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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 September 24, 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 October 20, 2022 the registrant had 31,418,575 shares of common stock, par value $0.01 per share, outstanding.


 

 

DORMAN PRODUCTS, INC. AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT ON FORM 10-Q

September 24, 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

 

15

 

 

 

 

 

ITEM 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

22

 

 

 

 

 

ITEM 4.

 

Controls and Procedures

 

23

 

 

 

 

 

PART II — OTHER INFORMATION

 

 

 

 

 

 

 

ITEM 1.

 

Legal Proceedings

 

24

 

 

 

 

 

ITEM 1A.

 

Risk Factors

 

24

 

 

 

 

 

ITEM 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

24

 

 

 

 

 

ITEM 3.

 

Defaults Upon Senior Securities

 

24

 

 

 

 

 

ITEM 4.

 

Mine Safety Disclosures

 

24

 

 

 

 

 

ITEM 5.

 

Other Information

 

24

 

 

 

 

 

ITEM 6.

 

Exhibits

 

24

 

 

 

 

 

Exhibit Index

 

 

 

26

 

 

 

 

 

Signatures

 

 

 

27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Nine Months Ended

 

(in thousands, except per share data)

 

September 24, 2022

 

 

September 25, 2021

 

 

September 24, 2022

 

 

September 25, 2021

 

Net sales

 

$

413,470

 

 

$

348,426

 

 

$

1,232,468

 

 

$

947,073

 

Cost of goods sold

 

 

281,559

 

 

 

231,572

 

 

 

825,792

 

 

 

615,574

 

Gross profit

 

 

131,911

 

 

 

116,854

 

 

 

406,676

 

 

 

331,499

 

Selling, general and administrative expenses

 

 

89,814

 

 

 

72,663

 

 

 

268,400

 

 

 

205,049

 

Income from operations

 

 

42,097

 

 

 

44,191

 

 

 

138,276

 

 

 

126,450

 

Interest expense, net

 

 

2,344

 

 

 

733

 

 

 

5,140

 

 

 

918

 

Other expense (income), net

 

 

65

 

 

 

(95

)

 

 

(130

)

 

 

(334

)

Income before income taxes

 

 

39,688

 

 

 

43,553

 

 

 

133,266

 

 

 

125,866

 

Provision for income taxes

 

 

9,087

 

 

 

10,449

 

 

 

29,553

 

 

 

28,414

 

Net income

 

$

30,601

 

 

$

33,104

 

 

$

103,713

 

 

$

97,452

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in foreign currency translation adjustment

 

$

(2,112

)

 

$

 

 

$

(2,415

)

 

$

 

Comprehensive Income

 

$

28,489

 

 

$

33,104

 

 

$

101,298

 

 

$

97,452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.97

 

 

$

1.04

 

 

$

3.30

 

 

$

3.06

 

Diluted

 

$

0.97

 

 

$

1.04

 

 

$

3.29

 

 

$

3.04

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

31,411

 

 

 

31,692

 

 

 

31,444

 

 

 

31,895

 

Diluted

 

 

31,545

 

 

 

31,842

 

 

 

31,561

 

 

 

32,039

 

 

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)

 

September 24, 2022

 

 

December 25, 2021

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

35,435

 

 

$

58,782

 

Accounts receivable, less allowance for doubtful accounts of $1,388 and $1,326

 

 

433,229

 

 

 

472,764

 

Inventories

 

 

677,898

 

 

 

531,988

 

Prepaids and other current assets

 

 

30,456

 

 

 

13,048

 

Total current assets

 

 

1,177,018

 

 

 

1,076,582

 

Property, plant and equipment, net

 

 

122,106

 

 

 

114,864

 

Operating lease right-of-use assets

 

 

92,440

 

 

 

59,029

 

Goodwill

 

 

195,725

 

 

 

197,332

 

Intangible assets, net

 

 

169,046

 

 

 

178,809

 

Other assets

 

 

44,873

 

 

 

46,503

 

Total assets

 

$

1,801,208

 

 

$

1,673,119

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

199,180

 

 

$

177,389

 

Accrued compensation

 

 

15,523

 

 

 

26,636

 

Accrued customer rebates and returns

 

 

199,779

 

 

 

188,080

 

Revolving credit facility

 

 

229,360

 

 

 

239,360

 

Other accrued liabilities

 

 

30,036

 

 

 

33,583

 

Total current liabilities

 

 

673,878

 

 

 

665,048

 

Long-term operating lease liabilities

 

 

83,983

 

 

 

52,443

 

Other long-term liabilities

 

 

5,159

 

 

 

4,916

 

Deferred tax liabilities, net

 

 

17,147

 

 

 

17,976

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.01 par value; 50,000,000 shares authorized; 31,419,392 and

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

 

 

314

 

 

 

316

 

Additional paid-in capital

 

 

85,374

 

 

 

77,451

 

Retained earnings

 

 

939,208

 

 

 

856,409

 

Accumulated other comprehensive loss

 

 

(3,855

)

 

 

(1,440

)

Total shareholders’ equity

 

 

1,021,041

 

 

 

932,736

 

Total liabilities and shareholders' equity

 

$

1,801,208

 

 

$

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 September 24, 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 June 25, 2022

 

 

31,425,224

 

 

$

314

 

 

$

82,192

 

 

$

910,194

 

 

$

(1,743

)

 

$

990,957

 

Exercise of stock options

 

 

169

 

 

 

 

 

 

14

 

 

 

 

 

 

 

 

 

14

 

Compensation expense under Incentive Stock Plan

 

 

 

 

 

 

 

 

2,472

 

 

 

 

 

 

 

 

 

2,472

 

Purchase and cancellation of common stock

 

 

(14,700

)

 

 

 

 

 

(26

)

 

 

(1,496

)

 

 

 

 

 

(1,522

)

Issuance of non-vested stock, net of cancellations

 

 

9,626

 

 

 

 

 

 

812

 

 

 

 

 

 

 

 

 

812

 

Other stock-related activity, net of tax

 

 

(927

)

 

 

 

 

 

(90

)

 

 

(91

)

 

 

 

 

 

(181

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,112

)

 

 

(2,112

)

Net income

 

 

 

 

 

 

 

 

 

 

 

30,601

 

 

 

 

 

 

30,601

 

Balance at September 24, 2022

 

 

31,419,392

 

 

$

314

 

 

$

85,374

 

 

$

939,208

 

 

$

(3,855

)

 

$

1,021,041

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 25, 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 June 26, 2021

 

 

31,891,890

 

 

$

319

 

 

$

71,947

 

 

$

820,719

 

 

$

 

 

$

892,985

 

Exercise of stock options

 

 

2,260

 

 

 

 

 

 

173

 

 

 

 

 

 

 

 

 

173

 

Compensation expense under Incentive Stock Plan

 

 

 

 

 

 

 

 

1,721

 

 

 

 

 

 

 

 

 

1,721

 

Purchase and cancellation of common stock

 

 

(234,044

)

 

 

(2

)

 

 

(421

)

 

 

(22,941

)

 

 

 

 

 

(23,364

)

Issuance of non-vested stock, net of cancellations

 

 

(537

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other stock-related activity, net of tax

 

 

(866

)

 

 

 

 

 

(95

)

 

 

 

 

 

 

 

 

(95

)

Net income

 

 

 

 

 

 

 

 

 

 

 

33,104

 

 

 

 

 

 

33,104

 

Balance at September 25, 2021

 

 

31,658,703

 

 

$

317

 

 

$

73,325

 

 

$

830,882

 

 

$

 

 

$

904,524

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 24, 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

 

 

17,455

 

 

 

 

 

 

971

 

 

 

 

 

 

 

 

 

971

 

Compensation expense under Incentive Stock Plan

 

 

 

 

 

 

 

 

6,742

 

 

 

 

 

 

 

 

 

6,742

 

Purchase and cancellation of common stock

 

 

(201,135

)

 

 

(2

)

 

 

(362

)

 

 

(19,353

)

 

 

 

 

 

(19,717

)

Issuance of non-vested stock, net of cancellations

 

 

13,847

 

 

 

 

 

 

1,189

 

 

 

 

 

 

 

 

 

1,189

 

Other stock-related activity, net of tax

 

 

(18,284

)

 

 

 

 

 

(617

)

 

 

(1,561

)

 

 

 

 

 

(2,178

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,415

)

 

 

(2,415

)

Net income

 

 

 

 

 

 

 

 

 

 

 

103,713

 

 

 

 

 

 

103,713

 

Balance at September 24, 2022

 

 

31,419,392

 

 

$

314

 

 

$

85,374

 

 

$

939,208

 

 

$

(3,855

)

 

$

1,021,041

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 25, 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

 

 

19,606

 

 

 

 

 

 

909

 

 

 

 

 

 

 

 

 

909

 

Compensation expense under Incentive Stock Plan

 

 

 

 

 

 

 

 

6,212

 

 

 

 

 

 

 

 

 

6,212

 

Purchase and cancellation of common stock

 

 

(539,075

)

 

 

(5

)

 

 

(970

)

 

 

(53,638

)

 

 

 

 

 

(54,613

)

Issuance of non-vested stock, net of cancellations

 

 

19,984

 

 

 

 

 

 

2,493

 

 

 

 

 

 

 

 

 

2,493

 

Other stock-related activity, net of tax

 

 

(10,552

)

 

 

 

 

 

596

 

 

 

(2,084

)

 

 

 

 

 

(1,488

)

Net income

 

 

 

 

 

 

 

 

 

 

 

97,452

 

 

 

 

 

 

97,452

 

Balance at September 25, 2021

 

 

31,658,703

 

 

$

317

 

 

$

73,325

 

 

$

830,882

 

 

$

 

 

$

904,524

 

See accompanying Notes to Condensed Consolidated Financial Statements

5


DORMAN PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

Nine Months Ended

 

(in thousands)

 

September 24, 2022

 

 

September 25, 2021

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Net income

 

$

103,713

 

 

$

97,452

 

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

 

 

 

 

 

 

 

 

Depreciation, amortization and accretion

 

 

31,131

 

 

 

24,931

 

Provision for doubtful accounts

 

 

80

 

 

 

61

 

Benefit for deferred income taxes

 

 

(546

)

 

 

(414

)

Provision for stock-based compensation

 

 

6,742

 

 

 

6,212

 

Payment of contingent consideration

 

 

 

 

 

(2,418

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

39,325

 

 

 

20,746

 

Inventories

 

 

(146,278

)

 

 

(97,156

)

Prepaids and other current assets

 

 

(7,228

)

 

 

(7,216

)

Other assets

 

 

157

 

 

 

(3,639

)

Accounts payable

 

 

17,887

 

 

 

20,456

 

Accrued customer rebates and returns

 

 

11,712

 

 

 

23,786

 

Accrued compensation and other liabilities

 

 

(27,351

)

 

 

(5,200

)

Cash provided by operating activities

 

 

29,344

 

 

 

77,601

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Acquisition, net of cash acquired

 

 

595

 

 

 

(345,483