EX-99 2 ex99.txt EARNINGS RELEASE Q3 2007 NEWS RELEASE DORMAN 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 Third Quarter Ended September 29, 2007 and Announces Promotion of Steven Berman to President and Chief Operating Officer Colmar, Pennsylvania (October 25, 2007) - Dorman Products, Inc., (NASDAQ:DORM) today announced financial results for the third quarter ended September 29, 2007. Sales in the three months ended September 29, 2007 increased 11% to $83.2 from $74.9 million in the same period last year. Revenues for the nine months ended September 29, 2007 were up 12% to $243.3 million from $217.9 million last year. Revenues increased as a result of higher new product sales and further penetration of existing automotive product lines. Reported net income in the third quarter of 2007 was $5.7 million compared to net income of $4.5 million in the same period last year. Reported diluted earnings per share in the third quarter of 2007 were $0.31 compared to $0.25 in the same period last year. Excluding the vacation adjustment discussed below, net income in the third quarter of 2007 was $5.3 million compared to net income of $4.5 million in the same period last year and diluted EPS in the third quarter of 2007 increased 16% to $0.29 from $0.25 in the same period last year. For the thirteen weeks ended September 29, 2007 and September 30, 2006: o Gross profit margin increased to 35.5% from 35.0% in the same period last year. The increase is the result of a more favorable product mix and lower required provisions for excess and obsolete inventory. o Selling, general and administrative expenses increased 8%, but declined from 24.6% to 23.9% of sales. Results for the thirteen weeks ended September 29, 2007 also include a $0.4 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 to 37.9% in the thirteen weeks ended September 29, 2007 from 37.1% in the same period last year. The increase is the result of the loss of certain state tax benefits as well as higher incremental state tax rates due to higher earnings level in 2007. Reported net income in the first nine months of 2007 was $15.5 million compared to net income of $8.9 million in the same period last year. Reported diluted earnings per share in the nine months ended September 29, 2007 were $0.86 compared to $0.49 in the same period last year. Excluding the vacation adjustment, goodwill impairment and deferred tax write off discussed below, net income in the first nine months of 2007 was $14.7 million compared to net income of $12.1 million in the same period last year and diluted EPS for the nine months ended September 29, 2007 increased 21% to $0.81 from $0.67 in the same period last year. 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 $1.8 million in 2007. Results for the nine months ended September 30, 2006 include a one-time $3.2 million non-cash write-down for goodwill impairment ($2.9 million or $0.16 per share) and the write off of deferred tax benefits ($0.3 million or $0.02 per share) associated with the Company's Swedish subsidiary. Mr. Richard Berman, Chairman, President and Chief Executive Officer said, "Our sales and profit growth was once again driven by the success of our new product offerings. Customers and end users alike continue to be enthusiastic supporters of our new to the aftermarket product offerings. We look forward to sharing many of these exciting new product opportunities with our customers during next week's AAPEX/AAIW Show." The Company also announced the promotion of Steven Berman to President and Chief Operating Officer. Richard Berman will remain Chairman of the Board of Directors and Chief Executive Officer. In announcing the promotion, Richard Berman said, "Dorman is at an exciting stage in its development and this change will enable me to focus more of my energy on vision, strategy and future growth. Steven has been a vital part of the business since its formation almost thirty years ago and has an intimate understanding of all aspects of the company's operations. I am confident that Dorman will continue to grow and prosper under his leadership. As part of our 2008-2009 plan we will be increasing responsibility for other contributors as well to ensure that we have the best infrastructure in place to capitalize on available growth opportunities." 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 (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 could 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 Third Quarter (unaudited) 9/29/07 Pct. 9/30/06 Pct. Net sales $83,174 100.0 $74,891 100.0 Cost of goods sold 53,670 64.5 48,714 65.0 Gross profit 29,504 35.5 26,177 35.0 Selling, general and administrative expenses 19,853 23.9 18,370 24.6 Income from operations 9,651 11.6 7,807 10.4 Interest expense, net 512 0.6 576 0.7 Income before income taxes 9,139 11.0 7,231 9.7 Provision for income taxes 3,460 4.2 2,682 3.6 Net income $ 5,679 6.8 $ 4,549 6.1 Earnings per share Basic $ 0.32 - $ 0.26 - Diluted $ 0.31 - $ 0.25 - Average shares outstanding Basic 17,695 - 17,708 - Diluted 18,145 - 18,147 - 39 Weeks 39 Weeks Year to date (unaudited) 9/29/07 Pct. 9/30/06 Pct. Net sales $243,263 100.0 $217,943 100.0 Cost of goods sold 158,913 65.3 140,390 64.4 Gross profit 84,350 34.7 77,553 35.6 Selling, general and administrative expenses 57,863 23.8 56,362 25.9 Goodwill impairment - - 2,897 1.3 Income from operations 26,487 10.9 18,294 8.4 Interest expense, net 1,551 0.6 1,797 0.8 Income before income taxes 24,936 10.3 16,497 7.6 Provision for income taxes 9,427 3.9 7,612 3.5 Net income $15,509 6.4 $ 8,885 4.1 Earnings per share Basic $ 0.88 - $ 0.50 - Diluted $ 0.86 - $ 0.49 - Average shares outstanding Basic 17,691 - 17,728 - Diluted 18,130 - 18,148 - DORMAN PRODUCTS, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (in thousands) 9/30/07 12/30/06 Assets: (unaudited) Cash and cash equivalents $ 6,148 $ 5,080 Accounts receivable 85,133 77,187 Inventories 77,905 67,768 Deferred income taxes 10,626 10,330 Prepaid expenses 1,675 1,443 Total current assets 181,487 161,808 Property & equipment 26,353 27,963 Goodwill 27,901 26,958 Other assets 1,015 1,029 Total assets $236,756 $217,758 Liability & Shareholders' Equity: Current portion of long-term debt $25,253 $ 8,651 Accounts payable 19,509 12,822 Accrued expenses and other 11,421 13,531 Total current liabilities 56,183 35,004 Long-term debt and other 2,417 20,596 Deferred income taxes 7,830 8,315 Shareholders' equity 170,326 153,843 Total Liabilities and Equity $236,756 $217,758 Selected Cash Flow Information: (in thousands) 13 Weeks (unaudited) 39 Weeks (unaudited) -------------------- -------------------- 9/29/07 9/30/06 9/29/07 9/30/06 Depreciation and amortization $ 2,004 $1,731 $ 5,752 $5,012 Capital Expenditures $ 1,409 $1,637 $ 4,061 $5,432 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 $1.8 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 nine months ended September 30, 2006 include a one-time $3.2 million non-cash write-down for goodwill impairment ($2.9 million or $0.16 per share) and the write off of deferred tax benefits ($0.3 million or $0.02 per share) associated with the Company's Swedish subsidiary. This press release contains non-GAAP measures which adjust net income and diluted earnings per share to exclude the impact of these items. 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) ----------- --------------------------------- 09/29/07 09/30/06 % Change Net income, as reported $ 5,679 $ 4,549 24.8% Less: Vacation adjustment, net of tax (332) - N/A ---------------- ------------------- ------------- Net income, as adjusted $ 5,347 $ 4,549 17.5% ================ =================== ============= Diluted EPS, as reported $ 0.31 $ 0.25 24.0% Less: Vacation adjustment, net of tax (0.02) - N/A ---------------- ------------------- ------------- Diluted EPS, as adjusted $ 0.29 $ 0.25 16.0% ================ =================== ============= 39 Weeks (unaudited) ---------------- ------------------- ------------- 09/29/07 09/30/06 % Change Net income, as reported $ 15,509 $ 8,885 74.6% Less: Vacation adjustment, net of tax (821) - N/A Add: Goodwill and deferred tax write offs - 3,216 ---------------- ------------------- ------------- Net income, as adjusted $ 14,688 $ 12,101 21.4% ================ =================== ============= Diluted EPS, as reported $ 0.86 $ 0.49 75.5% Less: Vacation adjustment, net of tax (0.05) - N/A Add: Goodwill and deferred tax write offs - 0.18 ---------------- ------------------- ------------- Diluted EPS, as adjusted $ 0.81 $ 0.67 20.9% ================ =================== =============