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 Third Quarter Ended
September 27, 2008
Colmar,Pennsylvania(October 31, 2008) - Dorman Products, Inc.
(NASDAQ:DORM) today announced financial results for the third quarter ended
September 27, 2008.
Sales increased 10% to $91.2 million for the three months ended
September 27, 2008 from $83.2 million last year. Revenue growth was driven by
several large line updates that shipped during the quarter, higher new product
sales and increased market penetration.
Reported net income in the third quarter of 2008 was $5.0 million
compared to net income of $5.7 million in the same period last year. Reported
diluted earnings per share in the third quarter of 2008 were $0.28 compared to
$0.31 in the same period last year. Prior year results include a $0.02 per share
benefit from a reduction in vacation expense as a result of a change in our
vacation policy. Excluding the impact of this adjustment, net income in the
third quarter of 2008 was $5.0 million compared to net income of $5.4 million in
the same period last year and diluted EPS in the third quarter of 2008 decreased
to $0.28 from $0.29 in the same period last year.
For the thirteen weeks ended September 27, 2008 and September 29, 2007:
o Gross profit margin was 32.4% compared to 35.5% in the prior year.
The decrease is primarily the result of strategic investments to grow
market share and higher material and shipping costs. During the second
and third quarters of 2008 we experienced significant increases in the
cost of our materials and transportation costs as a result of commodity
price increases and weakness in the U.S. dollar. We expect to be able
to offset a portion of these cost increases with higher selling prices
and through the use of alternate sources of supply.
o Selling, general and administrative expenses for the thirteen weeks
ended September 27, 2008 increased 6% to $21.0 million from $19.9
million in the same period last year. Results for the thirteen weeks
ended September 29, 2007, include a $0.4 million reduction in vacation
expense due to the vacation policy change mentioned above. A tighter
focus on cost control resulted in S,G&A increasing just 4% before the
vacation adjustment despite our 10% sales growth during the quarter.
Costs increased due to higher variable costs related to our sales
growth and increased staffing levels in product development,
engineering and quality control. These increases were partially offset
by cost reductions and incentive compensation expense which was
$0.3 million lower in the thirteen weeks ended September 27, 2008,
than in the prior year due to lower earnings levels in 2008.
o Interest expense, net, decreased to $0.2 million in the thirteen
weeks ended September 27, 2008 from $0.5 million in the same period
last year due to lower borrowing levels and interest rates.
Revenues for the nine months ended September 27, 2008 were up 8% to
$261.6 million from $243.3 million last year. The favorable effect of foreign
currency exchange and the net impact of an acquisition and a sale of assets
accounted for approximately 2% of the net sales increase. The remaining
increase is primarily the result of increased revenues from new product sales
and increased market penetration.
Reported net income in the first nine months of 2008 was $13.0 million
compared to net income of $15.5 million in the same period last year. Reported
diluted earnings per share in the nine months ended September 28, 2008 were
$0.72 compared to $0.86 in the same period last year. Excluding the vacation
adjustment in 2007, net income in the first nine months of 2008 was $13.0
million compared to net income of $14.7 million in the same period last year
and diluted EPS for the first nine months of 2008 decreased to $0.72 from $0.81
in the same period last year.
Mr. Richard Berman, Chairman and Chief Executive Officer, said, "Sales
growth in the quarter was strong as we shipped several large customer rollouts.
Our margin decline from the second quarter reflects the impact of rising
commodity prices and the weak dollar. We have not cut back on our new product
development efforts despite the softening economy as we remain committed to
maintaining our leadership position in aftermarket with innovative new products
and solutions for our customers and end users. We look forward to sharing many
of our most recent new product opportunities with our customers during next
week's AAPEX/AAIW Show."
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), Symmetry (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 2007 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) 9/27/08 Pct. 09/29/07 Pct.
Net sales $91,202 100.0 $83,174 100.0
Cost of goods sold 61,697 67.6 53,670 64.5
Gross profit 29,505 32.4 29,504 35.5
Selling, general and
administrative expenses 21,010 23.1 19,853 23.9
Income from operations 8,495 9.3 9,651 11.6
Interest expense, net 221 0.2 512 0.6
Income before income taxes 8,274 9.1 9,139 11.0
Provision for income taxes 3,226 3.6 3,460 4.2
Net income $ 5,048 5.5 $ 5,679 6.8
Earnings per share
Basic $ 0.29 - $ 0.32 -
Diluted $ 0.28 - $ 0.31 -
Average shares outstanding
Basic 17,660 - 17,695 -
Diluted 18,046 - 18,145 -
39 Weeks 39 Weeks
Year to Date (unaudited) 09/27/08 Pct. 09/29/07 Pct.
Net sales $261,638 100.0 $243,263 100.0
Cost of goods sold 177,265 67.8 158,913 65.3
Gross profit 84,373 32.2 84,350 34.7
Selling, general and
administrative expenses 62,463 23.8 57,863 23.8
Income from operations 21,910 8.4 26,487 10.9
Interest expense, net 774 0.3 1,551 0.6
Income before income taxes 21,136 8.1 24,936 10.3
Provision for income taxes 8,173 3.1 9,427 3.9
Net income $12,963 5.0 $15,509 6.4
Earnings per share
Basic $ 0.73 - $ 0.88 -
Diluted $ 0.72 - $ 0.86 -
Average shares outstanding
Basic 17,684 - 17,691 -
Diluted 18,059 - 18,130 -
DORMAN PRODUCTS, INC. SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
09/27/08 12/29/07
Assets:
Cash and cash equivalents $ 7,100 $ 6,918
Accounts receivable 84,865 76,897
Inventories 90,057 80,565
Deferred income taxes 10,751 10,111
Prepaid expenses 2,236 1,921
Total current assets 195,009 176,412
Property & equipment 25,555 25,680
Goodwill 26,633 26,662
Other assets 1,564 1,901
Total assets $248,761 $230,655
Liability & Shareholders' Equity:
Current portion of long-term debt $ 85 $ 8,654
Accounts payable 22,077 18,752
Accrued expenses and other 9,519 10,718
Total current liabilities 31,681 38,124
Long-term debt and other 22,935 10,811
Deferred income taxes 8,625 7,862
Shareholders' equity 185,520 173,858
Total Liabilities and Equity $248,761 $230,655
Selected Cash Flow Information:
(in thousands) 13 Weeks (unaudited) 39 Weeks (unaudited)
-------------------- --------------------
09/27/08 09/29/07 09/27/08 09/29/07
Depreciation and
amortization $ 1,893 $2,004 $ 5,707 $5,752
Capital Expenditures $ 2,189 $1,409 $ 5,792 $4,061
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 item:
- 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, $0.4 million of which
was recorded in the three months ended September 29, 2007, and
$1.3 million of which was recorded in the nine months ended
September 29, 2007.
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)
---------------------------------------------
09/27/08 09/29/07 %Change
Net income, as reported $ 5,048 $5,679 -11.1%
Less:Vacation adjustment
net of tax - (332) N/A
_____________________________________________
Net income, as adjusted $ 5,048 $5,347 -5.6%
_____________________________________________
Diluted EPS, as reported $ 0.28 $0.31 -9.7%
Less:Vacation adjustment
net of tax - (0.02) N/A
_____________________________________________
Diluted EPS, as adjusted $ 0.28 $0.29 -3.4%
_____________________________________________
39 Weeks (unaudited)
---------------------------------------------
09/27/08 09/29/07 %Change
Net income, as reported $ 12,963 $ 15,509 -16.4%
Less:Vacation adjustment
net of tax - (821) N/A
_____________________________________________
Net income, as adjusted $ 12,963 $ 14,688 -11.7%
_____________________________________________
Diluted EPS, as reported $ 0.72 $0.86 -16.3%
Less:Vacation adjustment
net of tax - (0.05) N/A
_____________________________________________
Diluted EPS, as adjusted $ 0.72 $0.81 -11.1%
_____________________________________________