Dorman(DORM) - 2024 Q2 - Quarterly Results

Financial Highlights and CEO Commentary Dorman Products reported strong Q2 2024 results, with net sales up 4.7% and adjusted diluted EPS rising 65%, leading to raised full-year guidance Q2 2024 Key Performance Indicators | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Net Sales ($ in millions) | $503.0 | $480.6 | +4.7% | | Diluted EPS ($) | $1.53 | $1.04 | +47% | | Adjusted Diluted EPS* ($) | $1.67 | $1.01 | +65% | - Net sales growth was led by high-single-digit growth in the Light Duty segment, which was partially offset by declines in the Heavy Duty and Specialty Vehicle segments due to continued sector softness[2] - The company raised its full-year 2024 earnings guidance, now expecting adjusted diluted EPS in the range of $6.00 to $6.20[2] Second Quarter 2024 Financial Performance Net sales reached $503.0 million, with gross margin expanding to 39.6%, leading to a 47% increase in diluted EPS and robust cash generation Overall Performance The company achieved $503.0 million in net sales with a gross margin of 39.6%, resulting in diluted EPS of $1.53 Q2 2024 vs. Q2 2023 Financial Results | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net Sales ($ in millions) | $503.0 | $480.6 | | Gross Profit ($ in millions) | $199.4 | $163.5 | | Gross Margin (%) | 39.6% | 34.0% | | Adjusted Gross Margin* (%) | 39.6% | 35.1% | | SG&A Expenses ($ in millions) | $126.9 | $108.3 | | Adjusted SG&A Expenses* ($ in millions) | $120.7 | $114.4 | | Diluted EPS ($) | $1.53 | $1.04 | | Adjusted Diluted EPS* ($) | $1.67 | $1.01 | Segment Performance Light Duty segment sales grew 9% with significant margin expansion, while Heavy Duty and Specialty Vehicle segments experienced slight declines Q2 2024 Segment Results ($ in millions) | Segment | Net Sales Q2 2024 | Net Sales Q2 2023 | % Change | Profit Margin Q2 2024 (%) | Profit Margin Q2 2023 (%) | Change (bps) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Light Duty | $385.4 | $353.8 | +9% | 17.1% | 11.6% | +550 bps | | Heavy Duty | $61.2 | $69.1 | -11% | 4.4% | 4.9% | -50 bps | | Specialty Vehicle | $56.4 | $57.7 | -2% | 17.8% | 16.8% | +100 bps | Cash Flow and Capital Allocation The company generated $63 million in operating cash flow, used for debt repayment and share repurchases during the quarter - During the second quarter, the company executed the following capital allocation activities: - Generated $63 million in cash from operating activities - Repaid $15 million of debt - Repurchased $25 million of its shares[1][5] Full-Year 2024 Guidance Dorman Products raised its full-year 2024 earnings guidance, now expecting adjusted diluted EPS between $6.00 and $6.20, maintaining net sales growth Updated Full-Year 2024 Guidance | Metric | Updated 2024 Guidance | Prior 2024 Guidance | | :--- | :--- | :--- | | Net Sales Growth vs. 2023 (%) | 3% – 5% | 3% – 5% | | Diluted EPS ($) | $5.32 – $5.52 | $4.71 – $5.01 | | Adjusted Diluted EPS* ($) | $6.00 – $6.20 | $5.40 – $5.70 | Financial Statements Consolidated financial statements detail performance for Q2 and YTD June 29, 2024, showing significant net income growth and a stable balance sheet Consolidated Statements of Operations Statements of operations show strong growth in net sales, gross profit, and net income for both Q2 and six months ended June 29, 2024 Q2 Statement of Operations Highlights (in thousands) | Account | Three Months Ended 6/29/24 | Three Months Ended 7/1/23 | | :--- | :--- | :--- | | Net sales | $502,951 | $480,568 | | Gross profit | $199,401 | $163,506 | | Income from operations | $72,452 | $55,198 | | Net income | $47,410 | $32,770 | | Diluted EPS | $1.53 | $1.04 | Six Months Statement of Operations Highlights (in thousands) | Account | Six Months Ended 6/29/24 | Six Months Ended 7/1/23 | | :--- | :--- | :--- | | Net sales | $971,652 | $947,306 | | Gross profit | $380,847 | $307,983 | | Income from operations | $126,890 | $73,312 | | Net income | $80,238 | $38,453 | | Diluted EPS | $2.58 | $1.22 | Consolidated Balance Sheets The balance sheet shows stable total assets and liabilities, with a slight increase in total shareholders' equity as of June 29, 2024 Balance Sheet Highlights (in thousands) | Account | 6/29/24 | 12/31/23 | | :--- | :--- | :--- | | Total current assets | $1,233,035 | $1,233,709 | | Total assets | $2,285,715 | $2,292,407 | | Total current liabilities | $514,119 | $547,151 | | Long-term debt | $461,188 | $467,239 | | Total shareholders' equity | $1,201,320 | $1,168,203 | Consolidated Statements of Cash Flows (Partial Data) Cash provided by operating activities was $63.3 million for Q2 and $115.3 million for the six months ended June 29, 2024 Key Cash Flow Data (in thousands) | Metric | Three Months Ended 6/29/24 | Six Months Ended 6/29/24 | | :--- | :--- | :--- | | Cash provided by operating activities | $63,349 | $115,329 | | Capital expenditures | $11,935 | $22,690 | Non-GAAP Financial Measures Reconciliation The company provides detailed reconciliations of GAAP to non-GAAP measures, adjusting for specific items to offer a clearer view of core operational performance Reconciliation of Net Income and EPS Reconciliation shows adjustments from GAAP net income of $47.4 million and diluted EPS of $1.53 to non-GAAP figures Q2 2024 Reconciliation of GAAP to Non-GAAP Net Income and EPS | Metric | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Net Income ($ in millions) | $47.4 | +$4.6 | $52.0 | | Diluted EPS ($) | $1.53 | +$0.14 | $1.67 | Reconciliation of Gross Profit and SG&A Expenses Adjustments to GAAP Gross Profit and SG&A expenses are detailed, showing their impact on adjusted margins and expense ratios - For Q2 2024, GAAP Gross Profit of $199.401M was adjusted by $2k for acquisition-related costs to arrive at an Adjusted Gross Profit of $199.403M The adjusted gross margin was 39.6%[21] - For Q2 2024, GAAP SG&A of $126.9M was adjusted down by $6.2M for items including intangible asset amortization and workforce reduction costs, resulting in Adjusted SG&A of $120.7M (24.0% of sales)[23] Reconciliation of 2024 EPS Guidance The reconciliation details adjustments from GAAP diluted EPS guidance to the higher non-GAAP adjusted diluted EPS guidance for full-year 2024 Reconciliation of Full-Year 2024 EPS Guidance | Metric | Low End | High End | | :--- | :--- | :--- | | Diluted EPS (GAAP) ($) | $5.32 | $5.52 | | Pretax Adjustments ($) | +$0.90 | +$0.90 | | Tax Adjustment ($) | ($0.22) | ($0.22) | | Adjusted Diluted EPS (Non-GAAP) ($) | $6.00 | $6.20 | Other Information This section provides conference call details, a company overview, and standard disclaimers regarding forward-looking statements and non-GAAP measures - The company will hold a conference call and webcast for investors on Friday, August 2, 2024, at 8:00 a.m. Eastern time[9] - The press release contains forward-looking statements based on current expectations that involve known and unknown risks and uncertainties, and the company disclaims any obligation to update them[12]