8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): February 22, 2017

Dorman Products, Inc.

(Exact name of Registrant as Specified in Charter)

Pennsylvania	000-18914	23-2078856
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

3400 East Walnut Street, Colmar, Pennsylvania 18915

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (215) 997-1800

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operation and Financial Condition.

The information being furnished in this Item 2.02 and in Exhibit 99.1 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly set forth by specific reference in such filing.

On February 22, 2017, Dorman Products, Inc. (the “Company”) issued a press release announcing its operating results for the fourth quarter and year ended December 31, 2016. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.

Certain statements in this document constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. While forward-looking statements sometimes are presented with numerical specificity, they are based on various assumptions made by management regarding future circumstances over many of which the Company has little or no control. Forward-looking statements may be identified by words including “anticipate,” “believe,” “estimate,” “expect,” and similar expressions. The Company cautions readers that forward-looking statements, including, without limitation, those relating to future business prospects, revenues, working capital, liquidity, and income, are subject to certain risks and uncertainties that would cause actual results to differ materially from those indicated in the forward-looking statements. Factors that could cause actual results to differ from forward-looking statements include but are not limited to: (i) competition in the automotive aftermarket; (ii) unfavorable economic conditions; (iii) the loss or decrease in sales among one of our top customers; (iv) customer consolidation in the automotive aftermarket leading to less favorable customer contract terms; (v) the cancellation or rescheduling of orders; (vi) foreign currency fluctuations and our dependence on foreign suppliers; (vii) extended credit to customers who may be unable to pay; (viii) the loss of a key vendor; (ix) limited customer shelf space; (x) reliance on new product development; (xi) claims of intellectual property infringement made by original equipment manufacturers; (xii) quality problems with product after their production and sale to customers; (xiii) loss of third party transportation providers on whom we depend; (xiv) improperly executed, or unrealized cost savings from, our on-going information technology initiatives; (xv) unfavorable results of legal proceedings; (xvi) dependence on senior management and control by officers, directors, and family members; (xvii) operations may be subject to quarter fluctuations and disruptions from events beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. For additional information concerning factors that could cause actual results to differ materially from the information contained in this report, reference is made to the information in Part I, “Item 1A Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 26, 2015. You should not place undue reliance on forward-looking statements. Such statements speak only as to the date on which they are made, and we undertake no obligation to update publicly or revise any forward-looking statement, regardless of future developments or availability of new information.

Item 9.01 Financial Statements and Exhibits.

Exhibit Number	Description
99.1	Press Release dated February 22, 2017

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	DORMAN PRODUCTS, INC.
Date: February 22, 2017	By:	/s/ Kevin M. Olsen
		Name: Kevin M. Olsen
		Title: Chief Financial Officer

Exhibit Index

Exhibit Number	Description
99.1	Press Release dated February 22, 2017

EX-99.1

Exhibit 99.1

NEWS RELEASE

Contact: Kevin Olsen, CFO, kolsen@dormanproducts.com, (215) 997-1800. Visit our website at www.dormanproducts.com

Dorman Products, Inc. Reports Sales and Earnings for the Fourth Quarter

and Full-Year Ended December 31, 2016

• Q4 Sales increased 12% over prior year to $229 million

• Q4 EPS increased 34% over prior year to $0.83 per diluted share

• Q4 Operating Cash Flow increased 91% over prior year to $66 million

• Full-Year 2016 Sales increased 7% to $860 million and EPS increased 18% to $3.07.

COLMAR, PENNSYLVANIA (February 22, 2017) – Dorman Products, Inc. (NASDAQ:DORM), a leading supplier in the automotive aftermarket, today announced record sales and EPS for the fourth quarter and full-year ended December 31, 2016.

4th Quarter Financial Results

Net Sales for the 14 week fourth quarter ended December 31, 2016 increased $24.3 million, or 12%, to $229.1 million from $204.8 million for the 13 week fourth quarter ended 2015. Net Sales growth, adjusted for the additional week, was approximately 7%. Gross Profit for the fourth quarter increased 18% to $92.2 million (or 40.2% of sales) from $77.8 million (or 38.0% of sales) in the fourth quarter of 2015. Selling, General and Administrative (“SG&A”) Expenses for the fourth quarter increased 4% to $45.1 million (or 19.7% of sales) from $43.4 million (or 21.2% of sales) in the fourth quarter of 2015. Operating Cash Flow increased 91% to $66.0 million compared to $34.6 million in the same quarter last year. Diluted Earnings Per Share for the fourth quarter increased 34% to $0.83 per share from $0.62 per share in the fourth quarter of 2015. EPS growth, adjusted for the additional week, was approximately 24%.

As expected, the unfavorable stocking order comparisons we experienced in the third quarter reversed, and sales growth returned to much stronger levels in the fourth quarter aided by an extra shipping week in 2016. Gross Margin expansion was primarily driven by a more favorable sales mix, a result of exiting some underperforming, low margin product lines last year in the fourth quarter, lower excess and obsolete provisions as we continue to reduce inventory levels while improving the quality of inventory on hand and, to a lesser extent, leverage on the higher sales volumes. SG&A Expenses, adjusted for a $3 million pre-tax bad debt provision taken in the fourth quarter of 2015, grew 12%. The extra week, continued investment in new product development, and volume growth were the primary drivers of the SG&A Expense growth.

Under its share repurchase program, Dorman repurchased 101.2 thousand shares of its common stock during the fourth quarter ended December 31, 2016 at an average share price of $63.04.

Full Year 2016 Financial Results

Net Sales for the 53 week fiscal year ended December 31, 2016 increased $56.6 million, or 7%, to $859.6 million from $803.0 million for the 52 week fiscal year ended December 25, 2016. Gross Profit for fiscal 2016 increased 10% to $338.1 million (or 39.3% of sales) from $308.1 million (or 38.4% of sales) in fiscal 2015.

SG&A Expenses for fiscal 2016 increased 5% to $169.5 million (or 19.7% of sales) from $161.9 million (or 20.2% of sales) in fiscal 2015. Operating Cash Flow increased 32% to $121.5 million for fiscal 2016 compared to $92.1 million in fiscal 2015. Diluted Earnings Per Share for fiscal 2016 increased 18% to $3.07 per share from $2.60 per share in fiscal 2015.

Under its share repurchase program, Dorman repurchased 430.9 thousand shares of its common stock during fiscal 2016 at an average share price of $52.15.

“We are pleased to announce another successful year highlighted by record sales and earnings. Our success is directly attributable to the tireless efforts of our contributors who continue to execute our proven “New to the Aftermarket” product development strategy while ensuring high levels of service to our customers and end users. I would like to thank all our contributors who continue to drive Dorman to new levels of performance. Our core mission continues to be identifying failure prone passenger car, light truck, and heavy duty truck parts that are only available from dealerships and make a high quality alternative available to our customers and end users. To that end, we continue to invest in our new product capabilities allowing us to deliver growth well in excess of industry growth levels. During 2016, we introduced 4,220 new parts, including 1,255 “Formerly Dealer Only” parts. Sales from New Product launched in the last twenty four months as a percentage of total sales was 17% and we remain confident that we can continue to deliver above average industry growth over the long term by remaining laser-focused on this “New to the Aftermarket” mission. As a result, our previously issued guidance for 2017 remains unchanged as we continue to expect mid to high single digit organic revenue and net income growth,” said Matt Barton, President and Chief Executive Officer.

Dorman Products, Inc. is a leading supplier of Dealer “Exclusive” replacement parts to the Automotive, Medium and Heavy Duty Aftermarkets. Dorman products are marketed under the Dorman^®, OE Solutions™, HELP!^®, AutoGrade™, First Stop™, Conduct-Tite^®, TECHoice™, Dorman^® Hybrid Drive Batteries and Dorman HD Solutions™ brand names.

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to the Company’s future growth rates. Words such as “believe,” “demonstrate,” “expect,” “estimate,” “forecast,” “anticipate,” “should” and “likely” and similar expressions identify forward-looking statements. In addition, statements that are not historical should also be considered forward-looking statements. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date the statement was made. Such forward-looking statements are based on current expectations that involve a number of known and unknown risks, uncertainties and other factors which may cause actual events to be materially different from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, competition in the automotive aftermarket industry, concentration of the Company’s sales and accounts receivable among a small number of customers, the impact of consolidation in the automotive aftermarket industry, foreign currency fluctuations, dependence on senior management and other risks detailed in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 26, 2015. The Company is under no obligation to (and expressly disclaims any such obligation to) update any of the information in this press release if any forward-looking statement later turns out to be inaccurate whether as a result of new information, future events or otherwise.

DORMAN PRODUCTS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands, except per-share amounts)

	14 Weeks				13 Weeks
Fourth Quarter (unaudited)	12/31/16		Pct.		12/26/15		Pct.
Net sales	$	229,097		100.0	$	204,834		100.0
Cost of goods sold		136,926		59.8		127,041		62.0
Gross profit		92,171		40.2		77,793		38.0
Selling, general and administrative expenses		45,123		19.7		43,423		21.2
Income from operations		47,048		20.5		34,370		16.8
Interest expense, net		61		—		64		0.1
Income before income taxes		46,987		20.5		34,306		16.7
Provision for income taxes		18,286		8.0		12,519		6.1
Net income	$	28,701		12.5	$	21,787		10.6
Diluted earnings per share	$	0.83			$	0.62
Weighted average diluted shares outstanding		34,517				35,323

DORMAN PRODUCTS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands, except per-share amounts)

	53 Weeks				52 Weeks
Year Ended (unaudited)	12/31/16		Pct.		12/26/15		Pct.
Net sales	$	859,604		100.0	$	802,957		100.0
Cost of goods sold		521,530		60.7		494,907		61.6
Gross profit		338,074		39.3		308,050		38.4
Selling, general and administrative expenses		169,473		19.7		161,893		20.2
Income from operations		168,601		19.6		146,157		18.2
Interest expense, net		241		—		216		—
Income before income taxes		168,360		19.6		145,941		18.2
Provision for income taxes		62,311		7.3		53,612		6.7
Net income	$	106,049		12.3	$	92,329		11.5
Diluted earnings per share	$	3.07			$	2.60
Weighted average diluted shares outstanding		34,598				35,538

DORMAN PRODUCTS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands)

	12/31/16		12/26/15
Assets:
Cash and cash equivalents	$	149,121	$	78,659
Accounts receivable		230,526		203,923
Inventories		168,851		193,725
Prepaid expenses		3,116		2,326
Total current assets		551,614		478,633
Property, plant & equipment, net		88,436		87,046
Goodwill and other intangible assets, net		29,788		29,889
Deferred income taxes, net		12,429		7,557
Other assets		29,525		18,740
Total assets	$	711,792	$	621,865
Liabilities & shareholders’ equity:
Accounts payable	$	72,629	$	63,967
Accrued expenses and other		31,219		34,603
Total current liabilities		103,848		98,570
Other long-term liabilities		6,302		5,259
Shareholders’ equity		601,642		518,036
Total liabilities and equity	$	711,792	$	621,865

Selected Cash Flow Information (unaudited):

(in thousands)	14 Weeks		13 Weeks		53 Weeks		52 Weeks
	12/31/16		12/26/15		12/31/16		12/26/15
Depreciation, amortization and accretion	$	5,017	$	4,447	$	18,907	$	16,186
Capital expenditures	$	5,169	$	5,154	$	20,059	$	21,688