Dorman Products, Inc. Reports Sales and Earnings for the Third Quarter Ended September 30, 2017

• Q3 Sales increased 5.6% to $224.6 million 
  
  
• Q3 EPS increased 3.9% to $0.80 per fully diluted share
  
  
• Year to Date Sales increased 7.1% to $675.5 million
  
  
• Year to Date EPS increased 10.8% to $2.47 per fully diluted share

COLMAR, Pa., Oct. 27, 2017 (GLOBE NEWSWIRE) -- Dorman Products, Inc. (NASDAQ:DORM), a leading supplier in the automotive aftermarket, today announced results for the third quarter.

3rd Quarter Financial Results
Net Sales for the third quarter ended September 30, 2017 increased $11.8 million, or 5.6%, to $224.6 million from $212.8 million for the third quarter ended 2016. Diluted Earnings Per Share for the third quarter increased 3.9% to $0.80 per share from $0.77 per share in the third quarter of 2016.

“We are pleased with our performance this quarter despite a significant inventory reduction initiative at one of our major customers that reduced our growth rate by approximately 3%. The inventory reduction began late in the second quarter and moderated toward the end of the third quarter. Our investment in developing new products continues to pay off, positioning us well for the future. Year to date, our Heavy Duty (HD) Solutions lines are up 36% and our Complex Electronics lines are up 21%. Both of these initiatives continue to present significant future growth opportunities for Dorman. We also launched 954 unique SKU’s in the quarter which represents a 10% increase on a year to date basis. We remain excited about our new Chassis offering which accounted for approximately 1% of our total year to date revenue growth. Our outlook for the full year remains largely unchanged as we estimate annual sales growth to be in the 6% range and EPS growth to be in the high single digit range despite one less week in this year’s fourth quarter,” said Matt Barton, President and Chief Executive Officer. 

Gross Profit for the third quarter increased 6.0% to $88.1 million (or 39.2% of Net Sales) from $83.1 million (or 39.1% of Net Sales) in the third quarter of 2016. On a year to date basis, Gross Profit has expanded 60Bps from 39.0% in 2016 to 39.6% in 2017. Selling, General and Administrative Expenses (SG&A) for the third quarter increased 9.2% to $45.3 million (or 20.1% of sales) from $41.5 million (or 19.5% of sales) in the third quarter of 2016. Besides variable expenses tied to growth and general wage and benefit inflation, the growth in SG&A is primarily attributable to investment in product development and $0.9 million in additional accounts receivable sale costs compared to a year ago. 

Operating Cash Flow was $17.4 million in the third quarter compared to $19.0 million in the same quarter last year. As previously discussed, we made additional investments in inventory to improve customer service levels in the second quarter. We believe inventory has plateaued and we expect it to decline slightly in the fourth quarter. 

Under its share repurchase program, Dorman repurchased 342.9 thousand shares of its common stock for $24.0 million at an average share price of $69.98 during the third quarter ended September 30, 2017, bringing year to date purchases to 782.4 thousand shares at an average price of $75.41.

Dorman Products, Inc. is a leading supplier of Dealer “Exclusive” replacement parts to the Automotive, Medium and Heavy Duty Aftermarkets. Dorman 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. 

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to the Company’s future growth rates. Words such as “believe,” “demonstrate,” “expect,” “estimate,” “forecast,” “anticipate,” “should” and “likely” and similar expressions identify forward-looking statements. 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 which may cause actual events to be materially different from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, competition in the automotive aftermarket industry, concentration of the Company’s sales and accounts receivable among a small number of customers, the impact of consolidation in the automotive aftermarket industry, foreign currency fluctuations, , imposition of new taxes or duties, and other risks detailed in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2016. 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.

DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per-share amounts)
		13 Weeks				13 Weeks
Third Quarter (unaudited)		9/30/17		Pct.		9/24/16			Pct.
Net sales		$ 224,615		100.0		$ 212,786			100.0
Cost of goods sold		136,489		60.8		129,641			60.9
Gross profit		88,126		39.2		83,145			39.1
Selling, general and administrative expenses		45,336		20.1		41,512			19.5
Income from operations		42,790		19.1		41,633			19.6
Interest income (expense), net		168		0.0		(61	)		(0.1	)
Income before income taxes		42,958		19.1		41,572			19.5
Provision for income taxes		15,950		7.1		14,877			7.0
Net income		$ 27,008		12.0		$ 26,695			12.5
Diluted earnings per share		$ 0.80				$ 0.77
Weighted average diluted shares outstanding		33,909				34,672

DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per-share amounts)
		39 Weeks				39 Weeks
Third Quarter (unaudited)		9/30/17		Pct.		9/24/16			Pct.
Net sales		$ 675,502		100.0		$ 630,507			100.0
Cost of goods sold		407,781		60.4		384,604			61.0
Gross profit		267,721		39.6		245,903			39.0
Selling, general and administrative expenses		134,890		19.9		124,350			19.7
Income from operations		132,831		19.7		121,553			19.3
Interest income (expense), net		472		0.0		(180	)		(0.0	)
Income before income taxes		133,303		19.7		121,373			19.3
Provision for income taxes		48,671		7.2		44,025			7.0
Net income		$ 84,632		12.5		$ 77,348			12.3
Diluted earnings per share		$ 2.47				$ 2.23
Weighted average diluted shares outstanding		34,202				34,626

DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
		9/30/17		12/31/16
Assets:
Cash and cash equivalents		$ 116,789		$ 149,121
Accounts receivable		231,094		230,526
Inventories		201,805		168,851
Prepaid expenses		4,348		3,116
Total current assets		554,036		551,614
Property, plant & equipment, net		89,897		88,436
Goodwill and other intangible assets, net		32,489		29,788
Deferred income taxes, net		16,427		12,429
Other assets		45,169		29,525
Total assets		$ 738,018		$ 711,792
Liabilities & shareholders’ equity:
Accounts payable		$ 72,661		$ 72,629
Accrued expenses and other		27,900		31,219
Total current liabilities		100,561		103,848
Other long-term liabilities		9,357		6,302
Shareholders’ equity		628,100		601,642
Total liabilities and equity		$ 738,018		$ 711,792

Selected Cash Flow Information:
(in thousands)			13 Weeks (unaudited)						39 Weeks (unaudited)
			9/30/17		9/24/16				9/30/17			9/24/16
Depreciation, amortization and accretion			$ 5,776		$ 4,711				$ 15,968			$ 13,890
Capital expenditures			$ 5,504		$ 4,772				$ 17,436			$ 14,890

Contact: Kevin Olsen, CFO, kolsen@dormanproducts.com, (215) 997-1800. Visit our website at www.dormanproducts.com