EARNINGS RELEASE DATED OCTOBER 30, 2006
Published on
NEWS RELEASE
DORMAN
NEW SINCE 1918
Corporate Headquarters:
Dorman Products, Inc.
3400 East Walnut Street
Colmar, Pennsylvania 18915
Fax: (215) 997-8577
For Further Information Contact Visit our Home Page:
Mathias J. Barton, CFO www.dormanproducts.com
(215) 997-1800 x 5132
E-mail:MBarton@dormanproducts.com
Dorman Products, Inc. Reports Sales and Earnings for the Third Quarter Ended
September 30, 2006
Colmar, Pennsylvania (October 30, 2006) - Dorman Products, Inc.,
(NASDAQ:DORM) (formerly R&B, Inc. NASDAQ: RBIN) today reported sales
increased 1.5% to $74.9 million for the third quarter ended September 30, 2006
from $73.8 million in the same period last year. Sales for the nine months ended
September 30, 2006 increased 7.0% to $217.9 million from $203.6 million in the
same period last year. Revenue growth from products introduced in the past two
years continued to climb during the quarter, but was offset by a softening of
demand from most of the Company's aftermarket customers.
Net income in the third quarter of 2006 was $4.5 million compared to
net income of $4.6 million in the same period last year. Diluted earnings per
share for both the third quarter of 2006 and the third quarter of 2005 were
$0.25.
Results for the nine months ended September 30, 2006 include a one-time
$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 benefits ($0.3 million or $0.02 per
share) associated with the Company's Swedish subsidiary (Scan-Tech). The
charges, which are not tax deductible, were the result of a second quarter
review of the Scan-Tech business in response to bad debt charge offs at two
large customers and the resulting loss of those customers in the first half of
the year. Total bad debt charges for the Swedish business were $0.8 million for
the nine months ended September 30, 2006.
Excluding the goodwill impairment and deferred tax write off, net
income for the first nine months of the year was $12.1 million compared to net
income of $12.7 million in the same period last year and fully diluted EPS for
the first nine months of the year were $0.67 compared to $0.69 in the same
period last year. Net income for the first nine months of 2006 was $8.9 million
compared to net income of $12.7 million in the same period last year. Diluted
earnings per share for the first nine months of 2006 decreased to $0.49 from
$0.69 in the same period last year.
Effective January 1, 2006, the Company adopted SFAS No. 123R,
"Share-Based Payment" and related interpretations and began expensing the grant
date fair value of employee stock options. Prior to January 1, 2006, the Company
applied Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees," and related interpretations in accounting for its stock option
plans. Accordingly, no compensation expense was recognized in net income for
employee stock options in the prior year. The Company adopted SFAS No. 123R
using the modified prospective transition method and therefore has not restated
prior periods. The estimated impact of adopting SFAS No. 123R in 2006, is
expected to reduce diluted earnings per share for the year by approximately
$0.02.
Mr. Richard Berman, Chairman, President and Chief Executive Officer
said, "Order patterns were lower than expected throughout the third quarter. We
remain enthusiastic about our new product initiatives despite the softened
demand that we experienced in the third quarter. We look forward to sharing many
of these exciting new product ideas with our customers during this week's AAPEX
show."
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(TM), HELP!(R),
AutoGrade(TM), First Stop(TM), Conduct-Tite(R), Pik-A-Nut(R) and Scan-Tech(R)
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 Annual Report on Form 10-K under "Item1A - Risk
Factors."
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per-share amounts)
13 Weeks 13 Weeks
Third Quarter (unaudited) 9/30/06 Pct. 9/24/05 Pct.
Net sales $74,891 100.0 $73,783 100.0
Cost of goods sold 48,714 65.0 48,005 65.1
Gross profit 26,177 35.0 25,778 34.9
Selling, general and
administrative expenses 18,370 24.6 17,769 24.0
Income from operations 7,807 10.4 8,009 10.9
Interest expense, net 576 0.7 672 1.0
Income before income taxes 7,231 9.7 7,337 9.9
Provision for income taxes 2,682 3.6 2,724 3.6
Net income $ 4,549 6.1 $ 4,613 6.3
Earnings per share
Basic $ 0.26 - $ 0.26 -
Diluted $ 0.25 - $ 0.25 -
Average shares outstanding
Basic 17,708 - 17,932 -
Diluted 18,147 - 18,444 -
39 Weeks 39 Weeks
Year-to-Date (unaudited) 9/30/06 Pct. 9/24/05 Pct.
Net sales $217,943 100.0 $203,625 100.0
Cost of goods sold 140,390 64.4 130,211 63.9
Gross profit 77,553 35.6 73,414 36.1
Selling, general and
administrative expenses 56,362 25.9 51,317 25.2
Goodwill impairment 2,897 1.3 - -
Income from operations 18,294 8.4 22,097 10.9
Interest expense, net 1,797 0.8 1,961 1.0
Income before income taxes 16,497 7.6 20,136 9.9
Provision for income taxes 7,612 3.5 7,441 3.7
Net income $ 8,885 4.1 $12,695 6.2
Earnings per share
Basic $ 0.50 - $ 0.71 -
Diluted $ 0.49 - $ 0.69 -
Average shares outstanding
Basic 17,728 - 17,915 -
Diluted 18,148 - 18,452 -
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
9/30/06 12/31/05
Assets: (unaudited)
Cash and cash equivalents $ 4,991 $ 2,944
Accounts receivable 66,729 64,778
Inventories 74,685 75,535
Deferred income taxes 10,133 9,560
Prepaid expenses 1,490 1,545
Total current assets 158,028 154,362
Property & equipment 27,929 27,473
Goodwill 26,998 29,617
Other assets 1,242 704
Total assets $214,197 $212,156
Liability & Shareholders' Equity:
Current portion of long-term debt $ 8,651 $ 8,571
Accounts payable 12,077 14,739
Accrued expenses and other 15,077 15,240
Total current liabilities 35,805 38,550
Long-term debt and other 22,367 27,869
Deferred income taxes 7,794 7,195
Shareholders' equity 148,231 138,542
Total Liabilities and Equity $214,197 $212,156
Selected Cash Flow Information:
(in thousands) 13 Weeks (unaudited) 39 Weeks (unaudited)
-------------------- --------------------
9/30/06 9/24/05 9/30/06 9/24/05
Depreciation and
amortization $ 1,731 $1,420 $ 5,012 $4,194
Capital Expenditures $ 1,637 $1,409 $ 5,432 $5,522
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures
(in thousands, except per-share amounts)
During the second quarter of 2006 the Company recorded a $3.2 million non-cash
write-down for goodwill impairment ($2.9 million) and the write off of deferred
tax benefits ($0.3 million) associated with the Company's Swedish operation
(Scan-Tech). This press release contains non-GAAP measures which adjust current
year net income and fully diluted earnings per share to exclude the impact of
these charges. 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:
39 Weeks
--------------------------------------------
09/30/06 09/25/06 % Change
Net Income, as reported $ 8,885 $ 12,695 -30.0%
Add: Goodwill and asset
impariment charge 3,216 - N/A
____________________________________________
Net Income, as adjusted $ 12,101 $ 12,695 -4.7%
Fully diluted EPS, as reported $ 0.49 $ 0.69 -29.%
Add: Goodwill and asset
impariment charge 0.18 - N/A
___________________________________________
Fully diluted EPS, as reported $ 0.67 $ 0.69 -2.9%