EX-99 3 ex99.txt EARNINGS RELEASE MAY 3, 2007 NEWS RELEASE DORMAN(R) NEW SINCE 1918 Corporate Headquarters: Dorman Products, Inc. 3400 East Walnut Street Colmar, Pennsylvania 18915 Fax: (215) 997-8577 For Further Information Contact: Visit our Home Page: Mathias J. Barton, CFO www.dormanproducts.com (215) 997-1800 x 5132 E-mail: MBarton@dormanproducts.com Dorman Products, Inc. Reports Sales and Earnings for the First Quarter Ended March 31, 2007 Colmar, Pennsylvania (May 3, 2007) - Dorman Products, Inc., (NASDAQ:DORM) today announced financial results for the first quarter ended March 31, 2007. Sales increased 8% to $74.3 million for the first quarter ended March 31, 2007 from $68.9 million in the same period last year. Reported net income in the first quarter of 2007 was $4.1 million compared to net income of $3.4 million in the same period last year. Reported diluted earnings per share in the first quarter were $0.22 compared to $0.19 in the same period last year. o 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. o 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. o 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. o Interest expense, net, decreased to $0.5 million from $0.6 million due to lower overall borrowing levels. o 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(TM), HELP!(R), AutoGrade(TM), First Stop(TM), Conduct-Tite(R), Pik-A-Nut(R) and Scan-Tech(R) 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 10.5% Less: Vacation adjustment, net of tax (0.01) - N/A ------------------------------- Fully diluted EPS, as adjusted $ 0.21 $ 0.19 10.5% ________________________________