final transcript

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final transcript - Dorel Industries

FINAL TRANSCRIPT Dorel Industries Third Quarter Results Event Date/Time: November 8, 2012 01:00 p.m. E.T. Length: 32 minutes "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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FINAL TRANSCRIPT
November 8, 2012 – 01:00 p.m. E.T.
Dorel Industries Third Quarter Results
CORPORATE PARTICIPANTS Martin Schwartz President and Chief Executive Officer, Dorel Industries Jeffrey Schwartz Executive Vice President and Chief Financial Officer, Dorel Industries Frank Rana Dorel Industries CONFERENCE CALL PARTICIPANTS Derek Lessard Analyst, TD Securities Anthony Zicha Analyst, Scotiabank Leon Aghazarian Analyst, National Bank Financial Mark Petrie Analyst, CIBC World Markets "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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November 8, 2012 – 01:00 p.m. E.T.
PRESENTATION Operator Good afternoon, ladies and gentlemen. Welcome to Dorel Industries' third quarter results conference call. At this time, all participants are in a listen‐only mode. Following the presentation we will conduct a question‐and‐answer session. Instructions will be provided at that time for you to queue up for questions. If anyone has any difficulties hearing the conference, please press * followed by 0 for operator assistance at any time. Before turning the meeting over to management, please be advised that this conference call will contain statements that are forward looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. I would like to remind everyone that this conference call is being recorded on Thursday, November 8, 2012. I will now turn the conference over to Martin Schwartz, President and CEO. Please go ahead. Martin Schwartz –President and CEO, Dorel Industries Good afternoon, and thank you all for joining us for Dorel's third quarter conference call for the period ended September 30th, 2012. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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November 8, 2012 – 01:00 p.m. E.T.
With me are Jeffrey Schwartz and Frank Rana. We will be pleased to take your questions following our initial comments, and a reminder that all numbers mentioned are in U.S. dollars. I am pleased to report that our results for the third quarter are much improved over the same period last year. After removing the benefit of the tax recovery in Q3 2011, earnings per diluted share were $0.63 compared to $0.46. Our Juvenile business has done much better, as evidenced by the substantial increase in its operating profit, which is up more than threefold. And Recreation‐Leisure is maintaining its solid momentum. It has been an active quarter with progress in many areas. We promoted our Dorel Juvenile Europe President to Global Juvenile President; made a strategic acquisition in Juvenile in Latin America; we augmented our offering to our IBD customers in Recreation‐Leisure; and we have participated actively in important tradeshows in the U.S. and Europe, where the innovation of our products was front and centre. In addition, we held an Analyst and Investor day in Toronto, which many of you on line were good enough to intend. Clearly, investors have recognized these advancements, as the market has rewarded shareholders over the past few months. Our core businesses are moving in the right direction, even while facing a listless economy. There's been progress at DJG USA and a solid performance at Dorel Europe, important factors for the significant increase in Juvenile's operating profits. Dorel Chile was also an important contributor to the quarter, underlining the value of the partnerships we established there a year ago. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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November 8, 2012 – 01:00 p.m. E.T.
While pleased with the advances at DJG, the division must continue to refine its procedures and is actively refreshing its product development process. Recreation‐Leisure did well in the quarter, particularly with mass merchants. Cannondale's strong product offerings have garnered considerable industry recognition, keeping the brand popular with consumers. Home furnishing sales were down slightly, due to a reduction in RCA furniture sales. This was somewhat offset by increased sales of futons and upholstered furniture. The segment's Internet sales maintained their steady growth pattern. Delving a little deeper into each of our segments, Jean‐Claude Jacomin, our new Global Juvenile President, is already well entrenched in his new responsibilities. He has been with Dorel since 2003 and has done an excellent job leading Dorel Europe, particularly in the area of product development and marketing. We are currently conducting a search for his replacement in Europe. In late September, we acquired a 70‐per‐cent interest in two juvenile product businesses, one in Colombia and one in Panama. The operations in Panama provide a distribution platform through all of Central America and into the Caribbean. This latest venture in Latin America expands Dorel's ownership of the highly popular Infanti brand, to which Dorel already owns the rights in Chile, Bolivia, Peru and Argentina. We have partnered with the same family we transacted with in Chile, as well as with the current owners of the businesses in Panama and Colombia, providing excellent continuity with feet‐on‐the‐street experience in the region. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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November 8, 2012 – 01:00 p.m. E.T.
We are excited about the prospects in Latin America, particularly with the positive results we've experienced to date in Chile. With a population base nearly 130 million people, Colombia, Ecuador, Venezuela and Central America are growing markets which offer mid‐term potential from an emerging consumer base. Also worth noting that, even excluding Mexico, Latin America has a very, very large economy and we are now well positioned to prosper there. Two of DJG's newest products won the JPMA Innovation Awards at last month's ABC Kids Expo. The Maxi‐Cosi Prezi car seat, which integrates our G‐Cell HX, a patented rebounding foam technology, and the Safety First booster pack, which converts from a belt positioning booster to a backpack, were among the judges' choices. Internationally recognized, the awards highlight the most exciting and innovative new products in the juvenile market today. We also launched Safety First Advanced Solutions, an innovative line of infant and toddler health and grooming products. Each product also contains custom educational materials developed by the American Academy of Paediatrics. Our exhibit at the European Juvenile Show in Cologne was one of the largest, and importantly, one of the busiest. Several new products were featured from our four key brands: Maxi‐Cosi, Quinny, Bébé Confort, and Safety First. New Maxi‐Cosi and Bébé Confort seats integrating I‐size (ph), a new European safety regulation to be in force next year, were also displayed to introduce retailers to the new concept. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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November 8, 2012 – 01:00 p.m. E.T.
You will recall that we have been placing renewed emphasis in the U.S. on our international brands, specifically Quinny and Maxi‐Cosi. The results have been very encouraging. We are adding another of our European premier brands to the group, as Bébé Confort will now be available in the States. This is doubly significant as this brand has done well for us in Europe, and with the launch in the U.S. market, we enter a most important category: feeding. Bébé Confort has been providing the European market with products for more than 75 years, and we look forward to offering parents in the U.S. a new natural feeding solution. In our bike segment, Cannondale continues to prove it is becoming a brand of choice. It won three awards at Eurobike 2012 held in September, including the Eurobike Gold Award for the SuperSix EVO Black Edition, named best bike in the world by Germany's Tour magazine. Other awards went to Cannondale's Trigger One and the SuperX Hi‐Mod Disc. Being chosen for three awards shows the depth of innovation and technical design in our 2013 Cannondale line‐up. Another recognition recently was from a major U.K. cycling trade publication which named Cannondale as the bike brand of the year in the U.K. As announced, we are significantly increasing our investment to become the title sponsor of the newly‐named Cannondale Pro Cycling Team, effective January 1st. The team has signed riders from around the world including, as announced yesterday, two riders from Quebec. Cannondale has been part of pro cycling for the past six years. And since Dorel acquired the company, we have "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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November 8, 2012 – 01:00 p.m. E.T.
steadily ramped up our involvement. We have found this exposure to be extremely beneficial for the brand, and it's been one of the key reasons for its growth, particularly in Europe. To further position Dorel as the go‐to bike company, we have launched the new Guru Experience, an advanced, personalized bike fitting system that will help consumers reach their peak performance. But I want to clarify that we have bought the Guru Fit System and not the Guru line of bikes. The way consumers shop is changing radically in and outside the cycling industry. Guru is the centrepiece of our overall goal of meeting the needs of consumers and our retailers and transforming bicycle shopping. The system will fit cyclists for any brand, not just those which Dorel markets. Coupled with Cannondale's innovative new products, we are convinced 2013 will be another exciting year. In home furnishings, lower ready‐to‐assemble sales coupled with less profitable sales mix reduced profits. However, this was somewhat offset by increased sales of upholstered furniture and futons and a more stable cost environment. The segment continued to benefit from strong Internet sales, a trend that has been consistent over the past several quarters. The High Point Furniture Show was one of the best attended in a long time, exposing our products to a wide range of mass merchants. Jeffrey will now add a more detailed financial perspective. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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FINAL TRANSCRIPT
November 8, 2012 – 01:00 p.m. E.T.
Jeffrey Schwartz – Executive Vice President and Chief Financial Officer, Dorel Industries Thank you, Martin. Revenues for the third quarter ended September 30th, 2012 increased by 37.5 million, or 6.5 per cent. After removing the impact of varying exchange rates and business acquisitions, the organic revenue increase in the quarter was approximately 5 per cent. For the nine months ended September 2002 [sic], revenues increased by 65.5 million, or 3.6 per cent, to 1.868 billion. Organically, the revenue increase for the nine months was 2.5 per cent. The total operating profit of the company's three segments was 35.2 million in the quarter versus 21.7 million in the prior year, an improvement of 13.5 million, or 62.4 per cent. And year to date, these figures are 128.5 million in 2002 [sic] versus 113.3 million in the prior year, an improvement of 13.4 per cent. Net income for the quarter was 20 million compared to 23.1 million last year. The main reason for the decrease in the net income despite an increase in operating profit was that in the third quarter of 2011 we had a significant tax recovery of 8.3 million, or $0.25 per diluted share that did not reoccur in 2012. Year to date, net income has increased by 2.9 per cent to 79.5 million from 77.2 million. If we move over to the Juvenile sector, or segment, third quarter Juvenile revenues were 249.1 million compared to 227.1 million last year, an increase of 22 million, or 9.7 per cent. After "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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November 8, 2012 – 01:00 p.m. E.T.
adjusting for the impact of varying exchange rates and new businesses, the organic revenue increase was about 4 per cent. Year‐to‐date revenues were 773.4 million, an increase of 32.7 million, or 4.4 per cent. Organically, revenues were flat with the prior year. It should be noted that this was the second consecutive quarter of organic sales growth for the segment after a decline in the first quarter. Operating profits in the quarter were 16.9 million, an increase of 12 million from the 4.9 million in 2011. Year to date, these figures were 54.7 million and 43.5 million respectively. Gross margins in the quarter were 27.7 per cent, an increase of 560 basis points from the 22.1 per cent last year. A positive contributor to the margin improvement was the impact of the higher gross margins earned by Dorel Chile, which operates retail stores that generate a higher gross profit. The segment's two main operating units, Dorel USA and Dorel Europe, both posted improved gross margins, mainly due to more stable costs and a better sales mix. It should be noted that the prior year's third quarter earnings were well below acceptable levels as higher input costs, mainly resin, was not passed on to customers, primarily hurt us in the United States in that area. Also in 2011, gross margins were hurt by unfavourable exchange rates near the end of last year's third quarter, resulting in a recording of an unrealized foreign exchange loss of about $2 million last year. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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FINAL TRANSCRIPT
November 8, 2012 – 01:00 p.m. E.T.
If we move over to the Rec and Leisure section now, third quarter Recreational/Leisure revenues increased by 19.2 million, or 9.1 per cent, 229 million compared to the 209.8 million last year. Year to date, revenues were up 42.5 per cent, or 6.5 per … 42.5 million, or 6.4 per cent, to 701.8 million from last year's number of 659.3 million. For the quarter, the sales increases were driven by the timing of shipments of products to the mass market channel. For the year, both IBD and the mass market channel have increased sales. Excluding the impact of foreign exchange on the segment's non‐U.S. business, the segment's organic revenue increase was about 11 per cent for the quarter and 8 per cent year to date. Operating profits for the quarter improved by 2.5 million, or 25 per cent, to 12.5 million compared to 10 million last year in the quarter. For the nine months, operating profits were 55.5 million, up 6.4 million, or 13.1 per cent from last year. Gross margins in the quarter were 24.2 per cent versus 22.4 per cent last year. Last year's quarter included losses at SUGOI and a number of unfavourable exchange rates, which hurt us on the bottom line last year. Over in Home Furnishings, for the quarter, Home Furnishing revenues decreased by 2.7 per cent to 135.2 million from 138.9 million. Operating profit for the quarter was 5.8 million in 2002 [sic], a decrease of 13.9 per cent from the prior year. For the first nine months, revenues decreased 2.5 per cent to 392.9 million. In the quarter, the majority of the revenue decline was due to ready‐to‐assemble furniture items. Operating profits for the first nine months were 18.3 million "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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November 8, 2012 – 01:00 p.m. E.T.
versus 20.8 million last year, a decrease of 11.9 per cent, as a result of the impact of decreased revenues and a less profitable sales mix. Gross margins in the quarter were consistent with last year, 11.2 versus 11.3. And for the first nine months, gross margins were 12.1 versus 12 per cent last year. If we move over to some other issues with the company, if we look at the most, I guess, significant change on our financial statement was the increase in inventories during the quarter. Last year we were… Last year at the end of the year, we were at 442 million. We closed the quarter, Q3, at 528.7 million. Several factors related to that. Most of it was in the Recreational area. We had a… we certainly brought in a lot more product for this year's Christmas season as we've had more Christmas orders than we've had in the past in that segment. In some other areas in the segment, we are running a little bit high as we had a transition in Q3 between the 2012 model year and the 2000… which is on its way out, and the 2013 model year, which is just coming in in Q3. So we ended up with more than we needed. We're not overly concerned about this. Again, everything's good, everything's moving through the system. We're now expectations for the end of the year will be a significant decrease from Q3, but probably coming in something above last year's closing figure. During the first nine months, cash flow provided by operations was 53.8 million compared to 105.8 million last year. And again, the main cause of the decrease would be increase in the inventory. And again, we should see that having a significant decrease in the fourth quarter. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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FINAL TRANSCRIPT
November 8, 2012 – 01:00 p.m. E.T.
With that, I'll pass it back to you, Martin.* Martin Schwartz Okay. Thank you, Jeffrey. In terms of our outlook, we expect that the operating profit for our three segments will continue to increase through the end of the year. Note that for the nine months operating profit is up by 15.2 million, or 13.4 per cent compared to last year. This improvement will be led by revenue and earnings growth in Juvenile and Recreation, partly offset by lower operating profit in Home Furnishings. Our two core businesses are well positioned in their various markets to meet what is still a challenging retail environment. And it is anticipated these segments will be better than last year's results. As for input costs in the fourth quarter, we expect them to remain stable, and assuming no significant fluctuation in exchange rates, we are confident that Q4's operating profits in all three segments will exceed last year. When looking at the comp for Q4, remember that the same period last year included a non‐operational gain of 11.1 million which reduced corporate expenses. This will not repeat this year. At this point, I'd like to have the conference operator open up the lines for questions. And again, I would ask everybody to keep their opening questions to a maximum of two. Operator, please. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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FINAL TRANSCRIPT
November 8, 2012 – 01:00 p.m. E.T.
Q&A Operator Thank you. Ladies and gentlemen, we will now conduct the question‐and‐answer session. If you have a question, please press the * followed by the 1 on your touchtone phone. You will hear a tone acknowledging your request. Your questions will be polled in the order they are received. Please ensure you lift the handset if you are using a speaker phone before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Derek Lessard with TD Securities. Your line is open. Derek Lessard – Analyst, TD Securities Yeah, thanks, guys. Good afternoon. Maybe I just missed this, but maybe can you just drill down on some of the expense line items, talk about the jump in the corporate expense this quarter. And as well, there was a jump in the G&A on the Recreational Division; so maybe if you could add some colour there. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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FINAL TRANSCRIPT
November 8, 2012 – 01:00 p.m. E.T.
Martin Schwartz On the corporate side, the bulk of it, believe it or not, is a foreign exchange hit to our contingent liability. You know, we have a number of contingent liabilities with our partnership agreement, so those were… we have to take that into income as the exchange rates fluctuate. So that's the bulk of that. On the ‐ I mean, any SG&A… yeah, any SG&A expense is just an increase in brand building. As our business gets bigger and better, we continue to invest in our brands on the Recreational side. Derek Lessard Okay. Do you think it's a sustainable level at the 6 mil? You know, it grew 35 per cent. Martin Schwartz Oh, we also, I believe we had a gain last year as well. We had a small gain which would bring that… It's not going to be 35 per cent. Derek Lessard Okay. Martin Schwartz We had a small, one‐time gain. But there, you know, we do continue to spend more in that category, there's no question. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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November 8, 2012 – 01:00 p.m. E.T.
Derek Lessard Okay, fine. And just one final question on the Recreational Division. You mentioned strong shipments in the mass market. How did the trends look on the dealer side? Martin Schwartz You know, the dealer side is fine. I mean, we're strong everywhere. You know, we're not going to break down the two. They both look good for the year. Timing sometimes, you know, one gets… one… you have a stronger September, the other one will have a stronger October. But, you know, we're good. We're very confident on where we're going to finish the year in that segment. Derek Lessard Okay. Thanks, guys. Operator Your next question comes from the line of Anthony Zicha with Scotiabank. Your line is open. Anthony Zicha – Analyst, Scotiabank Hi. Good afternoon, gentlemen. Martin Schwartz Hi. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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FINAL TRANSCRIPT
November 8, 2012 – 01:00 p.m. E.T.
Anthony Zicha Martin, could you give us an idea – in the Juvenile segment we had 4‐per‐cent organic growth rate – how much of that growth rate was tied to Chile? And if we look at the drivers, what were the key drivers in the United States and in Europe? Jeffrey Schwartz Okay. Well, I'll answer that, Tony. First of all, none of the growth rate is Chile because, when we pull that, when we do organic, we didn't have Chile in Q3 last year. Anthony Zicha Okay, yeah. Jeffrey Schwartz So you know, I was going to say it before, but in Chile in itself, although we don't have the old numbers, you know, they grew at a nice gain. I don't have it in front of me, but their internal growth was significant over last year in Q3. So, but that's not included in our Q4. So that would be just other numbers, whether it be in Europe or the United States or Canada or wherever. And as far, what was the second question? Anthony Zicha What were the key drivers, let's say for the United States and Europe? Jeffrey Schwartz In the earnings or on the sales line? "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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FINAL TRANSCRIPT
November 8, 2012 – 01:00 p.m. E.T.
Anthony Zicha On the sales line. Jeffrey Schwartz Well, I mean, again, you know, it's listings, I mean, it's new products. Certainly in Europe we've got a number of successful products. In the States, you know, the retail scene is getting a little bit better. We did place a number of new products at the end of last year that are doing well. We've got a number of items that are doing well. Some, you know, business in general is picking up slowly, but it's picking up. You know, on the earnings side, a lot of it just has to do with, like I said, stabilizing that price point and our mix so that we're not out of whack like we were last year, where costs had just gone up so much and we weren't able to pass anything on. Anthony Zicha Okay, super, and my second question, with reference to the Recreational Leisure, so we did achieve an organic growth rate of 11 per cent. So how much of that would be tied to the IBD side, and how much of that would go to the mass channel? Martin Schwartz That's information that we kind of don't want to give out for competitive reasons. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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November 8, 2012 – 01:00 p.m. E.T.
Anthony Zicha Okay. So maybe make it easier, basically, you're saying that year to date it was flat, so which one was up and which one was down? Or both were equal? Martin Schwartz It was flat. I'm not sure what… No, they're both growing. They're both. Are you talking for the year to date? Anthony Zicha Yeah. Martin Schwartz They're both up. Anthony Zicha They're both up for…? Martin Schwartz Yeah. Anthony Zicha …year to date? Martin Schwartz We're growing both sides of that, yeah. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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FINAL TRANSCRIPT
November 8, 2012 – 01:00 p.m. E.T.
Anthony Zicha Okay. Okay, I'll get back in queue. Thank you. Martin Schwartz Okay. Operator Your next question comes from the line of Leon Aghazarian with National Bank. Your line is open. Leon Aghazarian – Analyst, National Bank Hi. Good afternoon. My question is regarding the inventory increase that you mentioned before. You mentioned it was primarily due to Recreation and Leisure. Is there a particular brand that, you know, that's the reason for that? And if so, do you already have the orders ahead of time, or it's more of an anticipation type of situation right now? Martin Schwartz You know, I mean, one of the areas that we're doing quite well in right now is the electric ride‐ons, which Civic Cycle sells. These are these… Jeffrey Schwartz The toy car. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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November 8, 2012 – 01:00 p.m. E.T.
Martin Schwartz Toy cars, you know, Mercedes. We have a Audi car, we have a number of cars like that. That's a real Christmas item, so we brought a lot of that in. I mean, they have orders for those. You know, a lot of that inventory too is stuff on the water. You know, it's not even necessarily going to hit our warehouse. But as long as it's on the water, we own it, so we have to put it into our inventory. So you know, there's a lot of that type of stuff, although there's, as well, there's I think every brand we have, we have inventory on, you know. So, yes. Leon Aghazarian Okay. And then, I mean, speaking of, you know, putting items on the water, I mean, what's the freight cost situation looking like? And then I guess secondly to that like the input costs you mentioned would be stable into Q4, so maybe a bit of colour on that, if possible, please. Jeffrey Schwartz Our freight costs throughout this year have been pretty stable. Most of our freight containers have been contracted right through the end of the year, some into the beginning of next year. And we're negotiating now for next year. So there'll be a little bit of an increase for next year, which we're aware of, which we're budgeting, you know, going forward. But it’s not big amounts. Leon Aghazarian Okay, and on the input cost itself, on the price of resin, do you see any type of swing happening? "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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November 8, 2012 – 01:00 p.m. E.T.
Jeffrey Schwartz It’s fairly stable. It’s fairly stable right now. There might be, you know, a movement of $0.01 or $0.02 a pound either way over the next few months, but we don't foresee anything serious. Leon Aghazarian Great. Thank you. Operator Your next question comes from the line of Mark Petrie with CIBC. Your line is open. Mark Petrie – Analyst, CIBC World Markets Yes, good afternoon. I just wanted to come back actually to the bikes business in the mass channel. And I think last quarter you had said that you felt like the mass channel was a little low on their inventory. Do you have a sense of, you know, the strength there, whether it's driven by restocking or whether it's sort of a pick‐up in sell‐through? Martin Schwartz Probably both. Certainly, we're back in inventory where we're able to ship everything. We also, like I said, you know, you don't ship a lot of these electric ride‐on toys, you know, in the spring. It's more of a Christmas item. So certainly adding that to the mix is helping us in this quarter. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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FINAL TRANSCRIPT
November 8, 2012 – 01:00 p.m. E.T.
Jeffrey Schwartz And the major mass merchants have all gone to layaway plans, you know, in the fourth quarter, and that has generated a lot more, I guess you'd call it POS sales. And that's why we've got the inventory for, you know, to back up this layaway system that they're running. Mark Petrie Okay. And then in terms of all the Juvenile brand extensions and product launches that you guys have in sort of Q3/Q4, you know, is there one that you're sort of more excited about? Or which one are you the most excited about? And which one are you putting the most sort of marketing support behind? Martin Schwartz Again, it's not universal around the world, Q3/Q4. You know, there's a couple of items in Europe that we're expecting to do really well. We have some car seats. In the U.S., we have, you know, I think the thing that's made the biggest impact for us… Now again, unfortunately the numbers were small, but it's still a major impact, is we've introduced an infant car seat called the Prezi, which is a high‐end product that we've listed in the United States in some very interesting places. It's mainly aimed at the independents, and we're actually not sure if it's on the floor yet, but in a number of high‐end department stores in the U.S. For the first time they're going to have a car seat. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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November 8, 2012 – 01:00 p.m. E.T.
So that's kind of… I guess we're excited because it's a bit of new ground for us. It's selling very well. We're doing, you know, we've got to rush back and we've got a lot of listings, and then the sell‐through's great, so we've got to rush back and get some more production made. But again, not hugely material to the numbers yet, but the idea that we're selling, you know, a very high‐end product in some new channels, and being successful at it, is pretty exciting for us. Mark Petrie Okay. Thanks a lot. Operator Ladies and gentlemen, if there are any additional questions at this time, please press the * followed by the 1. As a reminder, if you're using a speakerphone, please lift the handset before pressing the keys. Your next question comes from the line of Derek Lessard with TD Securities. Your line is open. Derek Lessard Yeah, guys, I'm just wondering where you're at in the roll‐out of the Fit System. Martin Schwartz Actually, there are… Some of the equipment is being delivered as we speak. So we're going first with 50 units, you know, spread out around North America as basically test units. They'll be installed into the dealers over the next several weeks. And from there, we'll have a much better "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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November 8, 2012 – 01:00 p.m. E.T.
idea of the next step and the next, you know, the next amount of quantities. And it's been very well received, and there is a demand from a lot of dealers for the product. Derek Lessard Okay. And Jeffrey, just too as a follow‐up on your inventory comment, did you say that you expect them to come down in Q4 closer to what it was last year? Jeffrey Schwartz Yeah. I think what we said was we're not going to make it all the way down to the opening inventory number, but we're going to be, I believe and I hope to be a lot closer to that number than where we are today. Derek Lessard Okay, thanks. Operator Mr. Schwartz, there are no further questions at this time. Please continue. Martin Schwartz Okay, thank you. Well, I want to thank everybody for joining us this afternoon. Obviously, we are pleased that Dorel's stock has appreciated some 35 per cent since we announced our Q2 results and doubled our dividend in early August. It is gratifying that investors have recognized our efforts. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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FINAL TRANSCRIPT
November 8, 2012 – 01:00 p.m. E.T.
Let me again assure you that we will continue to press for improvements throughout all of our divisions. At the same time, we look at potential acquisitions to make our businesses even stronger. This concludes our call this afternoon. I want to thank everybody for being with us, and have a pleasant afternoon. Operator Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines. ***** "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript
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