Dorel Industries (TSE:DII.A) narrowed its third-quarter loss as its Home segment returned to operating profitability and its Juvenile business improved earnings despite weak U.S. demand, executives said on the company’s Nov. 10 earnings call.
Revenue fell 7.5% to $276 million for the quarter ended Sept. 30, 2026, with the decline concentrated in Dorel Home as the company exited product categories and wound down its legacy home furnishings business. All figures discussed on the call were in U.S. dollars.
The company reported a net loss of $3.5 million, or $0.10 per diluted share, compared with a loss of $47.4 million, or $1.45 per share, a year earlier. Its adjusted net loss narrowed to $13.3 million, or $0.39 per share, from $29.8 million, or $0.91 per share.
Results included a net recovery of $7.7 million in restructuring costs, reflecting a gain on the sale of the Tiffin facility offset by employee severance and termination benefits, CFO Jeffrey Schwartz said. The sale generated $12.5 million in net proceeds and a $9.6 million gain.
Home restructuring improves margins
Dorel Home revenue fell 30.9% to $54.1 million as the company reduced non-core products and continued liquidating legacy inventory. Adjusted operating profit was $1.7 million, compared with an adjusted operating loss of $10.2 million a year earlier. President and CEO Martin Schwartz said the segment recorded an operating profit for the first time since the second quarter of 2022.
The segment’s reported gross margin improved to 16% from negative 17% a year earlier. Jeffrey Schwartz said lower overhead and higher margins in the core business more than offset minimal margins on sales of non-core products.
The CFO described the remaining Home operations as three pieces: a profitable Cosco business, a roughly break-even Notio business and a legacy operation that still carries costs including leases and employees. He said Notio was expected to become profitable next year as it takes on some larger U.S. accounts previously served by Dorel Home Furnishings.
Jeffrey Schwartz said the company was working to reduce its warehouse footprint through negotiations or subletting arrangements and expected progress sometime in 2027, without committing to a quarter. He described approximately $200 million as the right “ballpark” for annual revenue from the go-forward Home business.
Juvenile growth plans focus on U.S. products
Martin Schwartz said Dorel Juvenile generated $221.9 million in third-quarter revenue, up 0.8%, as growth in Europe and international markets offset pressure in the U.S. Adjusted operating profit rose to $12.1 million from $6.6 million a year earlier.
The CEO said Dorel had reorganized the U.S. product development team and transferred leaders from Europe to bring European processes and practices to the market. New U.S. products are expected to launch throughout 2027.
Jeffrey Schwartz said the launches would be weighted toward the second half of 2027. He said recent European product introductions had performed well and that management was focused on applying a similar approach in the U.S.
For the fourth quarter, Martin Schwartz said Dorel expects U.S. conditions to remain difficult, with pressure on consumer demand, retailer ordering and competitive pricing. Jeffrey Schwartz added that he expected supply-chain cost pressure in 2027 and said some freight contracts were keeping costs below market levels even as higher costs were affecting certain markets.
Tariff refunds and financing costs
Third-quarter gross profit included $9.6 million in IEEPA tariff refunds. Jeffrey Schwartz said much of the benefit supported promotions and offset negative foreign-exchange effects. He cautioned analysts against simply removing the refunds to calculate underlying margins, saying the company would not have spent as much on promotions without them.
Dorel expects additional refunds, but the CFO declined to estimate the amount or timing, noting that some claims had not yet been filed and were not guaranteed.
The company amended its financing agreement on Sept. 30 and was compliant with its financial and other customary covenants as of that date, Jeffrey Schwartz said. Of the $22 million in financing costs reported for the quarter, $13.2 million was non-cash. Asked about a future quarterly run rate, he estimated it would be closer to $18 million.
Jeffrey Schwartz confirmed that preferred share dividends were expected to continue being paid in shares for the foreseeable future. He characterized the current financing as expensive bridge financing and said Dorel’s goal was to eventually bring the Juvenile business to a point where it could be sold.
About Dorel Industries (TSE:DII.A)
Dorel Industries Inc. (TSX: DII.B, DII.A) is a global organization, operating two distinct businesses in juvenile products and home products. Dorel’s strength lies in the diversity, innovation, and quality of its products, as well as the superiority of its brands. Dorel Juvenile’s powerfully branded products include global brands Maxi-Cosi ®, Safety 1st¿, and Tiny Love ®, complemented by regional brands such as BebeConfort ®, Cosco Kids ®, Mother’s Choice, and Infanti ®. Dorel Home, with its comprehensive e-commerce platform, markets a wide assortment of domestically produced and imported furniture.
