SOURCE: Dorman Products, Inc.

February 22, 2008 06:00 ET

Dorman Products, Inc. Reports Sales and Earnings for the Fourth Quarter and Year Ended December 29, 2007; Announces Stock Repurchase of up to 500,000 Shares

COLMAR, PA--(Marketwire - February 22, 2008) - Dorman Products, Inc. (NASDAQ: DORM) today announced financial results for the fourth quarter ended December 29, 2007.

Revenues for the year ended December 29, 2007 were up 11% to $327.7 million from $295.8 million last year. Sales increased primarily as a result of higher new product sales and further penetration of existing automotive product lines. The favorable effects of foreign currency exchange and the acquisition of the Consumer Products Division of Rockford Products Corporation ("Consumer Division") accounted for 1% of the 2007 sales growth.

Excluding the vacation adjustment and asset write downs discussed below, 2007 net income was $19.1 million compared to net income of $17.0 million last year and 2007 diluted EPS increased 12% to $1.05 from $0.94 last year. Reported net income for the year was $19.2 million compared to net income of $13.8 million last year. Reported diluted earnings per share for the year ended December 29, 2007 increased to $1.06 from $0.76 last year.

Sales in the three months ended December 29, 2007 increased 8% to $84.5 million from $77.9 million in the same period last year. Approximately 3% of the sales growth was the result of the acquisition of the Consumer Division and the favorable effects of foreign currency exchange.

Results for the thirteen weeks and year ended December 29, 2007 include a $0.4 million non-cash write down 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 2007 also include $1.8 million in vacation expense reductions as a result of the change in our vacation policy, $0.4 million of which was recorded in the fourth quarter. Results for the year ended December 30, 2006 include a $3.2 million non-cash write down for goodwill impairment and the write off of deferred tax benefits associated with our Swedish subsidiary.

Reported net income in the fourth quarter of 2007 was $3.7 million compared to net income of $4.9 million in the same period last year. Reported diluted earnings per share in the fourth quarter of 2007 were $0.20 compared to $0.27 in the same period last year. Excluding the vacation adjustment and asset write downs discussed above, net income in the fourth quarter of 2007 was $4.4 million compared to net income of $4.9 million in the same period last year and diluted EPS in the fourth quarter of 2007 decreased 11% to $0.24 from $0.27 in the same period last year.

For the thirteen weeks ended December 29, 2007 and December 30, 2006:

--  Gross profit margin of 33.3% was the same as the prior year as the
    impact of a less favorable product mix and higher expediting costs was
    offset by lower charges for excess and obsolete inventory during the
    quarter.
--  Selling, general and administrative expenses increased 16% over the
    prior year.  The increase is primarily the result of higher variable costs
    related to our 8% sales growth as well as our decision to invest more
    resources in engineering and new product development in 2007.
--  Interest expense, net, decreased to $0.3 million from $0.5 million due
    to lower overall borrowing levels.
--  Our effective tax rate increased to 48.7% from 38.6% in the prior
    year.  The increase is primarily the result of a goodwill impairment charge
    of our Canadian subsidiary which is not tax deductible and therefore had no
    income tax benefit associated with it.  In addition, our provision for
    income taxes includes a valuation allowance for deferred tax assets of the
    Canadian subsidiary.
    

Mr. Richard Berman, Chairman and Chief Executive Officer, said, "Our emphasis on new to the aftermarket parts resulted in strong sales growth in 2007 and a 12% year over year increase in net income before one time items. Fourth quarter organic sales growth slowed to 5% after double-digit increases in the last two quarters as a result of more difficult automotive aftermarket conditions. We believe that the need for continued investment in new products is more important now than ever before given market conditions. These investments demonstrate Dorman's long-term commitment to help our customers grow sales, market share and earnings."

The Company also announced that its Board of Directors has authorized the repurchase of up to 500,000 shares of Dorman's outstanding common stock. Under this new program, share repurchases may be made from time to time depending on market conditions, share price and availability and other factors at Dorman's discretion. Dorman's repurchase of shares will take place in open market transactions or in privately negotiated transactions in accordance with applicable laws.

Mr. Steven Berman, President, commented, "The Board's approval of this repurchase program is a reflection of the confidence that the board and management have in Dorman's operating fundamentals and growth prospects."

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®, 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 could cause actual results to differ materially include, but are not limited to, those factors discussed in the Companys 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
                              -------------------     -------------------
Fourth Quarter (unaudited)     12/29/07     Pct.       12/30/06     Pct.
Net sales                      $84,462     100.0       $77,882     100.0
Cost of goods sold              56,343      66.7        51,958      66.7
Gross profit                    28,119      33.3        25,924      33.3
Selling, general and
 administrative expenses        20,220      23.9        17,448      22.4
Goodwill impairment                414       0.5             -         -
Income from operations           7,485       8.9         8,476      10.9
Interest expense, net              305       0.4           470       0.6
Income before income taxes       7,180       8.5         8,006      10.3
Provision for income taxes       3,496       4.1         3,092       4.0
Net income                     $ 3,684       4.4       $ 4,914       6.3
Earnings per share
     Basic                     $  0.21         -       $  0.28         -
     Diluted                   $  0.20         -       $  0.27         -
Average shares outstanding
     Basic                      17,699         -        17,704         -
     Diluted                    18,132         -        18,113         -

                                   52 Weeks                52 Weeks
                              -------------------     -------------------
Year to date                   12/29/07     Pct.       12/30/06     Pct.
Net sales                     $327,725     100.0      $295,825     100.0
Cost of goods sold             215,256      65.7       192,348      65.0
Gross profit                   112,469      34.3       103,447      35.0
Selling, general and
 administrative expenses        78,083      23.8        73,810      25.0
Goodwill impairment                414       0.1         2,897       1.0
Income from operations          33,972      10.4        26,770       9.0
Interest expense, net            1,856       0.6         2,267       0.7
Income before income taxes      32,116       9.8        24,503       8.3
Provision for income taxes      12,923       3.9        10,704       3.6
Net income                     $19,193       5.9       $13,799       4.7
Earnings per share
     Basic                     $  1.08         -       $  0.78         -
     Diluted                   $  1.06         -       $  0.76         -
Average shares outstanding
     Basic                      17,693         -        17,722         -
     Diluted                    18,132         -        18,139         -



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

                                   12/30/07                12/30/06

Assets:
Cash and cash equivalents          $  6,918                $  5,080
Accounts receivable                  76,897                  77,187
Inventories                          80,565                  67,768
Deferred income taxes                10,111                  10,330
Prepaid expenses                      1,921                   1,443
Total current assets                176,412                 161,808
Property & equipment                 25,680                  27,963
Goodwill                             26,662                  26,958
Other assets                          1,901                   1,029
Total assets                       $230,655                $217,758

Liability & Shareholders= Equity:
Current portion of long-term debt  $  8,654                $  8,651
Accounts payable                     18,752                  12,822
Accrued expenses and other           10,718                  13,531
Total current liabilities            38,124                  35,004
Long-term debt and other             10,811                  20,596
Deferred income taxes                 7,862                   8,315
Shareholders= equity                173,858                 153,843
Total Liabilities and Equity       $230,655                $217,758


Selected Cash Flow Information:
(in thousands)                  13 Weeks (unaudited)         52 Weeks
                                -------------------     -------------------
                                12/29/07   12/30/06     12/29/07   12/30/06
Depreciation and
 amortization                   $ 1,992      $1,812     $ 7,744      $6,824
Capital Expenditures            $ 1,310      $1,846     $ 5,371      $7,278




                   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 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.
--  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 year ended December 30, 2006 include a $3.2 million
    non-cash write down for goodwill impairment ($2.9 million or $0.16 per
    share) and the write off of deferred tax assets ($0.3 million or $0.02 per
    share) associated with our Swedish 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)
                                              ----------------------------
                                              12/29/07   12/30/06 % Change
Net income, as reported                       $  3,684  $   4,914    -25.0%

  Less: Vacation adjustment, net of tax           (274)         -      N/A
  Add: Asset write downs                           998          -
                                              --------  --------- --------
Net income, as adjusted                       $  4,408  $   4,914    -10.3%
                                              ========  ========= ========

Diluted EPS, as reported                      $   0.20  $    0.27    -25.9%

  Less: Vacation adjustment, net of tax          (0.02)         -      N/A
  Add: Asset write downs                          0.06          -
                                              --------  --------- --------
Diluted EPS, as adjusted                      $   0.24  $    0.27    -11.1%
                                              ========  ========= ========

                                                        52 Weeks
                                              ----------------------------
                                              12/29/07   12/30/06 % Change
Net income, as reported                       $ 19,193  $  13,799     39.1%

  Less: Vacation adjustment, net of tax         (1,094)         -      N/A
  Add: Asset write downs                           998      3,216

                                              --------  --------- --------
Net income, as adjusted                       $ 19,097  $  17,015     12.2%
                                              ========  ========= ========

Diluted EPS, as reported                      $   1.06  $    0.76     39.5%

  Less: Vacation adjustment, net of tax          (0.06)         -      N/A
  Add: Asset write downs                          0.05       0.18

                                              --------  --------- --------
Diluted EPS, as adjusted                      $   1.05  $    0.94     11.7%
                                              ========  ========= ========

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