Dorman Products, Inc. (the “Company” or “Dorman”) (NASDAQ:DORM), a
leading supplier in the Automotive Aftermarket, today announced its
financial results for the second quarter ended June 29, 2019.
2nd Quarter Financial
ResultsThe Company reported second quarter 2019 net sales
of $254.2 million, up 7% compared to net sales of $238.1 million in
the second quarter of 2018. Sales growth in the quarter
attributable to acquisitions was approximately 2%.
Gross profit was $87.1 million in the second
quarter compared to $92.7 million for the same quarter last
year. Gross margin for the second quarter was 34.3% compared
to 38.9% in the same quarter last year. Adjusted gross margin
was 34.3% in the quarter compared to 39.3% in the same quarter last
year. The gross margin decline was primarily due to the
pass-through of tariff costs to our customers, acquisitions
completed in the last 12 months which carry lower gross margins
compared to our historical levels, and redundant overhead costs as
the result of operating out of two distribution locations in
Portland, TN. We also experienced a negative mix impact in
the quarter as growth from our seasonal, lower margin categories
outpaced growth from our high margin categories.
Selling, general and administrative (“SG&A”)
expenses were $59.9 million, or 23.6% of net sales, in the second
quarter of 2019 compared to $49.9 million, or 21.0% of net sales,
in the same quarter last year. Adjusted SG&A expenses
were $59.0 million, or 23.2% of net sales, in the quarter compared
to $48.1 million, or 20.2% of net sales, in the same quarter last
year. The increase in SG&A expenses as a percentage of
sales was primarily due to the temporary duplication of facility
overhead and operating costs related to our distribution center
consolidation.
Income tax expense was $5.8 million in the
second quarter of 2019, or 21.1% of income before income taxes,
down from $8.5 million, or 19.9% of income before income taxes,
recorded in the same quarter last year. The increase in tax
rate compared to the same quarter last year is primarily a result
of lower expected tax benefits from foreign operations.
Net income for the second quarter of 2019 was
$21.5 million, or $0.66 per diluted share, compared to $34.3
million, or $1.03 per diluted share, in the same quarter last
year. Adjusted net income in the second quarter was $22.2
million, or $0.68 per diluted share, compared to $36.2 million, or
$1.09 per diluted share, in the same quarter last year.
Please refer to the Non-GAAP Financial Measures
reported in the supplemental schedules at the end of this release
for a detailed reconciliation of the reported (GAAP) financial
information to the adjusted financial information
(Non-GAAP).
Kevin Olsen, Dorman Products President and Chief
Executive Officer, stated: “The first half of 2019 was challenging,
primarily due to the temporary headwinds relating to higher
distribution costs as we continued to work towards consolidating
our distribution locations in Portland, Tennessee and a product
sales mix that pressured margins. In addition, second
quarter sales growth was not as strong as we had previously
anticipated primarily due to softness of end market demand from our
Traditional (non-retail) channel. As a result, we are lowering our
full year EPS outlook. However, we do expect a stronger back
half in 2019 driven primarily by gross and operating margin
improvement. We are targeting to be fully operating out of
our new distribution facility as we exit 2019 and expect our
distribution costs to be back to more typical levels as we move
through 2020. Initially, we anticipated this
consolidation to be completed in the second quarter, but we delayed
the consolidation by approximately six months to minimize customer
disruption.”
Mr. Olsen continued “Our outlook for the
Automotive Aftermarket remains bullish, underscored by solid
industry fundamentals. We are continuing to launch new
products at a very healthy pace enabling our customers to achieve
year-over-year sales growth while offering our end users a
high-quality alternative to the OE. In the second quarter of
this year, we launched 1,824 new SKU’s, a 48% increase compared to
1,235 SKU’s launched in the second quarter last year, with 451 New
to the Aftermarket SKU’s as well as 206 heavy duty SKU’s.
Year to date, the percentage of our net sales from products
launched in the last twenty-four months was 18% which showcases the
strength of our innovation capabilities and product vitality.
In addition, year to date growth of both our Heavy Duty and Complex
Electronics product lines continues to outpace our overall
business. Our strong go-to-market strategy, competitive
advantage, and strong balance sheet will position us well to
continue to grow in excess of our end markets and deliver long-term
value for our shareholders.”
Acquisition Integration and Distribution
Facility Consolidation ActivitiesAcquisition integration
activities for MAS and Flight Systems were completed in the first
quarter of 2019 and have gone according to plan. In the
second quarter of 2019, we incurred costs of $0.3 million primarily
related to acquisition integration activities taking place during
the first quarter, and costs of $2.8 million primarily related to
acquisition integration and accelerated depreciation have been
incurred year to date. Moving forward, we anticipate that
these expenses are fully behind us. These costs are excluded
from our Non-GAAP financial measures.
As discussed above, in the first quarter of 2019
we began the process of moving our distribution facility in
Portland, to a new, larger facility that is near our existing
facility. We expect to be fully operating out of our new facility
as we exit 2019. Year to date, we have incurred approximately
$10.2 million ($7.9 million after tax or $0.24 per diluted share)
of costs due to start up inefficiencies and duplication of facility
overhead and operating costs related to our consolidation
activities, with $2.1 million ($1.7 million after tax or $0.05 per
diluted share) included in gross profit and $8.0 million ($6.2
million after tax or $0.19 per diluted share) in SG&A expenses.
These costs are included in our Non-GAAP financial
measures.
2019 Guidance We are lowering
our full year 2019 EPS guidance and now expect full year GAAP
diluted EPS of between $3.06 and $3.30 and Non-GAAP diluted EPS of
between $3.26 and $3.46. We expect second half of 2019 GAAP
diluted EPS of between $1.70 and $1.93 and Non-GAAP diluted EPS of
between $1.80 and $2.00 compared to GAAP diluted EPS of $1.37 and
Non-GAAP diluted EPS of $1.46 in the first half of 2019.
Second half of 2019 GAAP and Non-GAAP gross margin is anticipated
to be in the 35% to 36% range, and GAAP operating margin is
expected to be in the 12% to 14% range and Non-GAAP operating
margin is expected to be in the 13% to 15% range.
Included in the GAAP and Non-GAAP EPS guidance
for the second half of the year is anticipated cost of
approximately $10.9 million ($8.5 million after tax or $0.26 per
diluted share) related to start up inefficiencies and duplication
of facility overhead and operating costs related to our
distribution facility move, with $2.4 million ($1.9 million after
tax or $0.06 per diluted share) of expected costs to be included in
gross profit and $8.5 million ($6.6 million after tax or $0.20 per
diluted share) of expected cost to be included in SG&A
expenses. For the full year, we expect approximately $21.1
million ($16.3 million after tax or $0.50 per share) of such costs,
with $4.6 million ($3.5 million after tax or $0.11 per diluted
share) to be included in gross profit and $16.5 million ($12.8
million after tax or $0.39 per diluted share) to be included in
SG&A expenses.
We have also revised our previous guidance of
estimated net sales growth to now be between 7% and 9% for fiscal
2019. The midpoint of this guidance assumes we do not recover the
softer end market demand we experienced in the first half of 2019
from our Traditional (non-retail) channel which is expected to be
partially offset by a net sales increase due to price changes
related to the most recent tariff changes.
Please refer to the 2019 Guidance table at the
end of this release for a detailed reconciliation of the forecasted
(GAAP) financial information to the forecasted adjusted financial
information (Non-GAAP). We have not assumed any share
repurchases in this guidance.
Share RepurchasesUnder its
share repurchase program, Dorman repurchased 171.6 thousand shares
of its common stock for $14.4 million at an average share price of
$83.90 during the quarter ended June 29, 2019. The Company
has $160.6 million left under its current share repurchase
authorization.
About Dorman ProductsDorman
Products, Inc. is a leading supplier of Dealer “Exclusive”
replacement parts to the Automotive, Medium and Heavy Duty
Aftermarkets. Dorman’s 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.
Non-GAAP MeasuresIn addition to
the financial measures prepared in accordance with generally
accepted accounting principles (GAAP), this earnings release also
contains Non-GAAP financial measures. The reasons why we
believe these measures provide useful information to investors and
a reconciliation of these measures to the most directly comparable
GAAP measures and other information relating to these Non-GAAP
measures are included in the supplemental schedules attached.
Forward Looking StatementsThis
press release contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995,
including statements related to GAAP and Non-GAAP gross and
operating margins, the impact and timing of the Company’s site
consolidation activities, distribution costs, the Company’s
outlook, outlook for the Automotive Aftermarket, continued launch
of new products and the affect thereof, future growth, long-term
value, acquisition integration and accelerated depreciation
expenses, cost of start-up inefficiencies, cost of duplication of
facility overhead, operating costs related to the distribution
facility move, net sales, diluted EPS, adjusted diluted EPS, future
growth rates, gross profits, SG&A expenses, operating margins,
and tariffs. Words such as “believe,” “demonstrate,” “expect,”
“estimate,” “forecast,” “anticipate,” “should,” “will” and “likely”
and similar expressions identify forward-looking statements.
However, the absence of these words does not mean the statements
are not forward-looking. 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 (many of which are outside
of our control) which may cause actual events to be materially
different from those expressed or implied by such forward-looking
statements. These risks, uncertainties and other factors 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; (v) foreign currency
fluctuations and our dependence on foreign suppliers; (vi)
extending credit to customers; (vii) the loss of a key vendor;
(viii) limited customer shelf space; (ix) reliance on new product
development; (x) changes in automotive technology and improvements
in the quality of new vehicle parts; (xi) claims of intellectual
property infringement; (xii) quality problems with products after
their production and sale to customers; (xiii) loss of third party
transportation providers on whom we depend; (xiv) unfavorable
results of legal proceedings; (xv) our executive chairman and his
family owning a significant portion of the Company; (xvi)
operations may be subject to quarterly fluctuations and disruptions
from events beyond our control; (xvii) regulations related to
conflict minerals; (xviii) cyber-attacks; (xix) imposition of
taxes, duties or tariffs; (xx) exposure to risks related to
accounts receivable; (xxi) volatility in the market price of our
common stock and potential securities class action litigation;
(xxii) losing the services of our executive officers or other
highly qualified and experienced contributors; and (xxiii) the
inability to identify suitable acquisition candidates, complete
acquisitions or integrate acquisitions successfully. 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
press release, 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 29, 2018. 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.
Investor Relations
Contact David Hession, SVP and
Chief Financial Officerdhession@dormanproducts.com (215)
997-1800
Visit our website at www.dormanproducts.com
DORMAN PRODUCTS, INC. AND
SUBSIDIARIES Consolidated Statements of Operations (in
thousands, except per-share amounts)
|
|
13 Weeks |
|
|
13 Weeks |
|
Second Quarter
(unaudited) |
|
06/29/19 |
|
|
Pct. * |
|
|
06/30/18 |
|
|
Pct. * |
|
Net sales |
|
$ |
254,175 |
|
|
|
100.0 |
|
|
$ |
238,147 |
|
|
|
100.0 |
|
Cost of goods sold |
|
|
167,027 |
|
|
|
65.7 |
|
|
|
145,446 |
|
|
|
61.1 |
|
Gross profit |
|
|
87,148 |
|
|
|
34.3 |
|
|
|
92,701 |
|
|
|
38.9 |
|
Selling, general and
administrative expenses |
|
|
59,925 |
|
|
|
23.6 |
|
|
|
49,921 |
|
|
|
21.0 |
|
Income from operations |
|
|
27,223 |
|
|
|
10.7 |
|
|
|
42,780 |
|
|
|
18.0 |
|
Other income (expense), net |
|
|
27 |
|
|
|
0.0 |
|
|
|
73 |
|
|
|
0.0 |
|
Income before income taxes |
|
|
27,250 |
|
|
|
10.7 |
|
|
|
42,853 |
|
|
|
18.0 |
|
Provision for income taxes |
|
|
5,751 |
|
|
|
2.3 |
|
|
|
8,514 |
|
|
|
3.6 |
|
Net income |
|
$ |
21,499 |
|
|
|
8.5 |
|
|
$ |
34,339 |
|
|
|
14.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
0.66 |
|
|
|
|
|
|
$ |
1.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted shares
outstanding |
|
|
32,676 |
|
|
|
|
|
|
|
33,226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26 Weeks |
|
|
26 Weeks |
|
Second Quarter
(unaudited) |
|
06/29/19 |
|
|
Pct.* |
|
|
06/30/18 |
|
|
Pct. * |
|
Net sales |
|
$ |
497,966 |
|
|
|
100.0 |
|
|
$ |
465,409 |
|
|
|
100.0 |
|
Cost of goods sold |
|
|
323,327 |
|
|
|
64.9 |
|
|
|
284,072 |
|
|
|
61.0 |
|
Gross profit |
|
|
174,639 |
|
|
|
35.1 |
|
|
|
181,337 |
|
|
|
39.0 |
|
Selling, general and
administrative expenses |
|
|
117,676 |
|
|
|
23.6 |
|
|
|
98,563 |
|
|
|
21.2 |
|
Income from operations |
|
|
56,963 |
|
|
|
11.4 |
|
|
|
82,774 |
|
|
|
17.8 |
|
Other income (expense), net |
|
|
57 |
|
|
|
0.0 |
|
|
|
224 |
|
|
|
0.0 |
|
Income before income taxes |
|
|
57,020 |
|
|
|
11.5 |
|
|
|
82,998 |
|
|
|
17.8 |
|
Provision for income taxes |
|
|
12,115 |
|
|
|
2.4 |
|
|
|
18,013 |
|
|
|
3.9 |
|
Net income |
|
$ |
44,905 |
|
|
|
9.0 |
|
|
$ |
64,985 |
|
|
|
14.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
1.37 |
|
|
|
|
|
|
$ |
1.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted shares
outstanding |
|
|
32,811 |
|
|
|
|
|
|
|
33,355 |
|
|
|
|
|
* Percentage of sales data may not add due to rounding.
DORMAN PRODUCTS, INC. AND
SUBSIDIARIESCondensed Consolidated Balance Sheets
(in thousands)(Unaudited)
|
|
06/29/19 |
|
|
12/29/18 |
|
Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
38,424 |
|
|
$ |
43,458 |
|
Accounts receivable [1] |
|
|
376,639 |
|
|
|
400,663 |
|
Inventories |
|
|
291,739 |
|
|
|
270,504 |
|
Prepaid expenses |
|
|
17,519 |
|
|
|
5,652 |
|
Total current assets |
|
|
724,321 |
|
|
|
720,277 |
|
Property, plant & equipment,
net |
|
|
102,304 |
|
|
|
98,647 |
|
Right of use assets [2] |
|
|
35,238 |
|
|
|
- |
|
Goodwill and other intangible
assets, net |
|
|
96,454 |
|
|
|
97,770 |
|
Deferred income taxes, net |
|
|
6,114 |
|
|
|
6,228 |
|
Other assets |
|
|
51,826 |
|
|
|
55,184 |
|
Total assets |
|
$ |
1,016,257 |
|
|
$ |
978,106 |
|
Liabilities &
shareholders’ equity: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
102,307 |
|
|
$ |
109,096 |
|
Accrued customer rebates and
returns [1] |
|
|
89,542 |
|
|
|
96,888 |
|
Accrued expenses and other |
|
|
22,634 |
|
|
|
26,155 |
|
Total current liabilities |
|
|
214,483 |
|
|
|
232,139 |
|
Long-term lease liabilities
[2] |
|
|
32,813 |
|
|
|
- |
|
Other long-term liabilities |
|
|
18,629 |
|
|
|
18,344 |
|
Shareholders’ equity |
|
|
750,332 |
|
|
|
727,623 |
|
Total liabilities and equity |
|
$ |
1,016,257 |
|
|
$ |
978,106 |
|
[1] - The previously reported December 29, 2018
Consolidated Balance Sheet includes an adjustment to present
Accrued Customer Rebates and Returns as an accrued liability. The
effect of this reclassification adjustment was an $90.5 million
increase to accounts receivable and other accrued liabilities as of
December 29, 2018.
[2] - The Company adopted Accounting Standard Codification 842 –
Leases (“ASC 842”) during the first quarter ended March 30, 2019,
using the modified retrospective approach, which does not require
prior periods to be restated.
Selected Cash Flow Information (unaudited):
|
|
13 Weeks (unaudited) |
|
|
26 Weeks (unaudited) |
|
(in thousands) |
|
06/29/19 |
|
|
06/30/18 |
|
|
06/29/19 |
|
|
06/30/18 |
|
Depreciation, amortization and accretion |
|
$ |
6,832 |
|
|
$ |
6,626 |
|
|
$ |
14,097 |
|
|
$ |
13,004 |
|
Capital expenditures |
|
$ |
8,497 |
|
|
$ |
5,140 |
|
|
$ |
17,335 |
|
|
$ |
11,416 |
|
DORMAN PRODUCTS, INC. AND
SUBSIDIARIES Non-GAAP Financial Measures(in thousands,
except per-share amounts)
Our financial results include certain financial
measures not derived in accordance with generally accepted
accounting principles (GAAP). Non-GAAP financial measures
should not be used as a substitute for GAAP measures, or considered
in isolation, for the purpose of analyzing our operating
performance, financial position or cash flows. Additionally,
these non-GAAP measures may not be comparable to similarly titled
measures reported by other companies. However, we have
presented these non-GAAP financial measures because we believe this
presentation, when reconciled to the corresponding GAAP measure,
provides useful information to investors by offering additional
ways of viewing our results, profitability trends, and underlying
growth relative to prior and future periods and to our peers.
Management uses these Non-GAAP financial measures in making
financial, operating, and planning decisions and in evaluating our
performance. Non-GAAP financial measures may reflect
adjustments for charges such as fair value adjustments,
amortization, transaction costs, severance, accelerated
depreciation, and other similar expenses related to acquisitions as
well as other items that are not related to our ongoing
performance.
Adjusted Net Income:
|
|
13 Weeks |
|
|
13 Weeks |
|
|
26 Weeks |
|
|
26 Weeks |
|
(unaudited) |
|
06/29/19 |
|
|
06/30/18 |
|
|
06/29/19 |
|
|
06/30/18 |
|
Net income (GAAP) |
|
$ |
21,499 |
|
|
$ |
34,339 |
|
|
$ |
44,905 |
|
|
$ |
64,985 |
|
Pretax acquisition-related
inventory fair value adjustment [1] |
|
|
- |
|
|
|
880 |
|
|
|
129 |
|
|
|
1,779 |
|
Pretax acquisition-related
intangible assets amortization [2] |
|
|
619 |
|
|
|
491 |
|
|
|
1,236 |
|
|
|
991 |
|
Pretax acquisition-related
transaction and other costs [3] |
|
|
313 |
|
|
|
252 |
|
|
|
2,765 |
|
|
|
332 |
|
Pretax investment impairment
[4] |
|
|
- |
|
|
|
1,064 |
|
|
|
- |
|
|
|
1,064 |
|
Tax adjustment (related to above
items) [5] |
|
|
(239 |
) |
|
|
(435 |
) |
|
|
(1,022 |
) |
|
|
(831 |
) |
Tax (benefit) charge related to
pre-2016 state tax matters [5] |
|
|
- |
|
|
|
(368 |
) |
|
|
- |
|
|
|
(368 |
) |
Adjusted net income
(Non-GAAP) |
|
$ |
22,192 |
|
|
$ |
36,223 |
|
|
$ |
48,013 |
|
|
$ |
67,952 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
(GAAP) |
|
$ |
0.66 |
|
|
$ |
1.03 |
|
|
$ |
1.37 |
|
|
$ |
1.95 |
|
Pretax acquisition-related
inventory fair value adjustment [1] |
|
|
- |
|
|
|
0.03 |
|
|
|
0.00 |
|
|
|
0.05 |
|
Pretax acquisition-related
intangible assets amortization [2] |
|
|
0.02 |
|
|
|
0.01 |
|
|
|
0.04 |
|
|
|
0.03 |
|
Pretax acquisition-related
transaction and other costs [3] |
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.08 |
|
|
|
0.01 |
|
Pretax investment impairment
[4] |
|
|
- |
|
|
|
0.03 |
|
|
|
- |
|
|
|
0.03 |
|
Tax adjustment (related to above
items) [5] |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
(0.03 |
) |
|
|
(0.02 |
) |
Tax (benefit) charge related to
pre-2016 state tax matters [5] |
|
|
- |
|
|
|
(0.01 |
) |
|
|
- |
|
|
|
(0.01 |
) |
Adjusted diluted earnings per
share (Non-GAAP) |
|
$ |
0.68 |
|
|
$ |
1.09 |
|
|
$ |
1.46 |
|
|
$ |
2.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted shares
outstanding |
|
|
32,676 |
|
|
|
33,226 |
|
|
|
32,811 |
|
|
|
33,355 |
|
* Adjusted diluted earnings per share (Non-GAAP) may not add due
to rounding.
[ 1 ] – Pretax acquisition-related inventory fair value
adjustments result from adjusting the value of acquired inventory
from historical cost to fair value. Such costs were $0.1
million pretax (or $0.1 million after tax) during the twenty-six
weeks ended June 29, 2019 and were included in Cost of Goods
Sold.
[ 2 ] – Pretax acquisition-related intangible asset amortization
results from allocating the purchase price of acquisitions to the
acquired tangible and intangible assets of the acquired business
and recognizing the cost of the intangible asset over the period of
benefit. Such costs were $0.6 million pretax (or $0.5 million
after tax) during the thirteen weeks ended June 29, 2019 and $1.2
million pretax (or $0.9 million after tax) during the twenty-six
weeks ended June 29, 2019 and were included in Selling, General and
Administrative expenses.
DORMAN PRODUCTS, INC. AND
SUBSIDIARIESNon-GAAP Financial Measures(in thousands,
except per-share amounts)
[3] – Pretax acquisition-related transaction and other costs
include costs incurred to complete and integrate acquisitions,
adjustments to contingent consideration obligations, and facility
consolidation expenses. During the thirteen weeks ended June
29, 2019, we incurred charges for integration costs, severance, and
other facility consolidation expenses of $0.3 million pretax (or
$0.2 million after tax). During the twenty-six weeks ended
June 29, 2019, we incurred charges for integration costs,
severance, and other facility consolidation expenses of $1.9
million pretax (and $1.4 million after tax) and accelerated
depreciation of $0.8 million pretax (or $0.6 million after
tax). Each of these were included in Selling, General and
Administrative expenses. Additionally, we recorded inventory
transfer costs of $0.1 million pretax ($0.1 million after tax)
during the twenty-six weeks ended June 29, 2019 which were included
in Cost of Goods Sold.
[4] – Pretax investment impairment results from the acquisition
of the remaining outstanding shares of a previously unconsolidated
entity. The estimated fair value of the net assets acquired
was less than our prior investment in the entity. Such costs were
$1.1 million pretax (and $1.1 million after tax) during the
thirteen and twenty-six weeks ended June 30, 2018 and were included
in Selling, General and Administrative expenses.
[5] – Tax adjustments represent the aggregate tax effect of all
Non-GAAP adjustments reflected in the table above of $0.2 million
during the thirteen weeks ended June 29, 2019 and $1.0 million
during the twenty-six weeks ended June 29, 2019. Such items
are estimated by applying our overall estimated tax rate to the
pretax amount, or, by applying a specific tax rate if one is
appropriate.
Adjusted Gross Profit:
|
|
13 Weeks |
|
|
13 Weeks |
|
(unaudited) |
|
06/29/19 |
|
|
Pct. |
|
|
06/30/18 |
|
|
Pct. |
|
Gross profit (GAAP) |
|
$ |
87,148 |
|
|
|
34.3 |
|
|
$ |
92,701 |
|
|
|
38.9 |
|
Pretax acquisition-related
inventory fair value adjustment |
|
|
- |
|
|
|
- |
|
|
|
880 |
|
|
|
0.4 |
|
Adjusted gross profit
(Non-GAAP) |
|
$ |
87,148 |
|
|
|
34.3 |
|
|
$ |
93,581 |
|
|
|
39.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
254,175 |
|
|
|
|
|
|
$ |
238,147 |
|
|
|
|
|
|
|
26 Weeks |
|
|
26 Weeks |
|
(unaudited) |
|
06/29/19 |
|
|
Pct. |
|
|
06/30/18 |
|
|
Pct.* |
|
Gross profit (GAAP) |
|
$ |
174,639 |
|
|
|
35.1 |
|
|
$ |
181,337 |
|
|
|
39.0 |
|
Pretax acquisition-related
inventory fair value adjustment |
|
|
129 |
|
|
|
0.0 |
|
|
|
1,779 |
|
|
|
0.4 |
|
Pretax acquisition-related
transaction and other costs |
|
|
132 |
|
|
|
0.0 |
|
|
|
- |
|
|
|
- |
|
Adjusted gross profit
(Non-GAAP) |
|
$ |
174,900 |
|
|
|
35.1 |
|
|
$ |
183,116 |
|
|
|
39.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
497,966 |
|
|
|
|
|
|
$ |
465,409 |
|
|
|
|
|
Adjusted SG&A Expenses:
|
|
13 Weeks |
|
|
13 Weeks |
|
(unaudited) |
|
06/29/19 |
|
|
Pct. * |
|
|
06/30/18 |
|
|
Pct.* |
|
SG&A expenses (GAAP) |
|
$ |
59,925 |
|
|
|
23.6 |
|
|
$ |
49,921 |
|
|
|
21.0 |
|
Pretax acquisition-related
intangible assets amortization |
|
|
(619 |
) |
|
|
(0.2 |
) |
|
|
(491 |
) |
|
|
(0.2 |
) |
Pretax acquisition-related
transaction and other costs |
|
|
(313 |
) |
|
|
(0.1 |
) |
|
|
(252 |
) |
|
|
(0.1 |
) |
Pretax investment impairment |
|
|
- |
|
|
|
- |
|
|
|
(1,064 |
) |
|
|
(0.4 |
) |
Adjusted SG&A expenses
(Non-GAAP) |
|
$ |
58,993 |
|
|
|
23.2 |
|
|
$ |
48,114 |
|
|
|
20.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
254,175 |
|
|
|
|
|
|
$ |
238,147 |
|
|
|
|
|
* Percentage of sales information
may not add due to rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DORMAN PRODUCTS, INC. AND
SUBSIDIARIES Non-GAAP Financial Measures(in thousands,
except per-share amounts)
Adjusted SG&A Expenses:
|
|
26 Weeks |
|
|
26 Weeks |
|
(unaudited) |
|
06/29/19 |
|
|
Pct. |
|
|
06/30/18 |
|
|
Pct. |
|
SG&A expenses (GAAP) |
|
$ |
117,676 |
|
|
|
23.6 |
|
|
$ |
98,563 |
|
|
|
21.2 |
|
Pretax acquisition-related
intangible assets amortization |
|
|
(1,236 |
) |
|
|
(0.2 |
) |
|
|
(991 |
) |
|
|
(0.2 |
) |
Pretax acquisition-related
transaction and other costs |
|
|
(2,633 |
) |
|
|
(0.5 |
) |
|
|
(332 |
) |
|
|
(0.1 |
) |
Pretax investment impairment |
|
|
- |
|
|
|
- |
|
|
|
(1,064 |
) |
|
|
(0.2 |
) |
Adjusted SG&A expenses
(Non-GAAP) |
|
$ |
113,807 |
|
|
|
22.9 |
|
|
$ |
96,176 |
|
|
|
20.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
497,966 |
|
|
|
|
|
|
$ |
465,409 |
|
|
|
|
|
2019 Guidance:
The Company provided the following guidance ranges related to
their fiscal 2019 outlook:
Adjusted Diluted Earnings Per Share:
|
|
December 28, 2019 |
|
Fiscal Year Ended
(unaudited) |
|
Low End |
|
|
High End* |
|
Diluted earnings per share (GAAP) |
|
$ |
3.06 |
|
|
$ |
3.30 |
|
Pretax acquisition-related
inventory fair value adjustment [1] |
|
|
0.00 |
|
|
|
0.00 |
|
Pretax acquisition-related
intangible assets amortization [2] |
|
|
0.08 |
|
|
|
0.08 |
|
Pretax acquisition-related
transaction and other costs [1] [2] |
|
|
0.18 |
|
|
|
0.14 |
|
Tax adjustments (related to above
items) [3] |
|
|
(0.06 |
) |
|
|
(0.05 |
) |
Adjusted diluted earnings per
share (Non-GAAP) |
|
$ |
3.26 |
|
|
$ |
3.46 |
|
|
|
|
|
|
|
|
|
|
Weighted average diluted shares
outstanding |
|
|
32,811 |
|
|
|
32,811 |
|
|
|
|
|
|
|
|
|
|
|
|
December 28, 2019 |
|
Twenty-Six Weeks Ended
(unaudited) |
|
Low End* |
|
|
High End |
|
Diluted earnings per share
(GAAP) |
|
$ |
1.70 |
|
|
$ |
1.93 |
|
Pretax acquisition-related
intangible assets amortization [2] |
|
|
0.04 |
|
|
|
0.04 |
|
Pretax acquisition-related
transaction and other costs [2] |
|
|
0.10 |
|
|
|
0.05 |
|
Tax adjustments (related to above
items) [3] |
|
|
(0.03 |
) |
|
|
(0.02 |
) |
Adjusted diluted earnings per
share (Non-GAAP) |
|
$ |
1.80 |
|
|
$ |
2.00 |
|
|
|
|
|
|
|
|
|
|
Weighted average diluted shares
outstanding |
|
|
32,811 |
|
|
|
32,811 |
|
|
|
|
|
|
|
|
|
|
[1] - Included in Cost of
Goods Sold |
|
|
|
|
|
|
|
|
[2] - Included in Selling,
General and Administrative Expenses |
|
|
|
|
|
|
|
|
[3] - Included in Provision
for Income Taxes |
|
|
|
|
|
|
|
|
* Adjusted diluted earnings per share (Non-GAAP) may not add due
to rounding.
DORMAN PRODUCTS, INC. AND
SUBSIDIARIES Non-GAAP Financial Measures(in thousands,
except per-share amounts)
Adjusted Operating Margin [1]:
|
|
December 28, 2019 |
|
Twenty-Six Weeks Ended
(unaudited) |
|
Low End |
|
|
High End |
|
Operating margin (GAAP) |
|
|
12 |
% |
|
|
14 |
% |
Pretax acquisition-related
intangible assets amortization |
|
|
0 |
|
|
|
0 |
|
Pretax acquisition-related
transaction and other costs |
|
|
1 |
|
|
|
1 |
|
Adjusted operating margin
(Non-GAAP) |
|
|
13 |
% |
|
|
15 |
% |
|
|
|
|
|
|
|
|
|
[ 1 ] – Operating margin is calculated as income from operations
divided by net sales.
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