-- Gross profit margin was 30.8% compared to 34.7% in the prior year. The
decline in margin resulted from higher material costs caused by commodity
price increases and general weakness in the U.S. dollar, an increase in
customer allowances and returns and a $0.8 million increase in air freight
costs necessary to expedite product to fill customer orders.
-- Selling, general and administrative expenses increased 6% over the
prior year. The increase is the result of higher variable costs related to
our sales growth and increased staffing levels to support higher levels of
new product development. These increases were partially offset by lower
incentive compensation expense due to lower earnings levels in the current
year.
-- Interest expense, net, decreased to $0.3 million from $0.5 million due
to lower interest rates.
-- Our effective tax rate increased to 39.7% in the thirteen weeks ended
March 29, 2008 from 37.2% in the same period last year. The increase is the
result of the loss of certain state tax benefits and a $0.1 million charge
to provide a valuation allowance against deferred tax assets of our
Canadian subsidiary.
Mr. Richard Berman, Chairman and Chief Executive Officer, said, "It was
good to see positive organic sales growth in an aftermarket that is
generally flat. We continue to follow our long term growth plan to grow
market share and customer satisfaction. Our recent price increases have
not offset all of our cost increases, and in the first quarter we incurred
substantial operating expenses such as air freight and overtime to ensure
high service levels. We continue to build depth in our capability to
introduce new product, accommodate continually increasing customer demands,
and position ourselves to exploit opportunities that will likely arise in a
tougher market. Though we are disappointed in the first quarter earnings,
we remain committed and optimistic about the long-term success of our
strategy."
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 products are marketed under the OE Solutions™,
HELP!®, AutoGrade™, First Stop™, Conduct-Tite®, Symmetry® and
Scan-Tech® 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 could 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) 03/29/08 Pct. 03/31/07 Pct.
Net sales $80,125 100.0 $74,293 100.0
Cost of goods sold 55,422 69.2 48,517 65.3
Gross profit 24,703 30.8 25,776 34.7
Selling, general and
administrative expenses 19,984 24.9 18,785 25.3
Income from operations 4,719 5.9 6,991 9.4
Interest expense, net 268 0.3 527 0.7
Income before income taxes 4,451 5.6 6,464 8.7
Provision for income taxes 1,769 2.3 2,402 3.2
Net income $ 2,682 3.3 $ 4,062 5.5
Earnings per share
Basic $ 0.15 - $ 0.23 -
Diluted $ 0.15 - $ 0.22 -
Average shares outstanding
Basic 17,699 - 17,689 -
Diluted 18,087 - 18,099 -
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
03/29/08 12/29/07
Assets:
Cash and cash equivalents $ 6,899 $ 6,918
Accounts receivable 84,402 76,897
Inventories 84,810 80,565
Deferred income taxes 10,209 10,111
Prepaid expenses 1,566 1,921
Total current assets 187,866 176,412
Property & equipment 25,365 25,680
Goodwill 26,642 26,662
Other assets 1,688 1,901
Total assets $241,581 $230,655
Liability & Shareholders' Equity:
Current portion of long-term debt $ 8,655 $ 8,654
Accounts payable 19,936 18,752
Accrued expenses and other 7,318 10,718
Total current liabilities 35,909 38,124
Long-term debt and other 20,040 10,811
Deferred income taxes 8,152 7,862
Shareholders' equity 177,480 173,858
Total Liabilities and Equity $241,581 $230,655
Selected Cash Flow Information:
(in thousands) 13 Weeks (unaudited)
--------------------
03/29/08 03/31/07
Depreciation and
amortization $ 1,929 $1,863
Capital Expenditures $ 1,535 $1,242
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures
(in thousands, except per-share amounts)
This press release contains non-GAAP measures which adjust net income and
diluted earnings per share to exclude the impact of the following item:
- 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 resulted in a reduction in our
vacation accrual of $1.8 million in 2007, $0.4 of which was recorded
in the three months ended March 31, 2007.
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 diluted earnings per
share follows:
13 Weeks (unaudited)
-------------------------------------
03/29/08 03/31/07 % Change
Net income, as reported $ 2,682 $ 4,062 -34.0%
Less: Vacation adjustment, net of
tax - (249) N/A
-------------------------------------
Net income, as adjusted $ 2,682 $ 3,813 -29.7%
=====================================
Diluted EPS, as reported $ 0.15 $ 0.22 -31.8%
Less: Vacation adjustment, net of
tax - (0.01) N/A
-------------------------------------
Diluted EPS, as adjusted $ 0.15 $ 0.21 -28.6%
=========== =========== ===========
Contact Information: For Further Information Contact: Mathias J. Barton CFO (215) 997-1800 x 5132 E-mail: Corporate Headquarters: Dorman Products, Inc. 3400 East Walnut Street Colmar, Pennsylvania 18915 Fax: (215) 997-8577 Visit our Home Page: www.dormanproducts.com