SOURCE: Dorman Products, Inc.

May 02, 2008 06:00 ET

Dorman Products, Inc. Reports Sales and Earnings for the First Quarter Ended March 29, 2008

COLMAR, PA--(Marketwire - May 2, 2008) - Dorman Products, Inc. (NASDAQ: DORM) today announced financial results for the first quarter ended March 29, 2008.

Sales increased 8% to $80.1 million for the first quarter ended March 29, 2008 from $74.3 million last year. Revenues were up primarily as a result of higher new product sales.

Reported net income in the first quarter of 2008 was $2.7 million compared to net income of $4.1 million in the same period last year. Reported diluted earnings per share in the first quarter were $0.15 compared to $0.22 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 first quarter of 2008 was $2.7 million compared to net income of $3.8 million in the same period last year and diluted EPS in the first quarter of 2008 decreased to $0.15 from $0.21 in the same period last year.

For the thirteen weeks ended March 29, 2008 and March 31, 2007:

--  Gross profit margin was 30.8% compared to 34.7% in the prior year. The
    decline in margin resulted from higher material costs caused by commodity
    price increases and general weakness in the U.S. dollar, an increase in
    customer allowances and returns and a $0.8 million increase in air freight
    costs necessary to expedite product to fill customer orders.
--  Selling, general and administrative expenses increased 6% over the
    prior year. The increase is the result of higher variable costs related to
    our sales growth and increased staffing levels to support higher levels of
    new product development. These increases were partially offset by lower
    incentive compensation expense due to lower earnings levels in the current
    year.
--  Interest expense, net, decreased to $0.3 million from $0.5 million due
    to lower interest rates.
--  Our effective tax rate increased to 39.7% in the thirteen weeks ended
    March 29, 2008 from 37.2% in the same period last year. The increase is the
    result of the loss of certain state tax benefits and a $0.1 million charge
    to provide a valuation allowance against deferred tax assets of our
    Canadian subsidiary.
    

Mr. Richard Berman, Chairman and Chief Executive Officer, said, "It was good to see positive organic sales growth in an aftermarket that is generally flat. We continue to follow our long term growth plan to grow market share and customer satisfaction. Our recent price increases have not offset all of our cost increases, and in the first quarter we incurred substantial operating expenses such as air freight and overtime to ensure high service levels. We continue to build depth in our capability to introduce new product, accommodate continually increasing customer demands, and position ourselves to exploit opportunities that will likely arise in a tougher market. Though we are disappointed in the first quarter earnings, we remain committed and optimistic about the long-term success of our strategy."

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™, First 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 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
                                         --------              --------
First Quarter (unaudited)          03/29/08     Pct.     03/31/07     Pct.
Net sales                           $80,125    100.0      $74,293    100.0
Cost of goods sold                   55,422     69.2       48,517     65.3
Gross profit                         24,703     30.8       25,776     34.7
Selling, general and
 administrative expenses             19,984     24.9       18,785     25.3
Income from operations                4,719      5.9        6,991      9.4
Interest expense, net                   268      0.3          527      0.7
Income before income taxes            4,451      5.6        6,464      8.7
Provision for income taxes            1,769      2.3        2,402      3.2
Net income                          $ 2,682      3.3      $ 4,062      5.5
Earnings per share
  Basic                             $  0.15        -      $  0.23        -
  Diluted                           $  0.15        -      $  0.22        -
Average shares outstanding
  Basic                              17,699        -       17,689        -
  Diluted                            18,087        -       18,099        -


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

                                         03/29/08              12/29/07
Assets:
Cash and cash equivalents                $  6,899              $  6,918
Accounts receivable                        84,402                76,897
Inventories                                84,810                80,565
Deferred income taxes                      10,209                10,111
Prepaid expenses                            1,566                 1,921
Total current assets                      187,866               176,412
Property & equipment                       25,365                25,680
Goodwill                                   26,642                26,662
Other assets                                1,688                 1,901
Total assets                             $241,581              $230,655

Liability & Shareholders' Equity:
Current portion of long-term debt        $  8,655              $  8,654
Accounts payable                           19,936                18,752
Accrued expenses and other                  7,318                10,718
Total current liabilities                  35,909                38,124
Long-term debt and other                   20,040                10,811
Deferred income taxes                       8,152                 7,862
Shareholders' equity                      177,480               173,858
Total Liabilities and Equity             $241,581              $230,655


Selected Cash Flow Information:
(in thousands)                                 13 Weeks (unaudited)
                                               --------------------
                                               03/29/08    03/31/07
Depreciation and
 amortization                                   $ 1,929     $1,863
Capital Expenditures                            $ 1,535     $1,242


                  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 of which was recorded
    in the three months ended March 31, 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)
                                     -------------------------------------
                                       03/29/08     03/31/07     % Change
Net income, as reported              $     2,682  $     4,062        -34.0%

  Less: Vacation adjustment, net of
   tax                                         -         (249)         N/A

                                     -------------------------------------
Net income, as adjusted              $     2,682  $     3,813        -29.7%
                                     =====================================

Diluted EPS, as reported             $      0.15  $      0.22        -31.8%
  Less: Vacation adjustment, net of
   tax                                         -        (0.01)         N/A

                                     -------------------------------------
Diluted EPS, as adjusted             $      0.15  $      0.21        -28.6%
                                     ===========  ===========  ===========


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