Dorman Products, Inc 10-Q for FY2020 Q1

About this 10-Q

Headline figures

Dorman Products, Inc. (DORM)

10-Q 2020-04-27 For: 2020-03-28

Added on April 04, 2026

Dorman Products, Inc filed this 10-Q on April 27, 2020, covering the quarter ended March 28, 2020 (FY2020 Q1).

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Quarter ended March 28, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $257.73M; up 5.7% from $243.79M a year earlier
Net income: $22.78M; down 2.7% from net income of $23.41M a year earlier
Diluted EPS: $0.70; down 1.4% from $0.71 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)

	Consolidated Statements of Operations:

	Thirteen Weeks Ended March 28, 2020 and March 30, 2019		3


		Consolidated Balance Sheets		4

		Consolidated Statements of Shareholders’ Equity		5

		Consolidated Statements of Cash Flows		6

		Notes to Consolidated Financial Statements		7

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		16

Item 3.		Quantitative and Qualitative Disclosures About Market Risk		22

Item 4.		Controls and Procedures		22

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		25

Item 4.		Mine Safety Disclosures		25

Item 5.		Other Information		25

Item 6.		Exhibits		25

Exhibit Index				26

Signatures				27

	Thirteen Weeks Ended
(in thousands, except per share data)	March 28, 2020		March 30, 2019
Net sales	$	257,730	$	243,791
Cost of goods sold		172,933		156,299
Gross profit		84,797		87,492
Selling, general and administrative expenses		59,735		57,750
Income from operations		25,062		29,742
Other income, net		2,631		29
Income before income taxes		27,693		29,771
Provision for income taxes		4,918		6,364
Net income	$	22,775	$	23,407
Earnings Per Share:
Basic	$	0.70	$	0.71
Diluted	$	0.70	$	0.71
Weighted Average Shares Outstanding:
Basic		32,354		32,801
Diluted		32,426		32,889

(in thousands, except for share data)	March 28, 2020		December 28, 2019
Assets
Current assets:
Cash and cash equivalents	$	161,778	$	68,353
Accounts receivable, less allowance for doubtful accounts of $1,063 and $957		423,301		391,810
Inventories		258,371		280,813
Prepaids and other current assets		10,810		13,614
Total current assets		854,260		754,590
Property, plant and equipment, net		99,082		101,837
Operating lease right-of-use assets		32,230		32,198
Goodwill		91,275		74,458
Intangible assets, net		27,748		21,305
Deferred tax asset, net		3,886		4,336
Other assets		44,303		52,348
Total	$	1,152,784	$	1,041,072
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	73,283	$	90,437
Accrued compensation		9,339		9,782
Accrued customer rebates and returns		110,374		105,903
Revolving credit line		99,000		-
Other accrued liabilities		22,541		14,380
Total current liabilities		314,537		220,502
Long-term operating lease liabilities		29,714		29,730
Other long-term liabilities		13,298		13,297
Deferred tax liabilities, net		3,860		3,959
Commitments and contingencies
Shareholders’ Equity:
Common stock, par value $0.01; authorized 50,000,000 shares; issued and outstanding 32,434,665 and 32,558,168 in 2020 and 2019, respectively		325		326
Additional paid-in capital		53,454		52,605
Retained earnings		737,596		720,653
Total shareholders’ equity		791,375		773,584
Total	$	1,152,784	$	1,041,072

	Thirteen Weeks Ended March 28, 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		—			—			1,214			—			1,214
Purchase and cancellation of common stock		(96,709	)		(1	)		(175	)		(5,604	)		(5,780	)
Issuance of non-vested stock, net of cancellations		(21,974	)		—			—			—			—
Other stock related activity, net of tax		(2,925	)		—			(190	)		(228	)		(418	)
Net income		—			—			—			22,775			22,775
Balance at March 28, 2020		32,434,665		$	325		$	53,454		$	737,596		$	791,375

	Thirteen Weeks Ended March 30, 2019
	Common Stock						Additional
(in thousands, except share data)	Shares Issued			Par Value			Paid-In Capital			Retained Earnings			Total
Balance at December 29, 2018		33,004,861		$	330		$	47,861		$	679,432		$	727,623
Exercise of stock options		11,714			—			31			—			31
Compensation expense under Incentive Stock Plan		—			—			915			—			915
Purchase and cancellation of common stock		(115,090	)		(1	)		(207	)		(9,427	)		(9,635	)
Issuance of non-vested stock, net of cancellations		48,193			—			—			—			—
Other stock related activity, net of tax		(7,665	)		—			1,290			(1,924	)		(634	)
Net income		—			—			—			23,407			23,407
Balance at March 30, 2019		32,942,013		$	329		$	49,890		$	691,488		$	741,707

	Thirteen Weeks Ended
(in thousands)	March 28, 2020			March 30, 2019
Cash Flows from Operating Activities:
Net income	$	22,775		$	23,407
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, amortization and accretion		7,496			7,265
Gain on equity method investment		(2,498	)		-
Provision for doubtful accounts		14			-
Benefit for deferred income taxes		(912	)		-
Provision for stock-based compensation		1,214			915
Changes in assets and liabilities:
Accounts receivable		(29,491	)		13,333
Inventories		28,016			(18,184	)
Prepaids and other current assets		2,262			(3,685	)
Other assets		(2,219	)		1,925
Accounts payable		(19,346	)		(11,091	)
Accrued customer rebates and returns		4,471			(497	)
Accrued compensation and other liabilities		6,808			3,043
Cash provided by operating activities		18,590			16,431
Cash Flows from Investing Activities:
Acquisition, net of cash acquired		(14,462	)		-
Property, plant and equipment additions		(3,505	)		(8,838	)
Cash used in investing activities		(17,967	)		(8,838	)
Cash Flows from Financing Activities:
Net proceeds of revolving credit line		99,000			-
Other stock related activity		(418	)		(622	)
Purchase and cancellation of common stock		(5,780	)		(9,635	)
Cash provided by (used in) financing activities		92,802			(10,257	)
Net Increase (Decrease) in Cash and Cash Equivalents		93,425			(2,664	)
Cash and Cash Equivalents, Beginning of Period		68,353			43,458
Cash and Cash Equivalents, End of Period	$	161,778		$	40,794
Supplemental Cash Flow Information
Cash paid for interest expense	$	20		$	61
Cash paid for income taxes	$	62		$	74

	Thirteen Weeks Ended March 30, 2019
(in thousands)	As Previously Reported		Adjustment			As Revised
Revised Consolidated Statement of Cash Flows from Operating Activities Amounts:
Accounts receivable	$	12,611	$	722		$	13,333
Accrued customer rebates and returns	$	—	$	(497	)	$	(497	)
Accrued compensation and other liabilities	$	3,268	$	(225	)	$	3,043
Net cash provided by operating activities	$	16,431	$	—		$	16,431

(in thousands)	As of December 30, 2017		Effect of Adoption		As of December 31, 2017

Accounts receivable, net	$	241,880	$	95,537	$	337,417
Accrued customer rebates and returns	$	6,522	$	95,537	$	102,059

(in thousands)	Valuation		Amortization Period (in years)
Customer relationships	$	4,600		15
Tradenames		700		5
Technology		1,800		8
Other		190		5
Total	$	7,290

(in thousands)	March 28, 2020		December 28, 2019
Bulk product	$	101,118	$	114,308
Finished product		152,632		161,866
Packaging materials		4,621		4,639
Total	$	258,371	$	280,813

(in thousands)	March 28, 2020
2020 (Remainder of 2020)	$	4,357
2021		5,476
2022		5,004
2023		3,388
2024		3,451
2025 and thereafter		21,514
Total lease payments		43,190
Less: Imputed interest		(8,064	)
Present value of lease liabilities	$	35,126

	Shares			Weighted Average Price
Balance at December 28, 2019		177,491		$	76.70
Granted		72,369		$	61.68
Vested		(14,399	)	$	65.13
Cancelled		(22,488	)	$	78.67
Balance at March 28, 2020		212,973		$	72.17

			March 28, 2020						December 28, 2019
(in thousands)	Weighted Average Amortization Period		Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Intangible assets subject to amortization
Tradenames		11.2	$	6,760	$	1,128	$	5,632	$	6,060	$	975	$	5,085
Customer relationships		9.3		25,050		5,310		19,740		20,450		4,698	$	15,752
Technology		8.3		2,167		135		2,032		367		74	$	293
Other		4.1		430		86		344		240		65	$	175
Total			$	34,407	$	6,659	$	27,748	$	27,117	$	5,812	$	21,305

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Term (In years)		Aggregate Intrinsic Value
Balance at December 28, 2019		181,712		$	70.78
Granted		98,974		$	61.86
Exercised		(419	)	$	72.55
Balance at March 28, 2020		280,267		$	67.63		5.1	$	265,750
Options exercisable at March 28, 2020		96,386		$	65.15		2.4	$	265,750

	Thirteen Weeks Ended*
(in millions)	March 28, 2020				March 30, 2019
Net sales	$	257.7	100.0	%	$	243.8	100.0	%
Cost of goods sold	$	172.9	67.1	%	$	156.3	64.1	%
Gross profit	$	84.8	32.9	%	$	87.5	35.9	%
Selling, general and administrative expenses	$	59.7	23.2	%	$	57.8	23.7	%
Income from operations	$	25.1	9.7	%	$	29.7	12.2	%
Other income, net	$	2.6	1.0	%	$	0.0	0.0	%
Income before income taxes	$	27.7	10.7	%	$	29.8	12.2	%
Provision for income taxes	$	4.9	1.9	%	$	6.4	2.6	%
Net income	$	22.8	8.8	%	$	23.4	9.6	%

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)
December 29, 2019 through January 25, 2020 (1)		3,396	$	76.84		-	$	143,929,799
January 26, 2020 through February 22, 2020 (2)		1,336	$	67.59		-	$	143,929,799
February 23, 2020 through March 28, 2020 (3)		96,827	$	59.49		91,979	$	138,465,024
Total		101,559				91,979




3.2		Dorman Products, Inc. Amended and Restated By-Laws, as amended April 7, 2020. Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on April 9, 2020.
10.1		Form of Dorman Products, Inc. Non-Qualified Stock Option Award Pursuant to the Dorman Products, Inc. 2018 Stock Option and Stock Incentive Plan. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 2, 2020.
10.2		Form of Dorman Products, Inc. Restricted Stock Unit Award Pursuant to the Dorman Products, Inc. 2018 Stock Option and Stock Incentive Plan. Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on March 2, 2020.
10.3		Form of Dorman Products, Inc. Performance Restricted Stock Unit Award Pursuant to the Dorman Products, Inc. 2018 Stock Option and Stock Incentive Plan. Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on March 2, 2020.
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 March 28, 2020, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Operations; (ii) the Consolidated Balance Sheets; (iii) Consolidated Statements of Shareholders’ Equity; (iv) the Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements.

104		The cover page from the Company’s Quarterly Report on Form 10-Q as of and for the quarter ended March 28, 2020, formatted in Inline XBRL (included as Exhibit 101).