SOURCE: Dorman Products, Inc.

May 03, 2007 06:00 ET

Dorman Products, Inc. Reports Sales and Earnings for the First Quarter Ended March 31, 2007

COLMAR, PA -- (MARKET WIRE) -- May 3, 2007 -- Dorman Products, Inc. (NASDAQ: DORM) today announced financial results for the first quarter ended March 31, 2007. Sales increased 8% to $74.3 million for the first quarter ended March 31, 2007 from $68.9 million in the same period last year.

Reported net income in the first quarter of 2007 was $4.1 million compared to net income of $3.4 million in the same period last year. Reported diluted earnings per share in the first quarter were $0.22 compared to $0.19 in the same period last year.

--  Revenues increased primarily as a result of higher new product sales.
    Growth in our non-automotive products and further penetration of existing
    automotive product lines also contributed to the sales increase.
    Approximately 1% of our 2007 net sales increase was due to the favorable
    effect of foreign currency exchange.
--  Gross profit margin decreased to 34.7% from 35.9% in the same period
    last year.  The margin declines are the result of higher product return
    costs and initiatives designed to maintain and increase market share for us
    and our customers.  We partially offset the impact of these initiatives
    through material cost savings from suppliers.
--  Selling, general and administrative expenses were essentially
    unchanged, but declined from 27.1% to 25.3% of sales.  We were able to
    offset inflationary cost increases and variable spending increases related
    to sales growth with cost reductions and a $0.3 million reduction in
    vacation expense due to the vacation policy change mentioned below.
--  Interest expense, net, decreased to $0.5 million from $0.6 million due
    to lower overall borrowing levels.
--  Our effective tax rate increased slightly to 37.2% from 37.1% in the
    same period last year.  We adopted the provisions of Financial Accounting
    Standards Board Interpretation No. 48 Accounting for Uncertainty in Income
    Taxes ("FIN 48"), an interpretation of FASB Statement No. 109 ("SFAS 109")
    effective December 31, 2006. As a result of the implementation of FIN 48,
    we recognized no material adjustment in the liability for unrecognized
    income tax benefits.
    
Effective December 31, 2006 (the first day of our fiscal 2007), 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 $1.6 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 three months ended March 31, 2007 include vacation expense reductions of $0.1 million and $0.3 million in cost of goods sold and selling, general and administrative expenses, respectively.

Excluding the vacation adjustment discussed above, net income in the first quarter increased 11% to $3.8 million from $3.4 million last year and fully diluted EPS for the three months ended March 31, 2007 increased 11% to $0.21 from $0.19 last year.

Mr. Richard Berman, Chairman, President and Chief Executive Officer, said, "Strong first quarter sales growth along with responsible spending control enabled us to further leverage our fixed overhead expenses to drive earnings growth. Our customers have embraced our initiative to sell products that were previously only available at the OE dealer. As a result, our OE Solutions line is one of the fastest growing lines in the aftermarket. We intend to maintain this 'First to Market' approach as there are many more new product opportunities available for Dorman and the aftermarket."

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 automotive parts and hardware are marketed under the OE Solutions™, HELP!®, AutoGrade™, First Stop™, Conduct-Tite®, Pik-A-Nut® 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 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)            3/31/07    Pct.      4/01/06    Pct.
Net sales                           $ 74,293    100.0    $ 68,865    100.0
Cost of goods sold                    48,517     65.3      44,176     64.1
Gross profit                          25,776     34.7      24,689     35.9
Selling, general and administrative
 expenses                             18,785     25.3      18,659     27.1
Income from operations                 6,991      9.4       6,030      8.8
Interest expense, net                    527      0.7         590      0.9
Income before income taxes             6,464      8.7       5,440      7.9
Provision for income taxes             2,402      3.2       2,020      2.9
Net income                          $  4,062      5.5    $  3,420      5.0
Earnings per share
   Basic                            $   0.23        -    $   0.19        -
   Diluted                          $   0.22        -    $   0.19        -
Average shares outstanding
   Basic                              17,689        -      17,744        -
   Diluted                            18,099        -      18,158        -





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

                                                     3/31/07      12/30/06
Assets:                                            (unaudited)
Cash and cash equivalents                          $   7,320     $    5,080
Accounts receivable                                   75,345         77,187
Inventories                                           69,015         67,768
Deferred income taxes                                 10,402         10,330
Prepaid expenses                                       1,260          1,443
Total current assets                                 163,342        161,808
Property & equipment                                  27,339         27,963
Goodwill                                              26,966         26,958
Other assets                                             881          1,029
Total assets                                       $ 218,528      $ 217,758

Liability & Shareholders' Equity:
Current portion of long-term debt                  $   8,652      $   8,651
Accounts payable                                      12,515         12,822
Accrued expenses and other                            10,744         13,531
Total current liabilities                             31,911         35,004
Long-term debt and other                              19,576         20,596
Deferred income taxes                                  9,674          8,315
Shareholders' equity                                 157,367        153,843
Total Liabilities and Equity                       $ 218,528      $ 217,758


Selected Cash Flow Information:
(in thousands)                                    Quarter Ended (unaudited)
                                                  ------------------------
                                                     3/31/07       4/01/06
Depreciation and
 amortization                                      $    1,863    $    1,622
Capital Expenditures                               $    1,242    $    1,502


                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 $1.6 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. This press release contains non-GAAP measures which adjust current year net income and fully diluted earnings per share to exclude the impact of this adjustment to vacation expense. 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 fully diluted earnings per share follows:
                                             13 Weeks (unaudited)
                                     -------------------------------------
                                        03/31/07      04/01/06    % Change
Net income, as reported              $     4,062  $      3,420        18.8%
  Less: Vacation adjustment, net
   of tax                                   (249)            -         N/A
                                     -----------  ----------- -----------
Net income, as adjusted              $     3,813  $      3,420        11.5%
                                     ===========  ============ ===========


Fully diluted EPS, as reported       $      0.22  $       0.19        15.8%
  Less: Vacation adjustment, net
   of tax                                  (0.01)            -         N/A
Fully diluted EPS, as adjusted       $      0.21  $       0.19        10.5%
                                     ===========  ============ ===========

Contact Information

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

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

    Visit our Home Page:
    www.dormanproducts.com