SOURCE: Dorman Products, Inc.

Dorman Products, Inc.

July 29, 2015 07:00 ET

Dorman Products, Inc. Reports Sales and Earnings for the Second Quarter Ended June 27, 2015

COLMAR, PA--(Marketwired - Jul 29, 2015) - Dorman Products, Inc. (NASDAQ: DORM)

Second Quarter Highlights:

  • Sales increased 1% to $198.7 million.

  • EPS increased 2% to $0.65 per diluted share.

  • Cash flow from operations increased to $11.1 million.

  • Number of new products introduced ramps up.

Dorman Products, Inc. (NASDAQ: DORM) today announced sales for the second quarter ended June 27, 2015 of $198.7 million, an increase of 1% from $196.2 million in the second quarter of 2014. Diluted earnings per share for the second quarter ended June 27, 2015 increased 2% to $0.65 per share from $0.64 per share in 2014.

Gross profit margin was 38.5% for the second quarter ended June 27, 2015 compared to 37.2% for the same period last year. The gross profit margin improvement was primarily due to a favorable sales mix shift and lower transportation costs. Selling, general and administrative expenses increased 9%, or $3.4 million, during the quarter as a result of $1.9 million in additional costs associated with our ERP conversion. These incremental costs decreased from $2.8 million in the first quarter of 2015. The ERP-related expenses in the second quarter include $1.0 million in increased distribution costs (down from $1.7 million in the first quarter), ongoing incremental spending of $0.4 million in support costs and $0.5 million in additional depreciation expense. Distribution costs are expected to return to historical levels by the end of the third quarter.

 "The second quarter of 2015 sales growth rate was impacted by the 21% growth experienced in the second quarter of 2014 and the ongoing inventory reduction program by one customer. Softer market conditions also led to a reduction in product sell-through when compared to the first quarter and the prior year, but remain at encouraging levels," said Mr. Steven Berman, Chairman and Chief Executive Officer. "Growth rates in the second half of the year are expected to improve as the difficult comps of the prior year are behind us."

For the six months ended June 27, 2015, sales increased 2% over the comparable prior year period to $387.2 million from $379.7 million last year. Diluted earnings per share in 2015 declined 2% to $1.25 from $1.28 in the same period last year. Operating cash flow increased to $34.9 million for the first six months of 2015 compared to $19.2 million in the first six months of 2014.

"During the first half of 2015, sales from products introduced in the last 24 months represented 20% of our sales, which is down from 22% in fiscal 2014. The reduction is due to one large customer that has delayed expansion of new product placements that we believe will eventually normalize, and a slower new product introduction rate over the last 9 months," continued Mr. Berman. "We increased the number of new products released in the second quarter to 1,012 from 701 in the first quarter as we move beyond the distraction caused by the ERP implementation. Including the 690 new parts introduced in July, we are now ahead of last year's new product introduction pace and believe we will exceed prior year introductions by approximately 10%. The number of new parts introduced is a metric which helps us drive future longer term sales growth and does not have significant impact on sales in the quarter when these parts are introduced."

Dorman Products, Inc. is a leading supplier of 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 Dorman®, OE Solutions™, HELP!®, AutoGrade™, First Stop™, Conduct-Tite®, TECHoice™, Dorman® Hybrid Drive Batteries and Dorman HD Solutions™ brand names.

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to the Company's future growth rates. Words such as "believe," "demonstrate," "expect," "estimate," "forecast," "anticipate," "should" and "likely" and similar expressions identify forward-looking statements. In addition, statements that are not historical should also be considered forward-looking statements. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date the statement was made. Such forward-looking statements are based on current expectations that involve a number of known and unknown risks, uncertainties and other factors which may cause actual events to be materially different from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, competition in the automotive aftermarket industry, concentration of the Company's sales and accounts receivable among a small number of customers, the impact of consolidation in the automotive aftermarket industry, foreign currency fluctuations, dependence on senior management and other risks detailed in the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 27, 2014. The Company is under no obligation to (and expressly disclaims any such obligation to) update any of the information in this press release if any forward-looking statement later turns out to be inaccurate whether as a result of new information, future events or otherwise.

Visit our website at www.dormanproducts.com

 
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per-share data)
                 
    13 Weeks   13 Weeks
Second Quarter (unaudited)   6/27/15   Pct.   6/28/14   Pct.
Net sales   $ 198,721   100.0   $ 196,187   100.0
Cost of goods sold     122,151   61.5     123,226   62.8
Gross profit     76,570   38.5     72,961   37.2
Selling, general and administrative expenses     39,675   19.9     36,261   18.5
Income from operations     36,895   18.6     36,700   18.7
Interest expense, net     52   0.1     63   -
Income before income taxes     36,843   18.5     36,637   18.7
Provision for income taxes     13,700   6.9     13,393   6.9
Net income   $ 23,143   11.6   $ 23,244   11.8
                     
Diluted earnings per share   $ 0.65       $ 0.64    
                     
Weighted average diluted shares outstanding     35,614         36,471    
                     
 
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per-share data)
                 
    26 Weeks   26 Weeks
Second Quarter (unaudited)   6/27/15   Pct.   6/28/14   Pct.
Net sales   $ 387,195   100.0   $ 379,699   100.0
Cost of goods sold     237,732   61.4     235,096   61.9
Gross profit     149,463   38.6     144,603   38.1
Selling, general and administrative expenses     78,916   20.4     70,956   18.7
Income from operations     70,547   18.2     73,647   19.4
Interest expense, net     104   -     102   -
Income before income taxes     70,443   18.2     73,545   19.4
Provision for income taxes     25,961   6.7     26,750   7.1
Net income   $ 44,482   11.5   $ 46,795   12.3
                     
Diluted earnings per share   $ 1.25   -   $ 1.28   -
                     
Weighted average diluted shares outstanding     35,629   -     36,514   -
                     
 
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
         
    6/27/15   12/27/14
Assets:            
Cash and cash equivalents   $ 67,199   $ 47,656
Accounts receivable     197,292     206,035
Inventories     198,782     173,523
Deferred income taxes     25,701     25,103
Prepaid expenses     3,827     3,147
Total current assets     492,801     455,464
Property & equipment     85,202     82,270
Goodwill and other intangible assets     29,939     29,989
Other assets     17,351     12,645
Total assets   $ 625,293   $ 580,368
             
Liabilities & Shareholders' Equity:            
Accounts payable   $ 67,411   $ 59,541
Accrued expenses and other     26,642     31,292
Total current liabilities     94,053     90,833
Other long-term liabilities     4,632     4,822
Deferred income taxes     21,835     22,652
Shareholders' equity     504,773     462,061
Total Liabilities and Equity   $ 625,293   $ 580,368
             
                 
Selected Cash Flow Information:                
(in thousands)   13 Weeks (unaudited)   26 Weeks (unaudited)
    6/27/15   6/28/14   6/27/15   6/28/14
Depreciation, amortization and accretion   $ 3,978   $ 2,976   $ 7,596   $ 5,836
Capital expenditures   $ 5,267   $ 8,870   $ 11,016   $ 15,878