Dorman Products, Inc. Reports Second Quarter Results
Dorman Products reported record net sales of $310.6 million for Q2 2021, a 33% increase from $233.2 million in Q2 2020. Diluted earnings per share were $0.99, up from $0.43 in the prior year. The company attributes growth to the economic reopening and strong product demand, with all sales being organic. SG&A expenses decreased to 22.4% of net sales. Dorman also announced an acquisition of Dayton Parts, expected to close in H2 2021, which could accelerate growth in the heavy-duty segment. Share repurchases totaled 265,889 shares worth $27.2 million.
- Record net sales of $310.6 million in Q2 2021, up 33% YoY.
- Diluted EPS increased to $0.99 from $0.43 in Q2 2020.
- Gross profit expanded to $110.1 million, representing a gross margin of 35.5%.
- SG&A expenses decreased to 22.4% of net sales, showcasing operational efficiency.
- Announced acquisition of Dayton Parts, expected to enhance growth in heavy-duty segment.
- Strong share repurchases of $27.2 million during the quarter.
- Higher freight costs due to global transportation constraints.
- Inflationary pressures impacting material costs and operating environment.
Highlights:
- Record net sales of
$310.6 million , up33% as compared to$233.2 million in Q2 2020. - Diluted earnings per share (“EPS”) of
$0.99 , compared to$0.43 in Q2 2020. - Adjusted diluted EPS* of
$1.10 , compared to$0.47 in Q2 2020. - Dayton Parts acquisition on track to close in the second half of 2021.
COLMAR, Pa., July 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 second quarter ended June 26, 2021.
Second Quarter Financial Results
The Company reported record quarterly net sales in the second quarter of 2021 of
Gross profit was
Selling, general and administrative (“SG&A”) expenses were
Income tax expense was
Net income for the second quarter of 2021 was
Kevin Olsen, Dorman’s President and Chief Executive Officer, stated, “I am proud to report another solid quarter for Dorman, enabled by strong end market fundamentals and execution in a very challenging environment. We saw year-over-year and sequential growth across all of our sales channels, driving yet another record quarterly sales performance. Despite continued industry-wide logistical pressures on the global supply chain network that resulted in significantly higher freight and material inflation costs and impacted fulfillment levels, Dorman’s diversified supply chain and broad supplier network performed well under the circumstances. Also, our focus on driving productivity improvements in this challenging environment continued to bear fruit and resulted in gross margin expansion year over year. Additionally, we continued to deliver new and innovative solutions to the automotive aftermarket, highlighted by our recent product launches which included many new complex electronic solutions such as cruise control distance sensors, blind spot detection modules and other advanced driver assistance system (ADAS) products. Our Heavy Duty business also experienced strong growth delivering
2021 Guidance
The Company confirms its previously issued 2021 guidance, which excludes any impact from the pending Dayton Parts acquisition. Dorman expects the Dayton Parts acquisition to close in the second half of 2021, at which time the Company expects to update its 2021 guidance.
Mr. Olsen continued, “While transitory costs and inflationary pressures continue to drive heightened volatility in our operating environment, we are maintaining our outlook, which reflects our expectations for our performance given our results to date, visibility into the remainder of the year and our belief that the automotive aftermarket industry dynamics will remain strong throughout the remainder of 2021. We anticipate that freight and material inflation costs will be a headwind to the Company throughout the year, and we have actions in place to help offset these impacts. Additionally, our balance sheet and liquidity remain strong, and we are well-positioned to continue to execute on our strategic priorities.”
Share Repurchases
Dorman repurchased 265,889 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 acquisition of Dayton Parts, 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. In addition, there are a number of risks, uncertainties and other factors relating to the proposed acquisition of Dayton Parts that could affect our actual results, including, but not limited to: (i) the proposed transaction may not be completed, or completed within the expected timeframe; (ii) costs relating to the proposed transaction may be greater than expected; (iii) the possibility that a governmental entity may prohibit, delay or refuse to grant a necessary regulatory approval in connection with the proposed transaction; (iv) anticipated tax benefits may not be achieved by the Company; (v) problems may arise in integrating the businesses of the two companies and the integration may not be successful; (vi) the combined companies may be unable to achieve any anticipated synergies or any benefits of the transaction may take longer to realize than expected; (vii) the businesses of one or both companies may suffer as a result of uncertainties surrounding the proposed transaction, including disruption of relationships with customers, employees, suppliers or dealers; (viii) the combined companies may not perform as expected following the closing; (ix) the failure to enter into a new
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) | 06/26/21 | Pct.* | 06/27/20 | Pct. * | ||||||||||||
| Net sales | $ | 310,635 | 100.0 | $ | 233,182 | 100.0 | ||||||||||
| Cost of goods sold | 200,510 | 64.5 | 154,034 | 66.1 | ||||||||||||
| Gross profit | 110,125 | 35.5 | 79,148 | 33.9 | ||||||||||||
| Selling, general and administrative expenses | 69,517 | 22.4 | 61,525 | 26.4 | ||||||||||||
| Income from operations | 40,608 | 13.1 | 17,623 | 7.6 | ||||||||||||
| Other income (expense), net | 90 | 0.0 | (297 | ) | (0.1 | ) | ||||||||||
| Income before income taxes | 40,698 | 13.1 | 17,326 | 7.4 | ||||||||||||
| Provision for income taxes | 9,080 | 2.9 | 3,441 | 1.5 | ||||||||||||
| Net income | $ | 31,618 | 10.2 | $ | 13,885 | 6.0 | ||||||||||
| Diluted earnings per share | $ | 0.99 | $ | 0.43 | ||||||||||||
| Weighted average diluted shares outstanding | 32,089 | 32,338 | ||||||||||||||
| Six Months Ended | Six Months Ended | |||||||||||||||
| (unaudited) | 06/26/21 | Pct.* | 06/27/20 | Pct. * | ||||||||||||
| Net sales | $ | 598,647 | 100.0 | $ | 490,912 | 100.0 | ||||||||||
| Cost of goods sold | 384,002 | 64.1 | 326,967 | 66.6 | ||||||||||||
| Gross profit | 214,645 | 35.9 | 163,945 | 33.4 | ||||||||||||
| Selling, general and administrative expenses | 132,386 | 22.1 | 121,260 | 24.7 | ||||||||||||
| Income from operations | 82,259 | 13.7 | 42,685 | 8.7 | ||||||||||||
| Other income (expense), net | 54 | 0.0 | 2,334 | 0.5 | ||||||||||||
| Income before income taxes | 82,313 | 13.7 | 45,019 | 9.2 | ||||||||||||
| Provision for income taxes | 17,965 | 3.0 | 8,359 | 1.7 | ||||||||||||
| Net income | $ | 64,348 | 10.7 | $ | 36,660 | 7.5 | ||||||||||
| Diluted earnings per share | $ | 2.00 | $ | 1.13 | ||||||||||||
| Weighted average diluted shares outstanding | 32,136 | 32,388 | ||||||||||||||
* Percentage of sales. Data may not add due to rounding.
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share data)
| (unaudited) | 06/26/21 | 12/26/20 | ||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 155,539 | $ | 155,576 | ||||
| Accounts receivable, less allowance for doubtful accounts of respectively | 446,242 | 460,878 | ||||||
| Inventories | 356,759 | 298,719 | ||||||
| Prepaids and other current assets | 16,069 | 7,758 | ||||||
| Total current assets | 974,609 | 922,931 | ||||||
| Property, plant and equipment, net | 88,164 | 91,009 | ||||||
| Operating lease right-of-use assets | 38,295 | 39,002 | ||||||
| Goodwill | 91,080 | 91,080 | ||||||
| Intangible assets, net of accumulated amortization of | 23,513 | 25,207 | ||||||
| Deferred tax asset, net | 12,396 | 12,450 | ||||||
| Other assets | 41,420 | 38,982 | ||||||
| Total assets | $ | 1,269,477 | $ | 1,220,661 | ||||
| Liabilities and shareholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 126,463 | $ | 117,878 | ||||
| Accrued compensation | 12,634 | 19,711 | ||||||
| Accrued customer rebates and returns | 165,577 | 155,751 | ||||||
| Other accrued liabilities | 27,854 | 29,305 | ||||||
| Total current liabilities | 332,528 | 322,645 | ||||||
| Long-term operating lease liabilities | 35,950 | 37,083 | ||||||
| Other long-term liabilities | 4,462 | 3,555 | ||||||
| Deferred tax liabilities, net | 3,552 | 3,819 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders' equity: | ||||||||
| Common stock, 32,168,740 shares issued and outstanding in 2021 and 2020, respectively | 319 | 322 | ||||||
| Additional paid-in capital | 71,947 | 64,085 | ||||||
| Retained earnings | 820,719 | 789,152 | ||||||
| Total shareholders' equity | 892,985 | 853,559 | ||||||
| Total liabilities and shareholders' equity | $ | 1,269,477 | $ | 1,220,661 | ||||
Selected Cash Flow Information (unaudited):
| Three Months Ended | Six Months Ended | |||||||||||||||
| (in thousands) | 06/26/21 | 06/27/20 | 06/26/21 | 06/27/20 | ||||||||||||
| Cash provided by operating activities | $ | 18,067 | $ | 200,811 | $ | 39,087 | $ | 219,401 | ||||||||
| Depreciation, amortization and accretion | $ | 9,583 | $ | 7,539 | $ | 16,850 | $ | 15,035 | ||||||||
| Capital expenditures | $ | 3,946 | $ | 3,638 | $ | 10,153 | $ | 7,143 | ||||||||
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 | Six Months Ended | |||||||||||||||
| (unaudited) | 06/26/21* | 06/27/20* | 06/26/21* | 06/27/20* | ||||||||||||
| Net income (GAAP) | $ | 31,618 | $ | 13,885 | $ | 64,348 | $ | 36,660 | ||||||||
| Pretax acquisition-related intangible assets amortization [1] | 801 | 801 | 1,602 | 1,602 | ||||||||||||
| Pretax acquisition-related transaction and other costs [2] | 3,974 | 862 | 4,075 | 1,777 | ||||||||||||
| Pretax gain on equity method investment [3] | — | — | — | (2,498 | ) | |||||||||||
| Tax adjustment (related to above items) [4] | (1,107 | ) | (391 | ) | (1,331 | ) | (239 | ) | ||||||||
| Tax benefit for reversal of deferred tax liability for equity method investment [5] | — | — | — | (813 | ) | |||||||||||
| Adjusted net income (Non-GAAP) | $ | 35,286 | $ | 15,157 | $ | 68,694 | $ | 36,489 | ||||||||
| Diluted earnings per share (GAAP) | $ | 0.99 | $ | 0.43 | $ | 2.00 | $ | 1.13 | ||||||||
| Pretax acquisition-related intangible assets amortization [1] | 0.02 | 0.02 | 0.05 | 0.05 | ||||||||||||
| Pretax acquisition-related transaction and other costs [2] | 0.12 | 0.03 | 0.13 | 0.06 | ||||||||||||
| Pretax gain on equity method investment [3] | — | — | — | (0.08 | ) | |||||||||||
| Tax adjustment (related to above items) [4] | (0.03 | ) | (0.01 | ) | (0.04 | ) | (0.01 | ) | ||||||||
| Tax benefit for reversal of deferred tax liability for equity method investment [5] | — | — | — | (0.03 | ) | |||||||||||
| Adjusted diluted earnings per share (Non-GAAP) | $ | 1.10 | $ | 0.47 | $ | 2.14 | $ | 1.13 | ||||||||
| Weighted average diluted shares outstanding | 32,089 | 32,338 | 32,136 | 32,388 | ||||||||||||
* 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) | 06/26/21 | Pct.** | 06/27/20 | Pct.** | ||||||||||||
| Gross profit (GAAP) | $ | 110,125 | 35.5 | $ | 79,148 | 33.9 | ||||||||||
| Pretax acquisition-related transaction and other costs [2] | 5 | 0.0 | 450 | 0.2 | ||||||||||||
| Adjusted gross profit (Non-GAAP) | $ | 110,130 | 35.5 | $ | 79,598 | 34.1 | ||||||||||
| Net sales | $ | 310,635 | $ | 233,182 | ||||||||||||
| Six Months Ended | Six Months Ended | |||||||||||||||
| (unaudited) | 06/26/21 | Pct.** | 06/27/20 | Pct.** | ||||||||||||
| Gross profit (GAAP) | $ | 214,645 | 35.9 | $ | 163,945 | 33.4 | ||||||||||
| Pretax acquisition-related transaction and other costs [2] | 10 | 0.0 | 796 | 0.2 | ||||||||||||
| Adjusted gross profit (Non-GAAP) | $ | 214,655 | 35.9 | $ | 164,741 | 33.6 | ||||||||||
| Net sales | $ | 598,647 | $ | 490,912 | ||||||||||||
Adjusted SG&A Expenses:
| Three Months Ended | Three Months Ended | |||||||||||||||
| (unaudited) | 06/26/21 | Pct.** | 06/27/20 | Pct.** | ||||||||||||
| SG&A expenses (GAAP) | $ | 69,517 | 22.4 | $ | 61,525 | 26.4 | ||||||||||
| Pretax acquisition-related intangible assets amortization [1] | (801 | ) | (0.3 | ) | (801 | ) | (0.3 | ) | ||||||||
| Pretax acquisition-related transaction and other costs [2] | (3,968 | ) | (1.3 | ) | (412 | ) | (0.2 | ) | ||||||||
| Adjusted SG&A expenses (Non-GAAP) | $ | 64,748 | 20.8 | $ | 60,312 | 25.9 | ||||||||||
| Net sales | $ | 310,635 | $ | 233,182 | ||||||||||||
| Six Months Ended | Six Months Ended | |||||||||||||||
| (unaudited) | 06/26/21 | Pct.** | 06/27/20 | Pct.** | ||||||||||||
| SG&A expenses (GAAP) | $ | 132,386 | 22.1 | $ | 121,260 | 24.7 | ||||||||||
| Pretax acquisition-related intangible assets amortization [1] | (1,602 | ) | (0.3 | ) | (1,602 | ) | (0.3 | ) | ||||||||
| Pretax acquisition-related transaction and other costs [2] | (4,064 | ) | (0.7 | ) | (981 | ) | (0.2 | ) | ||||||||
| Adjusted SG&A expenses (Non-GAAP) | $ | 126,720 | 21.2 | $ | 118,677 | 24.2 | ||||||||||
| Net sales | $ | 598,647 | $ | 490,912 | ||||||||||||
Adjusted Other Income (Expense):
| Three Months Ended | Three Months Ended | |||||||||||||||
| (unaudited) | 06/26/21 | Pct.** | 06/27/20 | Pct.** | ||||||||||||
| Other income (expense) (GAAP) | $ | 90 | 0.0 | $ | (297 | ) | (0.1 | ) | ||||||||
| Gain on equity method investment [3] | — | — | — | — | ||||||||||||
| Adjusted other income (expense) (Non-GAAP) | $ | 90 | 0.0 | $ | (297 | ) | (0.1 | ) | ||||||||
| Net sales | $ | 310,635 | $ | 233,182 | ||||||||||||
| Six Months Ended | Six Months Ended | |||||||||||||||
| (unaudited) | 06/26/21 | Pct.** | 06/27/20 | Pct.** | ||||||||||||
| Other income (expense) (GAAP) | $ | 54 | 0.0 | $ | 2,334 | 0.5 | ||||||||||
| Gain on equity method investment [3] | — | — | (2,498 | ) | (0.5 | ) | ||||||||||
| Adjusted other income (expense) (Non-GAAP) | $ | 54 | 0.0 | $ | (164 | ) | (0.0 | ) | ||||||||
| Net sales | $ | 598,647 | $ | 490,912 | ||||||||||||
** 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 and six months ended June 26, 2021, we incurred charges included in selling, general and administrative expenses to complete and integrate acquisitions of
During the three months and six months ended June 27, 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, and totaled
[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
FAQ
What were the net sales for Dorman in Q2 2021?
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