Dorman Products, Inc 10-Q for FY2022 Q3

About this 10-Q

Headline figures

Dorman Products, Inc. (DORM)

10-Q 2022-10-24 For: 2022-09-24

Added on April 04, 2026

Dorman Products, Inc filed this 10-Q on October 24, 2022, covering the quarter ended September 24, 2022 (FY2022 Q3).

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Quarter ended September 24, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $413.47M; up 18.7% from $348.43M a year earlier
Net income: $30.6M; down 7.6% from net income of $33.1M a year earlier
Diluted EPS: $0.97; down 6.7% from $1.04 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →

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 and Comprehensive Income	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	15

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	22

ITEM 4.	Controls and Procedures	23

PART II — OTHER INFORMATION

ITEM 1.	Legal Proceedings	24

ITEM 1A.	Risk Factors	24

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24

ITEM 3.	Defaults Upon Senior Securities	24

ITEM 4.	Mine Safety Disclosures	24

ITEM 5.	Other Information	24

ITEM 6.	Exhibits	24

Exhibit Index		26

Signatures		27

	Three Months Ended						Nine Months Ended
(in thousands, except per share data)	September 24, 2022			September 25, 2021			September 24, 2022			September 25, 2021
Net sales	$	413,470		$	348,426		$	1,232,468		$	947,073
Cost of goods sold		281,559			231,572			825,792			615,574
Gross profit		131,911			116,854			406,676			331,499
Selling, general and administrative expenses		89,814			72,663			268,400			205,049
Income from operations		42,097			44,191			138,276			126,450
Interest expense, net		2,344			733			5,140			918
Other expense (income), net		65			(95	)		(130	)		(334	)
Income before income taxes		39,688			43,553			133,266			125,866
Provision for income taxes		9,087			10,449			29,553			28,414
Net income	$	30,601		$	33,104		$	103,713		$	97,452
Other comprehensive income:
Change in foreign currency translation adjustment	$	(2,112	)	$	—		$	(2,415	)	$	—
Comprehensive Income	$	28,489		$	33,104		$	101,298		$	97,452

Earnings per share:
Basic	$	0.97		$	1.04		$	3.30		$	3.06
Diluted	$	0.97		$	1.04		$	3.29		$	3.04
Weighted average shares outstanding:
Basic		31,411			31,692			31,444			31,895
Diluted		31,545			31,842			31,561			32,039

(in thousands, except for share data)	September 24, 2022			December 25, 2021
Assets
Current assets:
Cash and cash equivalents	$	35,435		$	58,782
Accounts receivable, less allowance for doubtful accounts of $1,388 and $1,326		433,229			472,764
Inventories		677,898			531,988
Prepaids and other current assets		30,456			13,048
Total current assets		1,177,018			1,076,582
Property, plant and equipment, net		122,106			114,864
Operating lease right-of-use assets		92,440			59,029
Goodwill		195,725			197,332
Intangible assets, net		169,046			178,809
Other assets		44,873			46,503
Total assets	$	1,801,208		$	1,673,119
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	199,180		$	177,389
Accrued compensation		15,523			26,636
Accrued customer rebates and returns		199,779			188,080
Revolving credit facility		229,360			239,360
Other accrued liabilities		30,036			33,583
Total current liabilities		673,878			665,048
Long-term operating lease liabilities		83,983			52,443
Other long-term liabilities		5,159			4,916
Deferred tax liabilities, net		17,147			17,976
Commitments and contingencies (Note 8)
Shareholders’ equity:
Common stock, $0.01 par value; 50,000,000 shares authorized; 31,419,392 and 31,607,509 shares issued and outstanding in 2022 and 2021, respectively		314			316
Additional paid-in capital		85,374			77,451
Retained earnings		939,208			856,409
Accumulated other comprehensive loss		(3,855	)		(1,440	)
Total shareholders’ equity		1,021,041			932,736
Total liabilities and shareholders' equity	$	1,801,208		$	1,673,119

	Three Months Ended September 24, 2022
	Common Stock
(in thousands, except share data)	Shares Issued			Par Value			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at June 25, 2022		31,425,224		$	314		$	82,192		$	910,194		$	(1,743	)	$	990,957
Exercise of stock options		169			—			14			—			—			14
Compensation expense under Incentive Stock Plan		—			—			2,472			—			—			2,472
Purchase and cancellation of common stock		(14,700	)		—			(26	)		(1,496	)		—			(1,522	)
Issuance of non-vested stock, net of cancellations		9,626			—			812			—			—			812
Other stock-related activity, net of tax		(927	)		—			(90	)		(91	)		—			(181	)
Other comprehensive income		—			—			—			—			(2,112	)		(2,112	)
Net income		—			—			—			30,601			—			30,601
Balance at September 24, 2022		31,419,392		$	314		$	85,374		$	939,208		$	(3,855	)	$	1,021,041

	Three Months Ended September 25, 2021
	Common Stock
(in thousands, except share data)	Shares Issued			Par Value			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			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	)
Issuance of non-vested stock, net of cancellations		(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

	Nine Months Ended September 24, 2022
	Common Stock
(in thousands, except share data)	Shares Issued			Par Value			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at December 25, 2021		31,607,509		$	316		$	77,451		$	856,409		$	(1,440	)	$	932,736
Exercise of stock options		17,455			—			971			—			—			971
Compensation expense under Incentive Stock Plan		—			—			6,742			—			—			6,742
Purchase and cancellation of common stock		(201,135	)		(2	)		(362	)		(19,353	)		—			(19,717	)
Issuance of non-vested stock, net of cancellations		13,847			—			1,189			—			—			1,189
Other stock-related activity, net of tax		(18,284	)		—			(617	)		(1,561	)		—			(2,178	)
Other comprehensive income		—			—			—			—			(2,415	)		(2,415	)
Net income		—			—			—			103,713			—			103,713
Balance at September 24, 2022		31,419,392		$	314		$	85,374		$	939,208		$	(3,855	)	$	1,021,041

	Nine Months Ended September 25, 2021
	Common Stock
(in thousands, except share data)	Shares Issued			Par Value			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			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
(in thousands)	September 24, 2022			September 25, 2021
Cash Flows from Operating Activities:
Net income	$	103,713		$	97,452
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, amortization and accretion		31,131			24,931
Provision for doubtful accounts		80			61
Benefit for deferred income taxes		(546	)		(414	)
Provision for stock-based compensation		6,742			6,212
Payment of contingent consideration		—			(2,418	)
Changes in assets and liabilities:
Accounts receivable		39,325			20,746
Inventories		(146,278	)		(97,156	)
Prepaids and other current assets		(7,228	)		(7,216	)
Other assets		157			(3,639	)
Accounts payable		17,887			20,456
Accrued customer rebates and returns		11,712			23,786
Accrued compensation and other liabilities		(27,351	)		(5,200	)
Cash provided by operating activities		29,344			77,601
Cash Flows from Investing Activities:
Acquisition, net of cash acquired		595			(345,483	)
Property, plant and equipment additions		(23,780	)		(15,274	)
Cash used in investing activities		(23,185	)		(360,757	)
Cash Flows from Financing Activities:
Proceeds of revolving credit line		—			252,360
Payments of revolving credit line		(10,000	)		(3,000	)
Payment of contingent consideration		—			(7,982	)
Payment of debt issuance costs		—			(4,215	)
Proceeds from exercise of stock options		971			909
Purchase and cancellation of common stock		(19,717	)		(54,272	)
Other stock-related activity		(664	)		1,055
Cash (used in) provided by financing activities		(29,410	)		184,855
Effect of exchange rate changes on Cash and Cash Equivalents		(96	)		(12	)
Net Decrease in Cash and Cash Equivalents		(23,347	)		(98,313	)
Cash and Cash Equivalents, Beginning of Period		58,782			155,576
Cash and Cash Equivalents, End of Period	$	35,435		$	57,263
Supplemental Cash Flow Information
Cash paid for interest expense	$	4,366		$	567
Cash paid for income taxes	$	49,670		$	37,500

(in thousands)
Accounts receivable	$	23,216
Inventories		79,625
Prepaids and other current assets		2,302
Property, plant and equipment		29,900
Goodwill		106,816
Identifiable intangible assets		160,400
Operating lease right-of-use assets		21,248
Other assets		848
Accounts payable		(11,970	)
Accrued compensation		(2,784	)
Other current liabilities		(7,604	)
Long-term operating lease liabilities		(18,444	)
Deferred tax liabilities		(38,665	)
Net cash consideration	$	344,888

(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

(in thousands)	September 24, 2022
Remainder of 2022	$	774
2023		3,160
2024		3,239
2025		3,320
2026		3,403
2027 and thereafter		27,001
Total remaining fixed lease payments	$	40,897

	September 24, 2022						December 25, 2021
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	$	148,188	$	18,460	$	129,728	$	149,150	$	12,139	$	137,011
Trade names		17,760		3,873		13,887		17,760		2,592		15,168
Product Portfolio		25,300		1,409		23,891		25,300		460		24,840
Technology		2,167		757		1,410		2,167		571		1,596
Other		430		300		130		430		236		194
Total	$	193,845	$	24,799	$	169,046	$	194,807	$	15,998	$	178,809

	Shares			Weighted Average Fair Value
Balance at December 25, 2021		206,677		$	85.97
Granted		100,517		$	100.66
Vested		(53,569	)	$	83.49
Canceled		(40,002	)	$	83.51
Balance at September 24, 2022		213,623		$	93.97

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Term (In years)		Aggregate Intrinsic Value
Balance at December 25, 2021		233,396		$	77.85
Granted		78,574		$	97.16
Canceled		(11,236	)	$	77.45
Expired		(663	)	$	101.45
Exercised		(31,141	)	$	71.78
Balance at September 24, 2022		268,930		$	84.16		5.6	$	1,793,436
Exercisable at September 24, 2022		95,927		$	76.08		4.2	$	929,436

	Three Months Ended*									Nine Months Ended*
(in thousands, except percentage data)	September 24, 2022				September 25, 2021					September 24, 2022					September 25, 2021
Net sales	$	413,470	100.0	%	$	348,426		100.0	%	$	1,232,468		100.0	%	$	947,073		100.0	%
Cost of goods sold		281,559	68.1	%		231,572		66.5	%		825,792		67.0	%		615,574		65.0	%
Gross profit		131,911	31.9	%		116,854		33.5	%		406,676		33.0	%		331,499		35.0	%
Selling, general and administrative expenses		89,814	21.7	%		72,663		20.9	%		268,400		21.8	%		205,049		21.7	%
Income from operations		42,097	10.2	%		44,191		12.7	%		138,276		11.2	%		126,450		13.4	%
Interest expense, net		2,344	0.6	%		733		0.2	%		5,140		0.4	%		918		0.1	%
Other expense (income), net		65	-0.0	%		(95	)	-0.0	%		(130	)	-0.0	%		(334	)	-0.0	%
Income before income taxes		39,688	9.6	%		43,553		12.5	%		133,266		10.8	%		125,866		13.3	%
Provision for income taxes		9,087	2.2	%		10,449		3.0	%		29,553		2.4	%		28,414		3.0	%
Net income	$	30,601	7.4	%	$	33,104		9.5	%	$	103,713		8.4	%	$	97,452		10.3	%

(in thousands)	September 24, 2022		December 25, 2021
Raw materials	$	16,407	$	12,746
Bulk product		251,778		225,879
Finished product		400,456		287,415
Packaging materials		9,257		5,948
Total	$	677,898	$	531,988

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 26, 2022 through July 23, 2022		2,200	$	115.08		2,200	$	229,258,567
July 24, 2022 through August 20, 2022 (1)		12,973	$	101.43		12,500	$	227,989,218
August 21, 2022 through September 24, 2022 (2)		171	$	90.73		—	$	227,989,218
Total		15,344				14,700	$	227,989,218

2.1		Unit Purchase Agreement, dated August 17, 2022, by and among Dorman Products, Inc., Super ATV, LLC, the Sellers listed on the signature pages thereto, and Lindsay Hunt, in her capacity as the Sellers’ Representative. Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on August 18, 2022. +
2.1.1		Amendment, dated as of October 4, 2022 to Unit Purchase Agreement, dated August 17, 2022, by and among Dorman Products, Inc., Super ATV, LLC, the Sellers listed on the signature pages thereto, and Lindsay Hunt, in her capacity as the Sellers’ Representative. Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on October 4, 2022 . +
10.1		Amendment No. 1 to Credit Agreement, dated October 4, 2022 by and among Dorman Products, Inc., the lenders from time to time party thereto, and Bank of America, N.A., as administrative agent. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 4, 2022. +
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 24, 2022, 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 24, 2022, formatted in Inline XBRL (included as Exhibit 101).