Dorel Industries Q2 2026 Earnings Report

Dorel Industries EPS Results

• Actual EPS: -C$0.97
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Dorel Industries Revenue Results

• Actual Revenue: $354.48 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Dorel Industries Announcement Details

• Quarter: Q2 2026
• Date: 8/5/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 6, 2026
• Conference Call Time: 11:00AM ET

Dorel Industries (TSE:DII.A). (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 Kids ®, 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.

Dorel Industries Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Dorel Juvenile’s underlying profitability improved excluding foreign-exchange effects and restructuring costs, despite a 3.9% reported revenue decline. International markets—including Australia, Brazil, Canada, and other export regions—delivered robust growth, with Maxi-Cosi gaining the No. 1 car-seat position in Australia.
• Positive Sentiment: Management expects Juvenile earnings to improve in the second half, citing stronger U.S. sales in July, increased promotional activity, and several new product launches planned for the second half of 2026 and early 2027.
• Positive Sentiment: Dorel Home is being reshaped around Cosco, youth furniture transferred to Juvenile, and select profitable furniture distributed through Notio. Cosco was profitable in Q2 under the new model, while Notio is expected to contribute positively in the second half.
• Negative Sentiment: Consolidated revenue fell 14.7% to approximately $249 million, driven by the planned elimination of non-core Home SKUs and weaker U.S. Juvenile demand. Dorel Home still reported a $6.5 million adjusted operating loss, with warehouse leases and other legacy costs expected to weigh on results through at least the second half.
• Negative Sentiment: Finance expenses rose by $8.6 million to $17 million, although $5.9 million was non-cash. The company also remains exposed to tariff and freight-cost volatility, with more than half of Juvenile products still imported and management noting ongoing pressure from higher freight rates and input costs.

Presentation

[Operator]

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Dorel Industries Q2 2026 Results Conference Call. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. To join the question queue, you may press *1 on your telephone keypad. Should you need assistance during the conference call, you may reach an operator by pressing *0. 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 today, August 6th, 2026. I would now like to turn the call over to Martin Schwartz, President and CEO. Please go ahead.

[Martin Schwartz, President and CEO at Dorel Industries]

Thank you. Good morning. Thanks for joining us for Dorel's Q2 Earnings Call for the period ending June 30th, 2026. Today, we will review our Q2 performance, provide an update on strategic actions underway across the Dorel Juvenile and Dorel Home, and discuss how these initiatives are intended to improve profitability, simplify the business, and strengthen cash generation over time. With me today are Jeffrey Schwartz, CFO, and Jayson Kwasnik, Senior Vice-President, Finance. We'll take your questions following our comments. Please note that all figures mentioned during this call are in U.S. dollars. Dorel Juvenile delivered a resilient Q2, supported by strong international performance and continued momentum in its premium brands. While softer market conditions in the U.S. affected sales, the segment continued to improve underlying operating performance with growth across several key international markets.

[Martin Schwartz, President and CEO at Dorel Industries]

Ongoing investment in innovation, consumer engagement, and commercial execution continues to reinforce Dorel Juvenile's ability to navigate market challenges while strengthening its foundation for long-term profitable growth. As announced with our Q1 results, Dorel Home required a further reduction in its overhead structure. During the quarter, we advanced a new business model centered on Cosco product categories. In addition, our European furniture distribution company, Notio, will continue to supply key large retailers with select furniture SKUs.

[Martin Schwartz, President and CEO at Dorel Industries]

Although this transition resulted in a reduction in revenue in the quarter, we are very pleased that the Cosco business performed in line with expectations and was profitable under the new operating model. As always, Jeffrey will walk you through our results. First, I want to add color to our press release of today, starting with the Juvenile segment. Juvenile results included some significant year-over-year foreign currency variations.

[Martin Schwartz, President and CEO at Dorel Industries]

Those are excluded from the figures, the underlying earnings actually improved both in the quarter and year-to-date. This was in spite of some challenges in our major U.S. markets. Again, demonstrates the resilience of our business model. The smaller international markets continue to excel, leveraging our product engine, mostly the European line. We are winning in our smaller markets like Australia and our export markets. Maxi-Cosi continues to be the growth engine and has been established in many non-European markets as a preferred choice for consumers.

[Martin Schwartz, President and CEO at Dorel Industries]

The quarter reflected progress in several areas that are important to our long-term strategy: innovation, strengthening our brands, and expanding product credibility. While these highlights are not financial results in themselves, they are meaningful indicators of the underlying health of the business. We saw encouraging momentum across several of our key brands during the quarter.

[Martin Schwartz, President and CEO at Dorel Industries]

At the ABC Kids Expo in Las Vegas, Dorel Juvenile USA showcased innovation and upcoming product launches across Maxi-Cosi, Safety 1st, Little Seeds, and Tiny Love. This event provided an important opportunity to engage customers and partners, present new category initiatives, and reinforce the relevance of our portfolio in the juvenile products market. External recognition also reinforced the strengths of our product offering. Safety 1st received recognition for home safety and connected nursery products, including the 80-piece babyproofing kit and the smart humidifier.

[Martin Schwartz, President and CEO at Dorel Industries]

Maxi-Cosi also received recognition for its Embraced Forms crib and dresser, supporting the brand's expansion into the nursery category. Our focus remains clear: build trusted brands, deliver relevant products, strengthen execution with retail partners, and support the teams that make us successful. We believe these priorities position Dorel Juvenile to continue advancing its strategy and creating long-term value for stakeholders.

[Martin Schwartz, President and CEO at Dorel Industries]

At Dorel Home, as previously announced, we undertook a further comprehensive review of the Dorel Home business after the slow start in 2026. As a result, we have fundamentally reshaped the home segment around the businesses we believe offer the strongest long-term return potential. The new structure is built around three focused platforms, Cosco products, youth furniture under Dorel Juvenile, and select furniture opportunities supported by Notio. Throughout the restructuring process, Cosco has demonstrated resilience and remains the foundation of our home strategy. It benefits from strong retailer relationships, leading positions in functional living categories, and an operating model that can generate attractive profitability and supported by the appropriate cost structure. Importantly, the Q2 reinforced our confidence in this business.

[Martin Schwartz, President and CEO at Dorel Industries]

While Dorel Home overall remains burdened by legacy costs and restructuring activities, management's analysis show that Cosco itself performed in line with expectations and was profitable within the new operating model. The second component of our strategy is the transfer of youth furniture into Dorel Juvenile. This move leverages the natural connection between youth furniture, nursery furniture, and Dorel Juvenile's existing product categories. Importantly, this business will remain subject to strict profitability requirements. Growth will only be pursued if it can generate appropriate returns without recreating the overhead structure of the legacy home organization. The third element involves transitioning the remaining viable furniture activities to Notio, our Europe-based furniture division. Notio is a lean furniture distribution business that possesses extensive furniture expertise, strong sourcing capabilities, established retailer relationships, and a lower cost operating structure.

[Martin Schwartz, President and CEO at Dorel Industries]

The items being transferred to Notio to be sold in North America will be limited to active, profitable SKUs to start, and will be direct shipment sales or utilize third-party warehousing that do not require company-owned warehousing in North America. The dedicated home furniture organization has been further downsized, with certain retained activities integrated into existing platforms at Juvenile or Notio. These actions are expected to improve profitability, increase flexibility, and reduce risk going forward. I will now ask Jeffrey to review the financials.

[Jeffrey Schwartz, CFO at Dorel Industries]

Thank you, Martin. For the Q2 of 2026, Dorel's revenue decreased by $42.9 million, 14.7%. The organic revenue decline was 16.9%. The decline in revenue in Dorel Home was mainly due to the intentional reduction of active SKUs that are now considered non-core. This is a continuation of our policy to drive down the business to get it to the new format that Martin described. In Dorel Juvenile, the decline was mainly in the U.S. The revenue declines were partially offset by some robust double-digit revenue and organic growth in most of our export markets. Places like Australia, Brazil, Canada are doing the best they've done in years and years. We're pretty excited about that level of growth.

[Jeffrey Schwartz, CFO at Dorel Industries]

On the margin line, the gross margin decreased by $9.3 million or 18.7%, and that decreased by 80 basis points to 16.1% from 16.9%. However, excluding restructuring costs, the gross profit decreased by $5.1 million, but improved as a percentage from 21.5% last year to 23.1%. In Dorel Home, the decrease in the gross profit and margin is mainly due to lower sales, which we talked about, and a continuing sales of non-core SKUs at very low margins to help clean up and get us out of some facilities. We do, of course, have significantly lower overheads now, but that wasn't able to offset all of the margin pressure from the stuff I've mentioned before.

[Jeffrey Schwartz, CFO at Dorel Industries]

On the Dorel Juvenile side, the decrease in gross profit and margin in the Q2 was primarily driven by year-over-year significant negative foreign exchange impacts due to the U.S. dollar weakening against the euro in the Q2. Operating loss for Dorel was $24.3 million compared to $37.2 million, when you take out restructuring, the operating loss drops to $5.3 million. Furthermore, if you remove the impact of FX, we actually get a positive result of $1.5 million. From an FX standpoint, we had a loss, not a significant loss this year. However, there were some significant FX gains in Q2 of last year as the euro strengthened significantly against the U.S. dollar.

[Jeffrey Schwartz, CFO at Dorel Industries]

When you take the loss of this year and you add back or you take away the gain of last year, we would have been slightly positive. If we move over to Dorel Juvenile now, the Q2 revenue was $209 million, decreased by 3.9% versus last year. The organic revenue line was down a little bit more at 6.8%. The revenue and organic revenue declines were mainly in the U.S. market. In the U.S. market, we were driven by some softer category demand.

[Jeffrey Schwartz, CFO at Dorel Industries]

We did some reduced promotional activity compared to last year, the timing of certain programs with key customers. In addition, some of our competitors engaged in what we thought was extremely aggressive promotional activity across a number of categories during the quarter. That pretty much caused a lot of the decline in sales. The revenue decline described above was partially offset by double-digit revenue and organic growth, like I said, in our international area. Australia, Brazil, like I said, doing extremely well.

[Jeffrey Schwartz, CFO at Dorel Industries]

Australia's growth has now allowed our Maxi-Cosi brand to finally take the number 1 position in car seats in that country with the leading retailers. That's been a long time coming, and we're pretty excited about that. In Brazil, organic revenue growth was from every major product category and across all the brands. Both the export markets and Canada are all really working from the fact that our original plan of having all this distribution works really well when we have some great product being produced. A lot of the product that's leading to the growth is the product that's coming out of Europe, and allowing our various divisions around the world to really succeed.

[Jeffrey Schwartz, CFO at Dorel Industries]

While this used to be a very minor point of Dorel that wasn't really influencing our export business or businesses outside of Europe and the U.S., are actually starting to contribute meaningful dollars to the bottom line. From a gross profit, gross margin standpoint, the numbers decreased in the Juvenile by $4.7 million, declined by 110 basis points as a percentage down to 27.9%.

[Jeffrey Schwartz, CFO at Dorel Industries]

The decrease was really mostly part of the negative foreign exchange and some obviously lower sales in the U.S. That doesn't help us on that end. Partially offset by higher sales volumes and better mixes in most of the other markets around the world. From an operating profit, was $3.6 million during the quarter compared to $6.5 million. If we remove restructuring costs, adjusted operating profits declined by $2.7 million to an operating profit of $5.1 million.

[Jeffrey Schwartz, CFO at Dorel Industries]

Again, if we look with the FX adjustments in both periods, just the FX would have improved our earnings by $4 million. Again, that's mostly because of the large FX gain that we had in 2025 Q2. Switching over to Home. Again, very difficult to read a lot into the numbers. Sales are down significantly. Again, all of that is pretty much in the areas that we are just exiting the business. You see a decline of 46.4%. As I explained before, where that's coming from. The Home loss was $11.3 million in the quarter versus $23.9 and excluding restructuring costs, adjusted operating losses decreased by $6.3 million to an adjusted operating loss of $6.5. The other thing just I wanted to address was finance expenses during the quarter increased by $8.6 million to $17 million.

[Jeffrey Schwartz, CFO at Dorel Industries]

However, the cash portion of the interest was $11.1 million this year. A significant chunk of that, just $5.9 million is non-cash. That's an important thing. With that, I'll pass it back to Martin for the outlook.

[Martin Schwartz, President and CEO at Dorel Industries]

Okay. Thank you, Jeffrey. Dorel Juvenile enters the second half of 2026 confident in its strategic priorities and the strength of its global platform. Building on solid performance in key international markets, company expects improved earnings in both the U.S. and Europe, supported by significant new product launches. As an early indicator, U.S. sales improved in July, and we expect that trend to continue. Dorel Juvenile remains focused on sustainability, profitable growth, while further strengthening its position as a global leader in juvenile products. Dorel Home remains focused on executing its transformation strategy and building a simpler, more agile, and financially sustainable business. Supported by the continued profitability of Cosco and a stable European operation expected to contribute positively to earnings.

[Martin Schwartz, President and CEO at Dorel Industries]

The company is focused on eliminating legacy costs and scaling its most profitable platforms. With that, I'll ask the operator to open the lines for questions. Operator?

[Operator]

We will now begin the question-and-answer session. To join the question queue, you may press *1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please *2. We will pause for a moment as callers join the queue. The first question comes from Cheryl Zhang with TD Cowen.

[Cheryl Zhang, Analyst at TD Cowen]

Hey, good morning, Jeffrey. Thanks for taking our questions. I wanted to first start on the juvenile segment. I think in the MD&A, you noted that part of the U.S. sales decline was due to the timing of certain programs, with the key customers delaying sales to the second half of the year. I wonder if you could please elaborate on that. You also said U.S. sales improved in July. Can you maybe speak to what you're seeing that support a continued sales improvement in the second half, please? Thanks.

[Jeffrey Schwartz, CFO at Dorel Industries]

Well, the first part of your question, that's standard. There's roll-outs, there's programs that retailers run, and they're not always the exact same time of the year. I think that's more of a general issue. We looked at what programs we had all across in 2026 versus 2025 and see some of them have shifted to later in the year. I don't have a hard number for you on that. On the second question, yeah, we're getting a little more active in promoting, and we're seeing the results. We started in July, and we saw some instant results, particularly in some car seat areas that we're excited about. I think it's just that. It's some of the timing of the year. It's coming back.

[Jeffrey Schwartz, CFO at Dorel Industries]

It was a particularly tough quarter on the top line, and I feel good that things are getting back to where they should be in the U.S., and July is a good indication that we're on the right track for that.

[Cheryl Zhang, Analyst at TD Cowen]

Okay. That's helpful. Is it fair to say that the improvement is from the promotional activity that you're doing, but will we also be seeing the retail programs coming back as a tailwind in the second half?

[Jeffrey Schwartz, CFO at Dorel Industries]

I think that's the key. The real key, and this goes for all markets, is the actual introduction of the new items that we've been showing. That's different for all different markets. We have a couple of really great products that we're waiting on. I know in Europe, one of the great strollers that I'm very excited about is hitting in Q4, beginning of Q4, but that one's only hitting in the U.S. in the beginning of Q1. That particular item will have to wait three months more. That's a key thing in juvenile, right? Promotions are great, and they drive some big numbers, but you really move the needle when you've got new products introduced.

[Jeffrey Schwartz, CFO at Dorel Industries]

That's what we've been focusing on, and that's what's driven our business so well in Europe over the last two, three years and driven our international businesses. We're just really succeeding. We've got to get more of those introduced into the U.S. We do have some that are coming in Q3, and we have more in Q4, and we have quite a bit Q1 and Q2 next year. That's what's really going to drive meaningful numbers.

[Cheryl Zhang, Analyst at TD Cowen]

That's helpful context. Thank you. Maybe switching gears to Home segment. You introduced a new business model. I wonder if you could give us a sense of how much of that Home sales currently is under Cosco, and when should we be expecting the transfer of youth furniture from Home to Juvenile, and how much would that sales shift be between the segments?

[Jeffrey Schwartz, CFO at Dorel Industries]

Okay. Let me answer the second part first. Really what it is, I don't think you're going to see it per se. We've already moved the cribs over. As you know, that was about a year plus ago, maybe two years ago. Then the next logical step we're up is what we call youth furniture. Youth furniture would be bunk beds and beds for children's bedrooms as opposed to just babies' bedrooms. That's not a big, huge business. There's a couple of SKUs that we had, but it's just more of a focus. I don't think that's going to be a material number that you're going to see. On the flip side, your first question was about Cosco. Cosco represents about 70% of our business right now, with 30% being Notio.

[Jeffrey Schwartz, CFO at Dorel Industries]

I'm excited not necessarily about the business, but I think we've finally found our right footing. It's been a while. This is a business that's been tumbling. As you know, many businesses in this area have just closed up. We have closed a lot of that business that just couldn't make a go at, and we finally found a place where it makes sense. I think for you to think about it, this is how we look at it now, is we've got a Cosco business that was profitable in Q1, in Q2, sorry, not in Q1, will be profitable for the rest of the year. We need to grow that business. We need to do a lot of things, but we're no longer burning money there. We finally turned that one around.

[Jeffrey Schwartz, CFO at Dorel Industries]

The Notio business, which is already distributing furniture in Europe, will now add the U.S. to its model, that business will be profitable in the second half. The third piece, what I call it is the legacy costs. These are things that we're still paying for as we get out of the old business. We still have some warehouses we want to exit. We're looking to sublease most of those. Some of them are running out sooner than others.

[Jeffrey Schwartz, CFO at Dorel Industries]

We still have inventory in them that we need to sell. Some of that inventory is generating cash to pay for these legacy costs. Eventually, when those legacy costs are gone, and I don't have an exact date for you when they're all gone, because they will be reducing every quarter, then you'll see a profitable business again on the Home side.

[Cheryl Zhang, Analyst at TD Cowen]

Okay. Awesome. That's great color. Thanks so much. I'll requeue.

[Jeffrey Schwartz, CFO at Dorel Industries]

Okay.

[Operator]

Our next question comes from Stephen MacLeod with BMO Capital Markets.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Thank you. Good morning, guys. I just wanted to circle back around on the Dorel Home business, and I guess post the most recent business transition or restructuring. If you look at the revenue base from where we are now, can you sort of size up what the go-forward business will be in terms of the top line?

[Jeffrey Schwartz, CFO at Dorel Industries]

Let's see. I'm just getting some feedback from my people. Yeah, that's the number I thought. We're looking at an area under $200 million, just under $200, for I guess a forward-looking business over the next 12 months would be in that ballpark.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Yeah. Okay. That's helpful. I guess, just thinking about the more near term, how long are you expecting to see sales declines from these proactive exits? I would have thought we would be close to lapping it in Q2, maybe it's something that you expect to lap in the back half of the year?

[Jeffrey Schwartz, CFO at Dorel Industries]

I'm not sure I understand. You're talking about Dorel Home, I'm assuming?

[Stephen MacLeod, Analyst at BMO Capital Markets]

Yeah, the home business. Yeah.

[Jeffrey Schwartz, CFO at Dorel Industries]

Well, it's going to last for We've had a number of restructurings here.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Yeah.

[Jeffrey Schwartz, CFO at Dorel Industries]

What we've done is we've said, "Okay, we're going to eliminate all of this business and run with the remainder." Then we go into it and find out, well, part of that remainder business isn't really going to be profitable. What happens in most cases is, oh, it needs a lot of overhead to run it. We need to have warehousing to run that business, but the volumes aren't there. We've cut that back, and we've done a number of times. We've finally got to a point where we're saying, "You know what? This business works." Because now we're seeing it work as opposed to hoping it works. Therefore, I don't think we're going to cut anymore. Again, we still have inventories left to do that with.

[Jeffrey Schwartz, CFO at Dorel Industries]

The core 180-200, I think, if we can isolate that, you're going to see both growth in top line and bottom line there. It's difficult to figure out how fast you can get rid of the old stuff. We're trying every day.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Right. Okay. Understood. Then maybe just moving to the Juvenile segment. You talked about a lot of the promotional discounting and particularly the FX headwinds that weighed on the quarter. If we backed out FX and saw where you were on the adjusted operating profit line, is that sort of a good run rate for the go-forward business when you think about the back half of the year?

[Jeffrey Schwartz, CFO at Dorel Industries]

Well, yeah. Actually, I expect it to be better in the back half of the year. This was a tough quarter. We have orders and business going forward. The U.S. is picking up, and that was the only spot. The only spot in the whole world, actually. The only country, and again, we are very global, that had a tough quarter is the U.S. Everywhere else things are working pretty much to plan. I'll tell you, when we look at our internal business plan, every area except for two areas right now are expected to hit or exceed its plan. One is the U.S. and the other one is Chile, and we're dealing with that. Every other country, every other market is doing exactly what we thought.

[Jeffrey Schwartz, CFO at Dorel Industries]

With an improvement in the U.S. in the second half and improvements even in Europe, in the second half with a lot of the new stuff that's coming through, yeah, I'm pretty optimistic about the second half of the year in juvenile.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Yeah. Okay. That's great. Maybe just on the balance sheet. You had some commentary on the MD&A about some covenant relief that was given, including the restructuring charges as add backs or sorry, non-cash write downs, I suppose. Is that something that does continue into Q3, or is it very one time in nature, isolated to this period?

[Jeffrey Schwartz, CFO at Dorel Industries]

I hope that we're not going to see that again in Q3. We're working hard. Some of it is, again, write downs of, like you said, non-cash items that weren't forecasted for the quarter. That ended up being really what the covenant issue was. We've taken care of it, and it's good. We don't intend on having that issue again. It doesn't mean there's not more restructuring. I think we have some restructuring in our plan. I don't see these particular items. They've been written down to zero type of thing.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Yeah.

[Jeffrey Schwartz, CFO at Dorel Industries]

Close to zero, so they're gone.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Okay. That's great. Thanks, Jeffrey.

[Jeffrey Schwartz, CFO at Dorel Industries]

Okay.

[Operator]

Our next question comes from Cheryl Zhang with TD Cowen.

[Cheryl Zhang, Analyst at TD Cowen]

Hi. Just a couple follow-ups. Circling back to Home business profile, I guess on a go-forward basis, I think you mentioned that Cosco is profitable and Notio will be profitable, and then there's just some legacy costs from the business that you guys are still paying. I wonder, should we be seeing Home overall as profitable in the second half, or is the legacy cost still continuing that's weighing on profitability?

[Jeffrey Schwartz, CFO at Dorel Industries]

I think the legacy costs are going to continue to negatively impact it for at least the second half. Some of it's big chunks, right? Most of it, I'm going to say, is leasing of warehouses. We are in the market to get out of those as soon as we can. Getting the right deal could have a major impact on that sort of legacy number. I can't tell you which quarter we're going to start really seeing those legacy costs drop away, but they are getting less and less. Hopefully we can fund those with some of the inventory sales that we're doing as well. Getting back to it, we know what legacy costs we have, we don't exactly have the exit date on those legacy costs going.

[Cheryl Zhang, Analyst at TD Cowen]

Okay. Understood. Just on your manufacturing footprint, I know there's been quite some changes over recent quarters. Could you remind us of your current manufacturing footprint globally, in both segments, and how much of your sales is currently exposed to U.S. tariffs?

[Jeffrey Schwartz, CFO at Dorel Industries]

Okay. Let's start with, there's no manufacturing in Home, right? In fact, most of Cosco's business is what we call direct import. It goes directly from, we design the product, sell the product, and it goes to a factory in various parts of Asia. On the Juvenile side, we have a very large production facility in Columbus, Indiana. Which is a very key asset because that facility is not subject to the variabilities of tariffs, and allows both us and our customers to know that we're sort of got a good solid cost base. A percent of sales, I'm not sure. It would have to be of our U.S. sales, I would guess.

[Jeffrey Schwartz, CFO at Dorel Industries]

I don't have that right now, Cheryl. In addition, we do have a assembly manufacturing facility in Portugal, which sells a lot of the lower priced European products. We actually have an assembly facility in Brazil, which sells, again, the lower cost car seat products in the Brazilian market. It's more than 50% of our business is still imported. China is still in the Juvenile industry. China still is the largest player. Difficult to get out of China in the Juvenile. In Home, we've exited a lot from China, although again, they still play a key role. Look, today, here's the crazy part. Today, Brazil has a much higher tariff going into the U.S. than China does. Brazil produces furniture.

[Jeffrey Schwartz, CFO at Dorel Industries]

I don't think anyone predicted that or saw that coming. Again, there's huge variability here in what's happening with tariffs. I can get back to you with, I guess, the percentage of our manufactured goods on the Juvenile side.

[Cheryl Zhang, Analyst at TD Cowen]

That would be great. Thank you. Just lastly, I guess on the cost pressures, wonder if you can maybe elaborate on any impact that you're seeing from the higher fuel costs and what you're seeing in terms of other raw material cost inflation.

[Jeffrey Schwartz, CFO at Dorel Industries]

Yeah, there is definitely pressure. I think we have been managing it well. Certainly, freight rates are being pushed up, and we have a lot of contracts for stuff, so we are not as reliant on spot markets that go up and down. There has been less pressure from that point of view. Definitely things are moving up. We have done some price increases. As we get more and more into the higher-end goods, the Maxi-Cosi brand, price is not as difficult as when you have the lower-end goods that are sold in a discount market at a certain price point. That is particularly more in the U.S.

[Jeffrey Schwartz, CFO at Dorel Industries]

The U.S. would be more, I guess, exposed to the price increases. While I find that in other areas, Maxi-Cosi, if we have to raise the price because costs have gone up, that is a lot easier to do. Because Maxi-Cosi is becoming more and more important in Dorel's business and certainly dominates most of the European and international business, it is a little bit less of a challenge than it might have been five, 10 years ago.

[Cheryl Zhang, Analyst at TD Cowen]

That is very helpful. Thanks so much.

[Jeffrey Schwartz, CFO at Dorel Industries]

Okay.

[Operator]

This concludes the question-and-answer session. I would like to turn the conference back over to Martin Schwartz for any closing remarks.

[Martin Schwartz, President and CEO at Dorel Industries]

I just want to thank everybody on with us today to hear our story, and I just want to wish everybody a great day. Thank you.

[Operator]

This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Participants

Executives

• Martin Schwartz, President and CEO
• Jeffrey Schwartz, CFO

Analysts

• Cheryl Zhang, Analyst at TD Cowen
• Stephen MacLeod, Analyst at BMO Capital Markets