-- Revenues increased primarily as a result of higher new product sales.
Growth in our non-automotive products and further penetration of existing
automotive product lines also contributed to the sales increase.
Approximately 1% of our 2007 net sales increase was due to the favorable
effect of foreign currency exchange.
-- Gross profit margin decreased to 34.7% from 35.9% in the same period
last year. The margin declines are the result of higher product return
costs and initiatives designed to maintain and increase market share for us
and our customers. We partially offset the impact of these initiatives
through material cost savings from suppliers.
-- Selling, general and administrative expenses were essentially
unchanged, but declined from 27.1% to 25.3% of sales. We were able to
offset inflationary cost increases and variable spending increases related
to sales growth with cost reductions and a $0.3 million reduction in
vacation expense due to the vacation policy change mentioned below.
-- Interest expense, net, decreased to $0.5 million from $0.6 million due
to lower overall borrowing levels.
-- Our effective tax rate increased slightly to 37.2% from 37.1% in the
same period last year. We adopted the provisions of Financial Accounting
Standards Board Interpretation No. 48 Accounting for Uncertainty in Income
Taxes ("FIN 48"), an interpretation of FASB Statement No. 109 ("SFAS 109")
effective December 31, 2006. As a result of the implementation of FIN 48,
we recognized no material adjustment in the liability for unrecognized
income tax benefits.
Effective December 31, 2006 (the first day of our fiscal 2007), 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 will result in a
reduction in our vacation accrual of approximately $1.6 million in 2007.
As a result, vacation expense in cost of goods sold and selling, general
and administrative expenses will be reduced during each of the fiscal
quarters in 2007. Results for the three months ended March 31, 2007
include vacation expense reductions of $0.1 million and $0.3 million in
cost of goods sold and selling, general and administrative expenses,
respectively.
Excluding the vacation adjustment discussed above, net income in the first
quarter increased 11% to $3.8 million from $3.4 million last year and fully
diluted EPS for the three months ended March 31, 2007 increased 11% to
$0.21 from $0.19 last year.
Mr. Richard Berman, Chairman, President and Chief Executive Officer, said,
"Strong first quarter sales growth along with responsible spending control
enabled us to further leverage our fixed overhead expenses to drive
earnings growth. Our customers have embraced our initiative to sell
products that were previously only available at the OE dealer. As a
result, our OE Solutions line is one of the fastest growing lines in the
aftermarket. We intend to maintain this 'First to Market' approach as
there are many more new product opportunities available for Dorman and the
aftermarket."
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 automotive parts and hardware are marketed under the OE
Solutions™, HELP!®, AutoGrade™, First Stop™, Conduct-Tite®,
Pik-A-Nut® 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 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) 3/31/07 Pct. 4/01/06 Pct.
Net sales $ 74,293 100.0 $ 68,865 100.0
Cost of goods sold 48,517 65.3 44,176 64.1
Gross profit 25,776 34.7 24,689 35.9
Selling, general and administrative
expenses 18,785 25.3 18,659 27.1
Income from operations 6,991 9.4 6,030 8.8
Interest expense, net 527 0.7 590 0.9
Income before income taxes 6,464 8.7 5,440 7.9
Provision for income taxes 2,402 3.2 2,020 2.9
Net income $ 4,062 5.5 $ 3,420 5.0
Earnings per share
Basic $ 0.23 - $ 0.19 -
Diluted $ 0.22 - $ 0.19 -
Average shares outstanding
Basic 17,689 - 17,744 -
Diluted 18,099 - 18,158 -
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
3/31/07 12/30/06
Assets: (unaudited)
Cash and cash equivalents $ 7,320 $ 5,080
Accounts receivable 75,345 77,187
Inventories 69,015 67,768
Deferred income taxes 10,402 10,330
Prepaid expenses 1,260 1,443
Total current assets 163,342 161,808
Property & equipment 27,339 27,963
Goodwill 26,966 26,958
Other assets 881 1,029
Total assets $ 218,528 $ 217,758
Liability & Shareholders' Equity:
Current portion of long-term debt $ 8,652 $ 8,651
Accounts payable 12,515 12,822
Accrued expenses and other 10,744 13,531
Total current liabilities 31,911 35,004
Long-term debt and other 19,576 20,596
Deferred income taxes 9,674 8,315
Shareholders' equity 157,367 153,843
Total Liabilities and Equity $ 218,528 $ 217,758
Selected Cash Flow Information:
(in thousands) Quarter Ended (unaudited)
------------------------
3/31/07 4/01/06
Depreciation and
amortization $ 1,863 $ 1,622
Capital Expenditures $ 1,242 $ 1,502
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures
(in thousands, except per-share amounts)
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 will result in a reduction in our vacation
accrual of approximately $1.6 million in 2007. As a result, vacation
expense in cost of goods sold and selling, general and administrative
expenses will be reduced during each of the fiscal quarters in 2007. This
press release contains non-GAAP measures which adjust current year net
income and fully diluted earnings per share to exclude the impact of this
adjustment to vacation expense. 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 fully diluted earnings per share follows:
13 Weeks (unaudited)
-------------------------------------
03/31/07 04/01/06 % Change
Net income, as reported $ 4,062 $ 3,420 18.8%
Less: Vacation adjustment, net
of tax (249) - N/A
----------- ----------- -----------
Net income, as adjusted $ 3,813 $ 3,420 11.5%
=========== ============ ===========
Fully diluted EPS, as reported $ 0.22 $ 0.19 15.8%
Less: Vacation adjustment, net
of tax (0.01) - N/A
Fully diluted EPS, as adjusted $ 0.21 $ 0.19 10.5%
=========== ============ ===========
Contact Information: Contact: Corporate Headquarters: Dorman Products, Inc. 3400 East Walnut Street Colmar, Pennsylvania 18915 Fax: (215) 997-8577 For Further Information Contact: Mathias J. Barton CFO (215) 997-1800 x 5132 Email Contact Visit our Home Page: www.dormanproducts.com