile uniquely positioned in the industry to deliver above average earnings relative to its peers.
The benefits of these changes are expected to improve earnings by the fourth quarter of this year. The estimated cost and run-rate savings of these activities will be provided in more detail in the Company's second quarter earnings release to be issued in August 2025.
Long-Term Debt and Financing Update
The Company has engaged two leading capital market advisors to assist in re-capitalizing the Company's balance sheet to allow for growth in the Juvenile segment and support the re-organization of the Home segment. The new structure will replace the current debt structure which no longer matches the Company's needs. Dorel will update stakeholders on developments as they arise.
"The changes being implemented at Dorel represent some of the most significant in our over fifty-year history. The decision to further reduce the size of the Home segment was not made lightly, considering our origins as an RTA manufacturer in North America and the impact on our numerous employees. However, it is the only feasible course of action to return to profitability. With the anticipated recovery of the Home segment in 2026, the sustained positive momentum at Dorel Juvenile, and new financing arrangements that will be in place, Dorel is establishing the path to return to profitability," stated Dorel President & CEO, Martin Schwartz.
Profile
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 3,600 people in facilities located in twenty-two countries worldwide.
Caution Regarding Forward-Looking Statements
Certain statements included in this press release may constitute "forward-looking statements" within the meaning of applicable Canadian securities legislation. Except as may be required by Canadian securities laws, the Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements, by their very nature, are subject to numerous risks and uncertainties, including statements regarding the substantial reduction in size of Dorel's Home segment, the implementation of new financing arrangements, the impact of the macro-economic environment, including inflationary pressures, changes in consumer spending, exchange rate fluctuations, the imposition of tariffs, and increases in interest rates on the Company's business, financial position and operations, and are based on several assumptions which give rise to the possibility that actual results could differ materially from the Company's expectations expressed in or implied by such forward-looking statements and that the objectives, plans, strategic priorities and business outlook may not be achieved. As a result, the Company cannot guarantee that any forward-looking statement will materialize, or if any of them do, what benefits the Company will derive from them including statements relating to the substantial reduction in the size of the Home segment and the implementation of new financing arrangements intended to replace the Company's current debt structure. Forward-looking statements are provided in this press release for the purpose of giving information about management's current expectations and plans and allowing investors and others to get a better understanding of the Company's operating environment. However, readers are cautioned that it may not be appropriate to use such forward-looking statements for any other purpose.
Forward-looking statements made in this press release are based on a number of assumptions that the Company believed were reasonable on the day it made the forward-looking statements. Factors that could cause actual results to differ materially from the Company's expectations expressed in or implied by the forward-looking statements include:
- general economic and financial conditions, including those resulting from the current high inflationary environment;
- changes in applicable laws or regulations;
- changes in product costs and supply channels, including disruption of the Company's supply chain resulting from the macro-economic environment;
- foreign currency fluctuations, including high levels of volatility in foreign currencies with respect to the US dollar reflecting uncertainties related to the macro-economic environment;
- the effect of tariffs on imported goods;
- customer and credit risk, including the concentration of revenues with a small number of customers;
- costs associated with product liability;
- changes in income tax legislation or the interpretation or application of those rules;
- the continued ability to develop products and support brand names;
- changes in the regulatory environment;
- outbreak of public health crises, such as the COVID-19 pandemic, that could adversely affect global economies and financial markets, resulting in an economic downturn which could be for a prolonged period of time and have a material adverse effect on the demand for the Company's products and on its business, financial condition and results of operations;
- the effect of international conflicts on the Company's sales;
- continued access to capital resources, including compliance by the Company with all of the covenants under its ABL facility and term loan facility, and the related costs of borrowing, all of which may be adversely impacted by the macro-economic environment;
- failures related to information technology systems;
- changes in assumptions in the valuation of goodwill and other intangible assets and any future decline in market capitalization;
- there being no certainty that the Company will declare any dividend in the future;
- increased exposure to cybersecurity risks as a result of remote work by the Company's employees;
- the Company's ability to protect its current and future technologies and products and to defend its intellectual property rights;
- potential damage to the Company's reputation; and
- the effect of climate change on the Company.
These and other risk factors that could cause actual results to differ materially from expectations expressed in or implied by the forward-looking statements are discussed in the Company's annual MD&A and Annual Information Form filed with the applicable Canadian securities regulatory authorities. The risk factors set out in the previously mentioned documents are expressly incorporated by reference herein in their entirety.
The Company cautions readers that the risks described above are not the only ones that could impact it. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial may also have a material adverse effect on the Company's business, financial condition, or results of operations. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.
CONTACTS:
Dorel Industries Inc.
John Paikopoulos
(514) 934-3034
Dorel Industries Inc.
Jeffrey Schwartz
(514) 934-3034
