SOURCE: Dorman Products, Inc.

August 01, 2008 06:00 ET

Dorman Products, Inc. Reports Sales and Earnings for the Second Quarter Ended June 28, 2008

COLMAR, PA--(Marketwire - August 1, 2008) - Dorman Products, Inc. (NASDAQ: DORM) today announced financial results for the second quarter ended June 28, 2008.

Sales increased 5% to $90.3 million for the three months ended June 28, 2008 from $85.8 million last year. Revenues for the six months ended June 28, 2008 were up 6% to $170.4 million from $160.1 million last year. The favorable effect of foreign currency exchange and the acquisition of the Consumer Division of Rockford Products Corporation accounted for approximately 3% of the net sales increase in both periods. The remaining increase is primarily the result of increased revenues from new product sales.

Reported net income in the second quarter of 2008 was $5.2 million compared to net income of $5.8 million in the same period last year. Reported diluted earnings per share in the second quarter of 2008 were $0.29 compared to $0.32 in the same period last year. Prior year results include a $0.01 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 second quarter of 2008 was $5.2 million compared to net income of $5.5 million in the same period last year and diluted EPS in the second quarter of 2008 decreased to $0.29 from $0.31 in the same period last year.

For the thirteen weeks ended June 28, 2008 and June 30, 2007:

--  Gross profit margin was 33.4% compared to 33.9% in the prior year.
    The decrease is primarily the result of higher material costs caused by
    higher commodity price increases and weakness in the U.S. dollar.
--  Selling, general and administrative expenses for the thirteen weeks
    ended June 28, 2008 increased 12% to $21.5 million from $19.2 million in
    the same period last year.  The increase is the result of higher variable
    costs related to our sales growth and increased staffing levels in product
    development, engineering and quality control.  Results for the thirteen
    weeks ended June 30, 2007 also include a $0.3 million reduction in vacation
    expense due to the vacation policy change mentioned above.
--  Interest expense, net, decreased to $0.3 million from $0.5 million due
    to lower interest rates.
--  Our effective tax rate decreased to 37.8% in the thirteen weeks ended
    June 28, 2008 from 38.1% in the same period last year.  The decrease is
    primarily the result of the reversal of reserves upon completion of the
    audit of our 2005 tax year by the Internal Revenue Service.
    

Reported net income in the first six months of 2008 was $7.9 million compared to net income of $9.8 million in the same period last year. Reported diluted earnings per share in the six months ended June 30, 2008 were $0.44 compared to $0.54 in the same period last year. Excluding the vacation adjustment discussed below, net income in the first six months of 2008 was $7.9 million compared to net income of $9.3 million in the same period last year and diluted EPS for the first six months of 2008 decreased to $0.44 from $0.52 in the same period last year.

Mr. Richard Berman, Chairman and Chief Executive Officer, said, "Sales growth in the quarter was 5% due to challenging aftermarket conditions. We also saw further increases in costs from rising commodity prices and the weak dollar that have not been offset by selling price increases. These factors combined to result in a decline in second quarter earnings. Our balance sheet is strong and we remain confident in the long-term success of our business despite these short term setbacks. We remain committed to maintaining our leadership position in aftermarket with innovative new products and solutions for our customers and end users."

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™, HELP!®, AutoGrade™, Second Stop™, Conduct-Tite®, Symmetry® and Scan-Tech® 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
                                -----------------        -----------------
Second Quarter (unaudited)      06/28/08    Pct.         06/30/07    Pct.
Net sales                       $ 90,311    100.0        $ 85,796    100.0
Cost of goods sold                60,146     66.6          56,726     66.1
Gross profit                      30,165     33.4          29,070     33.9
Selling, general and
 administrative expenses          21,469     23.8          19,225     22.4
Income from operations             8,696      9.6           9,845     11.5
Interest expense, net                285      0.3             512      0.6
Income before income taxes         8,411      9.3           9,333     10.9
Provision for income taxes         3,178      3.5           3,565      4.2
Net income                      $  5,233      5.8        $  5,768      6.7
Earnings per share
   Basic                        $   0.30        -        $   0.33        -
   Diluted                      $   0.29        -        $   0.32        -
Average shares outstanding
   Basic                          17,692        -          17,688        -
   Diluted                        18,041        -          18,129        -

                                    26 Weeks                 26 Weeks
                                -----------------        -----------------
Year to Date (unaudited)        06/28/08    Pct.         06/30/07    Pct.
Net sales                       $170,436    100.0        $160,089    100.0
Cost of goods sold               115,568     67.8         105,243     65.7
Gross profit                      54,868     32.2          54,846     34.3
Selling, general and
 administrative expenses          41,453     24.3          38,010     23.8
Income from operations            13,415      7.9          16,836     10.5
Interest expense, net                553      0.4           1,039      0.6
Income before income taxes        12,862      7.5          15,797      9.9
Provision for income taxes         4,947      2.9           5,967      3.8
Net income                      $  7,915      4.6        $  9,830      6.1
Earnings per share
   Basic                        $   0.45        -        $   0.56        -
   Diluted                      $   0.44        -        $   0.54        -
Average shares outstanding
   Basic                          17,695        -          17,689        -
   Diluted                        18,064        -          18,119        -



             DORMAN PRODUCTS, INC. AND SUBSIDIARIES
              Condensed Consolidated Balance Sheets
                          (Unaudited)
                         (in thousands)

                                      06/28/08       12/29/07
Assets:
Cash and cash equivalents             $   7,492      $   6,918
Accounts receivable                      82,079         76,897
Inventories                              87,888         80,565
Deferred income taxes                    10,306         10,111
Prepaid expenses                          3,103          1,921
Total current assets                    190,868        176,412
Property & equipment                     25,295         25,680
Goodwill                                 26,645         26,662
Other assets                              1,629          1,901
Total assets                          $ 244,437      $ 230,655

Liability & Shareholders' Equity:
Current portion of long-term debt     $   8,656      $   8,654
Accounts payable                         20,902         18,752
Accrued expenses and other                7,788         10,718
Total current liabilities                37,346         38,124
Long-term debt and other                 16,260         10,811
Deferred income taxes                     8,392          7,862
Shareholders' equity                    182,439        173,858
Total Liabilities and Equity          $ 244,437      $ 230,655


Selected Cash Flow Information:
(in thousands)                  13 Weeks (unaudited)   26 Weeks (unaudited)
                                --------------------   --------------------
                                06/28/08    06/30/07   06/28/08    06/30/07
Depreciation and
 amortization                   $  1,885    $  1,885   $  3,814    $  3,748
Capital Expenditures            $  2,068    $  1,410   $  3,603    $  2,652



                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 June 30, 2007, and $0.8
       million of which was recorded in the six months ended June 30, 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)
                                           ---------- ---------  ---------
                                            06/28/08  06/30/07   % Change
Net income, as reported                    $    5,233 $   5,768       -9.3%

  Less: Vacation adjustment, net of tax             -      (238)       N/A

                                           ---------- ---------  ---------
Net income, as adjusted                    $    5,233 $   5,530       -5.4%
                                           ========== =========  =========

Diluted EPS, as reported                   $     0.29 $    0.32       -9.4%

  Less: Vacation adjustment, net of tax             -     (0.01)       N/A

                                           ---------- ---------  ---------
Diluted EPS, as adjusted                   $     0.29 $    0.31       -6.5%
                                           ========== =========  =========

                                                 26 Weeks (unaudited)
                                           ---------- ---------  ---------
                                            06/28/08  06/30/07   % Change
Net income, as reported                    $    7,915 $   9,830      -19.5%

  Less: Vacation adjustment, net of tax             -      (487)       N/A

                                           ---------- ---------  ---------
Net income, as adjusted                    $    7,915 $   9,343      -15.3%
                                           ========== =========  =========

Diluted EPS, as reported                   $     0.44 $    0.54      -18.5%

  Less: Vacation adjustment, net of tax                   (0.02)       N/A

                                           ---------- ---------  ---------
Diluted EPS, as adjusted                   $     0.44 $    0.52      -15.4%
                                           ========== =========  =========

Contact Information

  • For Further Information Contact:
    Mathias J. Barton
    CFO
    (215) 997-1800 x 5132
    E-mail: Email Contact

    Corporate Headquarters:
    Dorman Products, Inc.
    3400 East Walnut Street
    Colmar, Pennsylvania 18915
    Fax: (215) 997-8577

    Visit our Home Page: www.dormanproducts.com