NEWS RELEASE
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 Fourth Quarter and
Year Ended December 29, 2007; Announces Stock Repurchase of up to 500,000 shares
Colmar, Pennsylvania (February 22,2008) - Dorman Products, Inc.,
(NASDAQ:DORM) today announced financial results for the fourth quarter ended
December 29, 2007.
Revenues for the year ended December 29, 2007 were up 11% to $327.7
million from $295.8 million last year. Sales increased primarily as a result
of higher new product sales and further penetration of existing automotive
product lines. The favorable effects of foreign currency exchange and the
acquisition of the Consumer Products Division of Rockford Products Corporation
("Consumer Division") accounted for 1% of the 2007 sales growth.
Excluding the vacation adjustment and asset write downs discussed
below, 2007 net income was $19.1 million compared to net income of $17.0 million
last year and 2007 diluted EPS increased 12% to $1.05 from $0.94 last year.
Reported net income for the year was $19.2 million compared to net income of
$13.8 million last year. Reported diluted earnings per share for the year ended
December 29, 2007 increased to $1.06 from $0.76 last year.
Sales in the three months ended December 29, 2007 increased 8% to
$84.5 million from $77.9 million in the same period last year. Approximately
3% of the sales growth was the result of the acquisition of the Consumer
Division and the favorable effects of foreign currency exchange.
Results for the thirteen weeks and year ended December 29, 2007
include a $0.4 million non-cash write down of goodwill of our Canadian
subsidiary as a result of a strategic review and realignment of the business
as well as a $0.6 million non-cash charge to our provision for income taxes to
provide a valuation allowance for deferred tax assets of the subsidiary.
Results for 2007 also include $1.8 million in vacation expense reductions as a
result of the change in our vacation policy, $0.4 million of which was recorded
in the fourth quarter. Results for the year ended December 30, 2006 include a
$3.2 million non-cash write-down for goodwill impairment and the write off
of deferred tax benefits associated with our Swedish subsidiary.
Reported net income in the fourth quarter of 2007 was $3.7 million
compared to net income of $4.9 million in the same period last year. Reported
diluted earnings per share in the fourth quarter of 2007 were $0.20 compared to
$0.27 in the same period last year. Excluding the vacation adjustment and asset
write downs discussed above, net income in the fourth quarter of 2007 was $4.4
million compared to net income of $4.9 million in the same period last year and
diluted EPS in the fourth quarter of 2007 decreased 11% to $0.24 from $0.27 in
the same period last year.
For the thirteen weeks ended December 29, 2007 and December 30, 2006:
o Gross profit margin of 33.3% was the same as the prior year as the
impact of a less favorable product mix and higher expediting costs was
offset by lower charges for excess and obsolete inventory during the
quarter.
o Selling, general and administrative expenses increased 16% over the
prior year. The increase is primarily the result of higher variable
costs related to our 8% sales growth as well as our decision to invest
more resources in engineering and new product development in 2007.
o Interest expense, net, decreased to $0.3 million from $0.5 million
due to lower overall borrowing levels.
o Our effective tax rate increased to 48.7% from 38.6% in the prior
year. The increase is primarily the result of a goodwill impairment
charge of our Canadian subsidiary which is not tax deductible and
therefore had no income tax benefit associated with it. In addition,
our provision for income taxes includes a valuation allowance for
deferred tax assets of the Canadian subsidiary.
Mr. Richard Berman, Chairman and Chief Executive Officer said, "Our
emphasis on new to the aftermarket parts resulted in strong sales growth in 2007
and a 12% year over year increase in net income before one time items. Fourth
quarter organic sales growth slowed to 5% after double-digit increases in the
last two quarters as a result of more difficult automotive aftermarket
conditions. We believe that the need for continued investment in new products is
more important now than ever before given market conditions. These investments
demonstrate Dorman's long term commitment to help our customers grow sales,
market share and earnings."
The Company also announced that its Board of Directors has authorized
the repurchase of up to 500,000 shares of Dorman's outstanding common stock.
Under this new program, share repurchases may be made from time to time
depending on market conditions, share price and availability and other factors
at Dorman's discretion. Dorman's repurchase of shares will take place in open
market transactions or in privately negotiated transactions in accordance with
applicable laws.
Mr. Steven Berman, President commented, "The Board's approval of this
repurchase program is a reflection of the confidence that the board and
management have in Dorman's operating fundamentals and growth prospects."
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. stocktickerAND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per-share amounts)
13 Weeks 13 Weeks
Fourth Quarter (unaudited) 12/29/07 Pct. 12/30/06 Pct.
Net sales $84,462 100.0 $77,882 100.0
Cost of goods sold 56,343 66.7 51,958 66.7
Gross profit 28,119 33.3 25,924 33.3
Selling, general and
administrative expenses 20,220 23.9 17,448 22.4
Goodwill impairment 414 0.5 - -
Income from operations 7,485 8.9 8,476 10.9
Interest expense, net 305 0.4 470 0.6
Income before income taxes 7,180 8.5 8,006 10.3
Provision for income taxes 3,496 4.1 3,092 4.0
Net income $ 3,684 4.4 $ 4,914 6.3
Earnings per share
Basic $ 0.21 - $ 0.28 -
Diluted $ 0.20 - $ 0.27 -
Average shares outstanding
Basic 17,699 - 17,704 -
Diluted 18,132 - 18,113 -
52 Weeks 52 Weeks
Year to date 12/29/07 Pct. 12/30/06 Pct.
Net sales $327,725 100.0 $295,825 100.0
Cost of goods sold 215,256 65.7 192,348 65.0
Gross profit 112,469 34.3 103,447 35.0
Selling, general and
administrative expenses 78,083 23.8 73,810 25.0
Goodwill impairment 414 0.1 2,897 1.0
Income from operations 33,972 10.4 26,770 9.0
Interest expense, net 1,856 0.6 2,267 0.7
Income before income taxes 32,116 9.8 24,503 8.3
Provision for income taxes 12,923 3.9 10,704 3.6
Net income $19,193 5.9 $13,799 4.7
Earnings per share
Basic $ 1.08 - $ 0.78 -
Diluted $ 1.06 - $ 0.76 -
Average shares outstanding
Basic 17,693 - 17,722 -
Diluted 18,132 - 18,139 -
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
12/30/07 12/30/06
Assets:
Cash and cash equivalents $ 6,918 $ 5,080
Accounts receivable 76,897 77,187
Inventories 80,565 67,768
Deferred income taxes 10,111 10,330
Prepaid expenses 1,921 1,443
Total current assets 176,412 161,808
Property & equipment 25,680 27,963
Goodwill 26,662 26,958
Other assets 1,901 1,029
Total assets $230,655 $217,758
Liability & Shareholders' Equity:
Current portion of long-term debt $ 8,654 $ 8,651
Accounts payable 18,752 12,822
Accrued expenses and other 10,718 13,531
Total current liabilities 38,124 35,004
Long-term debt and other 10,811 20,596
Deferred income taxes 7,862 8,315
Shareholders' equity 173,858 153,843
Total Liabilities and Equity $230,655 $217,758
Selected Cash Flow Information:
(in thousands) 13 Weeks (unaudited) 52 Weeks
-------------------- --------
12/29/07 12/30/06 12/29/07 12/30/06
Depreciation and
amortization $ 1,992 $1,812 $ 7,744 $6,824
Capital Expenditures $ 1,310 $1,846 $ 5,371 $7,278
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures
(in thousands, except per-share amounts)
This press release contains non-GAAP measures which adjust net income and
diluted earnings per share to exclude the impact of the following items:
- 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 resulted in a reduction in our
vacation accrual of $1.8 million in 2007.
- Results for the thirteen weeks and year ended December 29, 2007
include $0.4 million in non-cash write downs of goodwill of our
Canadian subsidiary as a result of a strategic review and realignment
of the business as well as a $0.6 million non-cash charge to our
provision for income taxes to provide a valuation allowance for
deferred tax assets of the subsidiary.
- Results for the year ended December 30, 2006 include a $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 assets ($0.3 million or
$0.02 per share) associated with our Swedish subsidiary.
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)
------------------------------------------
12/30/06 12/30/06 %Change
Net income, as reported $ 3,684 $ 4,914 -25.0%
Less: Vacation adjustment, net of tax (274) - N/A
Add: Asset write downs 998 -
-----------------------------------------
Net income, as adjusted $ 4.408 $ 4,914 -10.3%
=========================================
Diluted EPS, as reported $ 0.20 $ 0.27 -25.9%
Less: Vacation adjustment, net of tax (0.02) - N/A
Add: Asset write down 0.06 - -
-----------------------------------------
Diluted EPS, as adjusted $ 0.24 $ 0.27 -11.0%
=========================================
52 Weeks
------------------------------------------
12/29/07 12/30/06 %Change
Net income, as reported $ 19,193 $ 13,799 39.1%
Less: Vacation adjustment, net of tax (1,094) N/A
Add: Asset write down 998 3,216
------------------------------------------
Net income, as adjusted $ 19,097 $ 17,015 12.2%
==========================================
Diluted EPS, as reported $ 1.06 $ 0.76 39.5%
Less: Vacation adjustment, net of tax (0.06) - N/A
Add: Asset write down 0.05 0.18
------------------------------------------
Diluted EPS, as adjusted $ 1.05 $ 0.94 11.7%
==========================================