Dorman Products, Inc. [DORM] Filings

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

10-Q 1 dorm-10q_20220924.htm 10-Q dorm-10q_20220924.htm

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

☐	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.

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

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

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

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

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

Dorman Products, Inc. [DORM] Filings
10-Q	[2022-10-24]
10-Q	[2022-07-25]
10-Q	[2022-04-25]
10-K	[2022-02-22]
10-Q	[2021-10-25]
10-Q	[2021-07-26]
10-Q	[2021-04-26]
10-K	[2021-02-22]
10-Q	[2020-10-29]
10-Q	[2020-07-30]
10-Q	[2020-04-27]
10-K	[2020-02-26]
10-Q	[2019-10-28]
10-Q	[2019-07-31]
10-Q	[2019-05-01]
10-K	[2019-02-26]
10-Q	[2018-10-30]
10-Q	[2018-08-01]
10-Q	[2018-05-03]
10-K	[2018-02-27]
10-Q	[2017-11-01]
10-Q	[2017-08-03]
10-Q	[2017-05-04]
10-K	[2017-02-27]
10-Q	[2016-10-26]
10-Q	[2016-07-28]
10-Q	[2016-04-28]
10-K	[2016-02-23]
10-Q	[2015-10-29]
10-Q	[2015-07-30]
10-Q	[2015-05-01]
10-K	[2015-02-25]
10-Q	[2014-10-31]
10-Q	[2014-08-01]
10-Q	[2014-05-02]
10-K	[2014-02-25]
10-Q	[2013-11-01]
10-Q	[2013-08-02]
10-Q	[2013-05-03]
10-K	[2013-03-01]
10-Q	[2012-11-02]
10-Q	[2012-08-03]
10-Q	[2012-05-04]
10-K	[2012-03-02]