Dorel Industries Inc.

Good morning, ladies and gentlemen. Thank you for signing by. Welcome to Durell Industries' fourth quarter 2025 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 star then one on your telephone keypad. Should you need assistance during the conference call, you may reach an operator by pressing star then zero. 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 call is being recorded today, March 11, 2026. I would now like to turn the call over to Martin Shorts, President and CEO. Please go ahead.

Thank you. Good morning and thank you for joining us for Darrell's fourth quarter earnings call for the period ended December 30th, 2025. With me today are Jeffrey Schwartz, CFO, and Jason Kwasnick, Vice President of Finance. We'll take your questions following our comments. Please note that all figures mentioned during this call are in U.S. dollars. Darrell Juvenile delivered strong performance in 2025, demonstrating resilience amid ongoing tariff-related pressure in the U.S. and mixed market conditions globally. While these external factors moderated revenue growth, improved margins and disciplined cost management contributed to an 84.7% increase in adjusted operating profit for the year. Fourth quarter results were marked by a return to growth in the U.S., coupled with exceptional results in Europe and across several international markets. Innovation across core categories, particularly rotating car seats and maxi-cosy products, continues to support the segment's competitive positioning. These results underscore the benefit of the REL Juvenile's diversified geographic footprint and the segment's ability to execute in a challenging operating environment. During the fourth quarter, the REL Home operated a lower sales environment, reflecting constraint product availability. deliberate SKU rationalization, and the final stages of its restructuring plan. Notwithstanding these pressures, the segment advanced its operational initiatives, including cost reductions associated with facility closures, workforce actions, and administrative consolidation. Adjusted operating loss improved year over year in the quarter, reflecting the benefit of a reduced cost base. With the conclusion of our major restructuring activities and a disposition of non-core inventory near complete, the REL Home enters 2026 with a streamlined operating footprint and a simplified business model intended to support improved execution and performance. As always, Jeffrey will walk you through our results, but first I want to add color to our press release, starting with the juvenile segment. At Juvenile, throughout 2025, our international footprint allowed us to offset challenges in the U.S., principally due to the uncertainty around tariffs and increasing retail price points. In prior conference calls, I articulated how well we were doing with our divisions in Australia and Canada and other export markets, and this continued into the fourth quarter. And in Chile, Peru, our operations were profitable in the fourth quarter for the first time since 2022, as the team adjusts the business model to full omnichannel capabilities. But in the fourth quarter, we are particularly pleased by the results of our U.S. operations. As previously disclosed, revenues in the U.S. until the end of the third quarter were actually down versus prior year. But this reversed in fourth quarter, and we posted a small single-digit increase. The increase came from our traditional retail partners as we successfully reset modular items and introduced new items and price points. We had strong e-commerce sales, including our own direct-to-consumer fulfillment. Traditional car seat models like the Scenera, the Grow & Go, and the Finale did well and did new introductions that hit key price points supported by targeted promotional activities. Our opening price points PricePoint strollers did well, and Maxi Cosi continued its growth path in the US. This all illustrates clearly how our multiple PricePoint brand strategy allows us to compete from opening to high-end categories, and we did so with improved margins. And finally, in Europe, despite a slight decline in revenue, we gained market share and delivered improved earnings in the quarter. We are taking business from our competitors our competitors, and our product line is as good as it has ever been in Europe. Fourth quarter in general is quiet in terms of customer events, but I do want to call out a few highlights in certain markets. In Chile, Infante was named number one juvenile retail brand for the third consecutive year, according to the Omnichannel Index 2025 by Altivo. This achievement reflects the team's continued commitment to omnichannel excellence and digital transformation, reinforcing Infante's leadership position in the Chilean market. In Brazil, we were prominently featured on Auto Esporte, a leading Sunday program on TV Global, as part of a special Children's Day edition focused on child car seat safety. The four-minute segment showcased the latest innovations from Maxi Cosi, Safety First, and Infante, including eye-sized technology 360-degree rotating seats, height-adjustable models, and lightweight foldable designs, along with guidance on keeping children rear-facing until at least 15 months. And finally, in Canada, we made a strong return to the Toronto Baby Show, engaging with attendees across two lively booths for Maxi-Cosi and Safety First. The event delivered excellent visibility and standout commercial results with strong sales in strollers, travel systems, especially the Zillia travel system and car seats like the new Maxi-Cosi Andy and other Maxi-Cosi products. The success reinforced the value of a direct consumer engagement in the Canadian market. And now for Dorel Home. We concluded 2025 with the majority of our restructuring complete. There remain certain legacy costs that we are working to eliminate in 2026. Fundamentally, our cost structure has been reduced to where a return to profitability is possible. I already elaborated at the end of the third quarter the extent of the changes in 2025, and we delivered on those changes. The most significant restructuring event in fourth quarter was the migration to our juvenile IT systems, a task that was delivered within nine months of concept, which is a great feat by our teams. I want to thank everyone involved in that project. I know it took a lot of work outside of the usual tasks. It was only made possible by the sheer effort and determination of our employees. And as of today, we still have some work to do, the main ones being the final liquidation of a not-go-forward SKU, the sublease of our lease commitment at our former manufacturing facility in Cornwall, Ontario. Recading space in Dowagiac, Michigan, with the major lease expiring in Q2 of 2026. And the sublease of excess space in our East Coast warehouse in Georgia. Unfortunately, we were unable to kickstart our supply chain despite our new borrowing facilities. This meant our product availability was lacking, and we did lose sales as a result. As of now, that is resolved, and product is flowing again. We are working with our supplier partners, and we are slowly reestablishing the right level of inventory needed to support sales. But for fourth quarter and even the start of 2026, we are not seeing the sales rebound that was expected. Our core Costco business remains strong, but getting our traditional everyday living furniture categories back to the sales level that we expect is taking a little longer than anticipated. I'll now ask Jeffrey to review the financials. Jeffrey.

Thank you, Martin. I'm going to be pretty brief here. You know, as far as the consolidated numbers for the fourth quarter, our revenue decreased 14.7% to $278 million. That decline, as we said, is all in the home area. and partially upset by some improvements in the juvenile. As we said in the home, you know, we reduced our skews significantly. We got out of a lot of lines of business. It's a new, we're building a new business. We also did not have a lot of inventory in the fourth quarter, and that, all of that lines up together to have the negative results there. On the juvenile side, we did see improvements in revenue and organic revenue in the fourth quarter. U.S., Australia, Chile, and Canada sort of led the growth while we had some declines in Brazil. And in Europe, we actually had some organic decline of only 2%, but a growth when you convert it over to the U.S. dollar. Where we did do quite well in our gross profit areas, we increased that by 10 million or 21% in the quarter. The margins increased by 600 basis points. That's coming from the juvenile segment. Obviously, there were declines in the home segment. The juvenile increases gross profit and gross margin in the fourth quarter was primarily driven by... improved volumes, improved mix and FX exchange as well, all contributed to get us there. At the end, we reported an operating loss of 8.7 million compared to 23 million in the previous year. Finance expenses increased by 5 million to 15 million during the quarter. The increase is mainly explained by the interest on the preferred shares that we issued at the end of the third quarter and higher debt balances and a higher interest rate as well. If we move over to juvenile in itself now, a little bit more detail, quarter revenue was $226 million or 6.6% above last year. You know, as I said before, we improved in the U.S., Australia, Chile, Canada. In the U.S., the improvement was market share gains, you know, car seat performing quite well. We do have, as everyone knows, a car seat manufacturing facility in Columbus, Indiana, which is growing and doing well there in this tariff environment. Or Australia, you know, we never really talked about Australia, but it's really becoming a key element to our business. The Australia-New Zealand group that we have is doing extremely well through brand growth of Maxi Cozy. Martin mentioned Chile and Peru turned around, and we're starting to see some positive results there and happy to see the momentum in Canada as well. The gross profit for the quarter increased by 13 million or 24%. Gross margin was 29.9, representing an increase of 440 basis points. As I mentioned, higher sales volumes, better mix, selling more higher-margin product, and a favorable FX all contributed towards that. Operating profit, 14.6 million compared to 1.6 million the year before. If we move over to home, the numbers, I mean, obviously the top line, a large decline there by 61 million or 54%. And again, we're getting out of the old business. We're getting into a smaller, more streamlined business, which is really the Costco business and an additional business. We like to call it the plus business. which is a limited number of SKUs on the furniture side. I'm not going to get into gross margins and gross profit. There's incredible amounts of noise here. None of those numbers really mean anything. We took down a lot of this inventory. We're clearing out inventory. We're closing warehouses and all of that. So a very, very noisy quarter. And, you know, it produced the results that you see, which is, you know, excluding restructuring costs, we still had a loss of 2.9 million. Sorry, the loss decreased by 2.9 million to 8.8 this year. With that, I'm going to pass it back to Martin for any questions, any other comments.