Dorman Products, Inc. Reports Sales and Earnings for the Second Quarter Ended June 28, 2014; Announces Expansion of Stock Repurchase Program
COLMAR, PA -- (Marketwired) -- 07/30/14 -- Dorman Products, Inc. (NASDAQ: DORM)
Second Quarter Highlights:
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Sales increased 21% to $196.2 million.
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Net income increased 20% to $23.2 million, or $0.64 per diluted share.
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Share repurchases totaled $8.4 million under stock repurchase program.
Dorman Products, Inc. (NASDAQ: DORM) today announced sales for the second quarter ended June 28, 2014 of $196.2 million, an increase of 21% from $162.3 million in the second quarter of 2013. Revenue growth was driven by the combination of strong overall demand for our products and several large stocking orders and line updates. Net income for the second quarter ended June 28, 2014 increased 20% to $23.2 million, or $0.64 per diluted share, up from the prior year's net income of $19.3 million, or $0.53 per diluted share.
"We are pleased to report that our second quarter sales growth represents the sixth consecutive quarter of double digit sales growth. Our continued investments in new product development, and our customers' acceptance of these products, have led to the strong financial results," said Mr. Steven Berman, Chairman and Chief Executive Officer. "During the first half of 2014, we released nearly 2,450 new parts, a 44% increase over the first half of 2013 levels, and nearly equal to the total new part introductions in all of 2012."
Gross profit margin was 37.2% for the second quarter ended June 28, 2014, compared to 39.7% for the same period last year. The decline in margin is primarily the result of competitive pricing pressures and mix shift that resulted in lower overall net selling prices, provisions for excess and obsolete inventory that were $1.5 million higher during the quarter, and higher transportation costs. Selling, general and administrative expenses increased 8% in 2014 to $36.3 million from $33.6 million in 2013, but declined as a percentage of sales to 18.7% from 20.3%. Cost increases were primarily the result of higher variable costs associated with the 21% sales growth and additional investments in product development.
For the six months ended June 28, 2014, sales increased 20% over the prior year period to $379.7 million from $316.7 million last year. Net income in 2014 increased 22% to $46.8 million from $38.4 million in the same period last year. Diluted earnings per share in 2014 rose 22% to $1.28 from $1.05 in the same period last year.
"Our sales growth rate in the first half of 2014 is partially the result of large stocking initiatives from certain customers along with a larger than normal level of product line updates. We don't expect this pattern to continue in the second half of the year, and believe that sales growth for the remainder of the year will return to more historic low double digit rates," said Mr. Berman.
The Company also announced that its Board of Directors has authorized an increase to the existing share repurchase program from $30 million to $50 million. During the second quarter ended June 28, 2014, Dorman repurchased 158,300 shares of its common stock for $8.4 million, at an average price of $52.80 per share. During the first six months of 2014, the Company has repurchased 161,900 shares of its common stock for $8.5 million, at an average price of $52.75 per share. Subsequent to the end of the second quarter and through July 28, 2014, the Company repurchased an additional 298,700 shares of its common stock for $14.5 million, at an average price of $48.68 per share.
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 28, 2013. 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.
| DORMAN PRODUCTS, INC. AND SUBSIDIARIES | ||||||||||
| Consolidated Statements of Operations | ||||||||||
| (in thousands, except per-share data) | ||||||||||
| 13 Weeks | 13 Weeks | |||||||||
| Second Quarter (unaudited) | 6/28/14 | Pct. | 6/29/13 | Pct. | ||||||
| Net sales | $ | 196,187 | 100.0 | $ | 162,261 | 100.0 | ||||
| Cost of goods sold | 123,226 | 62.8 | 97,906 | 60.3 | ||||||
| Gross profit | 72,961 | 37.2 | 64,355 | 39.7 | ||||||
| Selling, general and administrative expenses | 36,261 | 18.5 | 33,601 | 20.7 | ||||||
| Income from operations | 36,700 | 18.7 | 30,754 | 19.0 | ||||||
| Interest expense, net | 63 | - | 53 | 0.1 | ||||||
| Income before income taxes | 36,637 | 18.7 | 30,701 | 18.9 | ||||||
| Provision for income taxes | 13,393 | 6.9 | 11,359 | 7.0 | ||||||
| Net income | $ | 23,244 | 11.8 | $ | 19,342 | 11.9 | ||||
| Diluted earnings per share | $ | 0.64 | $ | 0.53 | ||||||
| Weighted average diluted shares outstanding | 36,471 | 36,685 | ||||||||
| DORMAN PRODUCTS, INC. AND SUBSIDIARIES | ||||||||||
| Consolidated Statements of Operations | ||||||||||
| (in thousands, except per-share data) | ||||||||||
| 26 Weeks | 26 Weeks | |||||||||
| Second Quarter (unaudited) | 6/28/14 | Pct. | 6/29/13 | Pct. | ||||||
| Net sales | $ | 379,699 | 100.0 | $ | 316,704 | 100.0 | ||||
| Cost of goods sold | 235,096 | 61.9 | 191,525 | 60.5 | ||||||
| Gross profit | 144,603 | 38.1 | 125,179 | 39.5 | ||||||
| Selling, general and administrative expenses | 70,956 | 18.7 | 64,517 | 20.3 | ||||||
| Income from operations | 73,647 | 19.4 | 60,662 | 19.2 | ||||||
| Interest expense, net | 102 | - | 101 | 0.1 | ||||||
| Income before income taxes | 73,545 | 19.4 | 60,561 | 19.1 | ||||||
| Provision for income taxes | 26,750 | 7.1 | 22,147 | 7.0 | ||||||
| Net income | $ | 46,795 | 12.3 | $ | 38,414 | 12.1 | ||||
| Diluted earnings per share | $ | 1.28 | - | $ | 1.05 | - | ||||
| Weighted average diluted shares outstanding | 36,514 | - | 36,658 | - | ||||||
| DORMAN PRODUCTS, INC. AND SUBSIDIARIES | ||||||
| Condensed Consolidated Balance Sheets | ||||||
| (Unaudited) | ||||||
| (in thousands) | ||||||
| 6/28/14 | 12/28/13 | |||||
| Assets: | ||||||
| Cash and cash equivalents | $ | 53,984 | $ | 60,593 | ||
| Accounts receivable | 188,127 | 180,777 | ||||
| Inventories | 183,764 | 164,421 | ||||
| Deferred income taxes | 21,310 | 20,798 | ||||
| Prepaid expenses | 6,358 | 5,851 | ||||
| Total current assets | 453,543 | 432,440 | ||||
| Property & equipment | 75,848 | 64,786 | ||||
| Goodwill and other intangible assets | 30,039 | 30,089 | ||||
| Other assets | 2,457 | 1,854 | ||||
| Total assets | $ | 561,887 | $ | 529,169 | ||
| Liabilities & Shareholders' Equity: | ||||||
| Accounts payable | $ | 59,506 | $ | 61,255 | ||
| Accrued expenses and other | 27,139 | 30,483 | ||||
| Total current liabilities | 86,645 | 91,738 | ||||
| Other long-term liabilities | 5,358 | 5,310 | ||||
| Deferred income taxes | 18,317 | 18,480 | ||||
| Shareholders' equity | 451,567 | 413,641 | ||||
| Total Liabilities and Equity | $ | 561,887 | $ | 529,169 | ||
| Selected Cash Flow Information: | ||||||||||||||
| (in thousands) | 13 Weeks (unaudited) | 26 Weeks (unaudited) | ||||||||||||
| 6/28/14 | 6/29/13 | 6/28/14 | 6/29/13 | |||||||||||
| Depreciation, amortization and accretion | $ | 2,976 | $ | 2,465 | $ | 5,836 | $ | 4,733 | ||||||
| Capital expenditures | $ | 8,870 | $ | 4,240 | $ | 15,878 | $ | 7,086 | ||||||
Visit our website at www.dormanproducts.com
Source: Dorman Products, Inc.
Released July 30, 2014