Dorman Products, Inc. (the “Company” or “Dorman”) (NASDAQ:DORM), a
leading supplier in the motor vehicle aftermarket industry, today
announced its financial results for the second quarter ended
July 1, 2023.
Second Quarter Financial
ResultsThe Company reported second quarter 2023 net sales
of $480.6 million, up 15% compared to net sales of $417.4 million
in the second quarter of 2022. The sales growth was primarily
driven by the addition of SuperATV, along with price increases to
offset inflation and the introduction of new products to the
market. Net sales growth excluding acquisitions was 1% compared to
the second quarter of 2022, and 16% compared to the second quarter
of 2021.
Gross profit was $163.5 million in the second
quarter of 2023, or 34.0% of net sales, compared to $141.5 million,
or 33.9% of net sales, for the same quarter last year. Adjusted
gross margin* was 35.1% in the second quarter of 2023 compared to
34.0% in the same quarter last year. The 110-basis-point increase
in adjusted gross margin* is primarily due to the recognition of
sales of lower-cost inventory, price increases and the addition of
SuperATV, which has a higher gross margin percentage than the
Company average. In addition, adjusted gross margin* increased 270
basis points compared to the first quarter of 2023.
Selling, general and administrative (“SG&A”)
expenses were $108.3 million, or 22.5% of net sales, in the second
quarter of 2023 compared to $92.1 million, or 22.1% of net sales,
for the same quarter last year. Adjusted SG&A expenses* were
$114.4 million, or 23.8% of net sales, in the second quarter of
2023 compared to $88.7 million, or 21.3% of net sales, in the same
quarter last year. The increase in adjusted SG&A expenses* as a
percentage of net sales was due primarily to the addition of
SuperATV, which has higher SG&A expenses as a percentage of net
sales than the Company average, and the impact of higher interest
rates on our customer accounts receivable factoring programs.
Net interest expense was $12.6 million for the
second quarter of 2023 compared to $1.6 million for the same
quarter last year. The increase of $11.0 million primarily reflects
the addition of the term loan used to complete the acquisition of
SuperATV in October 2022, and significantly higher interest rates
compared to the prior year.
Income tax expense was $10.3 million, or 23.8%
of income before income taxes, compared to $10.1 million, or 21.1%
of income before income taxes, in the same quarter last year. The
increase in the effective tax rate was due to an increase in state
tax expense and the effect of foreign operations.
Net income for the second quarter of 2023 was
$32.8 million, or $1.04 per diluted share, compared to $37.9
million, or $1.20 per diluted share, in the prior-year quarter.
Adjusted net income* in the second quarter of 2023 was $31.9
million, or $1.01 per diluted share, compared to $40.6 million, or
$1.29 per diluted share, in the prior-year quarter.
Kevin Olsen, Dorman’s President and Chief
Executive Officer, stated, “We reported another solid quarter due
to the continuous dedication and hard work of our Contributors.
Overall, the quarter played out largely as expected. The forecasted
sequential improvement in adjusted gross margin* materialized as we
saw a 270 basis-point improvement over the first quarter of 2023,
which drove adjusted diluted EPS* growth of more than 80% over the
same period. We expect to see gross margins continue to improve
throughout the second half of 2023, as a large portion of products
sourced when inflationary pressures were much higher are now out of
our inventory.
“We were pleased with net sales performance,
recognizing that we were up against strong prior year comparables.
During the first half of 2022, we believe we benefited from
customers restocking their inventories as global supply chains
rebounded from the impact of the global pandemic. As a result, our
shipments outpaced customer point-of-sale over that time frame.
Year-to-date, end-user demand for our products has remained strong
as our customer point-of-sale growth was estimated to be in the low
double digits, and we expect this demand profile to continue
throughout the balance of 2023.
“SuperATV, our latest acquisition, continues to
perform well. The business generated high-single-digit
year-over-year sales growth and was accretive to both our overall
operating margin and EPS in the quarter. We couldn’t be happier
with the team, which continues to deliver on our integration and
synergy plans.
“As global supply chains have improved, we have
been able to reduce inventory $113 million from December 31, 2022.
Lower inventory drove a robust $67 million of cash from operating
activities in the quarter, which was used to repay $52 million of
indebtedness, for a total repayment of $79 million for the first
half of 2023. We expect strong cash flows to continue in the second
half of 2023, driven by further inventory reductions, and to
further pay down our debt.
“Regarding new product development, we launched
hundreds of new products during the quarter, including a new
Dorman® OE FIX™ engine heater hose assembly and torque
converter lock-up solenoid, a first-to-the-aftermarket suspension
sway bar bracket kit, and additional offerings for the Electric
Vehicle (EV) market. We believe that our focus on innovation and
new product development will enable us to continue to deliver the
products desired by end users and help drive profitable growth for
our customers.”
2023 GuidanceThe Company
confirms its full-year 2023 guidance, detailed in the table below,
which includes the impact of the SuperATV acquisition but excludes
any potential impacts from future acquisitions, additional supply
chain disruptions, significant interest rate increases, or share
repurchases.
|
2023 Fiscal Year |
|
Net
Sales |
$1.95B - $2.00B |
|
Growth vs. 2022 |
12.5% - 15.4% |
|
Diluted
EPS |
$4.35 - $4.55 |
|
Growth vs. 2022 |
13.0% - 18.2% |
|
Adjusted
Diluted EPS* |
$5.15 - $5.35 |
|
Growth vs. 2022 |
8.2% - 12.4% |
|
Tax Rate Estimate |
24% |
|
|
|
|
About Dorman ProductsDorman
gives professionals, enthusiasts and owners greater freedom to fix
motor vehicles. For over 100 years, we have been driving new
solutions, releasing tens of thousands of aftermarket replacement
products engineered to save time and money and increase convenience
and reliability.
Founded and headquartered in the United States,
we are a pioneering global organization offering an always-evolving
catalog of products, covering cars, trucks and specialty vehicles,
from chassis to body, from underhood to undercarriage, and from
hardware to complex electronics.
*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 net sales, diluted and adjusted
diluted earnings per share, gross profit, gross margin, adjusted
gross margin, SG&A, adjusted SG&A, income tax expense,
income before income taxes, net income, cash and cash equivalents,
indebtedness, liquidity, the Company’s share repurchase program,
the Company’s outlook and distribution facility costs and
productivity initiatives. Words such as “believe,” “demonstrate,”
“expect,” “estimate,” “forecast,” “anticipate,” “plan,” “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 such statements were 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). Such risks, uncertainties and
other factors relate to, among other things: competition in and the
evolution of the motor vehicle aftermarket industry; changes in our
relationships with, or the loss of, any customers or suppliers; our
ability to develop, market and sell new and existing products; our
ability to anticipate and meet customer demand; widespread public
health pandemics, such as COVID-19; our ability to purchase
necessary materials from our suppliers and the impacts of any
related logistics constraints; financial and economic factors, such
as our level of indebtedness, fluctuations in interest rates and
inflation; political and regulatory matters, such as changes in
trade policy, the imposition of tariffs and climate regulation; our
ability to protect our intellectual property and defend against any
claims of infringement; and our ability to protect our information
security systems and defend against cyberattacks.. Please refer to
“Statement Regarding Forward-Looking Statements” and “Item 1A. Risk
Factors” located in Part I of our in the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2022, filed with
the Securities and Exchange Commission (“SEC”), as updated by our
subsequent filings with the SEC, for a description of these and
other risks and uncertainties that could cause actual results to
differ materially from those projected or implied by the
forward-looking statements. The Company is under no obligation to,
and expressly disclaims any such obligation to, update any of the
information in this document, including but not limited to any
situation where any forward-looking statement later turns out to be
inaccurate whether as a result of new information, future events or
otherwise.
Investor Relations
ContactMichael P. DickersonVice President, Investor
Relations and Risk Managementmdickerson@dormanproducts.com (517)
667-4003
Visit our website at www.dormanproducts.com. The Investor
Relations section of the website contains a significant amount of
information about Dorman, including financial and other information
for investors. Dorman encourages investors to visit its website
periodically to view new and updated information.
|
DORMAN PRODUCTS, INC. |
Consolidated Statements of Operations |
(in thousands, except per-share amounts) |
|
|
Three Months Ended |
|
Three Months Ended |
(unaudited) |
7/1/23 |
|
Pct.* |
|
6/25/22 |
|
Pct. * |
Net sales |
$ |
480,568 |
|
|
100.0 |
|
|
$ |
417,419 |
|
|
100.0 |
|
Cost of goods sold |
|
317,062 |
|
|
66.0 |
|
|
|
275,894 |
|
|
66.1 |
|
Gross profit |
|
163,506 |
|
|
34.0 |
|
|
|
141,525 |
|
|
33.9 |
|
Selling, general and
administrative expenses |
|
108,308 |
|
|
22.5 |
|
|
|
92,058 |
|
|
22.1 |
|
Income from operations |
|
55,198 |
|
|
11.5 |
|
|
|
49,467 |
|
|
11.9 |
|
Interest expense, net |
|
12,565 |
|
|
2.6 |
|
|
|
1,565 |
|
|
0.4 |
|
Other income, net |
|
(396 |
) |
|
(0.1 |
) |
|
|
(111 |
) |
|
(0.0 |
) |
Income before income taxes |
|
43,029 |
|
|
9.0 |
|
|
|
48,013 |
|
|
11.5 |
|
Provision for income
taxes |
|
10,259 |
|
|
2.1 |
|
|
|
10,108 |
|
|
2.4 |
|
Net income |
$ |
32,770 |
|
|
6.8 |
|
|
$ |
37,905 |
|
|
9.1 |
|
|
|
|
|
|
|
|
|
Diluted earnings per
share |
$ |
1.04 |
|
|
|
|
$ |
1.20 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted
shares outstanding |
|
31,528 |
|
|
|
|
|
31,535 |
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
Six Months Ended |
(unaudited) |
7/1/23 |
|
Pct.* |
|
6/25/22 |
|
Pct. * |
Net
sales |
$ |
947,306 |
|
|
100.0 |
|
|
$ |
818,998 |
|
|
100.0 |
|
Cost of goods sold |
|
639,323 |
|
|
67.5 |
|
|
|
544,233 |
|
|
66.5 |
|
Gross profit |
|
307,983 |
|
|
32.5 |
|
|
|
274,765 |
|
|
33.5 |
|
Selling, general and
administrative expenses |
|
234,671 |
|
|
24.8 |
|
|
|
178,586 |
|
|
21.8 |
|
Income from operations |
|
73,312 |
|
|
7.7 |
|
|
|
96,179 |
|
|
11.7 |
|
Interest expense, net |
|
24,518 |
|
|
2.6 |
|
|
|
2,796 |
|
|
0.3 |
|
Other income, net |
|
(753 |
) |
|
(0.1 |
) |
|
|
(195 |
) |
|
0.0 |
|
Income before income taxes |
|
49,547 |
|
|
5.2 |
|
|
|
93,578 |
|
|
11.4 |
|
Provision for income
taxes |
|
11,094 |
|
|
1.2 |
|
|
|
20,466 |
|
|
2.5 |
|
Net income |
$ |
38,453 |
|
|
4.1 |
|
|
$ |
73,112 |
|
|
8.9 |
|
|
|
|
|
|
|
|
|
Diluted earnings per
share |
$ |
1.22 |
|
|
|
|
$ |
2.32 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted
shares outstanding |
|
31,533 |
|
|
|
|
|
31,568 |
|
|
|
* Percentage of sales. Data may not add due to rounding.
DORMAN PRODUCTS, INC. |
Consolidated Balance Sheets |
(in thousands, except share data) |
|
(unaudited) |
7/1/23 |
|
12/31/22 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
35,666 |
|
|
$ |
46,034 |
|
Accounts receivable, less allowance for doubtful accounts of $1,384
and $1,363 |
|
452,603 |
|
|
|
427,385 |
|
Inventories |
|
642,721 |
|
|
|
755,901 |
|
Prepaids and other current assets |
|
57,790 |
|
|
|
39,800 |
|
Total current assets |
|
1,188,780 |
|
|
|
1,269,120 |
|
Property, plant and equipment,
net |
|
156,544 |
|
|
|
148,477 |
|
Operating lease right-of-use
assets |
|
104,294 |
|
|
|
109,977 |
|
Goodwill |
|
443,889 |
|
|
|
443,035 |
|
Intangible assets, net |
|
312,554 |
|
|
|
322,409 |
|
Other assets |
|
50,779 |
|
|
|
48,768 |
|
Total assets |
$ |
2,256,840 |
|
|
$ |
2,341,786 |
|
Liabilities and
shareholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
152,121 |
|
|
$ |
179,819 |
|
Accrued compensation |
|
15,311 |
|
|
|
19,490 |
|
Accrued customer rebates and returns |
|
189,409 |
|
|
|
192,116 |
|
Revolving credit facility |
|
166,560 |
|
|
|
239,363 |
|
Current portion of long-term debt |
|
12,500 |
|
|
|
12,500 |
|
Other accrued liabilities |
|
34,470 |
|
|
|
35,007 |
|
Total current liabilities |
|
570,371 |
|
|
|
678,295 |
|
Long-term debt |
|
476,414 |
|
|
|
482,464 |
|
Long-term operating lease
liabilities |
|
92,620 |
|
|
|
98,221 |
|
Other long-term
liabilities |
|
16,497 |
|
|
|
28,349 |
|
Deferred tax liabilities,
net |
|
14,866 |
|
|
|
11,826 |
|
Commitments and
contingencies |
|
|
|
Shareholders’
equity: |
|
|
|
Common stock, $0.01 par value; 50,000,000 shares authorized;
31,488,164 and 31,430,632 shares issued and outstanding in 2023 and
2022, respectively |
|
315 |
|
|
|
314 |
|
Additional paid-in capital |
|
94,452 |
|
|
|
88,750 |
|
Retained earnings |
|
993,923 |
|
|
|
956,870 |
|
Accumulated other comprehensive loss |
|
(2,618 |
) |
|
|
(3,303 |
) |
Total shareholders’ equity |
|
1,086,072 |
|
|
|
1,042,631 |
|
Total liabilities and shareholders’ equity |
$ |
2,256,840 |
|
|
$ |
2,341,786 |
|
Selected
Cash Flow Information (unaudited): |
|
Three Months Ended |
|
Six Months Ended |
(in thousands) |
7/1/23 |
|
6/25/22 |
|
7/1/23 |
|
6/25/22 |
Cash provided by operating activities |
$ |
66,676 |
|
|
$ |
14,172 |
|
|
$ |
92,886 |
|
|
$ |
37,386 |
|
Depreciation, amortization and accretion |
$ |
13,429 |
|
|
$ |
9,857 |
|
|
$ |
26,969 |
|
|
$ |
19,600 |
|
Capital
expenditures |
$ |
12,732 |
|
|
$ |
8,853 |
|
|
$ |
23,269 |
|
|
$ |
16,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DORMAN PRODUCTS, INC.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 we believe are not related
to our ongoing performance.
Adjusted Net Income:
|
Three Months Ended |
|
Six Months Ended |
|
(unaudited) |
7/1/23 |
* |
6/25/22 |
* |
7/1/23 |
* |
6/25/22 |
* |
Net income (GAAP) |
$ |
32,770 |
|
|
$ |
37,905 |
|
|
$ |
38,453 |
|
|
$ |
73,112 |
|
|
Pretax
acquisition-related intangible assets amortization [1] |
|
5,418 |
|
|
|
2,997 |
|
|
|
10,851 |
|
|
|
5,995 |
|
|
Pretax
acquisition-related transaction and other costs [2] |
|
5,866 |
|
|
|
535 |
|
|
|
14,415 |
|
|
|
4,686 |
|
|
Executive transition services expense [3] |
|
22 |
|
|
|
— |
|
|
|
1,801 |
|
|
|
— |
|
|
Fair
value adjustment to contingent consideration [4] |
|
(12,400 |
) |
|
|
— |
|
|
|
(12,400 |
) |
|
|
— |
|
|
Tax
adjustment (related to above items) [5] |
|
201 |
|
|
|
(829 |
) |
|
|
(3,677 |
) |
|
|
(2,474 |
) |
|
Adjusted
net income (Non-GAAP) |
$ |
31,877 |
|
|
$ |
40,608 |
|
|
$ |
49,443 |
|
|
$ |
81,319 |
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share (GAAP) |
$ |
1.04 |
|
|
$ |
1.20 |
|
|
$ |
1.22 |
|
|
$ |
2.32 |
|
|
Pretax
acquisition-related intangible assets amortization [1] |
|
0.17 |
|
|
|
0.10 |
|
|
|
0.34 |
|
|
|
0.19 |
|
|
Pretax
acquisition-related transaction and other costs [2] |
|
0.19 |
|
|
|
0.02 |
|
|
|
0.46 |
|
|
|
0.15 |
|
|
Executive transition services expense [3] |
|
0.00 |
|
|
|
— |
|
|
|
0.06 |
|
|
|
— |
|
|
Fair
value adjustment to contingent consideration [4] |
|
(0.39 |
) |
|
|
— |
|
|
|
(0.39 |
) |
|
|
— |
|
|
Tax
adjustment (related to above items) [5] |
|
0.01 |
|
|
|
(0.03 |
) |
|
|
(0.12 |
) |
|
|
(0.08 |
) |
|
Adjusted
diluted earnings per share (Non-GAAP) |
$ |
1.01 |
|
|
$ |
1.29 |
|
|
$ |
1.57 |
|
|
$ |
2.58 |
|
|
|
|
|
|
|
|
|
|
|
Weighted
average diluted shares outstanding |
|
31,528 |
|
|
|
31,535 |
|
|
|
31,533 |
|
|
|
31,568 |
|
|
* Amounts may not add due to rounding.See accompanying notes at
the end of this supplemental schedule.
Adjusted
Gross Profit: |
|
Three Months Ended |
|
Three Months Ended |
(unaudited) |
7/1/23 |
|
|
Pct.** |
|
|
6/25/22 |
|
|
Pct.** |
|
Gross profit (GAAP) |
$ |
163,506 |
|
|
|
34.0 |
|
|
$ |
141,525 |
|
|
|
33.9 |
|
Pretax
acquisition-related transaction and other costs [2] |
|
4,971 |
|
|
|
1.0 |
|
|
|
206 |
|
|
|
0.0 |
|
Adjusted
gross profit (Non-GAAP) |
$ |
168,477 |
|
|
|
35.1 |
|
|
$ |
141,731 |
|
|
|
34.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
480,568 |
|
|
|
|
|
|
$ |
417,419 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
Six Months Ended |
(unaudited) |
7/1/23 |
|
|
Pct.** |
|
|
6/25/22 |
|
|
Pct.** |
|
Gross
profit (GAAP) |
$ |
307,983 |
|
|
|
32.5 |
|
|
$ |
274,765 |
|
|
|
33.5 |
|
Pretax
acquisition-related transaction and other costs [2] |
|
11,800 |
|
|
|
1.2 |
|
|
|
4,062 |
|
|
|
0.5 |
|
Adjusted
gross profit (Non-GAAP) |
$ |
319,783 |
|
|
|
33.8 |
|
|
$ |
278,827 |
|
|
|
34.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
947,306 |
|
|
|
|
|
|
$ |
818,998 |
|
|
|
|
|
Adjusted
SG&A Expenses: |
|
Three Months Ended |
|
Three Months Ended |
(unaudited) |
7/1/23 |
|
Pct.** |
|
6/25/22 |
|
Pct.** |
SG&A expenses (GAAP) |
$ |
108,308 |
|
|
22.5 |
|
|
$ |
92,058 |
|
|
22.1 |
|
Pretax
acquisition-related intangible assets amortization [1] |
|
(5,418 |
) |
|
(1.1 |
) |
|
|
(2,997 |
) |
|
(0.7 |
) |
Pretax
acquisition-related transaction and other costs [2] |
|
(896 |
) |
|
(0.2 |
) |
|
|
(329 |
) |
|
(0.1 |
) |
Executive transition services expense [3] |
|
(22 |
) |
|
(0.0 |
) |
|
|
— |
|
|
— |
|
Fair
value adjustment to contingent consideration [4] |
|
12,400 |
|
|
2.6 |
|
|
|
— |
|
|
— |
|
Adjusted
SG&A expenses (Non-GAAP) |
$ |
114,372 |
|
|
23.8 |
|
|
$ |
88,732 |
|
|
21.3 |
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
480,568 |
|
|
|
|
$ |
417,419 |
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
Six Months Ended |
(unaudited) |
7/1/23 |
|
Pct.** |
|
6/25/22 |
|
Pct.** |
SG&A
expenses (GAAP) |
$ |
234,671 |
|
|
24.8 |
|
|
$ |
178,586 |
|
|
21.8 |
|
Pretax
acquisition-related intangible assets amortization [1] |
|
(10,851 |
) |
|
(1.1 |
) |
|
|
(5,995 |
) |
|
(0.7 |
) |
Pretax
acquisition-related transaction and other costs [2] |
|
(2,615 |
) |
|
(0.3 |
) |
|
|
(624 |
) |
|
(0.1 |
) |
Executive transition services expense [3] |
|
(1,801 |
) |
|
(0.2 |
) |
|
$ |
— |
|
|
— |
|
Fair
value adjustment to contingent consideration [4] |
|
12,400 |
|
|
1.3 |
|
|
|
— |
|
|
— |
|
Adjusted
SG&A expenses (Non-GAAP) |
$ |
231,804 |
|
|
24.5 |
|
|
$ |
171,967 |
|
|
21.0 |
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
947,306 |
|
|
|
|
$ |
818,998 |
|
|
|
* *Percentage of sales. Data may not add due to rounding.
[1] – 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 $5.4 million pretax (or
$4.0 million after tax) during the three months ended July 1,
2023 and $10.9 million pretax (or $8.1 million after tax) during
the six months ended July 1, 2023. Such costs were $3.0
million pretax (or $2.3 million after tax) during the three months
ended June 25, 2022 and $6.0 million pretax (or $4.6 million
after tax) during the six months ended June 25, 2022.
[2] – Pretax acquisition-related transaction and
other costs include costs incurred to complete and integrate
acquisitions, accretion on contingent consideration obligations,
inventory fair value adjustments and facility consolidation and
start-up expenses. During the three and six months ended
July 1, 2023, we incurred charges included in cost of goods
sold for integration costs, other facility consolidation expenses
and inventory fair value adjustments of $5.0 million pretax (or
$3.8 million after tax) and $11.8 million pretax (or $8.9 million
after tax), respectively. During the three and six months ended
July 1, 2023, we incurred charges included in selling, general
and administrative expenses to complete and integrate acquisitions,
accretion on contingent consideration obligations and facility
consolidation and start-up expenses of $0.9 million pretax (or $0.7
million after tax) and $2.6 million pretax (or $2.0 million after
tax), respectively.
During the three and six months ended
June 25, 2022, we incurred charges included in cost of goods
sold for integration costs, other facility consolidation expenses
and inventory fair value adjustments of $0.2 million pretax (or
$0.1 million after tax) and $ 4.1 (or $3.1 million after tax),
respectively. During the three and six months ended June 25,
2022, we incurred charges included in selling, general and
administrative expenses to complete and integrate acquisitions, and
facility consolidation and start-up expenses of $0.3 million pretax
(or $0.2 million after tax) and $0.6 million pretax (or $0.5
million after tax), respectively.
[3] – Executive transition service expenses
represents an accrual for costs required to be paid under an
agreement in connection with the planned transition of our
Executive Chairman to Non-Executive Chairman, and other
professional services rendered in connection with the execution of
the agreement. The expense was $1.8 million pretax (or $1.4 million
after tax) during the six months ended July 1, 2023.
[4] – Fair value adjustments to contingent
consideration represents the change to our estimates of ultimate
earnout payment amounts for a previously completed acquisition
based on projections of financial performance compared to the
target amounts defined in the purchase agreement and totaled $12.4
million pretax (or $9.4 million after tax) during the three and six
months ended July 1, 2023.
[5] – Tax adjustments represent the aggregate
tax effect of all non-GAAP adjustments reflected in the table
above, and totaled $0.2 million and $(3.7) million during the three
and six months ended July 1, 2023, respectively, and $(0.8)
million and $(2.5) million during the three and six months ended
June 25, 2022, respectively. Such items are estimated by
applying our statutory tax rate to the pretax amount, or an actual
tax amount for discrete items.
2023 Guidance:
The Company provided the following guidance ranges related to
their fiscal 2023 outlook:
|
Year Ending 12/31/2023 |
(unaudited) |
Low End* |
|
High End* |
Diluted earnings per share (GAAP) |
$ |
4.35 |
|
|
$ |
4.55 |
|
Pretax
acquisition-related intangible assets amortization |
|
0.69 |
|
|
|
0.69 |
|
Pretax
acquisition transaction and other costs |
|
0.38 |
|
|
|
0.38 |
|
Tax
adjustment (related to above items) |
|
(0.27 |
) |
|
|
(0.27 |
) |
Adjusted
diluted earnings per share (Non-GAAP) |
$ |
5.15 |
|
|
$ |
5.35 |
|
|
|
|
|
Weighted
average diluted shares outstanding |
|
31,500 |
|
|
|
31,500 |
|
*Data may not add due to rounding.
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