SOURCE: Dorman Products, Inc.

February 27, 2009 06:00 ET

Dorman Products, Inc. Reports Sales and Earnings for the Fourth Quarter and Year Ended December 27, 2008

COLMAR, PA--(Marketwire - February 27, 2009) - Dorman Products, Inc. (NASDAQ: DORM) today announced financial results for the fourth quarter ended December 27, 2008.

Sales decreased 4.5% to $80.7 million for the three months ended December 27, 2008 from $84.5 million last year. The revenue drop was the result of a decline in demand across most of our product lines.

Reported net income in the fourth quarter of 2008 was $4.9 million compared to net income of $3.7 million in the same period last year. Reported diluted earnings per share in the fourth quarter of 2008 were $0.27 compared to $0.20 in the same period last year. Excluding the impact of the one-time items shown in the reconciliation of non-GAAP measures below, net income in the fourth quarter of 2008 was $4.2 million compared to net income of $4.4 million in the same period last year and diluted EPS in the fourth quarter of 2008 decreased to $0.23 from $0.24 in the same period last year.

Despite softness in the U.S. economy, revenues for the twelve months ended December 27, 2008 were up 4.5% to $342.3 million from $327.7 million last year. Revenue growth resulted from higher new product sales and further penetration of existing automotive lines.

Reported net income for the twelve months ended December 27, 2008 was $17.8 million compared to net income of $19.2 million in the same period last year. Reported diluted earnings per share in the twelve months ended December 27, 2008 were $0.99 compared to $1.06 in the same period last year. Excluding the impact of the one-time items shown in the reconciliation of non-GAAP measures below, net income in 2008 was $17.1 million compared to net income of $19.1 million in the same period last year and diluted EPS in 2008 decreased to $0.95 from $1.05 in the same period last year.

For the year ended December 27, 2008 and December 29, 2007:

--  Gross profit margin was 32.2% in 2008 compared to 34.3% in the prior
    year.  The decrease is primarily the result of strategic investments to
    grow market share and higher material and shipping costs.
--  Selling, general and administrative expenses in 2008 increased 4.7% to
    $81.8 million from $78.1 million in 2007.  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.  These
    increases were partially offset by incentive compensation expense which was
    $1.8 million lower in 2008 than in the prior year due to lower earnings
    levels.  Results for 2007 also include a $1.4 million reduction in vacation
    expense due to the vacation policy change mentioned above.
--  Interest expense, net, decreased to $0.9 million in 2008 from $1.9
    million in 2007 due to lower borrowing levels and interest rates.
--  Our effective tax rate decreased to 35.2% from 40.2% in the prior
    year.  The decrease is primarily the result of a $0.7 million tax benefit
    realized upon the disposition of our Canadian subsidiary.
    

Mr. Richard Berman, Chairman and Chief Executive Officer, said, "Our OE Solutions product lines continued to grow at double digit rates in the fourth quarter while most other lines declined due to softened demand. Our customers and end users continue to support our new products despite the weak economy. The strength of our balance sheet affords us the opportunity to make investments in new product development so that we can continue to enhance our leadership position in the 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™, 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 2007 Annual Report on Form 10-K under "Item 1" - Risk Factors.

                      DORMAN PRODUCTS, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations
                     (in thousands, except per-share amounts)

                                        13 Weeks               13 Weeks
                                        --------               --------
Fourth Quarter (unaudited)       12/27/08     Pct.      12/29/07     Pct.
Net sales                        $ 80,687     100.0     $ 84,462     100.0
Cost of goods sold                 54,875      68.0       56,343      66.7
Gross profit                       25,812      32.0       28,119      33.3
Selling, general and
 administrative expenses           19,318      24.0       20,220      23.9
Goodwill impairment                     -         -          414       0.5
Income from operations              6,494       8.0        7,485       8.9
Interest expense, net                 146       0.1          305       0.4
Income before income taxes          6,348       7.9        7,180       8.5
Provision for income taxes          1,498       1.9        3,496       4.1
Net income                       $  4,850       6.0     $  3,684       4.4
Earnings per share
     Basic                       $   0.27         -     $   0.21         -
     Diluted                     $   0.27         -     $   0.20         -
Average shares outstanding
     Basic                         17,649         -       17,699         -
     Diluted                       18,018         -       18,132         -

                                        52 Weeks               52 Weeks
                                        --------               --------
Year to Date                     12/27/08     Pct.      12/29/07     Pct.
Net sales                        $342,325     100.0     $327,725     100.0
Cost of goods sold                232,140      67.8      215,256      65.7
Gross profit                      110,185      32.2      112,469      34.3
Selling, general and
 administrative expenses           81,781      23.9       78,083      23.8
Goodwill impairment                     -         -          414       0.1
Income from operations             28,404       8.3       33,972      10.4
Interest expense, net                 920       0.3        1,856       0.6
Income before income taxes         27,484       8.0       32,116       9.8
Provision for income taxes          9,671       2.8       12,923       3.9
Net income                       $ 17,813       5.2     $ 19,193       5.9
Earnings per share
     Basic                       $   1.01         -     $   1.08         -
     Diluted                     $   0.99         -     $   1.06         -
Average shares outstanding
     Basic                         17,675         -       17,693         -
     Diluted                       18,049         -       18,132         -






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

                                         12/27/08            12/29/07
Assets:
Cash and cash equivalents                $  5,824            $  6,918
Accounts receivable                        77,101              76,897
Inventories                                93,577              80,565
Deferred income taxes                      11,626              10,111
Prepaid expenses                            2,135               1,921
Total current assets                      190,263             176,412
Property & equipment                       25,053              25,680
Goodwill                                   26,553              26,662
Other assets                                1,553               1,901
Total assets                             $243,422            $230,655

Liability & Shareholders' Equity:
Current portion of long-term debt        $     86            $  8,654
Accounts payable                           21,900              18,752
Accrued expenses and other                  8,040              10,718
Total current liabilities                  30,026              38,124
Long-term debt and other                   17,464              10,811
Deferred income taxes                       8,088               7,862
Shareholders' equity                      187,844             173,858
Total Liabilities and Equity             $243,422            $230,655


Selected Cash Flow Information:
(in thousands)                  13 Weeks (unaudited)   52 Weeks (unaudited)
                                --------------------   --------------------
                                12/27/08    12/29/07   12/27/08    12/29/07
Depreciation and
 amortization                   $  1,965    $  1,992   $  7,672    $  7,744
Capital Expenditures            $  1,531    $  1,310   $  7,323    $  5,371






                 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 one-time
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, $0.4
         million of which was recorded in the three months ended December
         29, 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 thirteen weeks and year ended December 27, 2008
         include a $0.7 million tax benefit realized upon the disposition
         of our Canadian 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)
                                              ----------------------------
                                              12/27/08  12/29/07  % Change
Net income, as reported                       $  4,850  $  3,684      31.7%

  Less: Vacation adjustment, net of tax              -      (274)      N/A
  Less: Tax benefit upon diposition of
   subsidiary                                     (673)        -       N/A
  Add: Asset write down                              -       998       N/A
                                              --------  --------  --------
Net income, as adjusted                       $  4,177  $  4,408      -5.2%
                                              ========  ========  ========

Diluted EPS, as reported                      $   0.27  $   0.20      35.0%

  Less: Vacation adjustment, net of tax              -     (0.02)      N/A
  Less: Tax benefit upon diposition of
   subsidiary                                    (0.04)        -       N/A
  Add: Asset write down                              -      0.06       N/A
                                              --------  --------  --------
Diluted EPS, as adjusted                      $   0.23  $   0.24      -4.2%
                                              ========  ========  ========

                                                  52 Weeks (unaudited)
                                              ----------------------------
                                              12/27/08   12/29/07 % Change
Net income, as reported                       $ 17,813  $ 19,193      -7.2%

  Less: Vacation adjustment, net of tax              -    (1,094)      N/A
  Less: Tax benefit upon diposition of
   subsidiary                                     (673)        -       N/A
  Add: Asset write down                              -       998       N/A

                                              --------  --------  --------
Net income, as adjusted                       $ 17,140  $ 19,097     -10.2%
                                              ========  ========  ========

Diluted EPS, as reported                      $   0.99  $   1.06      -6.6%

  Less: Vacation adjustment, net of tax              -     (0.06)      N/A
  Less: Tax benefit upon diposition of
   subsidiary                                    (0.04)                N/A
  Add: Asset write down                              -      0.05       N/A

                                              --------  --------  --------
Diluted EPS, as adjusted                      $   0.95  $   1.05      -9.5%
                                              ========  ========  ========

Contact Information

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

    Visit our Home Page:
    www.dormanproducts.com

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