Q4 2025 Dorel Industries Inc Earnings Call

March 11, 2026

Speaker #1: Good morning , ladies and gentlemen . Thank you for standing by . Welcome to Dorel Industries . Fourth quarter 2020 results conference call .

Speaker #1: At this time , all participants are in listen only mode . Following the presentation , we will conduct a question and answer session .

Speaker #1: 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 .

Speaker #1: 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 .

Speaker #1: I would like to remind everyone that this call is being recorded today , March 11th , 2026 . I would now like to turn the over to Martin Schwartz , president and CEO .

Martin Schwartz: Thank you. Good morning, and thank you for joining us for Dorel's Q4 earnings call for the period ended 30 December 2025. With me today are Jeffrey Schwartz, CFO, and Jayson Kwasnik, Vice President of Finance. We'll take your questions following our comments. Please note that all figures mentioned during this call are in US dollars. Dorel Industries delivered strong performance in 2025, demonstrating resilience amid ongoing tariff-related pressure in the US 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. Q4 results were marked by a return to growth in the US, coupled with exceptional results in Europe and across several international markets.

Speaker #1: Please go ahead .

Speaker #2: Thank you . Good morning , and thank you for joining us for Dorrell's fourth quarter earnings call for the period ended December 30th , 2025 .

Speaker #2: With me today are Jeffrey Schwartz, CFO, and Jason Kwasnik, Vice President of Finance. We'll take your questions following our comments.

Speaker #2: Please note that all figures mentioned during this call are in US dollars. The relative amount delivered strong performance in Q4 2025, demonstrating resilience amid ongoing tariff-related pressure in the US and mixed market conditions globally.

Speaker #2: While these external factors moderated , revenue growth , improved margins and disciplined cost management contributed to an 84% point 7% increase in adjusted operating profit for the year Fourth quarter results were marked by a return to growth in the US , coupled with exceptional results in Europe and across several international markets Innovation across core categories , particularly rotating car seats and maxi-cosi products , continue to support the segment's competitive positioning .

Martin Schwartz: Innovation across core categories, particularly rotating car seats and Maxi-Cosi products, continues to support the segment's competitive positioning. These results underscore the benefit of Dorel Juvenile's diversified geographic footprint and the segment's ability to execute in a challenging operating environment. During Q4, Dorel Home operated a lower sales environment, reflecting constrained 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 the disposition of non-core inventory near complete, Dorel Home enters 2026 with a streamlined operating footprint and a simplified business model intended to support improved execution and performance.

Speaker #2: These results underscore the benefits of the juveniles diversified geographic footprint and the segment's ability to execute in a challenging operating environment During the fourth quarter , Dorel Home operated a lower sales environment , reflecting constraint product availability .

Speaker #2: 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 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 the disposition of non-core inventory near complete , the 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 .

Martin Schwartz: As always, Jeffrey will walk you through our results. 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 US, 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, Canada, and other export markets, and this continued into Q4. In Chile and Peru, our operations were profitable in Q4 for the first time since 2022 as the team adjusts the business model to full omnichannel capabilities. In Q4, we are particularly pleased by the results of our US operations.

Speaker #2: 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 US , principally due to the uncertainty around tariffs and increasing retail price points in prior conference calls .

Speaker #2: I articulated how well we're doing with our divisions in Australia and Canada and other export markets , and this 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 US operations .

Martin Schwartz: As previously disclosed, revenues in the US until the end of Q3 were actually down versus prior year, but this reversed in Q4, 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 and Go, and the Finale did well, as did new introductions that hit key price points supported by targeted promotional activities. Our opening price points, price point strollers did well, and Maxi-Cosi continued its growth path in the US. This all illustrates clearly multiple price point brand strategy allows us to compete from opening to high-end categories, and we did so with improved margins.

Speaker #2: As previously disclosed , revenues in the US 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 .

Speaker #2: The increase came from our traditional retail partners . As we successfully reset modular items and introduce new items and price points We had strong e-commerce sales , including our own direct to consumer fulfillment , traditional car seat models like the Sonora , the Grow and Go , and the finale did well , as did new introductions that hit key price points supported by targeted promotional activities .

Speaker #2: Our opening price points, price point strollers did well, and Maxi-Cosi continued its growth path in the US. This all illustrates clearly multiple price points.

Martin Schwartz: 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, and our product line is as good as it has ever been in Europe. Q4, in general, is quiet in terms of customer events, but I do want to call out a few highlights in certain markets. In Chile, Infantino was named number one juvenile retail brand for the third consecutive year, according to the Omnichannel Index 2025 by Altevo. This achievement reflects the team's continued commitment to omnichannel excellence and digital transformation, reinforcing Infantino's leadership position in the Chilean market. In Brazil, we are prominently featured on Auto Esporte, a leading Sunday program on TV Globo, as part of a special Children's Day edition focused on child car seat safety.

Speaker #2: 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 .

Speaker #2: We are taking business from 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.

Speaker #2: Infante was named the 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.

Speaker #2: In Brazil , we are 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 I-size 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 Mexico and Safety First .

Martin Schwartz: The four-minute segment showcased the latest innovations from Maxi-Cosi, Safety 1st, and Infantino, including i-Size 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. Finally, in Canada, we made a strong return to The Baby Show Toronto, engaging with attendees across two lively booths for Maxi-Cosi and Safety 1st. The event delivered excellent visibility and standout commercial results with strong sales in strollers, travel systems, especially the Zelia travel system, and car seats like the new Maxi-Cosi Andi and other Maxi-Cosi products. The success reinforced the value of direct consumer engagement in the Canadian market. Now for Dorel Home. We concluded 2025 with the majority of our restructuring complete. There remains certain legacy costs that we are working to eliminate in 2026.

Speaker #2: The event delivered excellent visibility and standout commercial results, with strong sales in strollers and travel systems, especially the travel system and car seats.

Speaker #2: Like the new Maxi-cosi Andy and other Maxi-cosi products . The success reinforced the value of direct consumer engagement in the market And now for Daryl Hall .

Martin Schwartz: Fundamentally, our cost structure has been reduced to where a return to profitability is possible. I already elaborated at the end of the Q3 the extent of the changes in 2025, and we delivered on those changes. The most significant restructuring event in Q4 was the migration to our Juvenile IT systems, a task that was delivered within 9 months of concept, which is a great feat by our team. I wanna 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. As of today, we still have some work to do.

Speaker #2: We concluded 2025 with the majority of our restructuring complete. There remain certain legacy costs that we are working to eliminate in 2026.

Speaker #2: And fundamentally , our cost structure has been reduced to where our 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 .

Speaker #2: The most significant restructuring event in the 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 team.

Speaker #2: 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 .

Martin Schwartz: The main ones being the final liquidation of the not go forward SKU, the sublease of our lease commitment at our former manufacturing facility in Cornwall, Ontario, vacating space in Dowagiac, Michigan, with the major lease expiring in Q2 of 2026, and a 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. For Q4 and even the start of 2026, we are not seeing the sales rebound that was expected.

Speaker #2: The main ones being the final liquidation of the not go forward SKU , the sublease of our lease commitment and our former manufacturing facility in Cornwall , Ontario .

Speaker #2: Vacating space in Michigan with the major lease expiring in Q2 of 2026 and a sublease of excess space in our East Coast warehouse in Georgia Unfortunately , we were unable to kick start 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 .

Martin Schwartz: Our core Costco business remains strong, but getting our traditional everyday living furniture categories back to the sales levels that we expect is taking a little longer than anticipated. I'll now ask Jeffrey to review the financials. Jeffrey?

Speaker #2: But for the 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 levels that we expect is taking a little longer than anticipated. I'll now ask Geoffrey to review the financials.

Jeffrey Schwartz: Thank you, Martin. I'm gonna be pretty brief here. You know, as far as the consolidated numbers for Q4, our revenue decreased 14.7% to $278 million. That decline, as we said, is all in the home area and partially offset by some improvements in the juvenile. As we said in the home, you know, we reduced our SKUs significantly. We've got out of a lot of lines of business. It's new. We're building a new business. We also did not have a lot of inventory in Q4 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 Q4.

Speaker #2: Geoffrey

Speaker #3: 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 .

Speaker #3: That decline , as we said , is all in the home area . And partially offset by some improvements in the juvenile . As we said in the home , you know , we reduced our SKUs significantly .

Speaker #3: We've 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 .

Speaker #3: And that all of that lines up together to to have the negative results . There On the juvenile side , we did see improvements in revenue and organic revenue in the fourth quarter .

Jeffrey Schwartz: US, Australia, Chile, and Canada sort of led the growth, while we had some declines in Brazil. In Europe, we actually had some organic decline of only 2%, but a growth when you convert it over to the US 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. You know, that's coming from the juvenile segment. Yeah, obviously, there were declines in the home segment. The juvenile increases gross profit and gross margin in the Q4 was primarily driven by improved volumes, improved mix, and FX exchange as well, all contributed to get us there.

Speaker #3: US , Australia , Chile and Canada sort of led the the growth while we had some some declines in Brazil and in Europe , we actually had some organic decline of only 2% .

Speaker #3: But a growth, when you convert it over to the US dollar, where we did do quite well in our gross profit areas, we increased that by $10 million, or 21%, in the quarter.

Speaker #3: The margins increased by 600 basis points. You know that that's coming from the Juvenile segment. You know, obviously, there were declines in the Home segment.

Speaker #3: The juvenile increases in gross profit and gross margin in the fourth quarter were primarily driven by improved volumes, improved mix, and FX exchange as well.

Jeffrey Schwartz: 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 Q3, 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 US, Australia, Chile, Canada. In the US, the improvement was market share gains, you know, car seat performing quite well.

Speaker #3: 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.

Speaker #3: 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 , we like I said before , we improved in the US , Australia , Chile , Canada , in the US , the improvement was market share gains .

Jeffrey Schwartz: 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. Australia, you know, we never really talk 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-Cosi. 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.

Speaker #3: 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 .

Speaker #3: 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.

Speaker #3: The Australia and New Zealand group that we have is doing extremely well through brand growth in Mexico . Martin mentioned Chile and Peru turned around and we're starting to see some positive results there .

Speaker #3: And happy to see the momentum in Canada as well. The gross profit for the quarter increased by $13 million, or 24%.

Jeffrey Schwartz: As I mentioned, higher sales volumes, better mix, we're 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%. You know, 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 number of limited number of SKUs on the furniture side. I'm not gonna get into gross margins and gross profit. There's incredible amounts of noise here.

Speaker #3: 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 .

Speaker #3: 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% , you know , and again , we're getting out of the old business .

Speaker #3: We're getting into a smaller , more streamlined business , which is really a Costco business . And and an additional business , we like to call it the plus business , which is a number of a limited number of SKUs on the furniture side , I'm not going to get into gross margins and gross profit is incredible amounts of noise here .

Jeffrey Schwartz: None of those numbers really mean anything. You know, we just took down a lot of this, you know, inventory. We're clearing out inventory. We're closing warehouses and all of that. A very, very noisy quarter. You know, it produced the results that you see, which is, excluding restructuring costs, we still had a loss of $2.9 million. Sorry, the loss decreased by $2.99 million to $8.8 this year. With that, I'm going to pass it back to Martin for any questions, any other comments.

Speaker #3: None of those numbers really mean anything . You know , we just we took down a lot of , you inventory . We're clearing out inventory .

Speaker #3: We're closing warehouses and all of that . So very , very noisy quarter . And , you know , it produced the results that that you see , which is , you know , excluding restructuring costs , we still had a loss of 2.9 million .

Speaker #3: 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 ?

Martin Schwartz: All right. Thanks, Jeffrey. For our outlook, as we enter 2026, we remain focused on building on Dorel Juvenile's momentum while managing continued market uncertainty. Priorities include operational efficiency, strengthened supplier participation, and continued investments in product innovations. While volatility is expected to persist in the US and in certain Latin American markets, the company's diversified international footprint and disciplined execution provide important sources of resilience. We expect 2026 to continue the trend of year-over-year earnings improvement. At Dorel Home, we remain focused on completing the final stages of our transformation and cementing the foundations of a more efficient operating model. With the principal restructuring actions mostly completed and the cost structure materially reduced, we are positioned to focus on stabilizing the business and improving execution.

Speaker #2: Hi . Thanks , Jeffrey for our outlook as we enter 2026 . We remain focused on building on the juvenile momentum while managing continued market uncertainty .

Speaker #2: Priorities include operational efficiency , strengthened supplier participation , and continued investment in product innovation while volatility is expected to persist in the US and in certain Latin American markets , the company's diversified international footprint and disciplined execution provide important sources of resilience .

Speaker #2: We expect 2026 to continue the trend of year over year earnings improvement at home . We remain focused on completing the final stages of our transformation and cementing the foundations of a more efficient operating model with the principal restructuring actions mostly completed and the cost structure materially reduced .

Martin Schwartz: Key priorities include completing the sell-through of remaining non-core inventory, advancing integration with Dorel Juvenile's operational ecosystem, and reigniting our everyday living furniture business alongside our successful Costco folding furniture product line. As we start 2026, we continue to drive down legacy costs, and the ramp-up is slow on our traditional furniture product portfolio. As such, earnings improvements are expected as 2026 progresses. With that, I'll ask the operator to open the lines for questions, and please limit your questions to two in the first round. Operator?

Speaker #2: We are positioned to focus on stabilizing the business and improving execution . Key priorities include completing the sell through of remaining non-core inventory , advancing integration with juveniles , operational ecosystem and reigniting our everyday living furniture business alongside our successful Costco folding furniture product lines .

Speaker #2: As we start 2026 , we continue to drive down legacy costs , and the ramp up is slow on our traditional furniture product portfolio .

Speaker #2: As such , earnings improvement are expected as 2026 progresses , with that , I'll ask the operator to open the lines for questions and please limit your questions to two in the .

Operator: Thank you. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2. The first question comes from Stephen MacLeod with BMO Capital Markets. Please go ahead.

Speaker #2: In the first round. Operator.

Speaker #1: Thank you . To join the question queue , you may press star , then one on your telephone keypad . You will hear a tone acknowledging your request .

Speaker #1: If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two.

Stephen MacLeod: Thank you. Good morning, guys. I just turning to the home business, you know, you talked about completing the material parts of your restructuring in Q4, and so I assume when we turn the page to 2026, you know, we should see an improved operations. I'm just curious, given that now you have most of the restructuring in the rear view mirror, are you able to give some color around what the run rate sort of cost base is in that business in 2026? I guess a follow-up to that would be, do you expect to return to profitability on an adjusted EBIT basis in 2026?

Speaker #1: The first question comes from Stephen McLeod with BMO Capital Markets . Please go ahead .

Speaker #4: Thank you . Good morning guys . I just just turning to the to the home business . You know you you talked about completing the material parts of your restructuring in Q4 .

Speaker #4: And so I assume when we turn the page to 2026 , you know , we should see an improved , improved operations . But I'm just curious , given that now you have most of the rearview mirror , are you able to give some color around what the run rate sort of cost base is in that business ?

Speaker #4: In 2026 ? And I guess a follow up to that would be , do you expect to return to profitability on an adjusted Ebit basis in 2026 ?

Jeffrey Schwartz: You're asking now about the home business in itself?

Stephen MacLeod: Yes. The home business. Yeah.

Jeffrey Schwartz: Yeah. The home business. Okay. The home business, you know, the cost base. I don't have that number for you because it's still. You know, we're still creating this new business, to be honest with you. The Costco part is kind of okay as far as not a ton of changes there. The other part, we're still doing that now. We're still seeing what works. You know, to be honest, it's a bit of a work in progress. That's about a third of the business that we're still trying to figure out what the best cost and efficiencies are for that. I don't have a go-forward run rate on that. We do expect to see some profitability by the second half of the year. As Martin mentioned, it was challenging.

Speaker #3: So you're asking now about the Home business in itself?

Speaker #4: Yes , the home business . Yeah .

Speaker #3: Yeah . The home business okay . So the home business , you know , the cost base I don't have that number for you because it's still you know , we're still creating this new business .

Speaker #3: To be honest with you, the Costco part is kind of okay, as far as not a ton of changes there. But the other part, we're still doing that now.

Speaker #3: We're still seeing what what works , you know , to be honest , it's a bit of a work in progress . That's about a third of the business that we're still trying to figure out how what the best costs .

Speaker #3: And efficiencies are for that . So I don't have a go forward run rate on that . We do expect to see some profitability by the second half of the year .

Jeffrey Schwartz: You know, once we finally got in a good position with our suppliers, you don't just press a button, and they start shipping. I mean, they, you know, they had their factory orders in. They had to start slotting us in with new orders, ordering the inventory. It took a while to get the new inventory that we needed to start pushing the business forward. We saw that in Q4 and Q1. It is a bit of a process there. It is a lot murkier. You know, we see a fairly clear path on the Juvenile side, and but it is a little bit more of a work in progress. It is a very difficult marketplace. I mean, just, you know, staying around is challenging.

Speaker #3: So as Martin mentioned , it was challenging . You know , once we finally got in a good position with our suppliers , you don't just press a button and they start shipping .

Speaker #3: I mean , they , you know , they had their factory orders in , you know , so we they had to start slotting us in with new orders , ordering the inventory .

Speaker #3: So it took a while to get the new inventory that we needed to start pushing the business forward . And we saw that in Q4 and Q1 .

Speaker #3: So it's a bit of a of a process there . It's a lot murkier . You know , we see fairly clear path on the juvenile side .

Speaker #3: And but it is a little bit more of a work in progress . It's a very difficult marketplace . I mean , just , you know , staying around is , is challenging .

Jeffrey Schwartz: A lot of our competitors and a lot of the retailers are actually going out of business here. We do believe there's an opportunity, and like I said, part of our business is doing well in Home, and we're still building that second half of the business.

Speaker #3: A lot of our competitors and a lot of the retailers are actually going out of business here. So we do believe there's an opportunity.

Stephen MacLeod: Okay. That's helpful. Maybe just on the Juvenile side, you cited in the outlook just some volatility that you expect to persist in the US and Latin America. Is that just related to tariffs, or is there some other volatility that we should be aware of?

Speaker #3: And like I said , part of our business is doing well in home . And we're still building that second half of the business .

Speaker #4: Okay . That's that's helpful . And then maybe just on the juvenile side , you cited in the outlook , just some volatility that you expect to persist in the US and Latin America .

Jeffrey Schwartz: In the US, I mean, tariffs, yeah, for sure tariffs. You know, what's going on with the oil prices, with the war. I mean, people, you know, are they spending? It's just more volatile than it's been in a while in the US. The economy for consumer products, you know, is just tougher. Having said that, we do believe in our products. We do believe that we will pick up market share, like we're doing around the world. You know, we have some good momentum, which we're pleased with. But you know, the market challenges are much harder there. Chile is just, you know, we're coming out of a difficult period. Chile is getting better, but it's still a challenging area.

Speaker #4: Is that just related to tariffs or is there some some other volatility that we should be aware of

Speaker #3: In the US I mean tariffs . Yeah . Yeah for sure . Tariffs you know what's going on with with the oil prices with the war I mean people you know are they spending .

Speaker #3: It's just more volatile than it's been in a while in the U.S. The economy for, you know, consumer products is just tougher.

Speaker #3: Having said that, we do believe in our products. We do believe that we will pick up market share, like we're doing around the world.

Speaker #3: So , you know , we have some good momentum , which we're we're pleased with . And but , you know , the market challenges are much harder there .

Speaker #3: And Chile is just you know , we're coming out of a difficult period . So Chile is getting better . But it's still it's a challenging area okay .

Stephen MacLeod: Okay. That's helpful. Thanks, Jeffrey.

Operator: The next question comes from Derek Lessard with TD Cowen. Please go ahead.

Speaker #4: That's that's helpful . Thanks , Jeffrey

Derek Lessard: Good morning, gentlemen. Maybe just, I'll ask the question a different way than Steve. Would you say it's fair to say, and this is more pertaining to home, that you guys are past the worst in business?

Speaker #1: The next question comes from Derek Lessard with TD Cohen . Please go ahead .

Speaker #5: Good morning gentlemen . Maybe just ask the question a different way than Steve . Is it fair . Would you say it's fair to say and this is more pertaining to home that you guys are past the worst Business .

Jeffrey Schwartz: Yeah, for sure. It's more of... What's an analogy? I mean, the analogy is, you know, we ran out of gas, like, at the end of Q3 in the business, on the home side. On the juvenile side, we still had momentum. We were still. Things were slower, things where we didn't have all the inventory we wanted, but everything was moving. We stopped, you know, the business for a number of months. There's a number of SKUs, I won't get into the SKUs or the customers, but that were lost because we didn't respond properly in the tariff environment. Since then, since, you know, Q4, we have responded.

Speaker #3: Yeah , for sure . For sure . It's more of how do I what's an analogy ? I mean , the analogy is , you know , we ran out of gas like at the end of the third quarter in the business on the home side on the juvenile side , we still had momentum .

Speaker #3: We're still things were slower , things were we didn't have all the inventory we wanted . But everything was moving . We stopped .

Speaker #3: You know , the business for a number of months . So there's a number of SKUs I won't get into the SKUs of the customers , but that were were lost because we didn't respond properly in the tariff environment since then , since , you know , Q4 , we have responded .

Jeffrey Schwartz: Responding means, you know, probably changed the items so that, you know, the price points were different, or added features, or did what we had to do. We've gotten those items placed again. You know, we have a couple of items that we lost for six months.

Speaker #3: Responding means , you know , probably change the item so that , you know , the price points were different or added features or did what we had to do .

Derek Lessard: Right.

Jeffrey Schwartz: You know what I mean? It's just been really difficult, because the business stopped. Again, I don't wanna mean like we stopped shipping, but we couldn't move forward on a lot of things. You know, you gotta put some gas in the tank, then start the process. We're in that. The process is going. We're getting more listings. We're winning things back. We're getting in front and delivering to our customers. All of that needed to be done in the home business, which ended up being more challenging. You know, I think that's the reason.

Speaker #3: And we've gotten those items placed again. But, you know, we have a couple of items that we lost for six months.

Speaker #3: So it's just you know what I mean ? It's just been really difficult because the business stopped not and again , I don't want to mean like we stopped shipping , but we couldn't move forward on a lot of things .

Speaker #3: And then , you know , you got to put some oil in the gas in the tank and then process and start . So we're in that the process is going .

Speaker #3: We're getting more listings . We're winning things back . We're getting in front and delivering to our customers . But all of that needed to be done in the home business , which was ended up being more challenging .

Derek Lessard: Okay. I think Martin touched on it in his opening remarks, but, could you just maybe, I know you're close to the end of the restructuring process in Home, but maybe just remind me of the sort of biggest components of that restructuring that you have left?

Speaker #3: So , you know , I think that's the reason .

Speaker #5: Okay . And I think Martin touched it , touched on it . In his opening remarks . But could you just maybe and I know you're close to the end of the restructuring process in home , but maybe just remind me of or ask of the sort of the biggest components of that restructuring that that you that you have left Yeah .

Jeffrey Schwartz: Yeah. We still have a couple of pieces of real estate that I don't think it's technically restructuring, but it's, we call it legacy costs. There are some costs that we're still paying that we're getting no value for, so we're in the process of looking for subleases. So that's probably the single biggest area. It's not people anymore. You know, we've brought that down. We're just looking for the best and most efficient way to continue to operate. How do we pull some costs out, maybe join costs with the Juvenile group, increasingly doing that. You know, there's no major, other than some real estate, there's no major restructuring that we're facing.

Martin Schwartz: Yeah. We still have a couple of pieces of real estate that I don't think it's technically restructuring, but it's, we call it legacy costs. There are some costs that we're still paying that we're getting no value for, so we're in the process of looking for subleases. So that's probably the single biggest area. It's not people anymore. You know, we've brought that down. We're just looking for the best and most efficient way to continue to operate. How do we pull some costs out, maybe join costs with the Juvenile group, increasingly doing that. You know, there's no major, other than some real estate, there's no major restructuring that we're facing.

Speaker #3: We still have a couple of pieces of real estate that I don't think it's technically restructuring , but it's we call it legacy costs .

Speaker #3: There are there are some costs that we're still paying that we're getting no value for . So we're we're in the process of looking for subleases .

Speaker #3: So that's probably the single biggest area . It's not people anymore . You know , we've we've brought that down . We're just looking for the best and most efficient way to continue to operate .

Speaker #3: How do we pull some costs out , maybe join costs with the juvenile group increasingly doing that ? You know , there's no major other than than some some real estate .

Derek Lessard: Okay. Maybe turning to more of the positive story on the juvenile side. Jeffrey, in your prepared remarks, you alluded to volumes, mix, and FX as the drivers.

Speaker #3: There's no major, major restructuring that we're facing.

Speaker #5: Okay . And maybe turning to more of the positive story on the juvenile side , Jeffrey , in your prepared remarks , you you alluded to volumes mix and forex as as the drivers of the the improvement in the gross margin is , is that were they all equally weighted

Jeffrey Schwartz: Mm-hmm.

Derek Lessard: of the improvements in the gross margin. Were they all equally weighted?

Jeffrey Schwartz: I don't have the weighting for me. I do know that they're all important. Certainly our FX is, you know, the winds are behind us for a change.

Speaker #3: I don't have the waiting for me . I do know that they're all all important . Certainly our apex is is you know , the winds are behind us for a change .

Derek Lessard: Right.

Jeffrey Schwartz: What you gotta look at is, you know, you've got an adjustment of FX, but in the following quarter, your margins are higher because you're paying, you know, like in Europe, you know, the euros. We're collecting euro dollars, paying in US dollars for the product. So

Speaker #5: Right .

Speaker #3: What you got to look at is , you know , you've got an adjustment of FX , but in the following quarter , you're now your margins are higher because you're paying , you know , like in Europe , you know , the euros we're collecting euro dollars , paying in US dollars for the product .

Derek Lessard: Right.

Jeffrey Schwartz: The margins going forward end up being higher as well, right? It's hard. I don't have that adjustment to say, "Well, if it was a $1 million one-time hit in Q4, does that affect Q1?" It does.

Speaker #3: So our margins going forward end up being higher as well . Right . So it's hard . I don't have that adjustment to say , well if it was $1 million one time hit in Q4 , does that affect Q1 ?

Derek Lessard: Oh, yeah.

Jeffrey Schwartz: I don't have those numbers. You know what I mean? It's not just a one-time adjustment, even though it is an adjustment in Q4. Going forward, we're seeing some, and we've been hedging at some of the new rates. The impact of being a global company is probably coming to the forefront more than ever in the history of our business. While we have some challenges in the US, even though we're doing okay and we're making money and we're growing, if it was just a US business, like a bunch of our competitors, it wouldn't be as rosy a picture.

Speaker #3: It does . So I don't have those numbers . But you know what I mean . It's not it's not just a one time adjustment .

Speaker #3: Even though it is an adjustment in Q4 . But going forward , we're seeing some and and we've been hedging at some of the new rates and The the impact of being a global company is the probably coming to the , to the forefront more than in the history of our business .

Speaker #3: So while we have some challenges in the US , even though we're making we're doing okay and we're making money and we're growing , if it was just a US business , like a bunch of our competitors , it wouldn't be as a rosy picture .

Jeffrey Schwartz: We're able to drive the rest of the world at a pace significantly faster than the US, which is allowing for, I'll say, a better growth than most of the people in our industry.

Speaker #3: But we're we're able to drive the rest of the world at a pace significantly faster than the US , which is allowing for , I'll say , better growth than most of the people in our industry .

Derek Lessard: Yeah. I just wanted to make sure that volume and mix was a meaningful contributor, if that's a better way to ask the question.

Jeffrey Schwartz: Okay. Yeah. Thank you guys.

Speaker #5: Yeah , so I just wanted to and I just want to make sure that volume and mix was , was a was a meaningful contributor .

Operator: We have a follow-up question from Stephen MacLeod with BMO Capital Markets. Please go ahead. Stephen, please go ahead.

Speaker #5: If that's a better way to ask the question . Okay . Yeah . Thank you guys

Speaker #1: Do you have a follow up question from Stephen McLeod with BMO Capital Markets ? Please go ahead Stephen , please go ahead

Stephen MacLeod: Sorry, my bad. I was on mute there. I just had a follow-up question regarding the home business again and the outlook. I know that there are still some moving parts with respect to the some of the restructuring initiatives that haven't been done. You know, just again, trying to get a sense of the run rate on things, considering that's probably the business that has the most moving parts right now. In terms of D&A, you know, we saw D&A sort of take a pretty significant step down in Q4, and I'm just wondering if that's potentially a new run rate or is that maybe related to a Q4 full year true up or something like that?

Speaker #4: Sorry . My bad . I was on mute there . I just had a follow up question regarding the home business again and the outlook .

Speaker #4: And I know that there are still some moving parts with respect to the some of the restructuring initiatives that haven't been done , but , you know , just again , trying to trying to get a sense of the run rate on things , considering that's probably the business that has the most moving parts right now in terms of DNA .

Speaker #4: You know , we saw DNA sort of take a pretty significant step down in Q4 , and I'm just wondering if that's potentially a new run rate or is that maybe related to a Q4 full year ?

Jeffrey Schwartz: I'm gonna say on the home side, any number you see in Q4 is not a valid number for-

Speaker #4: True up or something like that

Stephen MacLeod: Okay.

Jeffrey Schwartz: Projecting forward.

Stephen MacLeod: Okay.

Jeffrey Schwartz: It doesn't matter what it is. It's about as noisy as you can get when you're taking things down, when you're restructuring, when you're you know running out of inventory, when you're like discontinuing stuff, when you've got factories that are still operating, but they're not operating. It's just a very messy quarter to do any analysis on.

Speaker #3: I'm going to say on the home side , any number you see in Q4 is not a valid number for projecting forward . It doesn't matter what it is , it's it's about as noisy as you can get when you're taking things down , when you're restructuring , when you're , you know , running out of inventory , when you're like discontinuing stuff and you've got factories that are still operating , but they're not operating .

Stephen MacLeod: Yeah. Understood.

Jeffrey Schwartz: The best thing I can just tell you is it's gonna be. Again, it's gonna be much better than last year, right? Last year we lost $40 million. I mean, our bad quarters are not going to be, you know, pro forma off of last year. It's probably gonna take to the second half before we see a turn in the profitability to a positive level.

Speaker #3: It's just it's a it's a very messy quarter to do any analysis on . Yeah . The best .

Speaker #4: The .

Speaker #3: Best thing I can just tell you is it's going to be a again , it's going to be much better than last year .

Speaker #3: Right . Last year we lost $40 million . I mean , we're our , our our bad quarters are not going to be , you know , pro forma off of last year .

Stephen MacLeod: Okay. Understood. Yeah. Thanks, Jeffrey. I appreciate it.

Speaker #3: But we it's probably going to take to the second half before we see a turn in the profitability to a positive level .

Jeffrey Schwartz: Yeah.

Operator: This concludes the question and answer session. I would like to turn the conference back over to Martin Schwartz for any closing remarks. Please go ahead.

Speaker #4: Okay . Understood . Yeah . Thanks , Jeffrey . Appreciate it .

Speaker #6: Okay

Martin Schwartz: Thank you. I just wanna say to everybody, thanks for joining us here today, and hope you all have a great rest of the week. Thank you.

Speaker #1: This concludes the question and answer session . I would like to turn the conference back over to Martin Schwartz for any closing remarks .

Speaker #1: Please go ahead .

Speaker #2: Thank you . I just want to say to everybody , thanks for joining us here today and hope you all have a great rest of the week .

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

Speaker #2: Thank you

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