NEWS RELEASE
DORMAN
New Since 1918
Corporate Headquarters:
Dorman Products, Inc.
3400 East Walnut Street
Colmar, Pennsylvania 18915
Fax: (215) 997-8577
For Further Information Contact: Visit our Home Page:
Mathias J. Barton, CFO www.dormanproducts.com
(215) 997-1800 x 5132
E-mail: MBarton@dormanproducts.com
Dorman Products, Inc. Reports Sales and Earnings for the Third Quarter Ended
September 29, 2007 and Announces Promotion of Steven Berman to President and
Chief Operating Officer
Colmar, Pennsylvania (October 25, 2007) - Dorman Products, Inc.,
(NASDAQ:DORM) today announced financial results for the third quarter ended
September 29, 2007.
Sales in the three months ended September 29, 2007 increased 11% to
$83.2 from $74.9 million in the same period last year. Revenues for the nine
months ended September 29, 2007 were up 12% to $243.3 million from $217.9
million last year. Revenues increased as a result of higher new product sales
and further penetration of existing automotive product lines.
Reported net income in the third quarter of 2007 was $5.7 million
compared to net income of $4.5 million in the same period last year. Reported
diluted earnings per share in the third quarter of 2007 were $0.31 compared to
$0.25 in the same period last year. Excluding the vacation adjustment discussed
below, net income in the third quarter of 2007 was $5.3 million compared to net
income of $4.5 million in the same period last year and diluted EPS in the third
quarter of 2007 increased 16% to $0.29 from $0.25 in the same period last year.
For the thirteen weeks ended September 29, 2007 and September 30, 2006:
o Gross profit margin increased to 35.5% from 35.0% in the same
period last year. The increase is the result of a more favorable
product mix and lower required provisions for excess and obsolete
inventory.
o Selling, general and administrative expenses increased 8%, but
declined from 24.6% to 23.9% of sales. Results for the thirteen
weeks ended September 29, 2007 also include a $0.4 million
reduction in vacation expense due to the vacation policy change
mentioned below.
o Interest expense, net, decreased to $0.5 million from $0.6 million due
to lower overall borrowing levels.
o Our effective tax rate increased to 37.9% in the thirteen weeks ended
September 29, 2007 from 37.1% in the same period last year. The
increase is the result of the loss of certain state tax benefits as
well as higher incremental state tax rates due to higher earnings level
in 2007.
Reported net income in the first nine months of 2007 was $15.5 million
compared to net income of $8.9 million in the same period last year. Reported
diluted earnings per share in the nine months ended September 29, 2007 were
$0.86 compared to $0.49 in the same period last year. Excluding the vacation
adjustment, goodwill impairment and deferred tax write off discussed below, net
income in the first nine months of 2007 was $14.7 million compared to net income
of $12.1 million in the same period last year and diluted EPS for the nine
months ended September 29, 2007 increased 21% to $0.81 from $0.67 in the same
period last year.
Effective December 31, 2006, we changed our vacation policy so that
vacation is earned ratably throughout the year rather than at the end of the
preceding year. This change will result in a reduction in our vacation accrual
of approximately $1.8 million in 2007. Results for the nine months ended
September 30, 2006 include a one-time $3.2 million non-cash write-down for
goodwill impairment ($2.9 million or $0.16 per share) and the write off of
deferred tax benefits ($0.3 million or $0.02 per share) associated with the
Company's Swedish subsidiary.
Mr. Richard Berman, Chairman, President and Chief Executive Officer
said, "Our sales and profit growth was once again driven by the success of our
new product offerings. Customers and end users alike continue to be enthusiastic
supporters of our new to the aftermarket product offerings. We look forward to
sharing many of these exciting new product opportunities with our customers
during next week's AAPEX/AAIW Show."
The Company also announced the promotion of Steven Berman to President
and Chief Operating Officer. Richard Berman will remain Chairman of the Board of
Directors and Chief Executive Officer. In announcing the promotion, Richard
Berman said, "Dorman is at an exciting stage in its development and this change
will enable me to focus more of my energy on vision, strategy and future growth.
Steven has been a vital part of the business since its formation almost thirty
years ago and has an intimate understanding of all aspects of the company's
operations. I am confident that Dorman will continue to grow and prosper under
his leadership. As part of our 2008-2009 plan we will be increasing
responsibility for other contributors as well to ensure that we have the best
infrastructure in place to capitalize on available growth opportunities."
Dorman Products, Inc. is a leading supplier of OE Dealer "Exclusive"
automotive replacement parts, automotive hardware, brake products, and household
hardware to the Automotive Aftermarket and Mass Merchandise markets. Dorman
products are marketed under the OE Solutions (TM), HELP! (R), AutoGrade (TM),
First Stop (TM), Conduct-Tite (R), Pik-A-Nut (R) and Scan-Tech (R) brand names.
Forward looking statements in this release are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such forward looking statements are subject to certain risks and uncertainties
that could cause actual results to differ materially from those projected.
Readers are cautioned not to place undue reliance on these forward looking
statements which speak only as of the date hereof. Factors that could cause
actual results to differ materially include, but are not limited to, those
factors discussed in the Company's 2006 Annual Report on Form 10-K under "Item
1A - Risk Factors."
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per-share amounts)
13 Weeks 13 Weeks
Third Quarter (unaudited) 9/29/07 Pct. 9/30/06 Pct.
Net sales $83,174 100.0 $74,891 100.0
Cost of goods sold 53,670 64.5 48,714 65.0
Gross profit 29,504 35.5 26,177 35.0
Selling, general and
administrative expenses 19,853 23.9 18,370 24.6
Income from operations 9,651 11.6 7,807 10.4
Interest expense, net 512 0.6 576 0.7
Income before income taxes 9,139 11.0 7,231 9.7
Provision for income taxes 3,460 4.2 2,682 3.6
Net income $ 5,679 6.8 $ 4,549 6.1
Earnings per share
Basic $ 0.32 - $ 0.26 -
Diluted $ 0.31 - $ 0.25 -
Average shares outstanding
Basic 17,695 - 17,708 -
Diluted 18,145 - 18,147 -
39 Weeks 39 Weeks
Year to date (unaudited) 9/29/07 Pct. 9/30/06 Pct.
Net sales $243,263 100.0 $217,943 100.0
Cost of goods sold 158,913 65.3 140,390 64.4
Gross profit 84,350 34.7 77,553 35.6
Selling, general and
administrative expenses 57,863 23.8 56,362 25.9
Goodwill impairment - - 2,897 1.3
Income from operations 26,487 10.9 18,294 8.4
Interest expense, net 1,551 0.6 1,797 0.8
Income before income taxes 24,936 10.3 16,497 7.6
Provision for income taxes 9,427 3.9 7,612 3.5
Net income $15,509 6.4 $ 8,885 4.1
Earnings per share
Basic $ 0.88 - $ 0.50 -
Diluted $ 0.86 - $ 0.49 -
Average shares outstanding
Basic 17,691 - 17,728 -
Diluted 18,130 - 18,148 -
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
9/30/07 12/30/06
Assets: (unaudited)
Cash and cash equivalents $ 6,148 $ 5,080
Accounts receivable 85,133 77,187
Inventories 77,905 67,768
Deferred income taxes 10,626 10,330
Prepaid expenses 1,675 1,443
Total current assets 181,487 161,808
Property & equipment 26,353 27,963
Goodwill 27,901 26,958
Other assets 1,015 1,029
Total assets $236,756 $217,758
Liability & Shareholders' Equity:
Current portion of long-term debt $25,253 $ 8,651
Accounts payable 19,509 12,822
Accrued expenses and other 11,421 13,531
Total current liabilities 56,183 35,004
Long-term debt and other 2,417 20,596
Deferred income taxes 7,830 8,315
Shareholders' equity 170,326 153,843
Total Liabilities and Equity $236,756 $217,758
Selected Cash Flow Information:
(in thousands) 13 Weeks (unaudited) 39 Weeks (unaudited)
-------------------- --------------------
9/29/07 9/30/06 9/29/07 9/30/06
Depreciation and
amortization $ 2,004 $1,731 $ 5,752 $5,012
Capital Expenditures $ 1,409 $1,637 $ 4,061 $5,432
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures
(in thousands, except per-share amounts)
Effective December 31, 2006, we changed our vacation policy so that
vacation is earned ratably throughout the year rather than at the end of the
preceding year. This change will result in a reduction in our vacation accrual
of approximately $1.8 million in 2007. As a result, vacation expense in cost of
goods sold and selling, general and administrative expenses will be reduced
during each of the fiscal quarters in 2007. Results for the nine months ended
September 30, 2006 include a one-time $3.2 million non-cash write-down for
goodwill impairment ($2.9 million or $0.16 per share) and the write off of
deferred tax benefits ($0.3 million or $0.02 per share) associated with the
Company's Swedish subsidiary. This press release contains non-GAAP measures
which adjust net income and diluted earnings per share to exclude the impact of
these items. The presentation of these non-GAAP measures is intended to enhance
the usefulness of the financial information by providing measures which the
Company's management uses internally to evaluate the Company's baseline
performance. A reconciliation of net income and diluted earnings per share
follows:
13 Weeks (unaudited)
----------- ---------------------------------
09/29/07 09/30/06 % Change
Net income, as reported $ 5,679 $ 4,549 24.8%
Less: Vacation adjustment, net of tax (332) - N/A
---------------- ------------------- -------------
Net income, as adjusted $ 5,347 $ 4,549 17.5%
================ =================== =============
Diluted EPS, as reported $ 0.31 $ 0.25 24.0%
Less: Vacation adjustment, net of tax (0.02) - N/A
---------------- ------------------- -------------
Diluted EPS, as adjusted $ 0.29 $ 0.25 16.0%
================ =================== =============
39 Weeks (unaudited)
---------------- ------------------- -------------
09/29/07 09/30/06 % Change
Net income, as reported $ 15,509 $ 8,885 74.6%
Less: Vacation adjustment, net of tax (821) - N/A
Add: Goodwill and deferred tax write offs - 3,216
---------------- ------------------- -------------
Net income, as adjusted $ 14,688 $ 12,101 21.4%
================ =================== =============
Diluted EPS, as reported $ 0.86 $ 0.49 75.5%
Less: Vacation adjustment, net of tax (0.05) - N/A
Add: Goodwill and deferred tax write offs - 0.18
---------------- ------------------- -------------
Diluted EPS, as adjusted $ 0.81 $ 0.67 20.9%
================ =================== =============