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Edited Transcript of DII.B.TO earnings conference call or presentation 8-May-20 5:00pm GMT

Q1 2020 Dorel Industries Inc Earnings Call

Montreal May 29, 2020 (Thomson StreetEvents) -- Edited Transcript of Dorel Industries Inc earnings conference call or presentation Friday, May 8, 2020 at 5:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Jeffrey Schwartz

Dorel Industries Inc. - Executive VP, CFO, Secretary & Director

* Martin Schwartz

Dorel Industries Inc. - President, CEO & Director

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Conference Call Participants

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* Chris Kawasoe

RBC Capital Markets, Research Division - Senior Associate

* Derek J. Lessard

TD Securities Equity Research - Research Analyst

* Stephen MacLeod

BMO Capital Markets Equity Research - Analyst

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Presentation

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Operator [1]

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Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Dorel Industries' First Quarter 2020 Results Conference Call. (Operator Instructions)

Before turning the meeting over to management, please be advised that this conference call will contain statements that are forward-looking and are 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 today, May 8, 2020.

I'll now turn the conference over to Martin Schwartz, President and CEO. Please go ahead.

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Martin Schwartz, Dorel Industries Inc. - President, CEO & Director [2]

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Thank you. Good afternoon, and thank you all for joining us for Dorel's earnings call for the first quarter ended March 31. Joining me today are Jeffrey Schwartz, CFO; and Frank Rana, VP of Finance. We will take your questions following our comments. As always, all numbers are in U.S. dollars.

First, let me say, I hope all of you have been keeping well and safe during this unprecedented crisis. Our priority at all Dorel operations, of course, has been the health and welfare of our employees. We quickly instituted additional safety measures at our facilities around the world, and like you, many of us have been working from home.

By mid-March, COVID-19 had brought the global economy to a grinding halt as lockdowns and stay-at-home orders were enforced almost everywhere. Like most companies, Dorel has been affected, although many of our products have remained popular with consumers who are able to purchase in stores where open.

Online shopping has filled the gap in a major way. We're confident we're in a good spot as the economy recovers. Both Dorel Home and Dorel Sports have been experiencing strong demand since the virus hit as our value priced home furnishing and bicycles have proven popular with consumers during these special times. However, Dorel Juvenile has been negatively impacted, primarily due to retail store closures. As well, with fewer people driving, sales of car seats are down materially. We believe these purchases have been deferred, but not canceled. Actually, in the past several weeks, there has been improved sales at retail.

Another priority has been Dorel's focus on liquidity and inventory reductions. As well, every one of our divisions is taking a microscope to all expenses to maximize cash flow. As of March 31, Dorel was compliant with all its financial covenants.

Turning to our 3 segments. Dorel Sports revenue was up for the fourth straight quarter, but the pandemic interrupted the momentum and eroded approximately $6 million in Q1 operating profit. With COVID-19 hitting first in Asia, many of the bicycle factories we deal with there were forced to close in February for 4 to 6 weeks, reducing supply. Since lockdowns were ordered, demand has remained strong, but there are some constraints in realizing sales as many countries have not yet allowed retail operations to resume, although this has recently started to change.

In-store POS levels on bikes, parts and accessories and even ride-ons have been very strong. E-commerce sales have also seen growth. At CSG, the impact varies by region. Some of the larger sporting goods outlets remained shut, although e-commerce sales have been filling the void. By the end of April, many of the CSG dealers that had been shuttered in Northern Europe had reopened, while most in the southern countries remain closed. Europe did well prior to the closures, with e-bike and road category sales up strong double-digits thanks to several new model launches, including e-urban bikes.

There has been a silver lining in this pandemic cloud. Families who have been cooped up at home are now getting out to escape the lockdown and enjoy the improving weather. The desire for physical and mental health wellness, which has never been greater, are all factors in the significant increase in bike demand, which is stronger than pre-virus. And this is not going unnoticed. Media have been reporting that the bike industry has experienced a surge in recent weeks as people are itching to get some fresh air and exercise, while others are using bicycles as a mode of transportation to avoid public transit. Many cities around the world are closing additional traffic lanes to give cyclists and pedestrians more space, and some cities temporarily or permanently expanded their cycling infrastructure. This all bodes well for the bike industry. The second quarter outlook for Dorel Sports is for sales to remain strong at mass retailers and online, both experiencing solid increases.

Pacific Cycle's POS increased significantly throughout April versus last year, and CSG North America is expected to deliver sales growth. European revenues and Caloi sales are anticipated to decline only because lockdowns are continuing across Southern Europe and at key customers in Brazil. While demand is high, Q2 sales will be dependent on inventory availability due to the earlier factory lockdowns in Asia. Short-term supply is tenuous, although we are doing what we can to mitigate the issue. Despite this and continued store closures affecting distribution, a return to profitability is expected during the second quarter.

At Dorel Home, COVID-19 created a shift in product sales and consumer buying habits. With so many in lockdown by mid-March, online shopping exploded with consumers seeking the segment's value priced furniture. People stuck at home 24/7 with not much else to do started cleaning and remodeling, and they started buying online. Items such as home office furniture and entertainment units have done especially well. Dorel Home branded sales, such as Cosmo and Novogratz, maintained their upward trend with substantial year-over-year increases. In addition to this group is a new line of Netflix Queer Eye branded products, which is expected to support the segment's margin improvement plan.

Supply was an issue earlier in the quarter. As of early February, Chinese and other Asian suppliers were unable to deliver due to widespread plant shutdowns forced by the pandemic. This resulted in decreased product and hence, lost sales from many of Dorel Home's customers, which lasted until the first half of March. Shipments began to recover in mid-March as Asian suppliers came back online and domestic sales started to rebound.

Looking to the second quarter for Dorel Home, April shipments from online buying have been extremely strong in response to consumers' needs during the prolonged stay-at-home period. Some products planned for Q3 shipping are going out now due to the elevated demand. We expect this trend to continue at most divisions due to an even bigger shift to online shopping and strong government support programs. We will likely see some out of stock challenges through May due to demand, but inventory levels should improve in June. Lower warehouse and logistics expenses are expected to further reduce operating costs, also contributing to improved second quarter earnings.

At Dorel Juvenile, the negative impact of COVID-19 was substantial due primarily to store closures and lower demand across most markets as well as supply issues out of China earlier in the quarter. Combined first quarter lost sales due to the pandemic are estimated at $24 million. Europe was on plan through February as new products were performing well. However, these gains evaporated as the pandemic took hold and retail store closed in almost all markets.

U.S. sales, which were good until mid-March, were also below expectations due to the overall market downturn. In Chile and Peru, all our company-owned retail stores were also closed in March. The supply chain interruptions, which began in February, have been largely resolved as Dorel Juvenile's China-based factories and other China-based suppliers were mostly back in operation in mid-March. In North America, where larger brick-and-mortar outlets remained open, the negative sales impact was due to the massive imposed pause as many could not get out to shop. The core Juvenile categories of car seats and strollers suffered as no one was traveling anywhere. We believe these purchases have only been deferred. However, products used in home, such as health and safety aids, walkers, gates, highchairs, all sold well through the quarter.

In Europe and South America, the sales impact was much more substantial. Smaller stores, the largest distribution channel, particularly in Europe, were forced to close. While there was an increase in online sales in most markets, sales in Europe were further limited as baby stores were deemed nonessential and Juvenile products were also deemed nonessential in certain countries and thus, online purchases could not be delivered. As for Juvenile's 2nd quarter, April sales were substantially lower as limitations on consumers' movement and retail operations remained in place in most markets.

But as lockdowns ease in various jurisdictions, we are seeing increased sales and the deferred sales of car seats are picking up. Recent customer POS in the U.S. shows increased sales of underperforming categories, and we foresee continued demand due to the catch-up of the deferred purchases. Travel strollers sales will likely take longer to come back as travel still seems like a distant thing.

As restrictions and lockdowns are further eased going forward, we believe Dorel Juvenile will be in a good position relative to our competition. The segment has a broad product portfolio, sells across all price points, has a best-in-class supply chain as well as advanced e-commerce capabilities, which allow them to keep pace with expected growth in this channel. With the long-standing trust of Safety 1st brand and the added importance through this infant health and safety category, we feel our products will now resonate even more with parents.

Nonetheless, the expected continued store closures will result in second quarter weakness. Significant second half improvement is expected based on the full reopening of retail stores, the launch of new products and a further catch-up of deferred purchases. Considering how the worldwide situation of the COVID-19 pandemic is negatively affecting many businesses, we remain optimistic for the second quarter for Dorel in general.

I'll now ask Jeffrey to provide the financial perspective. Jeffrey?

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Jeffrey Schwartz, Dorel Industries Inc. - Executive VP, CFO, Secretary & Director [3]

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Thank you, Martin. I'm going to do a rather quick update on Q1. All our numbers are in the press release. And then during questions, I'm sure we'll be talking a lot more about the future.

So obviously, during the first quarter, the global economy and financial markets were impacted by COVID-19 outbreak as it spread around the world. Dorel's 3 segments were adversely impacted during the quarter due to the closures of manufacturing facilities, the prolonged closing of stores of many of Dorel's customers around the world and disruptions in our supply chains and to a point in our own factories, a reduced workforce productivity.

Just going to highlight, we did have an impairment loss on goodwill of $43.1 million during the first quarter in connection with the Dorel Juvenile Europe unit due to reduced earnings and cash flow projections and higher risk-adjusted discount rates in light of the economic uncertainty caused by the pandemic.

As explained, the reported net loss for the first quarter and the comparable periods included impairment loss on goodwill, restructuring items. As such, I'll be discussing adjusted financial information as we believe the adjusted financial information provides investors with additional information to measure the company's financial performance by excluding the items that we don't believe are core to the business performance, and it will provide better comparability between the periods presented.

So first quarter revenues decreased $44.8 million or 7.2%. Again, much of that decrease was the last few weeks of March. Organic revenue declined by about 6% after removing the variation of foreign exchange year-over-year. The revenue and the organic revenue declines were in Dorel Juvenile and Dorel Home, offset slightly by some improvements in Dorel Sports. In Dorel Home, the decrease in the brick-and-mortar channel was partly offset by increases in e-commerce. And in the Juvenile, most markets were impacted by supply chain distribution and then lower demand at the latter part of March.

And then we touch on -- the finance expenses increased $5 million to $15.3 million compared to $10.3 million in the quarter. This increase is mainly explained by a loss of $3.7 million recorded during the quarter in connection with the modification of the senior unsecured note agreement and as well $2.3 million by just the average long-term debt balances were higher and the average effective interest rates compared to last year were higher as well.

During the quarter, the net loss was $57.8 million or $1.78 per share compared with $8.3 million or $0.26 per share. However, when you exclude the impairment loss on goodwill and restructuring, adjusted net income for the first quarter declined by $19.4 million to the adjusted net loss of $13.6 million or $0.42 a share loss compared to net income of $5.8 million or $0.18 last year.

If we go to the segment now, Dorel Home was certainly an up and down quarter. We had a very good January, a very poor February as the factories in China closed and we were not able to get orders shipped to our customers. And then by the second half of March when the pandemic hit, we saw a rise in sales, which has continued through into Q2. Again, a lot of that is e-commerce. Although we did see brick-and-mortar in Q1 down, but by the end of the quarter we started to see that going up. The operating profit for Dorel Home declined by $4.2 million or 28.8% to $10.3 million for the first quarter from $14.5 million. The decline was mainly due to some lower gross profit, partially offset by cost containment and operating expenses, as explained.

Over in the Juvenile, first quarter revenues decreased by $35.1 million or 15.2%. Organic revenue declined by 14% after removing the impact of varying foreign exchanges. Most of the segment's markets reported sales declines, supply chain disruptions from China, and lower demand due to the COVID outbreak negatively impacted the segment as well as, of course, all the stores, particularly in Europe, that closed down. The revenue decline was partially offset by an increase in online sales in most markets because of the stores that were closed.

If we look at -- so the gross profit was lower. The lower volume absorption of fixed overhead costs resulted from a decrease in revenue due to the impact of the COVID. But the strengthening of the U.S. dollar against all major currencies also contributed to an increase in cost of sales. That was a big event. The U.S. dollar, when this started to happen, the U.S. -- with all the uncertainty, the U.S. dollar got significantly stronger, and that hurt us in various markets around the world. And that had, again, a large impact on the quarter. I spoke about the impairment on goodwill, again, $43.1 million noncash. Therefore, the operating loss was $46.2 million for the quarter compared to $7.1 million in 2019. Excluding loss on goodwill, adjusted operating profit declined by $9.1 million to a loss of $1.9 million.

Over in Sports, the first quarter, Dorel Sports revenue increased by $3.6 million or 2%. When excluding the impact of the varying foreign exchange rates, the organic revenue actually improved to 4.3%. Dorel Sports revenue and organic revenue improved for the fourth consecutive quarter. During the quarter, the gross profit declined by 230 basis points to 19% from 21.3%. The decline was mainly explained by, again, by the impact of foreign currency fluctuations, particularly at Caloi in Brazil, where the Brazilian real has weakened significantly against the U.S. dollar since the beginning of this year.

So overall, the operating loss in the quarter was $600,000 compared to a profit of $4.5 million. The decline is mostly due to lower gross profits because of foreign exchange and a higher impairment loss on trade receivables recorded during the first quarter, which we did in light of the pandemic. The third part of what caused all that was the initial reduction in orders that happened when COVID hit. A lot of retailers got nervous, a lot of even North American retailers shifted to essential purchases, and bikes were not considered to be essential during that period. That, of course, changed as April went on.

A few other notes. Cash and cash equivalents increased by $107 million in the quarter. We increased it to $146 million at the end of March compared to $39.1 million at the end of December, while long-term debt increased by $111 million versus at the end of the year. The increase in the debt resulted mainly from Dorel drawing down funds on its revolving bank loan credit facility, improving its liquidity position during COVID pandemic. The increase in Dorel's debt level resulted from the management's strategy to maintain additional cash on hand and liquidity to meet the obligations during the current economic downturn. So what all that meant was the initial reaction at Dorel was to preserve liquidity and make sure we can make it through Q2 and Q3. When all this hit, nobody knew what was going to go up and what was going to go down, where the demand would be, where we'd be able to supply, and we did everything we could to organize a plan to maintain good liquidity through the quarter. As it turned out, we have good sales. We have good profitability. And therefore, liquidity is not an issue for Q2 for sure.

So with that, I'm going to pass it back to Martin, and we'll answer some questions.

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Martin Schwartz, Dorel Industries Inc. - President, CEO & Director [4]

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All right. Thank you, Jeffrey. With that, I'll now ask the operator to open the lines for questions. (Operator Instructions) Operator, please.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from Sabahat Khan with RBC Capital Markets.

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Chris Kawasoe, RBC Capital Markets, Research Division - Senior Associate [2]

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It's Chris on for Saba. Are you able to share some additional color on the amendments that you've made to your covenants, including how far out the amendments have been affected for?

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Jeffrey Schwartz, Dorel Industries Inc. - Executive VP, CFO, Secretary & Director [3]

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Not a lot of color there. I mean what we did was we took an initial -- to get through the first quarter until we have some stability. We, in fact, have more stability than we had at the end of Q1, and we'll be going back to adjust covenants. Now that we have some vision, it was very difficult to get long-term covenant relief from the banks until there was a vision as to where the businesses were going. That vision is much clearer, although, again, lots of uncertainty, but we have a vision now. We didn't have a vision back in the end of March when this all started. So we will be going back. I have good confidence based on the numbers we're seeing so far in Q2 and the outlook for the rest of the year that we should be okay.

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Chris Kawasoe, RBC Capital Markets, Research Division - Senior Associate [4]

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Okay. Great. And then turning to the eventual reopening of retail stores. What are your expectations in terms of rebuilding inventory levels? And how do you expect that will impact working capital going forward?

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Jeffrey Schwartz, Dorel Industries Inc. - Executive VP, CFO, Secretary & Director [5]

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There's 2 questions there. Retail stores in Europe -- it's primarily in Europe and South America that the retail stores that we sell to have affected us. The opening of shops on the bicycle side should be good. We do have European inventory. It's quite solid, so I'm not concerned about the European inventory. And on the Juvenile side, our inventory should be fine as well. So the opening of shops and the inventory levels are not really connected. We'll be fine with the opening of shops.

Where the inventory is more of a concern is where the shops have been open and where we do a lot of e-commerce, and that's mostly North America. So that's where demand has been significant, and there was 6 weeks of supply issues. So between the 2, we are running short -- in the home side, we're running short of a number of items, although I expect to be in much better condition vis-à-vis our in-stock positions by the end of the quarter. But nevertheless, we still have very, very strong sales in April, which has led us to this issue. But we won't take that long to get back into stock on the home side.

The bike side is a little different. The bike side, again, this is an industry issue. So Dorel had a lot of inventory, and we've been able to deliver a lot of bikes so far. But that's not going to stay that way throughout the whole quarter. We are getting a lot of bikes in. There's no question. But I still think for the short term, demand is going to outstrip supply.

So we're expecting a very good quarter. But I think the message is, it could have been a lot better had we had all the inventory that we needed, but there's no one in the industry that had all the inventory. It's not across the board in bikes. It's more on the lower-priced bikes. We don't see a lot of demand for $10,000 bikes right now but certainly the lower price points, a lot of demand. We had a lot of bikes. We weren't that short coming into the season, but demand is just incredible right now on bikes, and we're doing the best we can. But it will be the summer before we're probably back in stock.

And as far as where that leaves us, again, we've lowered our inventory significantly since the end of the quarter. We probably won't lower it much more than it is today as we can get more stuff in. We'll have to see. We're able to move a lot of sort of slow-moving bikes, not just bikes, slow-moving inventory in all 3 sections. We were able to move some of that out, so we don't have to, obviously, we don't replace that. We're focused on the current in-line models and current in-line products. So we're going to come out with a much cleaner inventory out of all of this. And I don't have a projection yet. I don't anticipate working capital will go up significantly. We've got a lot of systems in place. Last year was a real aberration. It caused a lot of pain on our balance sheet. We started cleaning that up in Q4, continued in Q1. And by now, I think we're sort of at the bottom here in Q2. And we'll build up from there, but it probably won't be until the end of the year.

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Operator [6]

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Your next question comes from Stephen MacLeod with BMO.

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Stephen MacLeod, BMO Capital Markets Equity Research - Analyst [7]

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I was just wondering if you could provide a little bit of color. You talked about April sales being strong in Home and Sports and maybe down in Juvenile, but I'm just trying to get a sense of what magnitude you're looking at. You talked about like significant growth on the bike side. Are you able to give a little bit of color around kind of what that means for all 3 segments?

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Jeffrey Schwartz, Dorel Industries Inc. - Executive VP, CFO, Secretary & Director [8]

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Well, the POS, which is what is being sold through the stores, is significantly outstripping our ability to deliver. So demand, we've talked a lot about demand. So demand is triple digits on bikes. Having said that, our sales will be -- where we're open, our sales will be much higher. But you've got to remember that there are places in the world that we sell bikes that aren't open at all yet. I mean, although it's funny how fast things move. Martin realized that Martin's speech was written a few days ago. And since then, countries in Southern Europe have already opened, like Italy has opened its bike shops.

So again, Europe will probably be down in bikes just because of that. So it's difficult to give you where our numbers are. We're going to have a solid, solid quarter profit-wise and sales-wise, but it's difficult to give you a number because we're limited by, again, which stores are open and which bikes we are able to ship given -- keep in mind, 6 weeks of no delivery or very little delivery of bikes because of the COVID that started in February in China affected our supply. So that's going to affect Q2. And limit the upside, I guess, is the key message here. Not going to damage the quarter from a profitability point of view, but it's limiting the upside.

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Stephen MacLeod, BMO Capital Markets Equity Research - Analyst [9]

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Okay. That's helpful. And how about -- maybe can you give the same color for the Home business?

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Jeffrey Schwartz, Dorel Industries Inc. - Executive VP, CFO, Secretary & Director [10]

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Yes. The Home business will be up. We're expecting a very strong quarter, again, running out of a lot of key items in the month of May. Our in-stock positions with retailers are definitely down now. We did have a lot of inventory, as you know. That's coming down. The lead times are shorter, thank God, than bicycles. So we're hoping to have -- we have a strong April, May will be a little lighter and a strong June. We think the demand here is going to stay for a while because of a couple of things. One, if this is a slow process in which people stay home, people staying home are redecorating. We have the right price points, the good value price points, so we see that as a positive.

There's obviously a recession. We're in line. It's going to stay for a while. Again, previous recessions, Home business has done well. So we think we've got the right business for the rest of the year, for sure, but there will be some supply, not challenges on the supply, but keeping up with the demand. It shifts. I mean, obviously, the first thing people went to were office desks for the house. Home office furniture was very strong. So that's something we've been going after. But since then, everything's picked up. I mean, everything, all types of furniture are popular today. I guess people are spending a lot of time at home. So it's going to be a strong quarter, Q2. It could have been even better if we knew what the demand was going to be.

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Operator [11]

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(Operator Instructions) Your next question comes from Derek Lessard with TD Securities.

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Derek J. Lessard, TD Securities Equity Research - Research Analyst [12]

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I'm definitely seeing anecdotal evidence of strong bike sales at the IBD level. Just wondering how it's looking for you guys on the mass side.

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Jeffrey Schwartz, Dorel Industries Inc. - Executive VP, CFO, Secretary & Director [13]

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The mass side is much stronger than the IBD because of the price points.

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Derek J. Lessard, TD Securities Equity Research - Research Analyst [14]

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Okay. No issues in terms of supply chain or --?

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Jeffrey Schwartz, Dorel Industries Inc. - Executive VP, CFO, Secretary & Director [15]

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Yes. I mean, that's where the real supply issues are. It's hard to find bikes in the stores. These are the lower-priced bikes people are going out to do stuff with their family. A bike is a natural social distancing vehicle, right? So people want bikes. They might not want to have a $5,000, $10,000 bike. So the mass has become very, very busy as well as the sporting goods channel.

And like I said, we had a lot of supply. We had all the supply we needed, plus a good reserve. And a lot of that has been sold, and now we're waiting for -- which we're getting in now. The bikes that have come out of the factory since they've reopened from COVID, those are starting to come in now. There has been some supply issues in the industry, too, with some component suppliers having their facilities closed even longer. So that's caused some delays. So the supply story is not pretty. We had a lot of inventory, which we're using now. We're going to be, for sure, by the end of this quarter, at record-low inventories in our bike business. We're going to build up, not to the same level. But yes, the demand there has been very strong.

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Derek J. Lessard, TD Securities Equity Research - Research Analyst [16]

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Okay. That's helpful. And I guess from an e-commerce perspective, just wondering if those channels across your various segments are more than offsetting the declines that you're seeing at the bricks and mortars.

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Jeffrey Schwartz, Dorel Industries Inc. - Executive VP, CFO, Secretary & Director [17]

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I don't like to put names out on this call, as you know. But there's one very good sized account whose stores are closed and whose business is better than last year. Their online business is covering all of last year's brick-and-mortar as well as putting it ahead of last year. And they're doing it all with the stores closed. So yes, people have done that. And in some places like Europe for baby products, I mean, that's the only way pretty much to get a car seat or a stroller today is online.

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Derek J. Lessard, TD Securities Equity Research - Research Analyst [18]

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Right. But you did mention that it was deemed nonessential. Has most of that business opened up?

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Jeffrey Schwartz, Dorel Industries Inc. - Executive VP, CFO, Secretary & Director [19]

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In a few countries, there were certain retailers, figure out the large ones, who were told to focus on essential and not sell nonessentials, even online. That wasn't across the board. It wasn't every country, but in a number of countries that was. So yes, I mean, Juvenile is a touch business. And I think long term, it's going to be fine. I don't see long-term negative effects. But this quarter is really tough, although getting better, like Martin said. We have 2 out of the 3 businesses are doing well. And one of them, we're doing everything we can to minimize any cash burn in that business.

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Derek J. Lessard, TD Securities Equity Research - Research Analyst [20]

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Okay. And maybe just one last one for me. And so wondering, and again, it's in relation to the balance sheet and liquidity. I was wondering if you anticipate a need to eventually to need to recapitalize the balance sheet at some point once the COVID smoke clears.

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Jeffrey Schwartz, Dorel Industries Inc. - Executive VP, CFO, Secretary & Director [21]

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Yes. I would think we're going to have a look at it. I mean we are at a point where we see our debts going down. We're sort of seeing that now as we remove significant inventory from the system and turning it into cash. And our balance sheet is in a better place. We will have a relook at it later in the year when things calm down. Right now, going out to the market to recapitalize, there's very little that we can do. And fortunately, we don't have to do right now, so that's the good news. But I wouldn't tell you that our balance sheet is set up for the long-term right now.

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Operator [22]

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Your next question comes from Sabahat Khan with RBC Capital Markets.

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Chris Kawasoe, RBC Capital Markets, Research Division - Senior Associate [23]

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Just one housekeeping item. We noticed that the corporate expenses were down about $4.5 million in Q1. Was that related to the previous restructuring initiatives in Europe or was there another driver for that decrease?

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Jeffrey Schwartz, Dorel Industries Inc. - Executive VP, CFO, Secretary & Director [24]

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No. A lot of that was removal of bonuses that would have happened. We have done some salary adjustments downwards, have done some cost-cutting looking forward. And then we've removed -- as of the end of Q1, it didn't look like we're going to hit the plan for bonuses, so that's been removed as well.

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Operator [25]

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There are no further questions at this time.

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Martin Schwartz, Dorel Industries Inc. - President, CEO & Director [26]

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Okay.

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Jeffrey Schwartz, Dorel Industries Inc. - Executive VP, CFO, Secretary & Director [27]

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Okay.

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Martin Schwartz, Dorel Industries Inc. - President, CEO & Director [28]

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Okay. Well, that concludes today's call. I want to thank you all for being with us. Okay. I want to wish all of you a good Mother's Day weekend, and above all, stay safe. Thank you.

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Jeffrey Schwartz, Dorel Industries Inc. - Executive VP, CFO, Secretary & Director [29]

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Thank you.

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Operator [30]

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Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.