Sign In  |  Register  |  About Mill Valley  |  Contact Us

Mill Valley, CA
September 01, 2020 1:29pm
7-Day Forecast | Traffic
  • Search Hotels in Mill Valley

  • CHECK-IN:
  • CHECK-OUT:
  • ROOMS:

Dorman Products, Inc. Reports Second Quarter 2023 Results

Highlights (All comparisons are to the prior year period unless otherwise noted):

  • Net sales of $480.6 million, up 15%
  • Diluted earnings per share (“EPS”) of $1.04, compared to $1.20
  • Adjusted diluted EPS* of $1.01, compared to $1.29
  • Generated $67 million of cash from operating activities; repaid $52 million of debt
  • The Company confirms its full-year 2023 guidance of net sales of $1.95 billion to $2.00 billion, diluted EPS of $4.35 to $4.55, and adjusted diluted EPS* of $5.15 to $5.35

COLMAR, Pa., Aug. 01, 2023 (GLOBE NEWSWIRE) -- Dorman Products, Inc. (the “Company” or “Dorman”) (NASDAQ:DORM), a leading supplier in the motor vehicle aftermarket industry, today announced its financial results for the second quarter ended July 1, 2023.

Second Quarter Financial Results
The Company reported second quarter 2023 net sales of $480.6 million, up 15% compared to net sales of $417.4 million in the second quarter of 2022. The sales growth was primarily driven by the addition of SuperATV, along with price increases to offset inflation and the introduction of new products to the market. Net sales growth excluding acquisitions was 1% compared to the second quarter of 2022, and 16% compared to the second quarter of 2021.

Gross profit was $163.5 million in the second quarter of 2023, or 34.0% of net sales, compared to $141.5 million, or 33.9% of net sales, for the same quarter last year. Adjusted gross margin* was 35.1% in the second quarter of 2023 compared to 34.0% in the same quarter last year. The 110-basis-point increase in adjusted gross margin* is primarily due to the recognition of sales of lower-cost inventory, price increases and the addition of SuperATV, which has a higher gross margin percentage than the Company average. In addition, adjusted gross margin* increased 270 basis points compared to the first quarter of 2023.

Selling, general and administrative (“SG&A”) expenses were $108.3 million, or 22.5% of net sales, in the second quarter of 2023 compared to $92.1 million, or 22.1% of net sales, for the same quarter last year. Adjusted SG&A expenses* were $114.4 million, or 23.8% of net sales, in the second quarter of 2023 compared to $88.7 million, or 21.3% of net sales, in the same quarter last year. The increase in adjusted SG&A expenses* as a percentage of net sales was due primarily to the addition of SuperATV, which has higher SG&A expenses as a percentage of net sales than the Company average, and the impact of higher interest rates on our customer accounts receivable factoring programs.

Net interest expense was $12.6 million for the second quarter of 2023 compared to $1.6 million for the same quarter last year. The increase of $11.0 million primarily reflects the addition of the term loan used to complete the acquisition of SuperATV in October 2022, and significantly higher interest rates compared to the prior year.

Income tax expense was $10.3 million, or 23.8% of income before income taxes, compared to $10.1 million, or 21.1% of income before income taxes, in the same quarter last year. The increase in the effective tax rate was due to an increase in state tax expense and the effect of foreign operations.

Net income for the second quarter of 2023 was $32.8 million, or $1.04 per diluted share, compared to $37.9 million, or $1.20 per diluted share, in the prior-year quarter. Adjusted net income* in the second quarter of 2023 was $31.9 million, or $1.01 per diluted share, compared to $40.6 million, or $1.29 per diluted share, in the prior-year quarter.

Kevin Olsen, Dorman’s President and Chief Executive Officer, stated, “We reported another solid quarter due to the continuous dedication and hard work of our Contributors. Overall, the quarter played out largely as expected. The forecasted sequential improvement in adjusted gross margin* materialized as we saw a 270 basis-point improvement over the first quarter of 2023, which drove adjusted diluted EPS* growth of more than 80% over the same period. We expect to see gross margins continue to improve throughout the second half of 2023, as a large portion of products sourced when inflationary pressures were much higher are now out of our inventory.

“We were pleased with net sales performance, recognizing that we were up against strong prior year comparables. During the first half of 2022, we believe we benefited from customers restocking their inventories as global supply chains rebounded from the impact of the global pandemic. As a result, our shipments outpaced customer point-of-sale over that time frame. Year-to-date, end-user demand for our products has remained strong as our customer point-of-sale growth was estimated to be in the low double digits, and we expect this demand profile to continue throughout the balance of 2023.

“SuperATV, our latest acquisition, continues to perform well. The business generated high-single-digit year-over-year sales growth and was accretive to both our overall operating margin and EPS in the quarter. We couldn’t be happier with the team, which continues to deliver on our integration and synergy plans.

“As global supply chains have improved, we have been able to reduce inventory $113 million from December 31, 2022. Lower inventory drove a robust $67 million of cash from operating activities in the quarter, which was used to repay $52 million of indebtedness, for a total repayment of $79 million for the first half of 2023. We expect strong cash flows to continue in the second half of 2023, driven by further inventory reductions, and to further pay down our debt.

“Regarding new product development, we launched hundreds of new products during the quarter, including a new Dorman® OE FIX™ engine heater hose assembly and torque converter lock-up solenoid, a first-to-the-aftermarket suspension sway bar bracket kit, and additional offerings for the Electric Vehicle (EV) market. We believe that our focus on innovation and new product development will enable us to continue to deliver the products desired by end users and help drive profitable growth for our customers.”

2023 Guidance
The Company confirms its full-year 2023 guidance, detailed in the table below, which includes the impact of the SuperATV acquisition but excludes any potential impacts from future acquisitions, additional supply chain disruptions, significant interest rate increases, or share repurchases.

 2023 Fiscal Year  
Net Sales$1.95B - $2.00B 
Growth vs. 202212.5% - 15.4% 
Diluted EPS$4.35 - $4.55 
Growth vs. 202213.0% - 18.2% 
Adjusted Diluted EPS*$5.15 - $5.35 
Growth vs. 20228.2% - 12.4% 
Tax Rate Estimate24% 
   

About Dorman Products
Dorman gives professionals, enthusiasts and owners greater freedom to fix motor vehicles. For over 100 years, we have been driving new solutions, releasing tens of thousands of aftermarket replacement products engineered to save time and money and increase convenience and reliability.

Founded and headquartered in the United States, we are a pioneering global organization offering an always-evolving catalog of products, covering cars, trucks and specialty vehicles, from chassis to body, from underhood to undercarriage, and from hardware to complex electronics.

*Non-GAAP Measures
In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings release also contains Non-GAAP financial measures. The reasons why we believe these measures provide useful information to investors and a reconciliation of these measures to the most directly comparable GAAP measures and other information relating to these Non-GAAP measures are included in the supplemental schedules attached.

Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to net sales, diluted and adjusted diluted earnings per share, gross profit, gross margin, adjusted gross margin, SG&A, adjusted SG&A, income tax expense, income before income taxes, net income, cash and cash equivalents, indebtedness, liquidity, the Company’s share repurchase program, the Company’s outlook and distribution facility costs and productivity initiatives. Words such as “believe,” “demonstrate,” “expect,” “estimate,” “forecast,” “anticipate,” “plan,” “should,” “will” and “likely” and similar expressions identify forward-looking statements. However, the absence of these words does not mean the statements are not forward-looking. 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 such statements were made. Such forward-looking statements are based on current expectations that involve a number of known and unknown risks, uncertainties and other factors (many of which are outside of our control). Such risks, uncertainties and other factors relate to, among other things: competition in and the evolution of the motor vehicle aftermarket industry; changes in our relationships with, or the loss of, any customers or suppliers; our ability to develop, market and sell new and existing products; our ability to anticipate and meet customer demand; widespread public health pandemics, such as COVID-19; our ability to purchase necessary materials from our suppliers and the impacts of any related logistics constraints; financial and economic factors, such as our level of indebtedness, fluctuations in interest rates and inflation; political and regulatory matters, such as changes in trade policy, the imposition of tariffs and climate regulation; our ability to protect our intellectual property and defend against any claims of infringement; and our ability to protect our information security systems and defend against cyberattacks.. Please refer to “Statement Regarding Forward-Looking Statements” and “Item 1A. Risk Factors” located in Part I of our in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”), as updated by our subsequent filings with the SEC, for a description of these and other risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements. The Company is under no obligation to, and expressly disclaims any such obligation to, update any of the information in this document, including but not limited to any situation where any forward-looking statement later turns out to be inaccurate whether as a result of new information, future events or otherwise.

Investor Relations Contact
Michael P. Dickerson
Vice President, Investor Relations and Risk Management
mdickerson@dormanproducts.com
(517) 667-4003

Visit our website at www.dormanproducts.com. The Investor Relations section of the website contains a significant amount of information about Dorman, including financial and other information for investors. Dorman encourages investors to visit its website periodically to view new and updated information.

 
DORMAN PRODUCTS, INC.
Consolidated Statements of Operations
(in thousands, except per-share amounts)
 
 Three Months Ended Three Months Ended
(unaudited)7/1/23 Pct.* 6/25/22 Pct. *
Net sales$480,568  100.0  $417,419  100.0 
Cost of goods sold 317,062  66.0   275,894  66.1 
Gross profit 163,506  34.0   141,525  33.9 
Selling, general and administrative expenses 108,308  22.5   92,058  22.1 
Income from operations 55,198  11.5   49,467  11.9 
Interest expense, net 12,565  2.6   1,565  0.4 
Other income, net (396) (0.1)  (111) (0.0)
Income before income taxes 43,029  9.0   48,013  11.5 
Provision for income taxes 10,259  2.1   10,108  2.4 
Net income$32,770  6.8  $37,905  9.1 
        
Diluted earnings per share$1.04    $1.20   
        
Weighted average diluted shares outstanding 31,528     31,535   
        
 Six Months Ended Six Months Ended
(unaudited)7/1/23 Pct.* 6/25/22 Pct. *
Net sales$947,306  100.0  $818,998  100.0 
Cost of goods sold 639,323  67.5   544,233  66.5 
Gross profit 307,983  32.5   274,765  33.5 
Selling, general and administrative expenses 234,671  24.8   178,586  21.8 
Income from operations 73,312  7.7   96,179  11.7 
Interest expense, net 24,518  2.6   2,796  0.3 
Other income, net (753) (0.1)  (195) 0.0 
Income before income taxes 49,547  5.2   93,578  11.4 
Provision for income taxes 11,094  1.2   20,466  2.5 
Net income$38,453  4.1  $73,112  8.9 
        
Diluted earnings per share$1.22    $2.32   
        
Weighted average diluted shares outstanding 31,533     31,568   

* Percentage of sales. Data may not add due to rounding.


DORMAN PRODUCTS, INC.
Consolidated Balance Sheets
(in thousands, except share data)
 
(unaudited)7/1/23 12/31/22
Assets   
Current assets:   
Cash and cash equivalents$35,666  $46,034 
Accounts receivable, less allowance for doubtful accounts of $1,384 and $1,363 452,603   427,385 
Inventories 642,721   755,901 
Prepaids and other current assets 57,790   39,800 
Total current assets 1,188,780   1,269,120 
Property, plant and equipment, net 156,544   148,477 
Operating lease right-of-use assets 104,294   109,977 
Goodwill 443,889   443,035 
Intangible assets, net 312,554   322,409 
Other assets 50,779   48,768 
Total assets$2,256,840  $2,341,786 
Liabilities and shareholders’ equity   
Current liabilities:   
Accounts payable$152,121  $179,819 
Accrued compensation 15,311   19,490 
Accrued customer rebates and returns 189,409   192,116 
Revolving credit facility 166,560   239,363 
Current portion of long-term debt 12,500   12,500 
Other accrued liabilities 34,470   35,007 
Total current liabilities 570,371   678,295 
Long-term debt 476,414   482,464 
Long-term operating lease liabilities 92,620   98,221 
Other long-term liabilities 16,497   28,349 
Deferred tax liabilities, net 14,866   11,826 
Commitments and contingencies   
Shareholders’ equity:   
Common stock, $0.01 par value; 50,000,000 shares authorized; 31,488,164 and 31,430,632 shares issued and outstanding in 2023 and 2022, respectively 315   314 
Additional paid-in capital 94,452   88,750 
Retained earnings 993,923   956,870 
Accumulated other comprehensive loss (2,618)  (3,303)
Total shareholders’ equity 1,086,072   1,042,631 
Total liabilities and shareholders’ equity$2,256,840  $2,341,786 


Selected Cash Flow Information (unaudited):
 Three Months Ended  Six Months Ended
(in thousands)7/1/23 6/25/22 7/1/23 6/25/22
Cash provided by operating activities$66,676  $14,172  $92,886  $37,386 
Depreciation, amortization and accretion$13,429  $9,857  $26,969  $19,600 
Capital expenditures$12,732  $8,853  $23,269  $16,100 
                
                

DORMAN PRODUCTS, INC.
Non-GAAP Financial Measures
(in thousands, except per-share amounts)

Our financial results include certain financial measures not derived in accordance with generally accepted accounting principles (GAAP). Non-GAAP financial measures should not be used as a substitute for GAAP measures, or considered in isolation, for the purpose of analyzing our operating performance, financial position or cash flows. Additionally, these non-GAAP measures may not be comparable to similarly titled measures reported by other companies. However, we have presented these non-GAAP financial measures because we believe this presentation, when reconciled to the corresponding GAAP measure, provides useful information to investors by offering additional ways of viewing our results, profitability trends, and underlying growth relative to prior and future periods and to our peers. Management uses these non-GAAP financial measures in making financial, operating, and planning decisions and in evaluating our performance. Non-GAAP financial measures may reflect adjustments for charges such as fair value adjustments, amortization, transaction costs, severance, accelerated depreciation, and other similar expenses related to acquisitions as well as other items that we believe are not related to our ongoing performance.

Adjusted Net Income:

 Three Months Ended  Six Months Ended 
(unaudited)7/1/23*6/25/22*7/1/23*6/25/22*
Net income (GAAP)$32,770  $37,905  $38,453  $73,112  
Pretax acquisition-related intangible assets amortization [1] 5,418   2,997   10,851   5,995  
Pretax acquisition-related transaction and other costs [2] 5,866   535   14,415   4,686  
Executive transition services expense [3] 22      1,801     
Fair value adjustment to contingent consideration [4] (12,400)     (12,400)    
Tax adjustment (related to above items) [5] 201   (829)  (3,677)  (2,474) 
Adjusted net income (Non-GAAP)$31,877  $40,608  $49,443  $81,319  
         
Diluted earnings per share (GAAP)$1.04  $1.20  $1.22  $2.32  
Pretax acquisition-related intangible assets amortization [1] 0.17   0.10   0.34   0.19  
Pretax acquisition-related transaction and other costs [2] 0.19   0.02   0.46   0.15  
Executive transition services expense [3] 0.00      0.06     
Fair value adjustment to contingent consideration [4] (0.39)     (0.39)    
Tax adjustment (related to above items) [5] 0.01   (0.03)  (0.12)  (0.08) 
Adjusted diluted earnings per share (Non-GAAP)$1.01  $1.29  $1.57  $2.58  
         
Weighted average diluted shares outstanding 31,528   31,535   31,533   31,568  

* Amounts may not add due to rounding.
See accompanying notes at the end of this supplemental schedule.

Adjusted Gross Profit:
 Three Months Ended Three Months Ended
(unaudited)7/1/23  Pct.**  6/25/22  Pct.** 
Gross profit (GAAP)$163,506   34.0  $141,525   33.9 
Pretax acquisition-related transaction and other costs [2] 4,971   1.0   206   0.0 
Adjusted gross profit (Non-GAAP)$168,477   35.1  $141,731   34.0 
            
Net sales$480,568      $417,419     
            
 Six Months Ended Six Months Ended
(unaudited)7/1/23  Pct.**  6/25/22  Pct.** 
Gross profit (GAAP)$307,983   32.5  $274,765   33.5 
Pretax acquisition-related transaction and other costs [2] 11,800   1.2   4,062   0.5 
Adjusted gross profit (Non-GAAP)$319,783   33.8  $278,827   34.0 
            
Net sales$947,306      $818,998     


Adjusted SG&A Expenses:
 Three Months Ended  Three Months Ended
(unaudited)7/1/23 Pct.** 6/25/22 Pct.**
SG&A expenses (GAAP)$108,308  22.5  $92,058  22.1 
Pretax acquisition-related intangible assets amortization [1] (5,418) (1.1)  (2,997) (0.7)
Pretax acquisition-related transaction and other costs [2] (896) (0.2)  (329) (0.1)
Executive transition services expense [3] (22) (0.0)     
Fair value adjustment to contingent consideration [4] 12,400  2.6      
Adjusted SG&A expenses (Non-GAAP)$114,372  23.8  $88,732  21.3 
        
Net sales$480,568    $417,419   
        
 Six Months Ended Six Months Ended
(unaudited)7/1/23 Pct.** 6/25/22 Pct.**
SG&A expenses (GAAP)$234,671  24.8  $178,586  21.8 
Pretax acquisition-related intangible assets amortization [1] (10,851) (1.1)  (5,995) (0.7)
Pretax acquisition-related transaction and other costs [2] (2,615) (0.3)  (624) (0.1)
Executive transition services expense [3] (1,801) (0.2) $   
Fair value adjustment to contingent consideration [4] 12,400  1.3      
Adjusted SG&A expenses (Non-GAAP)$231,804  24.5  $171,967  21.0 
        
Net sales$947,306    $818,998   

* *Percentage of sales. Data may not add due to rounding.

[1] – Pretax acquisition-related intangible asset amortization results from allocating the purchase price of acquisitions to the acquired tangible and intangible assets of the acquired business and recognizing the cost of the intangible asset over the period of benefit. Such costs were $5.4 million pretax (or $4.0 million after tax) during the three months ended July 1, 2023 and $10.9 million pretax (or $8.1 million after tax) during the six months ended July 1, 2023. Such costs were $3.0 million pretax (or $2.3 million after tax) during the three months ended June 25, 2022 and $6.0 million pretax (or $4.6 million after tax) during the six months ended June 25, 2022.

[2] – Pretax acquisition-related transaction and other costs include costs incurred to complete and integrate acquisitions, accretion on contingent consideration obligations, inventory fair value adjustments and facility consolidation and start-up expenses. During the three and six months ended July 1, 2023, we incurred charges included in cost of goods sold for integration costs, other facility consolidation expenses and inventory fair value adjustments of $5.0 million pretax (or $3.8 million after tax) and $11.8 million pretax (or $8.9 million after tax), respectively. During the three and six months ended July 1, 2023, we incurred charges included in selling, general and administrative expenses to complete and integrate acquisitions, accretion on contingent consideration obligations and facility consolidation and start-up expenses of $0.9 million pretax (or $0.7 million after tax) and $2.6 million pretax (or $2.0 million after tax), respectively.

During the three and six months ended June 25, 2022, we incurred charges included in cost of goods sold for integration costs, other facility consolidation expenses and inventory fair value adjustments of $0.2 million pretax (or $0.1 million after tax) and $ 4.1 (or $3.1 million after tax), respectively. During the three and six months ended June 25, 2022, we incurred charges included in selling, general and administrative expenses to complete and integrate acquisitions, and facility consolidation and start-up expenses of $0.3 million pretax (or $0.2 million after tax) and $0.6 million pretax (or $0.5 million after tax), respectively.

[3] – Executive transition service expenses represents an accrual for costs required to be paid under an agreement in connection with the planned transition of our Executive Chairman to Non-Executive Chairman, and other professional services rendered in connection with the execution of the agreement. The expense was $1.8 million pretax (or $1.4 million after tax) during the six months ended July 1, 2023.

[4] – Fair value adjustments to contingent consideration represents the change to our estimates of ultimate earnout payment amounts for a previously completed acquisition based on projections of financial performance compared to the target amounts defined in the purchase agreement and totaled $12.4 million pretax (or $9.4 million after tax) during the three and six months ended July 1, 2023.

[5] – Tax adjustments represent the aggregate tax effect of all non-GAAP adjustments reflected in the table above, and totaled $0.2 million and $(3.7) million during the three and six months ended July 1, 2023, respectively, and $(0.8) million and $(2.5) million during the three and six months ended June 25, 2022, respectively. Such items are estimated by applying our statutory tax rate to the pretax amount, or an actual tax amount for discrete items.

2023 Guidance:

The Company provided the following guidance ranges related to their fiscal 2023 outlook:

 Year Ending 12/31/2023
(unaudited)Low End* High End*
Diluted earnings per share (GAAP)$4.35  $4.55 
Pretax acquisition-related intangible assets amortization 0.69   0.69 
Pretax acquisition transaction and other costs 0.38   0.38 
Tax adjustment (related to above items) (0.27)  (0.27)
Adjusted diluted earnings per share (Non-GAAP)$5.15  $5.35 
    
Weighted average diluted shares outstanding 31,500   31,500 

*Data may not add due to rounding.


Primary Logo

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
 
 
Copyright © 2010-2020 MillValley.com & California Media Partners, LLC. All rights reserved.