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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 25, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                    

Commission file number: 0-18914

 

Dorman Products, Inc.

(Exact name of registrant as specified in its charter)

 

 

Pennsylvania

 

23-2078856

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

 

 

3400 East Walnut Street, Colmar, Pennsylvania

 

18915

(Address of principal executive offices)

 

(Zip Code)

(215) 997-1800

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common stock, par value $0.01 per share

 

DORM

 

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes      No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes      No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

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.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes      No

As of July 21, 2022 the registrant had 31,431,905 shares of common stock, par value $0.01 per share, outstanding.


 

 

DORMAN PRODUCTS, INC. AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT ON FORM 10-Q

June 25, 2022

 

 

 

 

 

Page

PART I — FINANCIAL INFORMATION

 

 

 

 

 

 

 

ITEM 1.

 

Financial Statements (unaudited)

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive Income

 

3

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows

 

6

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

7

 

 

 

 

 

ITEM 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

14

 

 

 

 

 

ITEM 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

21

 

 

 

 

 

ITEM 4.

 

Controls and Procedures

 

21

 

 

 

 

 

PART II — OTHER INFORMATION

 

 

 

 

 

 

 

ITEM 1.

 

Legal Proceedings

 

23

 

 

 

 

 

ITEM 1A.

 

Risk Factors

 

23

 

 

 

 

 

ITEM 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

23

 

 

 

 

 

ITEM 3.

 

Defaults Upon Senior Securities

 

23

 

 

 

 

 

ITEM 4.

 

Mine Safety Disclosures

 

24

 

 

 

 

 

ITEM 5.

 

Other Information

 

24

 

 

 

 

 

ITEM 6.

 

Exhibits

 

24

 

 

 

 

 

Exhibit Index

 

 

 

25

 

 

 

 

 

Signatures

 

 

 

26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2


 

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

DORMAN PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(UNAUDITED)

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

(in thousands, except per share data)

 

June 25, 2022

 

 

June 26, 2021

 

 

June 25, 2022

 

 

June 26, 2021

 

Net sales

 

$

417,419

 

 

$

310,635

 

 

$

818,998

 

 

$

598,647

 

Cost of goods sold

 

 

275,894

 

 

 

200,510

 

 

 

544,233

 

 

 

384,002

 

Gross profit

 

 

141,525

 

 

 

110,125

 

 

 

274,765

 

 

 

214,645

 

Selling, general and administrative expenses

 

 

92,058

 

 

 

69,517

 

 

 

178,586

 

 

 

132,386

 

Income from operations

 

 

49,467

 

 

 

40,608

 

 

 

96,179

 

 

 

82,259

 

Interest expense, net

 

 

1,565

 

 

 

63

 

 

 

2,796

 

 

 

184

 

Other income, net

 

 

(111

)

 

 

(153

)

 

 

(195

)

 

 

(238

)

Income before income taxes

 

 

48,013

 

 

 

40,698

 

 

 

93,578

 

 

 

82,313

 

Provision for income taxes

 

 

10,108

 

 

 

9,080

 

 

 

20,466

 

 

 

17,965

 

Net income

 

$

37,905

 

 

$

31,618

 

 

$

73,112

 

 

$

64,348

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in foreign currency translation adjustment

 

$

(1,999

)

 

$

 

 

$

(303

)

 

$

 

Comprehensive Income

 

$

35,906

 

 

$

31,618

 

 

$

72,809

 

 

$

64,348

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.21

 

 

$

0.99

 

 

$

2.32

 

 

$

2.01

 

Diluted

 

$

1.20

 

 

$

0.99

 

 

$

2.32

 

 

$

2.00

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

31,424

 

 

 

31,942

 

 

 

31,461

 

 

 

31,995

 

Diluted

 

 

31,535

 

 

 

32,089

 

 

 

31,568

 

 

 

32,136

 

 

See accompanying Notes to Condensed Consolidated Financial Statements

 

 

 

 

 

 

 

 

 

 

3


 

DORMAN PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

(in thousands, except for share data)

 

June 25, 2022

 

 

December 25, 2021

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

51,966

 

 

$

58,782

 

Accounts receivable, less allowance for doubtful accounts of $1,373 and $1,326

 

 

417,354

 

 

 

472,764

 

Inventories

 

 

634,774

 

 

 

531,988

 

Prepaids and other current assets

 

 

26,965

 

 

 

13,048

 

Total current assets

 

 

1,131,059

 

 

 

1,076,582

 

Property, plant and equipment, net

 

 

117,930

 

 

 

114,864

 

Operating lease right-of-use assets

 

 

96,580

 

 

 

59,029

 

Goodwill

 

 

197,165

 

 

 

197,332

 

Intangible assets, net

 

 

172,658

 

 

 

178,809

 

Other assets

 

 

45,775

 

 

 

46,503

 

Total assets

 

$

1,761,167

 

 

$

1,673,119

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

203,456

 

 

$

177,389

 

Accrued compensation

 

 

14,391

 

 

 

26,636

 

Accrued customer rebates and returns

 

 

185,163

 

 

 

188,080

 

Revolving credit facility

 

 

229,360

 

 

 

239,360

 

Other accrued liabilities

 

 

27,965

 

 

 

33,583

 

Total current liabilities

 

 

660,335

 

 

 

665,048

 

Long-term operating lease liabilities

 

 

87,459

 

 

 

52,443

 

Other long-term liabilities

 

 

5,117

 

 

 

4,916

 

Deferred tax liabilities, net

 

 

17,299

 

 

 

17,976

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.01 par value; 50,000,000 shares authorized; 31,425,224 and

   31,607,509 shares issued and outstanding in 2022 and 2021, respectively

 

 

314

 

 

 

316

 

Additional paid-in capital

 

 

82,192

 

 

 

77,451

 

Retained earnings

 

 

910,194

 

 

 

856,409

 

Accumulated other comprehensive loss

 

 

(1,743

)

 

 

(1,440

)

Total shareholders’ equity

 

 

990,957

 

 

 

932,736

 

Total liabilities and shareholders' equity

 

$

1,761,167

 

 

$

1,673,119

 

See accompanying Notes to Condensed Consolidated Financial Statements

 

 


4


 

DORMAN PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

 

 

Three Months Ended June 25, 2022

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except share data)

 

Shares

Issued

 

 

Par

Value

 

 

Additional Paid-In

Capital

 

 

Retained

Earnings

 

 

Accumulated Other Comprehensive Income (Loss)

 

 

Total

 

Balance at March 26, 2022

 

 

31,479,916

 

 

$

315

 

 

$

78,906

 

 

$

879,923

 

 

$

256

 

 

$

959,400

 

Exercise of stock options

 

 

14,808

 

 

 

 

 

 

957

 

 

 

 

 

 

 

 

 

957

 

Compensation expense under Incentive Stock Plan

 

 

 

 

 

 

 

 

2,118

 

 

 

 

 

 

 

 

 

2,118

 

Purchase and cancellation of common stock

 

 

(75,321

)

 

 

(1

)

 

 

(136

)

 

 

(7,141

)

 

 

 

 

 

(7,278

)

Issuance of non-vested stock, net of cancellations

 

 

6,732

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other stock-related activity, net of tax

 

 

(911

)

 

 

 

 

 

347

 

 

 

(493

)

 

 

 

 

 

(146

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,999

)

 

 

(1,999

)

Net income

 

 

 

 

 

 

 

 

 

 

 

37,905

 

 

 

 

 

 

37,905

 

Balance at June 25, 2022

 

 

31,425,224

 

 

$

314

 

 

$

82,192

 

 

$

910,194

 

 

$

(1,743

)

 

$

990,957

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 26, 2021

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except share data)

 

Shares

Issued

 

 

Par

Value

 

 

Additional Paid-In

Capital

 

 

Retained

Earnings

 

 

Accumulated Other Comprehensive Income (Loss)

 

 

Total

 

Balance at March 27, 2021

 

 

32,115,528

 

 

$

321

 

 

$

67,596

 

 

$

815,894

 

 

$

 

 

$

883,811

 

Exercise of stock options

 

 

5,732

 

 

 

 

 

 

420

 

 

 

 

 

 

 

 

 

420

 

Compensation expense under Incentive Stock Plan

 

 

 

 

 

 

 

 

2,380

 

 

 

 

 

 

 

 

 

2,380

 

Purchase and cancellation of common stock

 

 

(266,871

)

 

 

(2

)

 

 

(480

)

 

 

(26,793

)

 

 

 

 

 

(27,275

)

Issuance of non-vested stock, net of cancellations

 

 

38,120

 

 

 

 

 

 

2,493

 

 

 

 

 

 

 

 

 

2,493

 

Other stock-related activity, net of tax

 

 

(619

)

 

 

 

 

 

(462

)

 

 

 

 

 

 

 

 

(462

)

Net income

 

 

 

 

 

 

 

 

 

 

 

31,618

 

 

 

 

 

 

31,618

 

Balance at June 26, 2021

 

 

31,891,890

 

 

$

319

 

 

$

71,947

 

 

$

820,719

 

 

$

 

 

$

892,985

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 25, 2022

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except share data)

 

Shares

Issued

 

 

Par

Value

 

 

Additional Paid-In

Capital

 

 

Retained

Earnings

 

 

Accumulated Other Comprehensive Income (Loss)

 

 

Total

 

Balance at December 25, 2021

 

 

31,607,509

 

 

$

316

 

 

$

77,451

 

 

$

856,409

 

 

$

(1,440

)

 

$

932,736

 

Exercise of stock options

 

 

17,286

 

 

 

 

 

 

957

 

 

 

 

 

 

 

 

 

957

 

Compensation expense under Incentive Stock Plan

 

 

 

 

 

 

 

 

4,270

 

 

 

 

 

 

 

 

 

4,270

 

Purchase and cancellation of common stock

 

 

(186,435

)

 

 

(2

)

 

 

(336

)

 

 

(17,857

)

 

 

 

 

 

(18,195

)

Issuance of non-vested stock, net of cancellations

 

 

4,221

 

 

 

 

 

 

377

 

 

 

 

 

 

 

 

 

377

 

Other stock-related activity, net of tax

 

 

(17,357

)

 

 

 

 

 

(527

)

 

 

(1,470

)

 

 

 

 

 

(1,997

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(303

)

 

 

(303

)

Net income

 

 

 

 

 

 

 

 

 

 

 

73,112

 

 

 

 

 

 

73,112

 

Balance at June 25, 2022

 

 

31,425,224

 

 

$

314

 

 

$

82,192

 

 

$

910,194

 

 

$

(1,743

)

 

$

990,957

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 26, 2021

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except share data)

 

Shares

Issued

 

 

Par

Value

 

 

Additional Paid-In

Capital

 

 

Retained

Earnings

 

 

Accumulated Other Comprehensive Income (Loss)

 

 

Total

 

Balance at December 26, 2020

 

 

32,168,740

 

 

$

322

 

 

$

64,085

 

 

$

789,152

 

 

$

 

 

$

853,559

 

Exercise of stock options

 

 

17,346

 

 

 

 

 

 

736

 

 

 

 

 

 

 

 

 

736

 

Compensation expense under Incentive Stock Plan

 

 

 

 

 

 

 

 

4,491

 

 

 

 

 

 

 

 

 

4,491

 

Purchase and cancellation of common stock

 

 

(305,031

)

 

 

(3

)

 

 

(549

)

 

 

(30,697

)

 

 

 

 

 

(31,249

)

Issuance of non-vested stock, net of cancellations

 

 

20,521

 

 

 

 

 

 

2,493

 

 

 

 

 

 

 

 

 

2,493

 

Other stock-related activity, net of tax

 

 

(9,686

)

 

 

 

 

 

691

 

 

 

(2,084

)

 

 

 

 

 

(1,393

)

Net income

 

 

 

 

 

 

 

 

 

 

 

64,348

 

 

 

 

 

 

64,348

 

Balance at June 26, 2021

 

 

31,891,890

 

 

$

319

 

 

$

71,947

 

 

$

820,719

 

 

$

 

 

$

892,985

 

See accompanying Notes to Condensed Consolidated Financial Statements

5


DORMAN PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

 

Six Months Ended

 

(in thousands)

 

June 25, 2022

 

 

June 26, 2021

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Net income

 

$

73,112

 

 

$

64,348

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation, amortization and accretion

 

 

19,600

 

 

 

16,850

 

Provision for doubtful accounts

 

 

56

 

 

 

31

 

Benefit for deferred income taxes

 

 

(551

)

 

 

(213

)

Provision for stock-based compensation

 

 

4,270

 

 

 

4,491

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

55,341

 

 

 

14,605

 

Inventories

 

 

(102,824

)

 

 

(58,039

)

Prepaids and other current assets

 

 

(7,347

)

 

 

(8,288

)

Other assets

 

 

(726

)

 

 

(3,451

)

Accounts payable

 

 

25,565

 

 

 

8,818

 

Accrued customer rebates and returns

 

 

(2,917

)

 

 

9,826

 

Accrued compensation and other liabilities

 

 

(26,193

)

 

 

(9,891

)

Cash provided by operating activities

 

 

37,386

 

 

 

39,087

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Proceeds from purchase price adjustment

 

 

595

 

 

 

 

Property, plant and equipment additions

 

 

(16,100

)

 

 

(10,153

)

Cash used in investing activities

 

 

(15,505

)

 

 

(10,153

)

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Payments of revolving credit line

 

 

(10,000

)

 

 

 

Proceeds from exercise of stock options

 

 

894

 

 

 

736