EARNINGS RELEASE MAY 3, 2007
Published on
NEWS RELEASE
DORMAN(R)
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 First Quarter Ended
March 31, 2007
Colmar, Pennsylvania (May 3, 2007) - Dorman Products, Inc.,
(NASDAQ:DORM) today announced financial results for the first quarter ended
March 31, 2007. Sales increased 8% to $74.3 million for the first quarter ended
March 31, 2007 from $68.9 million in the same period last year.
Reported net income in the first quarter of 2007 was $4.1 million
compared to net income of $3.4 million in the same period last year. Reported
diluted earnings per share in the first quarter were $0.22 compared to $0.19 in
the same period last year.
o Revenues increased primarily as a result of higher new product
sales. Growth in our non-automotive products and further
penetration of existing automotive product lines also contributed
to the sales increase. Approximately 1% of our 2007 net sales
increase was due to the favorable effect of foreign currency
exchange.
o Gross profit margin decreased to 34.7% from 35.9% in the same
period last year. The margin declines are the result of higher
product return costs and initiatives designed to maintain and
increase market share for us and our customers. We partially
offset the impact of these initiatives through material cost
savings from suppliers.
o Selling, general and administrative expenses were essentially
unchanged, but declined from 27.1% to 25.3% of sales. We were able
to offset inflationary cost increases and variable spending
increases related to sales growth with cost reductions and a $0.3
million reduction in vacation expense due to the vacation policy
change mentioned below.
o Interest expense, net, decreased to $0.5 million from $0.6
million due to lower overall borrowing levels.
o Our effective tax rate increased slightly to 37.2% from 37.1% in
the same period last year. We adopted the provisions of Financial
Accounting Standards Board Interpretation No. 48 Accounting for
Uncertainty in Income Taxes ("FIN 48") an interpretation of FASB
Statement No. 109 ("SFAS 109") effective December 31, 2006.
As a result of the implementation of FIN 48, we recognized no
material adjustment in the liability for unrecognized income tax
benefits.
Effective December 31, 2006 (the first day of our fiscal 2007), 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 will result in a
reduction in our vacation accrual of approximately $1.6 million in 2007. As a
result, vacation expense in cost of goods sold and selling, general and
administrative expenses will be reduced during each of the fiscal quarters in
2007. Results for the three months ended March 31, 2007 include vacation expense
reductions of $0.1 million and $0.3 million in cost of goods sold and selling,
general and administrative expenses, respectively.
Excluding the vacation adjustment discussed above, net income in the
first quarter increased 11% to $3.8 million from $3.4 million last year and
fully diluted EPS for the three months ended March 31, 2007 increased 11% to
$0.21 from $0.19 last year.
Mr. Richard Berman, Chairman, President and Chief Executive Officer
said, "Strong first quarter sales growth along with responsible spending control
enabled us to further leverage our fixed overhead expenses to drive earnings
growth. Our customers have embraced our initiative to sell products that were
previously only available at the OE dealer. As a result, our OE Solutions line
is one of the fastest growing lines in the aftermarket. We intend to maintain
this "First to Market" approach as there are many more new product opportunities
available for Dorman and the aftermarket."
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 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
First Quarter (unaudited) 3/31/07 Pct. 4/01/06 Pct.
Net sales $ 74,293 100.0 $68,865 100.0
Cost of goods sold 48,517 65.3 44,176 64.1
Gross profit 25,776 34.7 24,689 35.9
Selling, general and
administrative expenses 18,785 25.3 18,659 27.1
Income from operations 6,991 9.4 6,030 8.8
Interest expense, net 527 0.7 590 0.9
Income before income taxes 6,464 8.7 5,440 7.9
Provision for income taxes 2,402 3.2 2,020 2.9
Net income $ 4,062 5.5 $ 3,420 5.0
Earnings per share
Basic $ 0.23 - $ 0.19 -
Diluted $ 0.22 - $ 0.19 -
Average shares outstanding
Basic 17,689 - 17,744 -
Diluted 18,099 - 18,158 -
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
3/31/07 12/30/06
Assets: (unaudited)
Cash and cash equivalents $ 7,320 $ 5,080
Accounts receivable 75,345 77,187
Inventories 69,015 67,768
Deferred income taxes 10,402 10,330
Prepaid expenses 1,260 1,443
Total current assets 163,342 161,808
Property & equipment 27,339 27,963
Goodwill 26,966 26,958
Other assets 881 1,029
Total assets $218,528 $217,758
Liability & Shareholders' Equity:
Current portion of long-term debt $ 8,652 $ 8,651
Accounts payable 12,515 12,822
Accrued expenses and other 10,744 13,531
Total current liabilities 31,911 35,004
Long-term debt and other 19,576 20,596
Deferred income taxes 9,674 8,315
Shareholders' equity 157,367 153,843
Total Liabilities and Equity $218,528 $217,758
Selected Cash Flow Information:
(in thousands) Quarter Ended (unaudited)
------------------------
3/31/07 4/01/06
Depreciation and
amortization $ 1,863 $1,622
Capital Expenditures $ 1,242 $1,502
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures
(in thousands, except per-share amounts)
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 will result in a reduction in our vacation accrual
of approximately $1.6 million in 2007. As a result, vacation expense in cost of
goods sold and selling, general and administrative expenses will be reduced
during each of the fiscal quarters in 2007. This press release contains non-GAAP
measures which adjust current year net income and fully diluted earnings per
share to exclude the impact of this adjustment to vacation expense. 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:
13 Weeks (unaudited)
------------------------------
03/31/07 04/01/06 % Change
Net income, as reported $ 4,062 $ 3,420 18.8%
Less: Vacation adjustment, net of tax (249) - N/A
-------------------------------
Net income, as adjusted $ 3,813 $ 3,420 11.5%
-------------------------------
Fully diluted EPS, as reported $ 0.22 $ 0.19 10.5%
Less: Vacation adjustment, net of tax (0.01) - N/A
-------------------------------
Fully diluted EPS, as adjusted $ 0.21 $ 0.19 10.5%
________________________________