COLMAR, PA — Dorman Products, Inc. (NASDAQ: DORM announced its financial results for the second quarter ended June 26, 2021.
Second Quarter Financial Results
The Company reported record quarterly net sales in the second quarter of 2021 of $310.6 million, up 33% as compared to net sales of $233.2 million in the second quarter of 2020, reflecting the continued re-opening of the economy as well as solid underlying demand for their products. More specifically, their sales performance during the quarter was all organic with growth across all of their channels. The absence of the government-imposed shut-downs that negatively impacted the Company’s prior year quarter was a significant contributor to the year-over-year growth. On a sequential basis, the Company experienced 8% net sales growth over the first quarter of 2021.
Gross profit was $110.1 million in the second quarter of 2021, or 35.5% of net sales, compared to $79.1 million, or 33.9% of net sales for the same quarter last year. Adjusted gross margin* was 35.5% in the second quarter of 2021 compared to 34.1% in the same quarter last year. Gross margin expansion was driven by fixed cost leverage from higher sales volumes and improved efficiencies as the Company continues to drive productivity savings in their end-to-end supply chain processes. Additionally, the Company benefitted from the absence of out-of-pocket costs incurred due to the COVID-19 pandemic in the prior year quarter. These benefits were partially offset by significantly higher freight costs in the second quarter of 2021 due to global transportation and logistics constraints, which the Company believes are transitory.
Selling, general and administrative (“SG&A”) expenses were $69.5 million, or 22.4% of net sales, in the second quarter of 2021 compared to $61.5 million, or 26.4% of net sales, in the same quarter last year. Adjusted SG&A expenses* were $64.7 million, or 20.8% of net sales, in the second quarter of 2021 compared to $60.3 million, or 25.9% of net sales, in the same quarter last year. Approximately 430 basis points of the decrease in SG&A as a percentage of net sales was due to the significant operating leverage from the $77 million increase in net sales in the second quarter of 2021 as compared to the second quarter of 2020. Additionally, the Company saw benefits to SG&A as a percentage of net sales from the absence of out-of-pocket costs related to the COVID-19 pandemic incurred in the prior year quarter, as well as continued operational efficiencies. These benefits were partially offset by wage and benefits inflation in the second quarter of 2021 as compared to the prior year quarter.
Income tax expense was $9.1 million in the second quarter of 2021, or 22.3% of income before income taxes, compared to $3.4 million, or 19.9% of income before income taxes, recorded in the same quarter last year. The lower effective tax rate in the prior year quarter was the result of lower state tax expense and a nontaxable book gain associated with an acquisition.
Net income for the second quarter of 2021 was $31.6 million, or $0.99 per diluted share, compared to $13.9 million, or $0.43 per diluted share, in the prior year quarter. Adjusted net income* in the second quarter was $35.3 million, or $1.10 per diluted share, compared to $15.2 million, or $0.47 per diluted share, in the prior year quarter.
Kevin Olsen, Dorman’s President and Chief Executive Officer, stated, “I am proud to report another solid quarter for Dorman, enabled by strong end market fundamentals and execution in a very challenging environment. We saw year-over-year and sequential growth across all of our sales channels, driving yet another record quarterly sales performance. Despite continued industry-wide logistical pressures on the global supply chain network that resulted in significantly higher freight and material inflation costs and impacted fulfillment levels, Dorman’s diversified supply chain and broad supplier network performed well under the circumstances. Also, our focus on driving productivity improvements in this challenging environment continued to bear fruit and resulted in gross margin expansion year over year. Additionally, we continued to deliver new and innovative solutions to the automotive aftermarket, highlighted by our recent product launches which included many new complex electronic solutions such as cruise control distance sensors, blind spot detection modules and other advanced driver assistance system (ADAS) products. Our Heavy Duty business also experienced strong growth delivering 43% sales growth over last year and 20% sales growth sequentially over the first quarter. We are very excited about our recently announced agreement to purchase Dayton Parts, which will be the largest acquisition in the Company’s history that we believe will provide a scaled platform to accelerate growth in the heavy-duty segment. I would like to thank all of Dorman’s Contributors whose commitment and dedication helped achieve these milestones for the quarter and continue to demonstrate our ability to deliver long-term value for our customers and shareholders alike.”
The Company confirms its previously issued 2021 guidance, which excludes any impact from the pending Dayton Parts acquisition. Dorman expects the Dayton Parts acquisition to close in the second half of 2021, at which time the Company expects to update its 2021 guidance.
Mr. Olsen continued, “While transitory costs and inflationary pressures continue to drive heightened volatility in our operating environment, we are maintaining our outlook, which reflects our expectations for our performance given our results to date, visibility into the remainder of the year and our belief that the automotive aftermarket industry dynamics will remain strong throughout the remainder of 2021. We anticipate that freight and material inflation costs will be a headwind to the Company throughout the year, and we have actions in place to help offset these impacts. Additionally, our balance sheet and liquidity remain strong, and we are well-positioned to continue to execute on our strategic priorities.”
Dorman repurchased 265,889 shares of its common stock for $27.2 million at an average share price of $102.19 during the quarter ended June 26, 2021. The Company has $176.2 million remaining under its current share repurchase authorization.
Thanks for visiting! MyChesCo brings reliable information and resources to Chester County, Pennsylvania. Please consider supporting us in our efforts. Your generous donation will help us continue this work and keep it free of charge. Show your support today by clicking here and becoming a patron.