dorm-10q_20210327.htm

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 27, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 0-18914

Dorman Products, Inc.

(Exact name of registrant as specified in its charter)

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)

(215) 997-1800

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of April 22, 2021 the registrant had 32,082,579 shares of common stock, par value $0.01 per share, outstanding.

DORMAN PRODUCTS, INC. AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT ON FORM 10-Q

March 27, 2021

		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	11

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	16

ITEM 4.	Controls and Procedures	16

PART II — OTHER INFORMATION

ITEM 1.	Legal Proceedings	17

ITEM 1A.	Risk Factors	17

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17

ITEM 3.	Defaults Upon Senior Securities	17

ITEM 4.	Mine Safety Disclosures	17

ITEM 5.	Other Information	17

ITEM 6.	Exhibits	17

Exhibit Index		18

Signatures		19

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

DORMAN PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended
(in thousands, except per share data)	March 27, 2021			March 28, 2020
Net sales	$	288,012		$	257,730
Cost of goods sold		183,492			172,933
Gross profit		104,520			84,797
Selling, general and administrative expenses		62,869			59,735
Income from operations		41,651			25,062
Other (expense) income, net		(36	)		2,631
Income before income taxes		41,615			27,693
Provision for income taxes		8,885			4,918
Net income	$	32,730		$	22,775

Earnings per share:
Basic	$	1.02		$	0.70
Diluted	$	1.02		$	0.70
Weighted average shares outstanding:
Basic		32,048			32,354
Diluted		32,184			32,426

See accompanying Notes to Condensed Consolidated Financial Statements

DORMAN PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except for share data)	March 27, 2021		December 26, 2020
Assets
Current assets:
Cash and cash equivalents	$	166,603	$	155,576
Accounts receivable, less allowance for doubtful accounts of $1,210 and $1,260 in 2021 and 2020, respectively		452,520		460,878
Inventories		337,697		298,719
Prepaids and other current assets		9,817		7,758
Total current assets		966,637		922,931
Property, plant and equipment, net		90,699		91,009
Operating lease right-of-use assets		39,552		39,002
Goodwill		91,080		91,080
Intangible assets, net of accumulated amortization of $10,040 and $9,194 in 2021 and 2020, respectively		24,360		25,207
Deferred tax asset, net		12,173		12,450
Other assets		39,768		38,982
Total assets	$	1,264,269	$	1,220,661
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	118,529	$	117,878
Accrued compensation		13,169		19,711
Accrued customer rebates and returns		163,967		155,751
Other accrued liabilities		39,752		29,305
Total current liabilities		335,417		322,645
Long-term operating lease liabilities		37,226		37,083
Other long-term liabilities		4,067		3,555
Deferred tax liabilities, net		3,748		3,819
Commitments and contingencies (Note 5)
Shareholders’ equity:
Common stock, par value $0.01; authorized 50,000,000 shares; issued and outstanding 32,115,528 and 32,168,740 shares in 2021 and 2020, respectively		321		322
Additional paid-in capital		67,596		64,085
Retained earnings		815,894		789,152
Total shareholders’ equity		883,811		853,559
Total liabilities and shareholders' equity	$	1,264,269	$	1,220,661

See accompanying Notes to Condensed Consolidated Financial Statements

DORMAN PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

	Three Months Ended March 27, 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		11,614			—			316			—			316
Compensation expense under Incentive Stock Plan		—			—			2,111			—			2,111
Purchase and cancellation of common stock		(38,160	)		(1	)		(69	)		(3,904	)		(3,974	)
Cancellations, net of issuance of non-vested stock		(17,599	)		—			—			—			—
Other stock-related activity, net of tax		(9,067	)		—			1,153			(2,084	)		(931	)
Net income		—			—			—			32,730			32,730
Balance at March 27, 2021		32,115,528		$	321		$	67,596		$	815,894		$	883,811

	Three Months 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	)
Cancellations, net of issuance of non-vested stock		(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

See accompanying Notes to Condensed Consolidated Financial Statements

DORMAN PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended
(in thousands)	March 27, 2021			March 28, 2020
Cash Flows from Operating Activities:
Net income	$	32,730		$	22,775
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, amortization and accretion		7,267			7,496
Gain on equity method investment		—			(2,498	)
Provision for doubtful accounts		18			14
Benefit for deferred income taxes		—			(912	)
Provision for stock-based compensation		2,111			1,214
Changes in assets and liabilities:
Accounts receivable		8,338			(29,491	)
Inventories		(38,978	)		28,016
Prepaids and other current assets		(2,017	)		2,262
Other assets		(1,270	)		(2,219	)
Accounts payable		737			(19,346	)
Accrued customer rebates and returns		8,215			4,471
Accrued compensation and other liabilities		3,869			6,808
Cash provided by operating activities		21,020			18,590
Cash Flows from Investing Activities:
Acquisition, net of cash acquired		—			(14,462	)
Property, plant and equipment additions		(6,207	)		(3,505	)
Cash used in investing activities		(6,207	)		(17,967	)

SEC Form 10-Q filed by Dorman Products, Inc.