Martin Schwartz - President and CEO Jeffrey Schwartz - CFO

Derek Lessard - TD Securities Sabahat Khan - RBC Capital Markets Dave King - Roth Capital Eric Beder - Wunderlich Leon Aghazarian - National Bank Financial Stephen MacLeod - BMO Capital Markets

Thank you. Good afternoon everyone and on behalf of Jeffery Schwartz and Frank Rana, thank you for joining us for Dorel's first quarter earnings call.

We will be pleased to take your questions following our comments, and a reminder all numbers are in U.S. dollars.

We are very pleased with the start of the year. Dorel Home had another record quarter.

Dorel's sports improved materially as a restructuring efforts and more cost efficient cost structure are now bearing fruit. Dorel's Juvenile is benefiting from its new strategic direction but face challenges at its China factory which are currently being addresses.

In our smaller Juvenile markets Brazil and Australia, they performed exceptionally well and are now recognized as industry leaders. On the corporate front, they successfully renegotiated our credit facilities and this is expected to reduce interest cost by approximately 4 million through the balance of 2017.

The related costs were significant in Q1, but this change will lower our finance cost through the balance of the year and will continue annually going forward, and more on this shortly from Jeffrey. Now some specifics regarding our three segments.

Dorel Home had another outstanding quarter, once more setting new records for both revenue and profits. E-commerce was again the driver with further gains to the point that insinuate and drop shift vendor channels represented 46% of total segment sales.

Year-over-year revenue increased in the majority of Home's division. This is a tribute to management success in developing a multitude of new products and putting in place a state-of-the-art distribution platform, which is effectively serving the growing online home furnishing markets.

Dorel Home received excellent customer reaction at the recently concluded High Point furniture show. The show remains a very valuable platform for Dorel with high interest in our home divisions and ended diversified line up.

Brick-and-mortar retailers are still present however increasingly the large growth in traffic is from e-commerce customers. Represented as of the Dorel Home highlighted a new operation capability such as automated labeling equipment and full line conveyor systems, which allows same day shipments, most important if we have to stay ahead of the game.

This insight was well received by customers at the show. Dorel Juvenile has made headwind focusing on its priorities to return to profitable sales growth with some important changes and additions.

We have filled the new position of Chief Research and Product Development Officer with a person with expansive experience. To be based in our Boston area office, he will focus on improving our time to market while ensuring that all products are delivered on schedule, on scope and on budget.

Under his leadership, we expect to drive innovation, maximize product development in synergies, create a new product planning framework and work with our brand teams and regions to translate consumer insights into world-class products. We have also made a change of leadership in China.

Productivity issues of the China factory delayed certain product launches and negatively impacted a number of markets. Part of problem was labor shortage compounded by the Chinese New Year, which traditionally caused employee turnover, as well more new items were schedule within a particular quarter than ever attempted before and they were more complex.

These matters have been addressed with a new person who is solely responsible for factory operations. We have added the position of Head in Global Quality who will be based at the China factory where our new QC lab is now operational and I've moved someone from Columbus to Zhongshan China to be our Senior Director of Manufacturing.

All operations are now centered in our large campus in Zhongshan with our smaller campus now sold. A further change is that China's domestic Juvenile business has been moved to the person who runs Australia and Greater East Asia, and who has done an excellent job in these geographies.

Regarding new product introduction, the Quinny Zapp, Dorel’s first premium stroller that can be used from birth to about three years old is attracting good reaction from consumers in Europe, what was initially rolled out. That will be available another goal in markets including Korea, China and Japan.

To further build market exclusiveness, online customization has been tested in the UK and the Netherland, allowing customers to choose the Zapp the way they wanted. The Zapp is an important addition for Juvenile's line up and it has been supported across all markets through social media, blogger events and proactive public relations.

Two of our other global brands, Maxi-Cosi which is our largest and Tiny Love are getting refreshed taglines, logos and websites. This is part of our drive to accelerate global growth outside the U.S.

with higher margin products. Dorel Sports is in working to develop a clear strategic focus and the benefits were evidenced in Q1.

Operating profit on this doubled from the prior year as second management has implemented its restructuring plan. We have succeeded in adapting their business model with an adjusted cost base and then offering of exciting products in order to profit even during this challenging time.

The global bike remains tough through the beginning of the year as poor weather in March and a later Easter push the started the cycling season into April, this effective sales at both CSG and Pacific Cycle as we did with the entire bike industry. Manufacturing inventory levels are normalized, but the inventory issue is now shifted at the retailers who continue to deplete their inventory.

Levels are currently the lowest that had been in over three years. Dealers are working down inventory and delaying replenishment order until the season really takes off all three months.

In North America, there has also been considerable retail consolidation. U.S.

comparable brick-and-mortar same-store sales are struggling while e-commerce sales continue to grow. Innovation in product development remains key and there were many excellent examples over the past few months.

Cannondale launched the new 2018 Jekyll and Trigger mountain bikes, entirely new version of Cannondale’s high performance mountain bike platforms. Both have been extremely well received by retailers with strong sell through so far and media reviews have been excellent.

A new version of the popular Bad Boy urban bike was also introduced. And our GT line has become the official bike of the Whistler Blackcomb area.

400 GT series sanctioned and Force models will be Whistler's rental fleet for the year. Schwinn successfully launched the Schwinn Lemon Peeler on Amazon with all 500 limited edition bikes selling out.

Schwinn was also voted as most recommended brand by women across America in the women's 2017 Choice awards. And Fabric our P&A division released an array of new parts and accessory products at March [Indiscernible] High Jump Show, including new opening price point products.

We remain very encouraged by the sound improvement in Q1 and not for the rest of the year with confidence. Jeffrey will now provide the financial perspectives.

Jeffery?

Thank you, Martin. Before we get into the numbers, I want to highlight an area of importance.

As Martin previously mentioned, during the first quarter we successfully renegotiated our credit facility with the support of our lenders and effective on March 24th. We amended our credit agreement with respect to revolving bank loans and secured U-term loan of $200 million.

We use the proceeds from that term loan to early repay the series B and C senior guaranteed notes a high-interest Brazilian non-convertible debenture and to reduce some bank indebtness in early many parts of the world. These early repayments in the first quarter resulted in the pretax expense of $10.2 million recorded as part of our finance expenses and represented about $0.30 a share diluted share.

This strategic decision allows us to better manage our long-term capital needs as well as decrease the interest expense by approximately $4 million for the balance of the year and will result in annual savings going forward as well. So, as I explained the reported net income for the quarter ended March 31, 2017 and '16 includes restructuring and other costs re-measurements of forward purchase agreement liabilities and a loss of early extinguishment of long-term debt.

As such, I will be discussing the adjusted financial information as we believe that excluding the above mentioned items, it will be more meaningful comparison to our core business performance between periods discussed. Please refer to the non-GAAP measures section of the press release or the MD&A for reconciliation to the most directly comparable financial measures calculation in accordance with GAAP.

So, I'll comment on quarter's results and some key highlights. Revenue for the first quarter was relatively flat $646 million compared to $645.9 million.

Gross profit for the quarter rose to 23.7% representing 50 basis points compared to 23.6 in 2016. Favorable sales mix in juvenile markets as well as its cost saving initiatives and operational efficiencies.

Margin improvements Dorel Sports also contributed to the gross profit increase that came from Caloi price increases, this favorable product mix in Caloi and the strengthening of the Brazilian currency against the U.S. dollar, Pacific Cycle’s favorable product mix and as well at CSG less discounting in the marketplace.

Dorel Home gross profit remains flat compared to the previous year. Our operating profit rose by 3 million or 9.9% to 33.9 million from a year ago.

Excluding restructuring and other costs adjusted operating profit increased by 5.2 million or 15.4% to 39 million from 33.8 million last year. And that’s driven by Dorel's gross profit improvement -- Dorel Sport's gross profit improvement and introduction of operating expenses.

Dorel Home’s higher than online, higher online sales and partially offsetting all that is well driven else increased operating expenses. If you look at finance expenses that increased 9.5 million to 20.2 million.

Last year and that again is mainly due to the $10.2 million loss on early extinguishment of the long-term debt. When excluding the re-measurement of forward purchase agreement liabilities and loss of the early extinguishment of long-term debt.

Adjusted finance expenses decline by 0.4 million to 9.7 million compared to 10.1 million in the previous year. For the quarter, net income decreased by 7.9 million to 8.8 million from 16.7 million; however, adjusted net income rose by 3 million or 15.4% to 22.7 million from 19.7 million in 2016 and represented on adjusted diluted EPS basis of $0.69 compared to $0.60 last year.

Effective tax rate during the quarter was 35.7 versus 17.2. However, the adjusted tax rate for the quarter was actually 22.6% versus last year 17%.

The bulk of the year-over-year variation is due to changes in the jurisdiction of which our company is generated its income. We do again predicted for the full year and our annual adjusted tax rate should be between 15% and 20%.

If we go into the divisions, Dorel Home first quarter rose by 16.6 million or 8.8% to 204 million, representing the highest quarter in the segment’s history. As Martin mentioned before higher sales or online retailers in all divisions represented 46% of the segment versus 42% of the segment in 2016 and sales to brick-and-mortar stores remain flat compared to last year.

Gross profit for the quarter was flat at 16.9%, compared to last year. We also, Dorel Home also posted a record operating profit during the quarter of 19.8 million, representing a double-digit growth of 12% from 17.6 million in 2016, that was driven by higher volumes slightly offset by an increasing selling expenses in line with sales growth.

Moving over to the Juvenile session, Dorel Juvenile’s first quarter revenue decrease by 13.2 million or 5.5% that would be 228.7 million compared 241.9 million last year. Organic revenue decreased by 5.2%.

This came from lower sales in the European market as well as the reduced sales by Dorel Juvenile China to non-domestic third-party customers. As mentioned by Martin, we want to stress the sales in several of our markets and primarily Europe was negatively impacted by delayed product launches due to product production issues at our Chinese factory.

If we move over the benefit of the focused efforts to improve sales mix in all markets as well as cost savings and other operational efficiencies from restructuring activities resulted in our gross profit of our 30.6% and an adjusted gross profit of 31.1% when excluding the structural and other costs, this represents an improvement of about the 130 basis points and 180 basis points on the adjusted basis, and in almost all markets compared to the first quarter of 2016 with the largest dollar contributors being Europe and North America. Gross profit dollars remain comparable year-over-year despite the decrease in revenue.

Operating profit for the quarter decreased by 4.9 million or 33.6% to 9.6 million, adjusted operating profit when excluding restructuring and other cost decline to 2.1 million or 11.9% to 15.3 million from 17.4 million through this year. Higher operating expenses such as higher technology spend and increased professional fees were probably issued.

Moving over to Dorel Sports, we are operating in a relatively difficult industry environment although our revenue for the quarter decreased by 2.5 million or 1.1%. If you look at the organic revenue when removing the foreign exchange fluctuations and the change in our international business model which revenue recognition transition from a licensing model to a distribution platform, our decline was actually almost 10%.

So, part of revenue shortfall was due to lower consumer demand for bikes in the max channel due to poor weather and a shift in the Easter holiday and sales moving from the end of the year from the end of the quarter into April and also on the in the independent area lower sales volumes just caused by retailers holding the lower inventory and poor weather certainly in North America, as well as less discounted sales, we're not including items in the although that's good for margin it's not and I'll show you good from the top line. Gross profit rose by 100 basis points to 22.9%, but when we exclude restructuring and other cost and the impact of the CSG international revenue recognition change, adjusted gross profit actually increased by 270 basis points to 24.6% from, 21.9%.

The increase in margin is caused by Caloi again achieving higher margins with improved pricing and product mix as well as the strengthening of the Brazilian currency. Pacific Cycle margins had a favorable product mix.And CSG the independent bike business contributed to the gross profit increase of less discounting and some selective price increases.

Operating profit at the end rose by 4.9 million or 92.5% to $10.1 million and again that explained by the improved margins and reduced operating expenses, which came from our restructuring plan previous year and good quality control initiatives that we put in. Some other items during the third -- three months, first quarter cash flow from used in operating activities was $17.5 million, last year was $5.9 million, so not a big change there.

Our consolidated net debt position was $460.4 million at the end of the first quarter. It was $551 million at the end of the first quarter last year and was $423.9 million at the end of the year.

So, that’s an increase of $36 million which is in line with traditional timings as we ramp up inventories for bicycle season among others. With that, I'll pass back to your Martin.

Okay, thank you. Regarding our outlook, both Dorel Home and Dorel Sports delivered on our year end outlook of improved 2017 earnings.

However, Dorel Juvenile has had a slower start than anticipated as our factory in China face challenges on new product launches. We are proactively managing this and we see improvements through the year.

We still expect all three segments to exceed prior year earnings. Dorel Home will continue to drive sales and earnings improvements for the balance of the year.

We expect the strong second half of Dorel Juvenile due to multiple new product introductions and new local management in china delivering our needed operations and improvements. In addition, 2016 normally high product liability cost will return to normal levels, contributing to the segments earnings improvements.

The bicycle industry is currently facing short-term challenges therefore sales growth opportunities in 2017 could be limited. Dorel Sports has restructured to improve earnings with this year for better margins and lower operating expenses and we expect this to be more than offset sales challenges.

We also made a strategic decision to amend the Company's credit agreement. Now, related costs were significant, but this change will lower our finance cost for the balance of the year and will continue annually going forward.

I'll now ask the operator to open the lines, and please as always limit your first round questions to two questions. Operator?

Jeffrey, I think you touched on it in your comments, but I just wanted to clarify. You guys have made good progress on your working capital improvement over the last three quarters.

And it was use of -- but it was use of cash in Q1 and inventories in particularly up $20 million. I just wanted to make sure that -- I think you had said that was seasonal.

Yes, I mean it's traditionally as every year we do bring in a lot of bikes in the quarter. Bikes sales are softer than we expected.

So that inventory which is not really material, but that actually inventory is sitting there because of the bike sales. And more on the mass side, we are actually giving quite a good job on the Cannondale side as much extra, but again nothing to worry about long term, but it did defect the quarter and the cash flow a little bit.

Okay, thanks for that. And seeing here and obviously looking at your window, the weather hasn’t improved much and it's not expected to for couple weeks.

Do you have any visibility on what that means for bike sales?

I mean I think at this point we are going to say this is not a great year again. The industry has had a number of poor years.

I think we have responded to that. We have built our business around tougher times and you can see the results and we are going to continue to see similar results unless it does pick up in which case we do even better, but we were managing our business going forward to deal with the difficult times.

It's the cyclical industry. This is not the first time this industry has slowdown, it happens regularly as the veterans of the industry have told me.

And it will come back and you will be in a good position when it comes back. The one thing I do want to point out is that, the one area that we are not cutting back on and we are not reducing and that product development.

And that’s at the mass side as well as at the high end side, we continue to work on some great products and we continue to invest in that area.

And then maybe just one final one, in China, how long should we expect the productivity issue to continue there? And have you been able to normalize the shipments of new product?

It's going to continue for a little bit of time, but it's getting better almost on a weekly basis. We have start to ship some new products, it's not as if [Indiscernible] there has been no product that are there.

And we have made some significant changes like I said, and we got a new General Manager there who is running the whole operation, but we did also as we separated from where previously where the management and at factory levels also managing the sales and marketing effort on the domestic basis in China. And I said, we give this to our South East Asia Manager and he is handling the sales and marketing.

So, the new person in the factory strictly is manufacturing and we've given him additionally new people below him, much stronger people. So, we expect to this problem to start going away in a fairly quick basis, but it will take few months, but every week things are getting better.

So, we are concerned but we are not panicking and we are going to get it right.

Just a follow up on bike industry there, so your outlook for soft top line for the rest of the year, as it just that continuation of the fact that you already seeing which is destocking at IBD and some weak PLS, or any of those factors embedding at all?

I mean I think its weak demand because of weather. Destocking, yes I mean from what I understand retail inventories are low which is good.

So, should there be a beautiful months of May and June, and perhaps we can see a pickup because they're not sitting on a lot of inventory, but they have enough inventory right now to cover them. So, I think it's a combination of both if certainly demand as well and the retailers are not carrying excessive inventories.

Thanks. And then on the home furnishing segment, the penetration of online sales if it's continue to increase.

Is there a target in mind, do you think it's at maturity or is there a more runway for the online portion of those --?

You're asking in this, that's not us, it's the industry, right. So, like anything else, I just a lot of home furnishing products going through that part of the channel.

I mean we set up our distribution in our platform to be able to deal with that channel really well and it just continues to grow. There is large sort of players like an Amazon and then there is a lot of specific online furniture and furnishing places that are being very successful as well.

So I don't see how it stops. And then surprisingly, online sales are still only a very small percentage of total retail and it's growing every year, that's not from what we're understand it's in the low teen.

I mean it's into the 20s. We're looking for major online growth.

I guess maybe just for incremental line of questioning, given the challenges at Mass and IBD within the sports business. I guess what are you doing drive more e-commerce sales in that part of the business.

I saw that Amazon launched for Mongoose, but then I guess just even beyond trying to drive e-commerce through retail partners. Is there anything you're trying to do drive more direct-to-consumer e-commerce on your part?

Basically, they are big difficult e-commerce, they're big, they tend to -- you just want to be fit it or there is a number of issues. They work better at the mass level.

We do much better. I think the industry does much better with things like accessories, parts, apparel then actual bicycle.

There are obviously online bicycle sales, but it's not the big part of the market. So I think there is somewhat limited and in addition to that, right now we have no plan to go directly particularly at the high end to go directly to consumers.

The retailers themselves add a lot of value to the shopping experience that I don't think you can quite get by opening up box and putting your bicycle together. So, it's kind of limited there, I mean we're doing it more in the mass as you can see and with the Mongoose, but on the high end we have no plans.

Okay fair enough. And then on gross margin within, again within the sports business, so it sounds like some of the improvement there is just, is less discounting.

And I think the margin there been up for few quarters now. I guess how sustainable do you think that margin improvement is should we still be expecting that into the back half of this year as well, particularly the anniversary some of the improvement you already have?

Thanks.

Yes. I think there is more over the year, so currently, I think we’re still, for operating at a better level today, but we’re certainly not operating at the prime level.

I hope, there are little things that we can do better, which would again help us. Even our managing of our inventory so much better now that it was years ago, but still not perfect.

So I do think that there is more upside, we are going to get into points where perhaps that upside is less than now as we said anniversary some of the changes, you’re right about that. But we’re not at a peak, there is definitely more, there is more capability and improving.

Good afternoon. Congratulations in the quarter.

You guys have done an outstanding job of management expenses. How much more do you have, when you look at it in terms of managing expense side?

And kind of what do you have more margin goes on your or whether you think that can go?

I would say on the home furnishing side, we’re running at the way, we think it should be run at this point. There will be increases that sales go up, certainly spending on the IT part of that business which is becoming a key for us.

But other words, I think that business which find, I don’t know that there is an ability to reduce expenses a lot more in any area. Certainly, we’ll respond to business slowdown, we’ll respond with some cut back and expenses.

But I think expenses as a percentage of sales is probably in the right area, here we take a little bit.

And switching topics here, in terms of Juvenile business, what is the level of competition you're seeing in the car seat business? And what specifically have you been doing to expand returns there?

Thank you.

I think every business is very competitive. We’re certainly one of the, it’s not the leading player in the world and it’s product development.

I mean we’ve got some really great stuff coming out later this year and into next year. We have some new technology that we’ve introducing in Europe on the safety side.

We’ve got some new sheets that are being go from ground up, that will be introduce later probably into next year. And at the best way to gave in this area, it’s just go better products and safer products.

First question on the home furnishing side, on the home side, you mentioned in the relief that there is a higher input prices. Can you give us some color as what that relates to and basically if that, I guess material also impact the other segments as well?

Well, last year, I know sale of that significantly in Q1. Although having said, some of these prices are following since I mean a number of inputs were up, so we had sort of some negative pressure with input costs in home furnishings on the other side we have some positive impacts for mix and the few other things which basically is kept on our gross margin flat.

But right now, I think I don’t know or Martin I'll ask you, is there anything that continues to go up?

Nothing is going up, they are here. There are material's that are going down.

We didn’t see any of that effect in the first quarter because we are working some inventories that purchased under previous cost, but we will see a little bit of savings going forward, and we don’t anticipate anything going up.

I mean three months ago there was a lot more headwinds that it seemed like everything was going up and it was, and now it's kind of either leveled upward or in few cases, it started to creep downwards. So, it's less of a concern than it was three months ago.

Okay, that's helpful. And another one for me would be on the FX.

I mean obviously the USD on 138 approximately today, and some issues with the high USD couple of years back and so I just want to kind of understands what are some of the changes that were made to help to mitigate that anything on hedging or?

Normally, we talk about it in the terms of U.S. dollar, this time I'm going to talk about it in the Canadian dollars terms because against other currency, it's not really that bad.

I think Canadian dollars has been one of the worst performers so far this year. So, yes, and the Canadian dollar term was somewhat hedged between our imports and our exports, so corporately doesn't really have as a big impact.

We are more exposed to things like the euro, the pound, the Chilean peso, the Brazilian real. Those are the ones that we have more open exposure on and in many of those cases we are hedged for the balance of the year, but all those currencies have been relatively stable.

And in some cases like the Mexican peso has actually gained strength in the last first week to two months, and a lot of actually show a profit in our new Mexican operation. So, I think it's a Canadian dollar issues.

Okay. And then last one from me would be -- I appreciate the color on the on what's going on at Dorel Juvenile, China with all the changes that's you've been implementing.

Is there any specific cost associated to any of those changes and it still have that all been incurred yet?

No, there is really nothing. I mean we're switching our people.

We're bringing in more talent. In some cases, the new people are indentifying carriers in the factory where we might have redundant workers or redundant management and we're cleaning up, so at worse it's neutral.

Yes, now we did announce last year from the restructuring which effects the Chinese factory, so that's -- but there is no new announcements, there is no new, something new in the work.

Just on the Dorel Juvenile China business. The disruption that you saw in first quarter, is that isolated to Q1 in terms of the top line and plus…

There will be a little bit of adding Q2 as well. I think our goal is to be back to normal by the end of Q2, but that's our goal hasn’t happened yet.

But as Martin said, it's getting better, it's much better today than 11 month ago. And also part of the problem was just introducing so many new items into a factory at the same time it's not used to that, so once they finished introducing the item and they start running into the product line it's not new anymore.

And those problems go away. So, it should get better.

We are pretty confident it's going to be better. I can't give you the exact date when it's all back to normal.

But we are taking months -- we are not talking six months. We are talking in terms of weeks.

And then in the Sports business, you cited just some more inventory management on the IBD side. Is that largely related to weather, do you think?

Or is there -- or are inventories still too high in the channel?

Actually, what happened in the last year, we noticed the IBD slowly stepping back from pre-buying a lot of products and saying we are going to buy it as we need it, and that caused their inventories to go down and in theory supplier inventories to go up unless suppliers managed this better. What we are seeing now with the weak start to the weather is that they haven’t really opened up their buying yet.

They have all the inventory in their stores, but it's not the season's inventory yet. They -- it's one of those things that we were actually get we believe three or four weeks of great weather that the orders would be higher now than they would be a year ago where these guys had a lot more inventories.

So, in the channel, there is no question in that retail channel, there is less inventory than it was a year ago.

And is there a risk that -- I mean, I guess there's always a risk, but is there a risk that we see discounting in the next -- in future periods if sales don't pick up? Or are inventories low enough…

It is not about discounting, it's normal about discounting at this time of the year. We are expecting it.

We budgeted for it, but it's coming in. What we have seen is much lower than last year where in February there was significant double digit in discounting across the board.

So, now you are seeing a little bit of single digit on particular items. We are not leading that for sure and some people have access of a model.

And they'll discount that one and they don’t have other models, so there is no discounting there. So, it’s a much better position than we have last year.

I am talking industry wide.

Hi, guys, I don’t want to beat a dead horse, but just in terms of the bike again. Do you think you'll run into the same issue did a couple years ago where at the end of this season, if it ends poorly, you are going to be overloaded with call it 2017 models and not be able to sell or you would have to affectively discount those ones in order to push due to new ones?

We are not applying -- we haven’t bought anywhere near what we bought a couple of years ago and that’s the big difference. What we have extra bikes left at the end of the season probably for sure we will.

We have a number of models that are going to carryover. So, that there won't be --some of the data they stops going to all year around.

It's not going to end like it used in the middle of the summer. So, we are managing our business differently.

So, now, we won’t have the same problem as we had a couple of years ago. That doesn't mean there is going to be some discounted bike here and there, but not to the extent that you saw like two years ago.

And maybe just if you comment again on the -- what was driving the increase in SG&A Juvenile?

So, I think whether it would…

We can take it offline, if you want to?

Yes, I mean there is definitely we are spending on technology areas. We are trying to keep that -- we're trying to get that business to catch to the success that the Home business is having with the e-commerce sector.

So, there is some definite investments there. There is some areas, I guess some markets are doing much better.

We have had -- as we've mentioned before, we've had some particular success in places like Brazil in Juvenile, which is really interesting because the general economy in Brazil is terrible, and we have had an incredible double digit sales and earnings gains and certainly a double digit market share gain in that territory. So, in those areas we are spending more.

So, it's a bit of that as well and there is nothing that really stands out other than some technology spending.

And one final one from me and just for housekeeping. Just wonder if you can give us some of the terms on the new credit facility interest rate maturity so wonder if you could remind us as well -- what level of leverage you guys are comfortable with?

It will be in the MD&A file later this afternoon.

Okay.

There you can see all the details.

And then in terms of your levels of leverage that you are comfortable with Jeffrey?

Yes, we are at a good spot now. It's giving us more flexibility.

One of the big things we were not able to do under the last agreement was, get rid of the Brazilian GAAP which was significant at very high interest rate. This allowed us to pay that off and that’s been a big deal for us and that’s big part of the savings we're to going to have.

So, it gives us very flexibility, it allows us to grow the business better than it was under the old agreement. And you will some more details.

Just a follow-up there on the level position. Can you maybe give us a quick update on your adopt on capital allocation and how you are feeling about your current leverage position and the options you have for your future cash flow?

We are around 2.5 just under 2.5 and that’s a very comfortable spot for Dorel. We want to continue to pay down debt at this point.

We just had a Board of Directors meeting. We didn't look at any changes at this time and, but every meeting we sit down and we relook at it and look at our forecast.

We are going to certainly invest some more capital this year in R&D particularly on the Juvenile side, we have got some really, really good products that we want to get to our market next year. That’s our focus.

We were a little bit slow in getting new products and we had a point of one thing that sort of kept our revenue line flat in last couple of years. It’s not enough good products hitting the market.

So, we've got a good pipeline and we got to work it and you got to pay for it. So, that's -- there is going to be an increase in spending in that area in the next 12 to 18 months.

Okay, thank you. I want to thank everybody for joining us today.

And on behalf of the management, I want to invite you to join us our Annual Meeting scheduled for 10 AM, May 25th at the Ritz-Carlton hotel on the Sherbrooke Street in Montreal. Thank you all again and everybody have a great weekend.