Dorman Products, Inc 10-Q for FY2022 Q2

About this 10-Q

Headline figures

Dorman Products, Inc. (DORM)

10-Q 2022-07-25 For: 2022-06-25

Added on April 04, 2026

Dorman Products, Inc filed this 10-Q on July 25, 2022, covering the quarter ended June 25, 2022 (FY2022 Q2).

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Quarter ended June 25, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $417.42M; up 34.4% from $310.64M a year earlier
Net income: $37.91M; up 19.9% from net income of $31.62M a year earlier
Diluted EPS: $1.20; up 21.2% from $0.99 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 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	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	24

ITEM 5.	Other Information	24

ITEM 6.	Exhibits	24

Exhibit Index		25

Signatures		26

	Three Months Ended						Six Months Ended
(in thousands, except per share data)	June 25, 2022			June 26, 2021			June 25, 2022			June 26, 2021
Net sales	$	417,419		$	310,635		$	818,998		$	598,647
Cost of goods sold		275,894			200,510			544,233			384,002
Gross profit		141,525			110,125			274,765			214,645
Selling, general and administrative expenses		92,058			69,517			178,586			132,386
Income from operations		49,467			40,608			96,179			82,259
Interest expense, net		1,565			63			2,796			184
Other income, net		(111	)		(153	)		(195	)		(238	)
Income before income taxes		48,013			40,698			93,578			82,313
Provision for income taxes		10,108			9,080			20,466			17,965
Net income	$	37,905		$	31,618		$	73,112		$	64,348
Other comprehensive income:
Change in foreign currency translation adjustment	$	(1,999	)	$	—		$	(303	)	$	—
Comprehensive Income	$	35,906		$	31,618		$	72,809		$	64,348

Earnings per share:
Basic	$	1.21		$	0.99		$	2.32		$	2.01
Diluted	$	1.20		$	0.99		$	2.32		$	2.00
Weighted average shares outstanding:
Basic		31,424			31,942			31,461			31,995
Diluted		31,535			32,089			31,568			32,136

(in thousands, except for share data)	June 25, 2022			December 25, 2021
Assets
Current assets:
Cash and cash equivalents	$	51,966		$	58,782
Accounts receivable, less allowance for doubtful accounts of $1,373 and $1,326		417,354			472,764
Inventories		634,774			531,988
Prepaids and other current assets		26,965			13,048
Total current assets		1,131,059			1,076,582
Property, plant and equipment, net		117,930			114,864
Operating lease right-of-use assets		96,580			59,029
Goodwill		197,165			197,332
Intangible assets, net		172,658			178,809
Other assets		45,775			46,503
Total assets	$	1,761,167		$	1,673,119
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	203,456		$	177,389
Accrued compensation		14,391			26,636
Accrued customer rebates and returns		185,163			188,080
Revolving credit facility		229,360			239,360
Other accrued liabilities		27,965			33,583
Total current liabilities		660,335			665,048
Long-term operating lease liabilities		87,459			52,443
Other long-term liabilities		5,117			4,916
Deferred tax liabilities, net		17,299			17,976
Commitments and contingencies (Note 8)
Shareholders’ equity:
Common stock, $0.01 par value; 50,000,000 shares authorized; 31,425,224 and 31,607,509 shares issued and outstanding in 2022 and 2021, respectively		314			316
Additional paid-in capital		82,192			77,451
Retained earnings		910,194			856,409
Accumulated other comprehensive loss		(1,743	)		(1,440	)
Total shareholders’ equity		990,957			932,736
Total liabilities and shareholders' equity	$	1,761,167		$	1,673,119

	Three Months Ended June 25, 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 March 26, 2022		31,479,916		$	315		$	78,906		$	879,923		$	256		$	959,400
Exercise of stock options		14,808			—			957			—			—			957
Compensation expense under Incentive Stock Plan		—			—			2,118			—			—			2,118
Purchase and cancellation of common stock		(75,321	)		(1	)		(136	)		(7,141	)		—			(7,278	)
Issuance of non-vested stock, net of cancellations		6,732			—			—			—			—			—
Other stock-related activity, net of tax		(911	)		—			347			(493	)		—			(146	)
Other comprehensive income		—			—			—			—			(1,999	)		(1,999	)
Net income		—			—			—			37,905			—			37,905
Balance at June 25, 2022		31,425,224		$	314		$	82,192		$	910,194		$	(1,743	)	$	990,957

	Three Months Ended June 26, 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 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

	Six Months Ended June 25, 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		17,286			—			957			—			—			957
Compensation expense under Incentive Stock Plan		—			—			4,270			—			—			4,270
Purchase and cancellation of common stock		(186,435	)		(2	)		(336	)		(17,857	)		—			(18,195	)
Issuance of non-vested stock, net of cancellations		4,221			—			377			—			—			377
Other stock-related activity, net of tax		(17,357	)		—			(527	)		(1,470	)		—			(1,997	)
Other comprehensive income		—			—			—			—			(303	)		(303	)
Net income		—			—			—			73,112			—			73,112
Balance at June 25, 2022		31,425,224		$	314		$	82,192		$	910,194		$	(1,743	)	$	990,957

	Six Months Ended June 26, 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		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
(in thousands)	June 25, 2022			June 26, 2021
Cash Flows from Operating Activities:
Net income	$	73,112		$	64,348
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, amortization and accretion		19,600			16,850
Provision for doubtful accounts		56			31
Benefit for deferred income taxes		(551	)		(213	)
Provision for stock-based compensation		4,270			4,491
Changes in assets and liabilities:
Accounts receivable		55,341			14,605
Inventories		(102,824	)		(58,039	)
Prepaids and other current assets		(7,347	)		(8,288	)
Other assets		(726	)		(3,451	)
Accounts payable		25,565			8,818
Accrued customer rebates and returns		(2,917	)		9,826
Accrued compensation and other liabilities		(26,193	)		(9,891	)
Cash provided by operating activities		37,386			39,087
Cash Flows from Investing Activities:
Proceeds from purchase price adjustment		595			—
Property, plant and equipment additions		(16,100	)		(10,153	)
Cash used in investing activities		(15,505	)		(10,153	)
Cash Flows from Financing Activities:
Payments of revolving credit line		(10,000	)		—
Proceeds from exercise of stock options		894			736
Purchase and cancellation of common stock		(18,195	)		(30,848	)
Other stock-related activity		(1,386	)		1,141
Cash used in financing activities		(28,687	)		(28,971	)
Effect of exchange rate changes on Cash and Cash Equivalents		(10	)		—
Net Decrease in Cash and Cash Equivalents		(6,816	)		(37	)
Cash and Cash Equivalents, Beginning of Period		58,782			155,576
Cash and Cash Equivalents, End of Period	$	51,966		$	155,539
Supplemental Cash Flow Information
Cash paid for interest expense	$	2,285		$	140
Cash paid for income taxes	$	36,700		$	26,436

(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)	June 25, 2022
Remainder of 2022	$	1,548
2023		3,160
2024		3,239
2025		3,320
2026		3,403
2027 and thereafter		27,001
Total remaining fixed lease payments	$	41,671

	June 25, 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	$	149,150	$	16,636	$	132,514	$	149,150	$	12,139	$	137,011
Trade names		17,760		3,446		14,314		17,760		2,592		15,168
Product Portfolio		25,300		1,093		24,207		25,300		460		24,840
Technology		2,167		695		1,472		2,167		571		1,596
Other		430		279		151		430		236		194
Total	$	194,807	$	22,149	$	172,658	$	194,807	$	15,998	$	178,809

	Shares			Weighted Average Fair Value
Balance at December 25, 2021		206,677		$	85.97
Granted		95,226		$	100.79
Vested		(51,027	)	$	83.67
Canceled		(40,002	)	$	83.51
Balance at June 25, 2022		210,874		$	93.69

	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
Cancelled		(11,236	)	$	77.45
Exercised		(30,972	)	$	71.73
Balance at June 25, 2022		269,762		$	84.20		5.8	$	5,532,808
Exercisable at June 25, 2022		94,126		$	76.03		4.3	$	2,699,534

	Three Months Ended*										Six Months Ended*
(in thousands, except percentage data)	June 25, 2022					June 26, 2021					June 25, 2022					June 26, 2021
Net sales	$	417,419		100.0	%	$	310,635		100.0	%	$	818,998		100.0	%	$	598,647		100.0	%
Cost of goods sold		275,894		66.1	%		200,510		64.5	%		544,233		66.5	%		384,002		64.1	%
Gross profit		141,525		33.9	%		110,125		35.5	%		274,765		33.5	%		214,645		35.9	%
Selling, general and administrative expenses		92,058		22.1	%		69,517		22.4	%		178,586		21.8	%		132,386		22.1	%
Income from operations		49,467		11.9	%		40,608		13.1	%		96,179		11.7	%		82,259		13.7	%
Interest expense, net		1,565		0.4	%		63		0.0	%		2,796		0.3	%		184		0.0	%
Other income, net		(111	)	-0.0	%		(153	)	-0.0	%		(195	)	-0.0	%		(238	)	-0.0	%
Income before income taxes		48,013		11.5	%		40,698		13.1	%		93,578		11.4	%		82,313		13.7	%
Provision for income taxes		10,108		2.4	%		9,080		2.9	%		20,466		2.5	%		17,965		3.0	%
Net income	$	37,905		9.1	%	$	31,618		10.2	%	$	73,112		8.9	%	$	64,348		10.7	%

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 27, 2022 through April 23, 2022 (1)		31,756	$	95.41		31,450	$	133,036,702
April 24, 2022 through May 21, 2022 (2)		41,735	$	97.29		36,250	$	129,511,749
May 22, 2022 through June 25, 2022 (3)		2,450	$	101.14		—	$	129,511,749
Total		75,941				67,700	$	129,511,749

(in thousands)	June 25, 2022		December 25, 2021
Raw materials	$	15,997	$	12,746
Bulk product		236,354		225,879
Finished product		373,537		287,415
Packaging materials		8,886		5,948
Total	$	634,774	$	531,988


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 25, 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 June 25, 2022, formatted in Inline XBRL (included as Exhibit 101).