8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): August 1, 2017

Dorman Products, Inc.

(Exact name of Registrant as Specified in Charter)

Pennsylvania	000-18914	23-2078856
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

3400 East Walnut Street, Colmar, Pennsylvania 18915

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (215) 997-1800

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 2.02. Results of Operation and Financial Condition.

The information being furnished in this Item 2.02 and in Exhibit 99.1 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly set forth by specific reference in such filing.

On August 1, 2017, Dorman Products, Inc. (the “Company”) issued a press release announcing its operating results for the second quarter ended July 1, 2017. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.

Certain statements in this document constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. While forward-looking statements sometimes are presented with numerical specificity, they are based on various assumptions made by management regarding future circumstances over many of which the Company has little or no control. Forward-looking statements may be identified by words including “anticipate,” “believe,” “estimate,” “expect,” and similar expressions. The Company cautions readers that forward-looking statements, including, without limitation, those relating to future business prospects, revenues, working capital, liquidity, and income, are subject to certain risks and uncertainties that would cause actual results to differ materially from those indicated in the forward-looking statements. Factors that could cause actual results to differ from forward-looking statements include but are not limited to: (i) competition in the automotive aftermarket; (ii) unfavorable economic conditions; (iii) the loss or decrease in sales among one of our top customers; (iv) customer consolidation in the automotive aftermarket leading to less favorable customer contract terms; (v) foreign currency fluctuations and our dependence on foreign suppliers; (vi) extended credit to customers who may be unable to pay; (vii) the loss of a key vendor; (viii) limited customer shelf space; (ix) reliance on new product development; (x) claims of intellectual property infringement made by original equipment manufacturers; (xi) quality problems with product after their production and sale to customers; (xii) loss of third party transportation providers on whom we depend; (xiii) unfavorable results of legal proceedings; (xiv) no history of paying regular dividends and no intent to do so; (xv) our executive chairman and his family own a significant portion of the company; (xvi) operations may be subject to quarter fluctuations and disruptions from events beyond our control; (xvii) regulations related to conflict minerals could adversely impact our business; (xviii) cyber-attacks could adversely impact our business; (xix) imposition of new taxes or duties could adversely affect our business; and (xx) exposure to risks related to accounts receivable. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. For additional information concerning factors that could cause actual results to differ materially from the information contained in this report, reference is made to the information in Part I, “Item 1A Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016. You should not place undue reliance on forward-looking statements. Such statements speak only as to the date on which they are made, and we undertake no obligation to update publicly or revise any forward-looking statement, regardless of future developments or availability of new information.

Item 9.01 Financial Statements and Exhibits.

Exhibit Number	Description
99.1	Press Release dated August 1, 2017

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	DORMAN PRODUCTS, INC.
Date:    August 1, 2017	By:	/s/ Kevin M. Olsen
		Name: Kevin M. Olsen
		Title: Chief Financial Officer

Exhibit Index

Exhibit Number	Description
99.1	Press Release dated August 1, 2017

EX-99.1

Exhibit 99.1

NEWS RELEASE

Contact: Kevin Olsen, CFO, kolsen@dormanproducts.com, (215) 997-1800. Visit our website at www.dormanproducts.com

Dorman Products, Inc. Reports Sales and Earnings for the Second Quarter

Ended July 1, 2017

• Q2 Sales increased 9.4% to $229.3 million

• Q2 EPS increased 10.7% to $0.83 per diluted share

• Year to Date Sales increased 7.9% to $450.9 million

• Year to Date EPS increased 15.1% to $1.68 per diluted share

COLMAR, PENNSYLVANIA (August 1, 2017) – Dorman Products, Inc. (NASDAQ:DORM), a leading supplier in the automotive aftermarket, today announced sales and EPS for the second quarter.

2nd Quarter Financial Results

Net Sales for the second quarter ended July 1, 2017 increased $19.7 million, or 9.4%, to $229.3 million from $209.6 million for the second quarter ended 2016. Diluted Earnings Per Share for the second quarter increased 10.7% to $0.83 per share from $0.75 per share in the second quarter of 2016.

“The team delivered very solid results in the second quarter. Despite an overall challenging automotive aftermarket demand environment, our top line sales growth remained robust, driven by the continued growth of new products. Some key highlights in the Quarter were:

• We launched 1,011 Unique SKU’s in the second quarter, a 16% increase over last year

• Dorman HD Solutions sales grew 26% over the second quarter of 2016

• Complex Electronics lines grew 17% over the second quarter of 2016

In the quarter, we also started to realize meaningful revenue from the launch of our Dorman Premium full line chassis program. We are truly excited to see the results of a lot of hard work by the team as we strive to become a market leader in this category. Overall, we continue to execute well, and although we are very pleased with our first half growth, we remain cautious entering the back half of the year given current market conditions. However, our previously issued full year guidance for top and bottom line growth remains unchanged” said Matt Barton, President and Chief Executive Officer.

Gross Profit for the second quarter increased 10.6% to $90.9 million (or 39.6% of Net Sales) from $82.2 million (or 39.2% of Net Sales) in the second quarter of 2016. Product mix (higher sales concentration of higher margin products) was the main driver of the year over year Gross Margin percentage improvement. Selling, General and Administrative Expenses for the second quarter increased 11.4% to $45.9 million (or 20.0% of sales) from $41.2 million (or 19.6% of sales) in the second quarter of 2016. Continued investment in new product development, variable expenses tied to growth and general wage and benefit inflation drove the year over year increases.

Operating Cash Flow was $3.8 million in the quarter compared to $12.6 million in the same quarter last year. Investment in inventories (of approximately $29 million in the quarter), to ensure high customer fill rates, was the driver of the decreased Operating Cash Flows. We expect inventory to plateau in the third quarter and begin to decline slightly in the second half of the year.

Under its share repurchase program, Dorman repurchased 300.6 thousand shares of its common stock for $24.0 million at an average share price of $79.73 during the second quarter ended July 1, 2017, bringing year to date purchases to 439.5 shares at an average price of $79.64.

Dorman Products, Inc. is a leading supplier of Dealer “Exclusive” replacement parts to the Automotive, Medium and Heavy Duty Aftermarkets. 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, , imposition of new taxes or duties, 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 31, 2016. 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.

DORMAN PRODUCTS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands, except per-share amounts)

	13 Weeks			13 Weeks
Second Quarter (unaudited)		7/1/17	Pct.		6/25/16		Pct.
Net sales	$	229,262	100.0	$	209,573		100.0
Cost of goods sold		138,410	60.4		127,409		60.8
Gross profit		90,852	39.6		82,164		39.2
Selling, general and administrative expenses		45,853	20.0		41,175		19.6
Income from operations		44,999	19.6		40,989		19.6
Interest income (expense), net		241	0.1		(62	)	(0.1	)
Income before income taxes		45,240	19.7		40,927		19.5
Provision for income taxes		16,803	7.3		14,945		7.1
Net income	$	28,437	12.4	$	25,982		12.4
Diluted earnings per share	$	0.83		$	0.75
Weighted average diluted shares outstanding		34,225			34,626

DORMAN PRODUCTS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands, except per-share amounts)

	26 Weeks			26 Weeks
Second Quarter (unaudited)		7/1/17	Pct.		6/25/16		Pct.
Net sales	$	450,887	100.0	$	417,721		100.0
Cost of goods sold		271,292	60.2		254,963		61.0
Gross profit		179,595	39.8		162,758		39.0
Selling, general and administrative expenses		89,554	19.8		82,838		19.9
Income from operations		90,041	20.0		79,920		19.1
Interest income (expense), net		305	0.0		(119	)	0.0
Income before income taxes		90,346	20.0		79,801		19.1
Provision for income taxes		32,722	7.2		29,148		7.0
Net income	$	57,624	12.8	$	50,653		12.1
Diluted earnings per share	$	1.68		$	1.46
Weighted average diluted shares outstanding		34,350			34,669

DORMAN PRODUCTS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands)

	7/1/17		12/31/16
Assets:
Cash and cash equivalents	$	129,208	$	149,121
Accounts receivable		230,414		230,526
Inventories		200,383		168,851
Prepaid expenses		5,048		3,116
Total current assets		565,053		551,614
Property, plant & equipment, net		90,216		88,436
Goodwill and other intangible assets, net		32,642		29,788
Deferred income taxes, net		15,095		12,429
Other assets		42,028		29,525
Total assets	$	745,034	$	711,792
Liabilities & shareholders’ equity:
Accounts payable	$	90,611	$	72,629
Accrued expenses and other		21,058		31,219
Total current liabilities		111,669		103,848
Other long-term liabilities		8,724		6,302
Shareholders’ equity		624,641		601,642
Total liabilities and equity	$	745,034	$	711,792

Selected Cash Flow Information:
(in thousands)	13 Weeks (unaudited)				26 Weeks (unaudited)
	7/1/17		6/25/16		7/1/17		6/25/16
Depreciation, amortization and accretion	$	5,187	$	4,680	$	10,192	$	9,179
Capital expenditures	$	6,314	$	4,520	$	11,932	$	10,118