Dorman Products, Inc. Reports First Quarter 2021 Results
Dorman Products (NASDAQ: DORM) reported Q1 2021 net sales of $288.0 million, a 12% increase from $257.7 million in Q1 2020. Diluted EPS rose to $1.02, a 46% jump from $0.70 in the same quarter last year. Adjusted diluted EPS also saw a significant increase to $1.04, up 58% year-over-year. For FY 2021, Dorman anticipates net sales growth between 9%-12%, with diluted EPS projected between $4.32 and $4.52. The company emphasizes strong balance sheet and liquidity, aiming for continued innovation in the automotive aftermarket.
- Net sales increased 12% YoY to $288.0 million.
- Diluted EPS rose 46% YoY to $1.02.
- Adjusted diluted EPS up 58% YoY to $1.04.
- Strong guidance for FY 2021 with net sales projected between $1,191 million and $1,224 million.
- Increased freight costs due to global transportation constraints.
- Inflationary pressures impacting operational costs.
Highlights:
- Net sales of
$288.0 million , up12% as compared to$257.7 million in Q1 2020. - Diluted earnings per share (“EPS”) of
$1.02 up46% as compared to$0.70 in Q1 2020. - Adjusted diluted EPS* of
$1.04 , up58% as compared to$0.66 in Q1 2020. - Dorman’s strong balance sheet and ample liquidity provide solid foundation for growth.
- For fiscal 2021, the Company expects net sales growth between
9% -12% , diluted EPS of between$4.32 and$4.52 , and adjusted diluted EPS* of between$4.40 and$4.60 .
COLMAR, Pa., April 26, 2021 (GLOBE NEWSWIRE) -- Dorman Products, Inc. (the “Company” or “Dorman”) (NASDAQ:DORM), a leading supplier in the automotive aftermarket industry, today announced its financial results for the first quarter ended March 27, 2021.
First Quarter Financial Results
The Company reported first quarter 2021 net sales of
Gross profit was
Selling, general and administrative (“SG&A”) expenses were
Income tax expense was
Net income for the first quarter of 2021 was
Kevin Olsen, Dorman Products’ President and Chief Executive Officer, stated, “I am pleased to report a strong start to the fiscal year as we continue to execute on our strategic priorities. Our net sales performance was driven by robust demand, as we saw consistent order strength throughout the quarter. While we saw modest growth with ‘Do-It-For-Me’ focused customers, we saw particular strength with ‘Do-It-Yourself’ focused customers, consistent with trends across the automotive aftermarket. Our diversified supply chain and broad supplier network remain critical to delivering for our customers as pressures on the global supply network continue to cause logistical issues, including higher freight and material inflation costs. Despite those pressures, our focus on driving productivity across our operations continued to bear fruit, as we achieved significant year-over-year efficiency improvements, resulting in gross margin growth for the quarter. Finally, bringing new and innovative solutions to the automotive aftermarket remains a strategic priority for Dorman. Examples of some of the innovative solutions we recently launched during the first quarter include pre-pressed axles, blind spot detection modules, and cruise control distance sensors. We intend to continue to build on the strength of our new product development, including by capitalizing on the increased adoption of complex electronics in today’s vehicles, a key area of our innovation efforts this year.”
2021 Guidance
The Company expects fiscal 2021 net sales between
Mr. Olsen stated, “While the environment remains very fluid, we are issuing full-year guidance today, which reflects our expectations for our performance given our results year to date, visibility into the remainder of the year, and the expectation that automotive aftermarket industry dynamics will continue to improve as we move through 2021. We anticipate the cost pressures from global transportation and logistics constraints and other inflationary pressures to continue, and our guidance includes plans to mitigate the impact of these items. Importantly, our balance sheet and liquidity are strong, and we are well-positioned to execute on our strategic priorities.”
The Company’s guidance does not include the impact from potential future acquisitions or related financings or potential impacts from any further possible government-mandated shutdowns, as well as any potential impact from supply chain disruptions caused by the ongoing COVID-19 pandemic.
Share Repurchases
Dorman repurchased 36,000 shares of its common stock for
About Dorman Products
At Dorman, we give repair professionals and vehicle owners greater freedom to fix cars and trucks by focusing on solutions first. For over 100 years, we have been one of the automotive aftermarket’s pioneering problem solvers, releasing tens of thousands of replacement products engineered to save time and money and increase convenience and reliability.
Founded and headquartered in the United States, we are a global organization offering more than 81,000 distinct parts, covering both light-duty and heavy-duty vehicles, from chassis to body, from underhood to undercar, and from hardware to complex electronics. See our full offering and learn more at DormanProducts.com.
*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 the COVID-19 pandemic, 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,” “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 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 (many of which are outside of our control) which may cause actual events to be materially different from those expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include, but are not limited to: (i) the age, condition and number of vehicles that need servicing; (ii) competition in the automotive aftermarket industry; (iii) the loss or decrease in sales among one of our top customers; (iv) price competition; (v) limited customer shelf space; (vi) customer consolidation; (vii) widespread public health epidemics, including COVID-19; (viii) failure to maintain sufficient inventory or anticipate changes in customer demand; (ix) excess overstock inventory-related returns; (x) the inability to purchase raw materials, components and other items from our suppliers; (xi) the availability and cost of third-party transportation providers; (xii) reliance on new product development; (xiii) changes in, or restrictions on access to, automotive technology; (xiv) quality problems with our products; (xv) inability to protect our intellectual property; (xvi) claims of intellectual property infringement; (xvii) failure to maintain the value of our brands; (xviii) cyber-attacks; (xix) foreign currency fluctuations and dependence on foreign suppliers; (xx) exposure to risks related to accounts receivable; (xxi) changes in U.S. trade policy, including the imposition of tariffs; (xxii) the level of our indebtedness; (xxiii) risks related to accounts receivable sales agreements; (xxiv) the phaseout of LIBOR or the impact of the imposition of a new reference rate; (xxv) our executive chairman and his family owning a significant portion of the Company; (xxvi) unfavorable economic conditions; (xxvii) quarterly fluctuations and disruptions from events beyond our control; (xxviii) unfavorable results of legal proceedings; (xxix) volatility in the market price of our common stock and potential securities class action litigation; (xxx) losing the services of our executive officers or other highly qualified and experienced Contributors; (xxxi) the inability to identify suitable acquisition candidates, complete acquisitions or integrate acquisitions successfully; (xxxii) changes in tax laws; (xxxiii) global climate change and related regulations; (xxxiv) violations of anti-bribery laws; and (xxxv) import and export control and economic sanctions laws and regulations. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. For additional information concerning factors that could cause actual results to differ materially from the information contained in this press release, reference is made to the information in Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 26, 2020. The Company is under no obligation to (and expressly disclaims any such obligation to) update any of the information in this press release, 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
David Hession, SVP and Chief Financial Officer
dhession@dormanproducts.com
(215) 997-1800
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. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per-share amounts)
| Three Months Ended | Three Months Ended | |||||||||||||||
| (unaudited) | 03/27/21 | Pct.* | 03/28/20 | Pct. * | ||||||||||||
| Net sales | $ | 288,012 | 100.0 | $ | 257,730 | 100.0 | ||||||||||
| Cost of goods sold | 183,492 | 63.7 | 172,933 | 67.1 | ||||||||||||
| Gross profit | 104,520 | 36.3 | 84,797 | 32.9 | ||||||||||||
| Selling, general and administrative expenses | 62,869 | 21.8 | 59,735 | 23.2 | ||||||||||||
| Income from operations | 41,651 | 14.5 | 25,062 | 9.7 | ||||||||||||
| Other income (expense), net | (36 | ) | 0.0 | 2,631 | 1.0 | |||||||||||
| Income before income taxes | 41,615 | 14.4 | 27,693 | 10.7 | ||||||||||||
| Provision for income taxes | 8,885 | 3.1 | 4,918 | 1.9 | ||||||||||||
| Net income | $ | 32,730 | 11.4 | $ | 22,775 | 8.8 | ||||||||||
| Diluted earnings per share | $ | 1.02 | $ | 0.70 | ||||||||||||
| Weighted average diluted shares outstanding | 32,184 | 32,426 | ||||||||||||||
* Percentage of sales. Data may not add due to rounding.
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share data)
| (unaudited) | 03/27/21 | 12/26/20 | ||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 166,603 | $ | 155,576 | ||||
| Accounts receivable, less allowance for doubtful accounts of | ||||||||
| in 2021 and 2020, respectively | 452,520 | 460,878 | ||||||
| Inventories | 337,697 | 298,719 | ||||||
| Prepaids and other current assets | 9,817 | 7,758 | ||||||
| Total current assets | 966,637 | 922,931 | ||||||
| Property, plant and equipment, net | 90,699 | 91,009 | ||||||
| Operating lease right-of-use assets | 39,552 | 39,002 | ||||||
| Goodwill | 91,080 | 91,080 | ||||||
| Intangible assets, net of accumulated amortization of | ||||||||
| 2021 and 2020, respectively | 24,360 | 25,207 | ||||||
| Deferred tax asset, net | 12,173 | 12,450 | ||||||
| Other assets | 39,768 | 38,982 | ||||||
| Total assets | $ | 1,264,269 | $ | 1,220,661 | ||||
| Liabilities and shareholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 118,529 | $ | 117,878 | ||||
| Accrued compensation | 13,169 | 19,711 | ||||||
| Accrued customer rebates and returns | 163,967 | 155,751 | ||||||
| Other accrued liabilities | 39,752 | 29,305 | ||||||
| Total current liabilities | 335,417 | 322,645 | ||||||
| Long-term operating lease liabilities | 37,226 | 37,083 | ||||||
| Other long-term liabilities | 4,067 | 3,555 | ||||||
| Deferred tax liabilities, net | 3,748 | 3,819 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders' equity: | ||||||||
| Common stock, par value | ||||||||
| outstanding 32,115,528 and 32,168,740 shares in 2021 and 2020, respectively | 321 | 322 | ||||||
| Additional paid-in capital | 67,596 | 64,085 | ||||||
| Retained earnings | 815,894 | 789,152 | ||||||
| Total shareholders' equity | 883,811 | 853,559 | ||||||
| Total liabilities and shareholders' equity | $ | 1,264,269 | $ | 1,220,661 | ||||
Selected Cash Flow Information (unaudited):
| Three Months Ended | ||||||||
| (in thousands) | 03/27/21 | 03/28/20 | ||||||
| Cash provided by operating activities | $ | 21,020 | $ | 18,590 | ||||
| Depreciation, amortization and accretion | $ | 7,267 | $ | 7,496 | ||||
| Capital expenditures | $ | 6,207 | $ | 3,505 | ||||
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
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 | ||||||||
| (unaudited) | 3/27/21* | 3/28/20* | ||||||
| Net income (GAAP) | $ | 32,730 | $ | 22,775 | ||||
| Pretax acquisition-related intangible assets amortization [1] | 801 | 801 | ||||||
| Pretax acquisition-related transaction and other costs [2] | 101 | 915 | ||||||
| Pretax gain on equity method investment [3] | — | (2,498 | ) | |||||
| Tax adjustment (related to above items) [4] | (224 | ) | 152 | |||||
| Tax benefit for reversal of deferred tax liability for equity method investment [5] | — | (813 | ) | |||||
| Adjusted net income (Non-GAAP) | $ | 33,408 | $ | 21,332 | ||||
| Diluted earnings per share (GAAP) | $ | 1.02 | $ | 0.70 | ||||
| Pretax acquisition-related intangible assets amortization [1] | 0.02 | 0.02 | ||||||
| Pretax acquisition-related transaction and other costs [2] | 0.00 | 0.03 | ||||||
| Pretax gain on equity method investment [3] | — | (0.08 | ) | |||||
| Tax adjustment (related to above items) [4] | (0.01 | ) | 0.00 | |||||
| Tax benefit for reversal of deferred tax liability for equity method investment [5] | — | (0.03 | ) | |||||
| Adjusted diluted earnings per share (Non-GAAP) | $ | 1.04 | $ | 0.66 | ||||
| Weighted average diluted shares outstanding | 32,184 | 32,426 | ||||||
* 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) | 03/27/21 | Pct.** | 03/28/20 | Pct.** | ||||||||||||
| Gross profit (GAAP) | $ | 104,520 | 36.3 | $ | 84,797 | 32.9 | ||||||||||
| Pretax acquisition-related transaction and other costs [2] | 5 | 0.0 | 346 | 0.1 | ||||||||||||
| Adjusted gross profit (Non-GAAP) | $ | 104,525 | 36.3 | $ | 85,143 | 33.0 | ||||||||||
| Net sales | $ | 288,012 | $ | 257,730 | ||||||||||||
| Adjusted SG&A Expenses: | ||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||
| (unaudited) | 03/27/21 | Pct.** | 03/28/20 | Pct.** | ||||||||||||
| SG&A expenses (GAAP) | $ | 62,869 | 21.8 | $ | 59,735 | 23.2 | ||||||||||
| Pretax acquisition-related intangible assets amortization [1] | (801 | ) | (0.3 | ) | (801 | ) | (0.3 | ) | ||||||||
| Pretax acquisition-related transaction and other costs [2] | (96 | ) | (0.0 | ) | (569 | ) | (0.2 | ) | ||||||||
| Adjusted SG&A expenses (Non-GAAP) | $ | 61,972 | 21.5 | $ | 58,365 | 22.6 | ||||||||||
| Net sales | $ | 288,012 | $ | 257,730 | ||||||||||||
| Adjusted Other Income (Expense): | ||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||
| (unaudited) | 03/27/21 | Pct.** | 03/28/20 | Pct.** | ||||||||||||
| Other (expense) income (GAAP) | $ | (36 | ) | (0.0 | ) | $ | 2,631 | 1.0 | ||||||||
| Gain on equity method investment [3] | — | — | (2,498 | ) | (1.0 | ) | ||||||||||
| Adjusted other (expense) income (Non-GAAP) | $ | (36 | ) | (0.0 | ) | $ | 133 | 0.1 | ||||||||
| Net sales | $ | 288,012 | $ | 257,730 | ||||||||||||
* *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
[2] – Pretax acquisition-related transaction and other costs include costs incurred to complete and integrate acquisitions, adjustments to contingent consideration obligations, inventory fair value adjustments and facility consolidation expenses. During the three months March 27, 2021, we incurred charges included in cost of goods sold for integration costs of
During the three months March 28, 2020, we incurred charges included in cost of goods sold for integration costs, severance, other facility consolidation expenses, inventory fair value adjustments and inventory transfer costs of
[3] – Pretax gain on equity method investment results from the acquisition of the remaining outstanding shares of a previously unconsolidated entity. The estimated fair value of the net assets acquired was more than the carry value of our prior investment in the entity. Such gain was
[4] – Tax adjustments represent the aggregate tax effect of all Non-GAAP adjustments reflected in the table above of
[5] – Tax benefit represents a reversal of a deferred tax liability related to an equity method investment which was converted to a consolidated subsidiary upon acquisition of the controlling interest. The benefit was
2021 Guidance:
The Company provided the following guidance ranges related to their fiscal 2021 outlook:
| Year Ending 12/25/21 | ||||||||
| (unaudited) | Low End* | High End* | ||||||
| Diluted earnings per share (GAAP) | $ | 4.32 | $ | 4.52 | ||||
| Pretax acquisition-related intangible assets amortization, transaction and other costs | 0.10 | 0.10 | ||||||
| Tax adjustment (related to above items) | (0.02 | ) | (0.02 | ) | ||||
| Adjusted diluted earnings per share (Non-GAAP) | $ | 4.40 | $ | 4.60 | ||||
| Weighted average diluted shares outstanding | 31,700 | 31,700 | ||||||
* Amounts may not add due to rounding.
FAQ
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