Dorman Products, Inc 10-Q for FY2021 Q3

About this 10-Q

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Dorman Products, Inc. (DORM)

10-Q 2021-10-25 For: 2021-09-25

Added on April 04, 2026

Dorman Products, Inc filed this 10-Q on October 25, 2021, covering the quarter ended September 25, 2021 (FY2021 Q3).

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Quarter ended September 25, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $348.43M; up 15.9% from $300.62M a year earlier
Net income: $33.1M; down 3.4% from net income of $34.26M a year earlier
Diluted EPS: $1.04; down 1.9% from $1.06 a year earlier

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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)

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

		Page
PART I — FINANCIAL INFORMATION

ITEM 1.	Financial Statements (unaudited)

	Condensed Consolidated Statements of Operations	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	14

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	21

ITEM 4.	Controls and Procedures	21

PART II — OTHER INFORMATION

ITEM 1.	Legal Proceedings	23

ITEM 1A.	Risk Factors	23

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23

ITEM 3.	Defaults Upon Senior Securities	23

ITEM 4.	Mine Safety Disclosures	23

ITEM 5.	Other Information	23

ITEM 6.	Exhibits	24

Exhibit Index		25

Signatures		26

	Three Months Ended						Nine Months Ended
(in thousands, except per share data)	September 25, 2021			September 26, 2020			September 25, 2021			September 26, 2020
Net sales	$	348,426		$	300,620		$	947,073		$	791,532
Cost of goods sold		231,572			192,819			615,574			519,786
Gross profit		116,854			107,801			331,499			271,746
Selling, general and administrative expenses		72,663			63,028			205,049			184,288
Income from operations		44,191			44,773			126,450			87,458
Interest expense, net		733			63			918			545
Other income, net		(95	)		(46	)		(334	)		(2,862	)
Income before income taxes		43,553			44,756			125,866			89,775
Provision for income taxes		10,449			10,497			28,414			18,856
Net income	$	33,104		$	34,259		$	97,452		$	70,919

Earnings per share:
Basic	$	1.04		$	1.06		$	3.06		$	2.19
Diluted	$	1.04		$	1.06		$	3.04		$	2.19
Weighted average shares outstanding:
Basic		31,692			32,281			31,895			32,317
Diluted		31,842			32,371			32,039			32,394

(in thousands, except for share data)	September 25, 2021		December 26, 2020
Assets
Current assets:
Cash and cash equivalents	$	57,263	$	155,576
Accounts receivable, less allowance for doubtful accounts of $1,248 and $1,260		463,113		460,878
Inventories		475,462		298,719
Prepaids and other current assets		17,297		7,758
Total current assets		1,013,135		922,931
Property, plant and equipment, net		116,309		91,009
Operating lease right-of-use assets		57,698		39,002
Goodwill		200,026		91,080
Intangible assets, net		182,827		25,207
Deferred tax asset, net		—		12,450
Other assets		45,853		38,982
Total assets	$	1,615,848	$	1,220,661
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	149,925	$	117,878
Accrued compensation		21,081		19,711
Accrued customer rebates and returns		180,594		155,751
Revolving credit facility		249,360		—
Other accrued liabilities		21,800		29,305
Total current liabilities		622,760		322,645
Long-term operating lease liabilities		52,530		37,083
Other long-term liabilities		4,706		3,555
Deferred tax liabilities, net		31,328		3,819
Commitments and contingencies (Note 7)
Shareholders’ equity:
Common stock, $0.01 par value; 50,000,000 shares authorized; 31,658,703 and 32,168,740 shares issued and outstanding in 2021 and 2020, respectively		317		322
Additional paid-in capital		73,325		64,085
Retained earnings		830,882		789,152
Total shareholders’ equity		904,524		853,559
Total liabilities and shareholders' equity	$	1,615,848	$	1,220,661

	Three Months Ended September 25, 2021
	Common Stock
(in thousands, except share data)	Shares Issued			Par Value			Additional Paid-In Capital			Retained Earnings			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	)
Cancellation of non-vested stock, net of issuances		(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

	Three Months Ended September 26, 2020
	Common Stock
(in thousands, except share data)	Shares Issued			Par Value			Additional Paid-In Capital			Retained Earnings			Total
Balance at June 27, 2020		32,440,413		$	326		$	55,406		$	751,400		$	807,132
Exercise of stock options		2,886			—			—			—			—
Compensation expense under Incentive Stock Plan		—			—			1,248			—			1,248
Purchase and cancellation of common stock		(135,787	)		(1	)		(244	)		(11,203	)		(11,448	)
Cancellation of non-vested stock, net of issuances		(2,937	)		(1	)		—			—			(1	)
Other stock-related activity, net of tax		111			—			483			(308	)		175
Net income		—			—			—			34,259			34,259
Balance at September 26, 2020		32,304,686		$	324		$	56,893		$	774,148		$	831,365

	Nine Months Ended September 25, 2021
	Common Stock
(in thousands, except share data)	Shares Issued			Par Value			Additional Paid-In Capital			Retained Earnings			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

	Nine Months Ended September 26, 2020
	Common Stock
(in thousands, except share data)	Shares Issued			Par Value			Additional Paid-In Capital			Retained Earnings			Total
Balance at December 28, 2019		32,556,263		$	326		$	52,605		$	720,653		$	773,584
Exercise of stock options		2,896			—			—			—			—
Compensation expense under Incentive Stock Plan		—			—			3,966			—			3,966
Purchase and cancellation of common stock		(234,116	)		(2	)		(421	)		(16,890	)		(17,313	)
Cancellation of non-vested stock, net of issuances		(14,782	)		—			504			—			504
Other stock related activity, net of tax		(5,575	)		—			239			(534	)		(295	)
Net income		—			—			—			70,919			70,919
Balance at September 26, 2020		32,304,686		$	324		$	56,893		$	774,148		$	831,365

	Nine Months Ended
(in thousands)	September 25, 2021			September 26, 2020
Cash Flows from Operating Activities:
Net income	$	97,452		$	70,919
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, amortization and accretion		24,931			22,544
Gain on equity method investment		—			(2,498	)
Provision for doubtful accounts		61			197
Benefit for deferred income taxes		(414	)		(1,154	)
Provision for stock-based compensation		6,212			4,069
Payment of contingent consideration		(2,418	)		—
Changes in assets and liabilities:
Accounts receivable		20,746			(11,685	)
Inventories		(97,156	)		3,093
Prepaids and other current assets		(7,216	)		1,360
Other assets		(3,639	)		(1,923	)
Accounts payable		20,456			20,334
Accrued customer rebates and returns		23,786			24,690
Accrued compensation and other liabilities		(5,200	)		15,773
Cash provided by operating activities		77,601			145,719
Cash Flows from Investing Activities:
Acquisition, net of cash acquired		(345,483	)		(14,308	)
Property, plant and equipment additions		(15,274	)		(12,061	)
Cash used in investing activities		(360,757	)		(26,369	)
Cash Flows from Financing Activities:
Proceeds of revolving credit line		252,360			99,000
Payments of revolving credit line		(3,000	)		(99,000	)
Payment of contingent consideration		(7,982	)		—
Payment of debt issuance costs		(4,215	)		—
Proceeds from exercise of stock options		909			—
Other stock-related activity		1,055			112
Purchase and cancellation of common stock		(54,272	)		(17,313	)
Cash provided by (used in) financing activities		184,855			(17,201	)
Effect of exchange rate changes on Cash and Cash Equivalents		(12	)		-
Net (Decrease) Increase in Cash and Cash Equivalents		(98,313	)		102,149
Cash and Cash Equivalents, Beginning of Period		155,576			68,353
Cash and Cash Equivalents, End of Period	$	57,263		$	170,502
Supplemental Cash Flow Information
Cash paid for interest expense	$	567		$	680
Cash paid for income taxes	$	37,500		$	19,575

(in thousands)
Accounts receivable	$	23,061
Inventories		79,625
Prepaids and other current assets		2,403
Property, plant and equipment		29,861
Goodwill		108,946
Identifiable intangible assets		160,400
Operating lease right-of-use assets		21,248
Other assets		877
Accounts payable		(11,968	)
Accrued compensation		(2,784	)
Other current liabilities		(7,409	)
Long-term operating lease liabilities		(18,444	)
Deferred tax liabilities		(40,333	)
Net cash consideration	$	345,483

(in thousands)	Fair Value		Amortization Period (in years)
Customer relationships	$	124,100		20
Product portfolio		25,300		20
Trade names		11,000		10
Total	$	160,400

	September 25, 2021						December 26, 2020
Intangible assets subject to amortization	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
(in thousands)
Customer relationships	$	149,150	$	9,140	$	140,010	$	25,050	$	7,141	$	17,909
Trade names		17,760		2,075		15,685		6,760		1,585		5,175
Product Portfolio		25,300		42		25,258		—		—		—
Technology		2,167		508		1,659		2,167		323		1,844
Other		430		215		215		430		151		279
Total	$	194,807	$	11,980	$	182,827	$	34,407	$	9,200	$	25,207

	Shares			Weighted Average Fair Value
Balance at December 26, 2020		217,735		$	72.77
Granted		76,984		$	106.23
Vested		(36,042	)	$	67.05
Canceled		(45,451	)	$	74.61
Balance at September 25, 2021		213,226		$	85.42

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Term (In years)		Aggregate Intrinsic Value
Balance at December 26, 2020		250,779		$	70.21
Granted		58,393		$	101.47
Forfeited		(9,457	)	$	79.02
Exercised		(39,794	)	$	66.11
Balance at September 25, 2021		259,921		$	77.54		5.3	$	5,228,021
Options exercisable at September 25, 2021		94,762		$	73.84		3.6	$	2,159,758

	Three Months Ended*										Nine Months Ended*
(in millions)	September 25, 2021					September 26, 2020					September 25, 2021					September 26, 2020
Net sales	$	348,426		100.0	%	$	300,620		100.0	%	$	947,073		100.0	%	$	791,532		100.0	%
Cost of goods sold		231,572		66.5	%		192,819		64.1	%		615,574		65.0	%		519,786		65.7	%
Gross profit		116,854		33.5	%		107,801		35.9	%		331,499		35.0	%		271,746		34.3	%
Selling, general and administrative expenses		72,663		20.9	%		63,028		21.0	%		205,049		21.7	%		184,288		23.3	%
Income from operations		44,191		12.7	%		44,773		14.9	%		126,450		13.4	%		87,458		11.0	%
Interest expense, net		733		0.2	%		63		0.0	%		918		0.1	%		545		0.1	%
Other income, net		(95	)	-0.0	%		(46	)	-0.0	%		(334	)	-0.0	%		(2,862	)	-0.4	%
Income before income taxes		43,553		12.5	%		44,756		14.9	%		125,866		13.3	%		89,775		11.3	%
Provision for income taxes		10,449		3.0	%		10,497		3.5	%		28,414		3.0	%		18,856		2.4	%
Net income	$	33,104		9.5	%	$	34,259		11.4	%	$	97,452		10.3	%	$	70,919		9.0	%

(in thousands)	September 25, 2021		December 26, 2020
Raw materials	$	10,467	$	—
Bulk product		198,205		136,726
Finished product		257,141		157,484
Packaging materials		9,649		4,509
Total	$	475,462	$	298,719

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (3)		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (3)
June 27, 2021 through July 24, 2021		64,000	$	104.52		64,000	$	169,526,376
July 25, 2021 through August 21, 2021 (1)		101,467	$	99.80		99,368	$	159,613,310
August 22, 2021 through September 25, 2021 (2)		69,443	$	95.54		69,250	$	152,997,179
Total		234,910				232,618	$	152,997,179


2.1		Agreement and Plan of Merger, dated June 25, 2021, by and among Dorman Products, Inc., Senators Merger Sub, Inc., DPL Holding Corporation and SBF II Representative Corp., solely in its capacity as Equityholder Representative. Incorporated by reference to Exhibit 2.1 to the company’s Current Report on Form 8-K filed on June 28, 2021.⁺

10.1		Credit Agreement, dated August 10, 2021 by and among Dorman Products, Inc., the lenders from time to time party thereto, and Bank of America, N.A., as administrative agent. ⁺

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished with this report). **

101		The following financial statements from the Dorman Products, Inc. Quarterly Report on Form 10-Q as of and for the quarter ended September 25, 2021, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations; (ii) the Condensed Consolidated Balance Sheets; (iii) Condensed Consolidated Statements of Shareholders’ Equity; (iv) the Condensed Consolidated Statements of Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements.

104		The cover page from the Company’s Quarterly Report on Form 10-Q as of and for the quarter ended September 25, 2021, formatted in Inline XBRL (included as Exhibit 101).


+		The schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish a copy of such schedules and exhibits, or any section thereof, to the SEC upon request.

*		Filed herewith

**		Furnished herewith