Dorman Products, Inc. Reports Sales and Earnings for the Fourth Quarter and Year Ended December 26, 2015
COLMAR, PA -- (Marketwired) -- 02/17/16 -- Dorman Products, Inc. (NASDAQ: DORM)
Fourth Quarter Results:
- Q4 sales increased 18% to $204.8 million
- Q4 EPS increased 19% to $0.62 per diluted share
Full Year Results:
- 2015 sales increased 7% to $803.0 million
- 2015 EPS increased 4% to $2.60 per diluted share
Dorman Products, Inc. (NASDAQ: DORM) today announced sales for the fourth quarter ended December 26, 2015 of $204.8 million, an increase of 18% from $174.0 million in the fourth quarter of 2014. Diluted earnings per share for the fourth quarter ended December 26, 2015 increased 19% to $0.62 per share from $0.52 per share in 2014.
Results for the fourth quarter of 2015 include a pre-tax charge of $3.0 million for uncollectible accounts receivable due to the bankruptcy filing of one customer. The results for the fourth quarter of 2014 include $4.6 million in incremental costs associated with our 2014 ERP conversion. Excluding these items, adjusted diluted earnings per share increased 10% to $0.67 from $0.61 last year as noted in the Reconciliation of Non-GAAP Measures table below.
"As expected, our fourth quarter sales growth rate returned to historical double-digit levels. As previously stated, approximately $10 million of the fourth quarter revenue increase was attributable to lower prior year sales as a result of the acceleration of customer orders ahead of our ERP system conversion in September 2014. The remaining increase was due to higher sales of new products and strong product sell-through rates at most customers," said Matt Barton, President and Chief Executive Officer.
Gross profit margin was 38.0% for the fourth quarter ended December 26, 2015 compared to 38.3% for the same period last year. The slight decline in the gross profit margin rate was primarily due to increased provisions for excess and obsolete inventory. SG&A expenses increased 14% in the fourth quarter of 2015 to $43.4 million from $38.1 million in the fourth quarter of 2014 as a result of higher variable expenses associated with the 18% sales growth, labor cost increases and increased costs associated with accounts receivable sales programs. The fourth quarter of 2015 includes a $3.0 million provision for uncollectible accounts receivable, while the SG&A expenses in the fourth quarter of 2014 included $3.9 million in costs associated with our prior year ERP conversion.
For the fiscal year ended December 26, 2015, sales increased 7% over the prior year to $803.0 million from $751.5 million last year. Diluted earnings per share in 2015 rose 4% to $2.60 from $2.49 in the prior year. Additionally:
- Revenues from products introduced in the last 24 months accounted for 19% of our fiscal 2015 sales, down from a record high of 22% last year. The decline can be attributed to a shut-down of new product introductions during our ERP conversion and a gradual move towards introducing new products earlier in their lifecycle.
- Total parts introduced in 2015 increased 30% to 4,852 parts, including 1,495 "Formerly Dealer Only" parts.
- Gross profit margin increased from 38.2% in 2014 to 38.4% in 2015.
- Selling, general and administrative expenses include $3.5 million and $3.9 million in incremental ERP conversion costs in 2015 and 2014 respectively; and also include a $3.0 million provision for uncollectible accounts receivable in 2015.
- Research and development spending increased 6% to $16.8 million in 2015.
- Operating cash flow increased 54% to $92.1 million.
"This year marked our 15th consecutive year of sales growth. We introduced a record number of new products through our continued commitment to our 'New to the Aftermarket' strategy. We continue to make investments in new product opportunities, especially in areas like complex electronics and heavy duty vehicles. Earlier this year, we completed the stabilization phase of our ERP implementation and returned to pre-conversion efficiency levels within twelve months of the system go-live as expected," said Mr. Barton. "I would like to thank all of our contributors for another successful year, and our customers and end-users for their continued support and acceptance of our new products."
The Company repurchased 747,700 shares of its common stock for $35.7 million at an average price of $47.77 per share during fiscal 2015, and has $73.9 million remaining under its current $150 million share repurchase program.
Dorman Products, Inc. is a leading supplier of 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 Dorman�, OE Solutions", HELP!�, AutoGrade", First Stop", Conduct-Tite�, TECHoice", Dorman� Hybrid Drive Batteries and Dorman HD Solutions" brand names.
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to the Company's future growth rates. Words such as "believe," "demonstrate," "expect," "estimate," "forecast," "anticipate," "should" and "likely" and similar expressions identify forward-looking statements. 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 which may cause actual events to be materially different from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, competition in the automotive aftermarket industry, concentration of the Company's sales and accounts receivable among a small number of customers, the impact of consolidation in the automotive aftermarket industry, foreign currency fluctuations, dependence on senior management and other risks detailed in the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 27, 2014. The Company is under no obligation to (and expressly disclaims any such obligation to) update any of the information in this press release if any forward-looking statement later turns out to be inaccurate whether as a result of new information, future events or otherwise.
Visit our website at www.dormanproducts.com
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per-share amounts)
13 Weeks 13 Weeks
Fourth Quarter (unaudited) 12/26/15 Pct. 12/27/14 Pct.
Net sales $ 204,834 100.0 $ 173,981 100.0
Cost of goods sold 127,041 62.0 107,264 61.7
Gross profit 77,793 38.0 66,717 38.3
Selling, general and administrative expenses 43,423 21.2 38,106 21.9
Income from operations 34,370 16.8 28,611 16.4
Interest expense, net 64 0.1 44 -
Income before income taxes 34,306 16.7 28,567 16.4
Provision for income taxes 12,519 6.1 9,911 5.7
Net income $ 21,787 10.6 $ 18,656 10.7
Diluted earnings per share $ 0.62 $ 0.52
Weighted average diluted shares outstanding 35,323 35,669
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per-share amounts)
52 Weeks 52 Weeks
Year Ended (unaudited) 12/26/15 Pct. 12/27/14 Pct.
Net sales $802,957 100.0 $751,476 100.0
Cost of goods sold 494,907 61.6 464,275 61.8
Gross profit 308,050 38.4 287,201 38.2
Selling, general and administrative expenses 161,893 20.2 146,467 19.5
Income from operations 146,157 18.2 140,734 18.7
Interest expense, net 216 - 204 -
Income before income taxes 145,941 18.2 140,530 18.7
Provision for income taxes 53,612 6.7 50,543 6.7
Net income $ 92,329 11.5 $ 89,987 12.0
Diluted earnings per share $ 2.60 $ 2.49
Weighted average diluted shares outstanding 35,538 36,190
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
12/26/15 12/27/14
Assets:
Cash and cash equivalents $ 78,659 $ 47,656
Accounts receivable 203,923 206,035
Inventories 193,725 173,523
Prepaid expenses 2,326 3,147
Total current assets 478,633 430,361
Property, plant & equipment, net 87,046 82,270
Goodwill and other intangible assets, net 29,889 29,989
Deferred income taxes, net 7,557 2,451
Other assets 18,740 12,645
Total assets $ 621,865 $ 557,716
Liabilities & shareholders' equity:
Accounts payable $ 63,967 $ 59,541
Accrued expenses and other 34,603 31,292
Total current liabilities 98,570 90,833
Other long-term liabilities 5,259 4,822
Shareholders' equity 518,036 462,061
Total liabilities and equity $ 621,865 $ 557,716
Selected Cash Flow Information
(unaudited):
(in thousands) 13 Weeks 13 Weeks 52 Weeks 52 Weeks
-------- -------- -------- --------
12/26/15 12/27/14 12/26/15 12/27/14
Depreciation, amortization and accretion $ 4,447 $ 3,657 $ 16,186 $ 12,658
Capital expenditures $ 5,154 $ 6,870 $ 21,688 $ 29,862
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 diluted earnings per share to exclude the impact of the following items:
- Results for the thirteen weeks ended December 26, 2015 include a $3.0 million pre-tax provision for uncollectible accounts receivable due to a bankruptcy filing by one customer. Results for the thirteen weeks ended December 27, 2014 include $4.6 million of incremental pre-tax costs associated with implementing our ERP system.
These Company-defined non-GAAP financial measures exclude from reported results those items that management believes are not indicative of our ongoing performance and are being provided herein because management believes they are useful in analyzing the operating performance of the business and are consistent with how management reviews our operating results and the underlying business trends. Use of these non-GAAP measures may be inconsistent with similar measures presented by other companies and should only be used in conjunction with the Company's results reported according to GAAP. A reconciliation of diluted earnings per share follows:
(unaudited)
13 Weeks 13 Weeks
Ended Ended
12/26/15 12/27/14 % Change
-------- -------- ---------
Diluted EPS, as reported $ 0.62 $ 0.52 19%
Add: Incremental costs incurred after ERP system
conversion date, after tax - 0.09
Add: Provision for uncollectible accounts, after
tax 0.05 -
Diluted EPS, as adjusted $ 0.67 $ 0.61 10%
Source: Dorman Products, Inc.