-- Gross profit margin was 33.4% compared to 33.9% in the prior year.
The decrease is primarily the result of higher material costs caused by
higher commodity price increases and weakness in the U.S. dollar.
-- Selling, general and administrative expenses for the thirteen weeks
ended June 28, 2008 increased 12% to $21.5 million from $19.2 million in
the same period last year. The increase is the result of higher variable
costs related to our sales growth and increased staffing levels in product
development, engineering and quality control. Results for the thirteen
weeks ended June 30, 2007 also include a $0.3 million reduction in vacation
expense due to the vacation policy change mentioned above.
-- Interest expense, net, decreased to $0.3 million from $0.5 million due
to lower interest rates.
-- Our effective tax rate decreased to 37.8% in the thirteen weeks ended
June 28, 2008 from 38.1% in the same period last year. The decrease is
primarily the result of the reversal of reserves upon completion of the
audit of our 2005 tax year by the Internal Revenue Service.
Reported net income in the first six months of 2008 was $7.9 million
compared to net income of $9.8 million in the same period last year.
Reported diluted earnings per share in the six months ended June 30, 2008
were $0.44 compared to $0.54 in the same period last year. Excluding the
vacation adjustment discussed below, net income in the first six months of
2008 was $7.9 million compared to net income of $9.3 million in the same
period last year and diluted EPS for the first six months of 2008 decreased
to $0.44 from $0.52 in the same period last year.
Mr. Richard Berman, Chairman and Chief Executive Officer, said, "Sales
growth in the quarter was 5% due to challenging aftermarket conditions. We
also saw further increases in costs from rising commodity prices and the
weak dollar that have not been offset by selling price increases. These
factors combined to result in a decline in second quarter earnings. Our
balance sheet is strong and we remain confident in the long-term success of
our business despite these short term setbacks. We remain committed to
maintaining our leadership position in aftermarket with innovative new
products and solutions for our customers and end users."
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™, Second 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 2007 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
----------------- -----------------
Second Quarter (unaudited) 06/28/08 Pct. 06/30/07 Pct.
Net sales $ 90,311 100.0 $ 85,796 100.0
Cost of goods sold 60,146 66.6 56,726 66.1
Gross profit 30,165 33.4 29,070 33.9
Selling, general and
administrative expenses 21,469 23.8 19,225 22.4
Income from operations 8,696 9.6 9,845 11.5
Interest expense, net 285 0.3 512 0.6
Income before income taxes 8,411 9.3 9,333 10.9
Provision for income taxes 3,178 3.5 3,565 4.2
Net income $ 5,233 5.8 $ 5,768 6.7
Earnings per share
Basic $ 0.30 - $ 0.33 -
Diluted $ 0.29 - $ 0.32 -
Average shares outstanding
Basic 17,692 - 17,688 -
Diluted 18,041 - 18,129 -
26 Weeks 26 Weeks
----------------- -----------------
Year to Date (unaudited) 06/28/08 Pct. 06/30/07 Pct.
Net sales $170,436 100.0 $160,089 100.0
Cost of goods sold 115,568 67.8 105,243 65.7
Gross profit 54,868 32.2 54,846 34.3
Selling, general and
administrative expenses 41,453 24.3 38,010 23.8
Income from operations 13,415 7.9 16,836 10.5
Interest expense, net 553 0.4 1,039 0.6
Income before income taxes 12,862 7.5 15,797 9.9
Provision for income taxes 4,947 2.9 5,967 3.8
Net income $ 7,915 4.6 $ 9,830 6.1
Earnings per share
Basic $ 0.45 - $ 0.56 -
Diluted $ 0.44 - $ 0.54 -
Average shares outstanding
Basic 17,695 - 17,689 -
Diluted 18,064 - 18,119 -
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
06/28/08 12/29/07
Assets:
Cash and cash equivalents $ 7,492 $ 6,918
Accounts receivable 82,079 76,897
Inventories 87,888 80,565
Deferred income taxes 10,306 10,111
Prepaid expenses 3,103 1,921
Total current assets 190,868 176,412
Property & equipment 25,295 25,680
Goodwill 26,645 26,662
Other assets 1,629 1,901
Total assets $ 244,437 $ 230,655
Liability & Shareholders' Equity:
Current portion of long-term debt $ 8,656 $ 8,654
Accounts payable 20,902 18,752
Accrued expenses and other 7,788 10,718
Total current liabilities 37,346 38,124
Long-term debt and other 16,260 10,811
Deferred income taxes 8,392 7,862
Shareholders' equity 182,439 173,858
Total Liabilities and Equity $ 244,437 $ 230,655
Selected Cash Flow Information:
(in thousands) 13 Weeks (unaudited) 26 Weeks (unaudited)
-------------------- --------------------
06/28/08 06/30/07 06/28/08 06/30/07
Depreciation and
amortization $ 1,885 $ 1,885 $ 3,814 $ 3,748
Capital Expenditures $ 2,068 $ 1,410 $ 3,603 $ 2,652
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 million of which
was recorded in the three months ended June 30, 2007, and $0.8
million of which was recorded in the six months ended June 30, 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)
---------- --------- ---------
06/28/08 06/30/07 % Change
Net income, as reported $ 5,233 $ 5,768 -9.3%
Less: Vacation adjustment, net of tax - (238) N/A
---------- --------- ---------
Net income, as adjusted $ 5,233 $ 5,530 -5.4%
========== ========= =========
Diluted EPS, as reported $ 0.29 $ 0.32 -9.4%
Less: Vacation adjustment, net of tax - (0.01) N/A
---------- --------- ---------
Diluted EPS, as adjusted $ 0.29 $ 0.31 -6.5%
========== ========= =========
26 Weeks (unaudited)
---------- --------- ---------
06/28/08 06/30/07 % Change
Net income, as reported $ 7,915 $ 9,830 -19.5%
Less: Vacation adjustment, net of tax - (487) N/A
---------- --------- ---------
Net income, as adjusted $ 7,915 $ 9,343 -15.3%
========== ========= =========
Diluted EPS, as reported $ 0.44 $ 0.54 -18.5%
Less: Vacation adjustment, net of tax (0.02) N/A
---------- --------- ---------
Diluted EPS, as adjusted $ 0.44 $ 0.52 -15.4%
========== ========= =========
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