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Automotive Aftermarket Manufacturing

Dorman Products Reports 4th Quarter, Fiscal 2017 Results, Issues Fiscal 2018 Guidance

The company has completed the acquisition of MAS Automotive Distribution Inc., and expects 2018 net sales growth between 6 to 9 percent.

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Dorman Products Inc. has announced its financial results for the fourth quarter and fiscal year ended Dec. 30, 2017.

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4th Quarter Financial Results

The company reported fourth quarter 2017 net sales of $227.7 million, down slightly compared to net sales of $229.1 million in the fourth quarter of 2016. The MAS acquisition increased 2017 net sales by 3 percent ($7 million), while 2016 fourth quarter results included an extra week and accounted for a 5 percent year-over-year decline in revenues.

Net income for the fourth quarter of 2017 was $22 million, or 65 cents per diluted share compared to $28.7 million, or 83 cents per diluted share in the prior year quarter. Adjusted net income in the current year fourth quarter was $29.1 million, or 87 cents per diluted share, up 5 percent compared to $28.7 million, or 83 cents per diluted share in the prior year quarter.

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Fiscal 2017 Financial Results

Fiscal 2017 net sales were $903.2 million, up 5 percent compared to $859.6 million in 2016. Growth attributable to the MAS acquisition was 1 percent, offset by a 1 percent decline attributable to one less week’s net sales in fiscal 2017.

Net income for the current fiscal year was $106.6 million, or $3.13 per diluted share compared to $106 million, or $3.07 per diluted share in the prior year. Adjusted net income in the current fiscal year was $114.7 million, or $3.37 per diluted share, up 10 percent compared to $106 million, or $3.07 per diluted share in the prior year.

Matt Barton, Dorman Products president and CEO, said, “The fourth quarter caps off another successful year at Dorman, with record sales and earnings for the company. I would like to thank our 2,000-plus worldwide contributors, whose dedication, passion and persistence made this possible. We executed well in 2017, delivering full year sales growth of 6 percent (adjusted for one less week in 2017) and Adjusted EPS growth of 10 percent, despite tough end-market conditions coupled with inventory reductions at several customers.

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“We launched 4,079 new SKUs in 2017 ensuring that our future growth prospects remain strong. Sales from new products launched in the past 24 months represented 18 percent of our total sales in 2017, which is up from 17 percent in 2016, showcasing our healthy new product pipeline. Our heavy-duty business continues its strong growth trajectory, growing 31 percent this year, and is well-positioned to continue to deliver strong growth over the next several years. Our complex electronics portfolio, which we believe is a key competitive differentiator for us, grew 16 percent in 2017. We also completed the acquisition of MAS in the fourth quarter, a premium chassis parts company. We believe this acquisition firmly positions us as a leader in the category and provides exciting opportunities for growth in the future,” said Barton.

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Barton continued, “We remain bullish on the automotive aftermarket despite slower market growth in 2017. We believe the market fundamentals remain strong. Miles driven are up and are expected to increase, gasoline prices remain relatively low and the pool of cars aged 6-plus years is expected to increase going forward. Our strategy of developing ‘New to the Aftermarket’ parts will continue to enable our customers to achieve year-over-year sales growth while offering the end-user a high-quality alternative to the OE. We believe that this, combined with other growth initiatives, will enable us to grow at a faster rate than the overall market.”

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2018 Guidance

The company’s full year sales growth is estimated to be in the 6 percent to 9 percent range for 2018, which includes the net sales contribution from MAS. Fiscal 2018 EPS on a GAAP basis is expected to be in the $4 to $4.23 range. Fiscal 2018 Adjusted EPS is expected to be in the $4.10 to $4.32 range or a 22 percent to 28 percent growth rate.

Share Repurchases

Under its share repurchase program, Dorman repurchased 223,900 shares of its common stock for $15.7 million at an average share price of $70.23 during the fourth quarter ended Dec. 30, 2017, bringing fiscal year 2017 purchases to 1 million shares for $74.7 million at an average price of $74.26.

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