Dorman Products, Inc. (the “Company” or “Dorman”) (NASDAQ: DORM), a
leading supplier in the motor vehicle aftermarket industry, today
announced its financial results for the first quarter ended
March 30, 2024.
Kevin Olsen, Dorman’s President and Chief
Executive Officer, stated, “We’re pleased with our first quarter
results and the strong start to the year driven by the hard work
and dedication of our Contributors. Our focus on delivering new and
innovative products continues to be a winning formula for our
customers and our shareholders. Through our strong financial
results, we generated $52 million of cash from operating
activities, a 98% improvement year-over-year, which we used to
repay $15 million of debt and return $27 million to shareholders
through the repurchase of our stock.
“Our results were in line with our expectations,
as Light Duty industry fundamentals remained strong while the Heavy
Duty and Specialty Vehicle industries experienced softness. I’m
confident that our ongoing initiatives and our team of dedicated
Contributors will enable us to navigate industry challenges and
continue to drive success.”
First Quarter Financial
ResultsThe Company reported first quarter 2024 net sales
of $468.7 million, up slightly compared to net sales of $466.7
million in the first quarter of 2023.
Gross profit was $181.4 million in the first
quarter of 2024, or 38.7% of net sales, compared to $144.5 million,
or 31.0% of net sales, for the same quarter last year. Adjusted
gross margin* was 38.7% in the first quarter of 2024 compared to
32.4% in the same quarter last year.
Selling, general and administrative (“SG&A”)
expenses were $127.0 million, or 27.1% of net sales, in the first
quarter of 2024 compared to $126.4 million, or 27.1% of net sales,
for the same quarter last year. Adjusted SG&A expenses* were
$116.5 million, or 24.9% of net sales, in the first quarter of
2024, compared to $117.4 million, or 25.2% of net sales, in the
same quarter last year.
Diluted EPS was $1.05 in the first quarter of
2024, up 483% compared to diluted EPS of $0.18 in the same quarter
last year. Adjusted diluted EPS* was $1.31 in the first quarter of
2024, up 134% compared to adjusted diluted EPS* of $0.56 in the
same quarter last year.
Segment results were as follows:
|
Net Sales |
|
Segment Profit Margin |
($ in millions) |
Q1 2024 |
|
Q1 2023 |
|
Change |
|
Q1 2024 |
|
Q1 2023 |
|
Change |
|
Light Duty |
$ |
359.3 |
|
$ |
348.1 |
|
3 |
% |
|
16.1 |
% |
|
6.2 |
% |
|
990 bps |
|
Heavy
Duty |
$ |
57.8 |
|
$ |
67.6 |
|
-15 |
% |
|
0.0 |
% |
|
7.9 |
% |
|
-790 bps |
|
Specialty
Vehicle |
$ |
51.6 |
|
$ |
51.0 |
|
1 |
% |
|
13.9 |
% |
|
13.9 |
% |
|
0 bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 GuidanceThe Company
confirms its 2024 full-year guidance and expects net sales growth
in the range of 3% to 5% over 2023, diluted EPS in the range of
$4.71 to $5.01, and adjusted diluted EPS* in the range of $5.40 to
$5.70. This guidance assumes a tax rate of 24%, includes the impact
of a previously announced reduction in workforce, and excludes any
potential impacts from future acquisitions and divestitures, supply
chain disruptions, significant inflation and interest rate changes,
and share repurchases.
Conference Call and WebcastThe
Company will hold a conference call and webcast for investors on
Tuesday, May 7, 2024 beginning at 8:00 a.m. Eastern time. The
conference call can be accessed by telephone at (888) 440-4182
within the U.S. or +1 (646) 960-0653 outside the U.S. When
prompted, enter the conference ID number 1698878. A live audio
webcast along with the accompanying presentation materials can be
accessed on the Company’s website at investors.dormanproducts.com
under the subheading “Events.” A replay of the session will be
available on the Investor section of the Company’s website after
the call.
About Dorman ProductsDorman
gives professionals, enthusiasts and owners greater freedom to fix
motor vehicles. For over 100 years, we have been driving new
solutions, releasing tens of thousands of aftermarket replacement
products engineered to save time and money and increase convenience
and reliability.
Founded and headquartered in the United States,
we are a pioneering global organization offering an always-evolving
catalog of products, covering cars, trucks and specialty vehicles,
from chassis to body, from underhood to undercarriage, and from
hardware to complex electronics.
*Non-GAAP MeasuresIn 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 StatementsThis
press release contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995.
Words such as “may,” “will,” “should,” “likely,” “probably,”
“anticipates,” “expects,” “intends,” “plans,” “projects,”
“believes,” “views,” “estimates” and similar expressions are used
to identify these forward-looking statements. Readers are cautioned
not to place undue reliance on those forward-looking statements,
which speak only as of the date such statements were made. Such
forward-looking statements are based on current expectations that
involve known and unknown risks, uncertainties and other factors
(many of which are outside of our control). Such risks,
uncertainties and other factors relate to, among other things:
competition in and the evolution of the motor vehicle aftermarket
industry; changes in our relationships with, or the loss of, any
customers or suppliers; our ability to develop, market and sell new
and existing products; our ability to anticipate and meet customer
demand; our ability to purchase necessary materials from our
suppliers and the impacts of any related logistics constraints;
widespread public health pandemics; political and regulatory
matters, such as changes in trade policy, the imposition of tariffs
and climate regulation; our ability to protect our information
security systems and defend against cyberattacks; our ability to
protect our intellectual property and defend against any claims of
infringement; and financial and economic factors, such as our level
of indebtedness, fluctuations in interest rates and inflation. More
information on these risks and other potential factors that could
affect the Company’s business, reputation, results of operations,
financial condition, and stock price is included in the Company’s
filings with the Securities and Exchange Commission (“SEC”),
including in the “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” sections
of the Company’s most recently filed periodic reports on Form 10-K
and Form 10-Q and subsequent filings. The Company is under no
obligation to, and expressly disclaims any such obligation to,
update any of the information in this document, 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 ContactDavid
Hession, SVP and Chief Financial Officerdhession@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. Consolidated Statements of
Operations(in thousands, except per-share amounts) |
|
|
Three Months Ended |
|
Three Months Ended |
(unaudited) |
3/30/24 |
|
Pct.* |
|
4/1/23 |
|
Pct. * |
Net sales |
$ |
468,701 |
|
100.0 |
|
$ |
466,738 |
|
|
100.0 |
|
Cost of goods sold |
|
287,255 |
|
61.3 |
|
|
322,261 |
|
|
69.0 |
|
Gross profit |
|
181,446 |
|
38.7 |
|
|
144,477 |
|
|
31.0 |
|
Selling, general and
administrative expenses |
|
127,008 |
|
27.1 |
|
|
126,363 |
|
|
27.1 |
|
Income from operations |
|
54,438 |
|
11.6 |
|
|
18,114 |
|
|
3.9 |
|
Interest expense, net |
|
10,605 |
|
2.3 |
|
|
11,953 |
|
|
2.6 |
|
Other expense (income),
net |
|
40 |
|
0.0 |
|
|
(357 |
) |
|
(0.1 |
) |
Income before income taxes |
|
43,793 |
|
9.3 |
|
|
6,518 |
|
|
1.4 |
|
Provision for income
taxes |
|
10,965 |
|
2.3 |
|
|
835 |
|
|
0.2 |
|
Net income |
$ |
32,828 |
|
7.0 |
|
$ |
5,683 |
|
|
1.2 |
|
|
|
|
|
|
|
|
|
Diluted earnings per
share |
$ |
1.05 |
|
|
|
$ |
0.18 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted
shares outstanding |
|
31,250 |
|
|
|
|
31,537 |
|
|
|
|
* Percentage of
sales. Data may not add due to rounding. |
|
DORMAN PRODUCTS, INC. Consolidated Balance Sheets
(in thousands, except share data) |
|
(unaudited) |
3/30/24 |
|
12/31/23 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
34,433 |
|
|
$ |
36,814 |
|
Accounts receivable, less allowance for doubtful accounts of $3,513
and $3,518 |
|
486,352 |
|
|
|
526,867 |
|
Inventories |
|
619,972 |
|
|
|
637,375 |
|
Prepaids and other current assets |
|
22,062 |
|
|
|
32,653 |
|
Total current assets |
|
1,162,819 |
|
|
|
1,233,709 |
|
Property, plant and equipment,
net |
|
162,439 |
|
|
|
160,113 |
|
Operating lease right-of-use
assets |
|
105,714 |
|
|
|
103,476 |
|
Goodwill |
|
443,296 |
|
|
|
443,889 |
|
Intangible assets, net |
|
295,880 |
|
|
|
301,556 |
|
Other assets |
|
49,989 |
|
|
|
49,664 |
|
Total assets |
$ |
2,220,137 |
|
|
$ |
2,292,407 |
|
Liabilities and
shareholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
131,478 |
|
|
$ |
176,664 |
|
Accrued compensation |
|
18,206 |
|
|
|
23,971 |
|
Accrued customer rebates and returns |
|
186,332 |
|
|
|
204,495 |
|
Revolving credit facility |
|
81,160 |
|
|
|
92,760 |
|
Current portion of long-term debt |
|
12,500 |
|
|
|
15,625 |
|
Other accrued liabilities |
|
35,944 |
|
|
|
33,636 |
|
Total current liabilities |
|
465,620 |
|
|
|
547,151 |
|
Long-term debt |
|
467,338 |
|
|
|
467,239 |
|
Long-term operating lease
liabilities |
|
93,105 |
|
|
|
91,262 |
|
Other long-term
liabilities |
|
10,233 |
|
|
|
9,627 |
|
Deferred tax liabilities,
net |
|
9,346 |
|
|
|
8,925 |
|
Commitments and
contingencies |
|
|
|
Shareholders’
equity: |
|
|
|
Common stock, $0.01 par value; 50,000,000 shares authorized;
31,011,870 and 31,299,770 shares issued and outstanding in 2024 and
2023, respectively |
|
310 |
|
|
|
313 |
|
Additional paid-in capital |
|
102,211 |
|
|
|
101,045 |
|
Retained earnings |
|
1,075,663 |
|
|
|
1,069,435 |
|
Accumulated other comprehensive loss |
|
(3,689 |
) |
|
|
(2,590 |
) |
Total shareholders’ equity |
|
1,174,495 |
|
|
|
1,168,203 |
|
Total liabilities and shareholders' equity |
$ |
2,220,137 |
|
|
$ |
2,292,407 |
|
|
Selected Cash Flow Information (unaudited):
|
Three Months Ended |
(in thousands) |
3/30/24 |
|
4/1/23 |
Cash provided by operating activities |
$ |
51,980 |
|
$ |
26,210 |
|
Depreciation, amortization and accretion |
$ |
13,851 |
|
$ |
13,540 |
|
Capital
expenditures |
$ |
10,755 |
|
$ |
10,537 |
|
|
|
|
|
|
|
|
DORMAN PRODUCTS, INC. 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) |
3/30/24* |
|
4/1/23* |
Net income (GAAP) |
$ |
32,828 |
|
|
$ |
5,683 |
|
Pretax
acquisition-related intangible assets amortization [1] |
|
5,484 |
|
|
|
5,433 |
|
Pretax
acquisition-related transaction and other costs [2] |
|
483 |
|
|
|
8,549 |
|
Pretax
executive transition services expense [3] |
|
— |
|
|
|
1,779 |
|
Pretax
reduction in workforce costs [4] |
|
4,568 |
|
|
|
— |
|
Tax
adjustment (related to above items) [5] |
|
(2,517 |
) |
|
|
(3,878 |
) |
Adjusted
net income (Non-GAAP) |
$ |
40,846 |
|
|
$ |
17,566 |
|
|
|
|
|
Diluted
earnings per share (GAAP) |
$ |
1.05 |
|
|
$ |
0.18 |
|
Pretax
acquisition-related intangible assets amortization [1] |
|
0.18 |
|
|
|
0.17 |
|
Pretax
acquisition-related transaction and other costs [2] |
|
0.02 |
|
|
|
0.27 |
|
Pretax
executive transition services expense [3] |
|
— |
|
|
|
0.06 |
|
Pretax
reduction in workforce costs [4] |
|
0.15 |
|
|
|
— |
|
Tax
adjustment (related to above items) [5] |
|
(0.08 |
) |
|
|
(0.12 |
) |
Adjusted
diluted earnings per share (Non-GAAP) |
$ |
1.31 |
|
|
$ |
0.56 |
|
|
|
|
|
Weighted
average diluted shares outstanding |
|
31,250 |
|
|
|
31,537 |
|
|
|
|
|
|
|
|
|
* 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) |
3/30/24 |
|
Pct.** |
|
4/1/23 |
|
Pct.** |
|
Gross profit (GAAP) |
$ |
181,446 |
|
38.7 |
|
$ |
144,477 |
|
31.0 |
|
Pretax
acquisition-related transaction and other costs [2] |
|
8 |
|
0.0 |
|
|
6,829 |
|
1.5 |
|
Adjusted
gross profit (Non-GAAP) |
$ |
181,454 |
|
38.7 |
|
$ |
151,306 |
|
32.4 |
|
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
468,701 |
|
|
|
$ |
466,738 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted SG&A Expenses:
|
Three Months Ended |
|
Three Months Ended |
(unaudited) |
3/30/24 |
|
Pct.** |
|
4/1/23 |
|
Pct.** |
SG&A expenses (GAAP) |
$ |
127,008 |
|
|
27.1 |
|
|
$ |
126,363 |
|
|
27.1 |
|
Pretax
acquisition-related intangible assets amortization [1] |
|
(5,484 |
) |
|
(1.2 |
) |
|
|
(5,433 |
) |
|
(1.2 |
) |
Pretax
acquisition-related transaction and other costs [2] |
|
(475 |
) |
|
(0.1 |
) |
|
|
(1,719 |
) |
|
(0.4 |
) |
Pretax
executive transition services expense [3] |
|
— |
|
|
— |
|
|
|
(1,779 |
) |
|
(0.4 |
) |
Pretax
reduction in workforce costs [4] |
|
(4,568 |
) |
|
(1.0 |
) |
|
|
— |
|
|
— |
|
Adjusted
SG&A expenses (Non-GAAP) |
$ |
116,481 |
|
|
24.9 |
|
|
$ |
117,432 |
|
|
25.2 |
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
468,701 |
|
|
|
|
$ |
466,738 |
|
|
|
|
* *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 $5.5 million pretax (or $4.1 million after
tax) during the three months ended March 30, 2024. Such costs
were $5.4 million pretax (or $4.1 million after tax) during the
three months ended April 1, 2023. |
|
[2] – Pretax
acquisition-related transaction and other costs include costs
incurred to complete and integrate acquisitions, accretion on
contingent consideration obligations, inventory fair value
adjustments and facility consolidation and start-up expenses.
During the three months ended March 30, 2024, we incurred
charges included in cost of goods sold for integration costs of
$0.0 million pretax (or $0.0 million after tax). During the three
months ended March 30, 2024, we incurred charges included in
selling, general and administrative expenses to complete and
integrate acquisitions of $0.5 million pretax (or $0.4 million
after tax). |
|
During the three
months ended April 1, 2023, we incurred charges included in
cost of goods sold for integration costs, other facility
consolidation expenses and inventory fair value adjustments of $6.8
million pretax (or $5.1 million after tax). During the three months
ended April 1, 2023, we incurred charges included in selling,
general and administrative expenses to complete and integrate
acquisitions, accretion on contingent consideration obligations and
facility consolidation and start-up expenses of $1.7 million pretax
(or $1.3 million after tax). |
|
[3] – Pretax
executive transition service expenses represents an accrual for
costs required to be paid under an agreement in connection with the
planned transition of our Executive Chairman to Non-Executive
Chairman, and other professional services rendered in connection
with the execution of the agreement. The expense was $1.8 million
pretax (or $1.3 million after tax) during the three months ended
April 1, 2023. |
|
[4] – Pretax
reduction in workforce costs represents costs incurred in
connection with our planned workforce reduction including severance
and other payroll-related costs insurance continuation costs,
modifications of share-based compensation awards, and other costs
directly attributable to the action. The expense was $4.6 million
pretax (or $3.5 million after tax) during the three months ended
March 30, 2024. |
|
[5] – Tax
adjustments represent the aggregate tax effect of all non-GAAP
adjustments reflected in the table above and totaled $(2.5) million
during the three months ended March 30, 2024, and $(3.9)
million during the three months ended April 1, 2023. Such
items are estimated by applying our statutory tax rate to the
pretax amount, or an actual tax amount for discrete items. |
|
2024 Guidance:
The Company provided the following guidance ranges related to
their fiscal 2024 outlook:
|
Year Ending 12/31/2024 |
(unaudited) |
Low End* |
|
High End* |
Diluted earnings per share (GAAP) |
$ |
4.71 |
|
|
$ |
5.01 |
|
Pretax
acquisition-related intangible assets amortization |
|
0.70 |
|
|
|
0.70 |
|
Pretax
acquisition transaction and other costs |
|
0.05 |
|
|
|
0.05 |
|
Pretax
reduction in workforce costs |
|
0.12 |
|
|
|
0.12 |
|
Tax
adjustment (related to above items) |
|
(0.18 |
) |
|
|
(0.18 |
) |
Adjusted
diluted earnings per share (Non-GAAP) |
$ |
5.40 |
|
|
$ |
5.70 |
|
|
|
|
|
Weighted
average diluted shares outstanding |
|
31,500 |
|
|
|
31,500 |
|
|
|
|
|
|
|
|
|
*Data may not add
due to rounding. |
|
|
|
|
|
|
|
|
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