Dorman Products, Inc 10-Q for FY2021 Q2

About this 10-Q

Headline figures

Dorman Products, Inc. (DORM)

10-Q 2021-07-26 For: 2021-06-26

Added on April 04, 2026

Dorman Products, Inc filed this 10-Q on July 26, 2021, covering the quarter ended June 26, 2021 (FY2021 Q2).

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Quarter ended June 26, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $310.64M; up 33.2% from $233.18M a year earlier
Net income: $31.62M; up 127.7% from net income of $13.89M a year earlier
Diluted EPS: $0.99; up 130.2% from $0.43 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	12

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	18

ITEM 4.	Controls and Procedures	18

PART II — OTHER INFORMATION

ITEM 1.	Legal Proceedings	20

ITEM 1A.	Risk Factors	20

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20

ITEM 3.	Defaults Upon Senior Securities	20

ITEM 4.	Mine Safety Disclosures	20

ITEM 5.	Other Information	20

ITEM 6.	Exhibits	20

Exhibit Index		21

Signatures		22

	Three Months Ended					Six Months Ended
(in thousands, except per share data)	June 26, 2021		June 27, 2020			June 26, 2021		June 27, 2020
Net sales	$	310,635	$	233,182		$	598,647	$	490,912
Cost of goods sold		200,510		154,034			384,002		326,967
Gross profit		110,125		79,148			214,645		163,945
Selling, general and administrative expenses		69,517		61,525			132,386		121,260
Income from operations		40,608		17,623			82,259		42,685
Other income (expense), net		90		(297	)		54		2,334
Income before income taxes		40,698		17,326			82,313		45,019
Provision for income taxes		9,080		3,441			17,965		8,359
Net income	$	31,618	$	13,885		$	64,348	$	36,660

Earnings per share:
Basic	$	0.99	$	0.43		$	2.01	$	1.13
Diluted	$	0.99	$	0.43		$	2.00	$	1.13
Weighted average shares outstanding:
Basic		31,942		32,269			31,995		32,312
Diluted		32,089		32,338			32,136		32,388

(in thousands, except for share data)	June 26, 2021		December 26, 2020
Assets
Current assets:
Cash and cash equivalents	$	155,539	$	155,576
Accounts receivable, less allowance for doubtful accounts of $1,220 and $1,260, respectively		446,242		460,878
Inventories		356,759		298,719
Prepaids and other current assets		16,069		7,758
Total current assets		974,609		922,931
Property, plant and equipment, net		88,164		91,009
Operating lease right-of-use assets		38,295		39,002
Goodwill		91,080		91,080
Intangible assets, net of accumulated amortization of $10,886 and $9,194, respectively		23,513		25,207
Deferred tax asset, net		12,396		12,450
Other assets		41,420		38,982
Total assets	$	1,269,477	$	1,220,661
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	126,463	$	117,878
Accrued compensation		12,634		19,711
Accrued customer rebates and returns		165,577		155,751
Other accrued liabilities		27,854		29,305
Total current liabilities		332,528		322,645
Long-term operating lease liabilities		35,950		37,083
Other long-term liabilities		4,462		3,555
Deferred tax liabilities, net		3,552		3,819
Commitments and contingencies (Note 5)
Shareholders’ equity:
Common stock, $0.01 par value; 50,000,000 shares authorized; 31,891,890 and 32,168,740 shares issued and outstanding in 2021 and 2020, respectively		319		322
Additional paid-in capital		71,947		64,085
Retained earnings		820,719		789,152
Total shareholders’ equity		892,985		853,559
Total liabilities and shareholders' equity	$	1,269,477	$	1,220,661

	Three Months Ended June 26, 2021
	Common Stock						Additional
(in thousands, except share data)	Shares Issued			Par Value			Paid-In Capital			Retained Earnings			Total
Balance at March 27, 2021		32,115,528		$	321		$	67,596		$	815,894		$	883,811
Exercise of stock options		5,732			—			420			—			420
Compensation expense under Incentive Stock Plan		—			—			2,380			—			2,380
Purchase and cancellation of common stock		(266,871	)		(2	)		(480	)		(26,793	)		(27,275	)
Issuance of non-vested stock, net of cancellations		38,120			—			2,493			—			2,493
Other stock-related activity, net of tax		(619	)		—			(462	)		—			(462	)
Net income		—			—			—			31,618			31,618
Balance at June 26, 2021		31,891,890		$	319		$	71,947		$	820,719		$	892,985

	Three Months Ended June 27, 2020
	Common Stock						Additional
(in thousands, except share data)	Shares Issued			Par Value			Paid-In Capital			Retained Earnings			Total
Balance at March 28, 2020		32,434,665		$	325		$	53,454		$	737,596		$	791,375
Exercise of stock options		—			—			—			—			—
Compensation expense under Incentive Stock Plan		—			—			1,504			—			1,504
Purchase and cancellation of common stock		(1,620	)		(1	)		(2	)		(83	)		(86	)
Issuance of non-vested stock, net of cancellations		10,129			2			504			—			506
Other stock-related activity, net of tax		(2,761	)		—			(54	)		2			(52	)
Net income		—			—			—			13,885			13,885
Balance at June 27, 2020		32,440,413		$	326		$	55,406		$	751,400		$	807,132

	Six Months Ended June 26, 2021
	Common Stock						Additional
(in thousands, except share data)	Shares Issued			Par Value			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		17,346			—			736			—			736
Compensation expense under Incentive Stock Plan		—			—			4,491			—			4,491
Purchase and cancellation of common stock		(305,031	)		(3	)		(549	)		(30,697	)		(31,249	)
Issuance of non-vested stock, net of cancellations		20,521			—			2,493			—			2,493
Other stock related activity, net of tax		(9,686	)		—			691			(2,084	)		(1,393	)
Net income		—			—			—			64,348			64,348
Balance at June 26, 2021		31,891,890		$	319		$	71,947		$	820,719		$	892,985

	Six Months Ended June 27, 2020
	Common Stock						Additional
(in thousands, except share data)	Shares Issued			Par Value			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		10			—			—			—			—
Compensation expense under Incentive Stock Plan		—			—			2,718			—			2,718
Purchase and cancellation of common stock		(98,329	)		(1	)		(177	)		(5,687	)		(5,865	)
Cancellation of non-vested stock, net of issuances		(11,845	)		1			504			—			505
Other stock related activity, net of tax		(5,686	)		—			(244	)		(226	)		(470	)
Net income		—			—			—			36,660			36,660
Balance at June 27, 2020		32,440,413		$	326		$	55,406		$	751,400		$	807,132

	Six Months Ended
(in thousands)	June 26, 2021			June 27, 2020
Cash Flows from Operating Activities:
Net income	$	64,348		$	36,660
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, amortization and accretion		16,850			15,035
Gain on equity method investment		—			(2,498	)
Provision for doubtful accounts		31			105
Benefit for deferred income taxes		(213	)		(1,074	)
Provision for stock-based compensation		4,491			2,718
Changes in assets and liabilities:
Accounts receivable		14,605			151,818
Inventories		(58,039	)		11,564
Prepaids and other current assets		(8,288	)		2,462
Other assets		(3,451	)		(4,779	)
Accounts payable		8,818			(8,665	)
Accrued customer rebates and returns		9,826			7,557
Accrued compensation and other liabilities		(9,891	)		8,498
Cash provided by operating activities		39,087			219,401
Cash Flows from Investing Activities:
Acquisition, net of cash acquired		—			(14,308	)
Property, plant and equipment additions		(10,153	)		(7,143	)
Cash used in investing activities		(10,153	)		(21,451	)
Cash Flows from Financing Activities:
Proceeds of revolving credit line		—			99,000
Proceeds from exercise of stock options		736			—
Other stock-related activity		1,141			120
Purchase and cancellation of common stock		(30,848	)		(5,865	)
Cash (used in) provided by financing activities		(28,971	)		93,255
Net (Decrease) Increase in Cash and Cash Equivalents		(37	)		291,205
Cash and Cash Equivalents, Beginning of Period		155,576			68,353
Cash and Cash Equivalents, End of Period	$	155,539		$	359,558
Supplemental Cash Flow Information
Cash paid for interest expense	$	140		$	433
Cash paid for income taxes	$	26,436		$	1,750

	Shares			Weighted Average Fair Value
Balance at December 26, 2020		217,735		$	72.77
Granted		52,001		$	111.78
Vested		(33,676	)	$	66.38
Canceled		(42,227	)	$	74.56
Balance at June 26, 2021		193,833		$	83.95

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Term (In years)		Aggregate Intrinsic Value
Balance at December 26, 2020		250,779		$	70.21
Granted		57,056		$	101.50
Forfeited		(5,540	)	$	81.71
Exercised		(37,534	)	$	65.48
Balance at June 26, 2021		264,761		$	77.38		5.5	$	6,101,198
Options exercisable at June 26, 2021		94,722		$	73.70		3.7	$	2,506,557

	For the Three Months Ended				For the Six Months Ended
	June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
Shares repurchased and canceled		982		1,620		3,142		6,350
Total cost of shares repurchased and canceled (in thousands)	$	106	$	85	$	316	$	400
Average price per share	$	107.63	$	52.33	$	100.49	$	63.00

	Three Months Ended*									Six Months Ended*
(in millions)	June 26, 2021				June 27, 2020					June 26, 2021				June 27, 2020
Net sales	$	310,635	100.0	%	$	233,182		100.0	%	$	598,647	100.0	%	$	490,912	100.0	%
Cost of goods sold		200,510	64.5	%		154,034		66.1	%		384,002	64.1	%		326,967	66.6	%
Gross profit		110,125	35.5	%		79,148		33.9	%		214,645	35.9	%		163,945	33.4	%
Selling, general and administrative expenses		69,517	22.4	%		61,525		26.4	%		132,386	22.1	%		121,260	24.7	%
Income from operations		40,608	13.1	%		17,623		7.6	%		82,259	13.7	%		42,685	8.7	%
Other income (expense), net		90	0.0	%		(297	)	-0.1	%		54	0.0	%		2,334	0.5	%
Income before income taxes		40,698	13.1	%		17,326		7.4	%		82,313	13.7	%		45,019	9.2	%
Provision for income taxes		9,080	2.9	%		3,441		1.5	%		17,965	3.0	%		8,359	1.7	%
Net income	$	31,618	10.2	%	$	13,885		6.0	%	$	64,348	10.7	%	$	36,660	7.5	%

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (4)		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (4)
March 28, 2021 through April 24, 2021 (1)		66,026	$	105.53		64,738	$	196,555,408
April 25, 2021 through May 22, 2021 (2)		96,477	$	100.74		96,000	$	186,885,928
May 23, 2021 through June 26, 2021 (3)		105,224	$	101.48		105,151	$	176,215,541
Total		267,727				265,889	$	176,215,541


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.⁺

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 June 26, 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 June 26, 2021, formatted in Inline XBRL (included as Exhibit 101).

(in thousands)	June 26, 2021		December 26, 2020
Bulk product	$	163,429	$	136,726
Finished product		188,250		157,484
Packaging materials		5,080		4,509
Total	$	356,759	$	298,719


+		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