On August 1, 2024, Dorman Products Inc (DORM, Financial) released its 8-K filing for the second quarter of 2024, showcasing a robust financial performance that surpassed analyst expectations. The company, a leading supplier of original equipment parts for automobiles, reported significant growth in both net sales and earnings per share (EPS).
Company Overview
Dorman Products Inc is a supplier of original equipment parts for automobiles. The company produces automotive and heavy-duty replacement parts, automotive hardware, brake parts, and fasteners for the automotive and heavy-duty aftermarket. The products are sold under the Dorman brand and its sub-brands OE Solutions, Help!, Conduct-Tite, and HD Solutions through aftermarket retailers, regional and local warehouse distributors, specialty markets, and salvage yards. It operates as a single reportable operating segment, namely, the sale of replacement and upgrades parts in the motor vehicle aftermarket industry, serving passenger cars, light-, medium-, and heavy-duty trucks as well as specialty vehicles. The company operates in the United States.
Q2 2024 Financial Highlights
Dorman Products Inc reported net sales of $503.0 million for Q2 2024, a 4.7% increase compared to $480.6 million in the same period last year. This figure slightly exceeded the analyst estimate of $502.19 million. The company's diluted EPS for the quarter was $1.53, up 47% from $1.04 in Q2 2023, and significantly higher than the analyst estimate of $1.28.
Segment Performance
| Segment | Q2 2024 Net Sales ($ millions) | Q2 2023 Net Sales ($ millions) | Change (%) | Q2 2024 Profit Margin (%) | Q2 2023 Profit Margin (%) | Change (bps) |
|---|---|---|---|---|---|---|
| Light Duty | 385.4 | 353.8 | 9% | 17.1% | 11.6% | 550 |
| Heavy Duty | 61.2 | 69.1 | -11% | 4.4% | 4.9% | -50 |
| Specialty Vehicle | 56.4 | 57.7 | -2% | 17.8% | 16.8% | 100 |
Income Statement Highlights
Gross profit for Q2 2024 was $199.4 million, or 39.6% of net sales, compared to $163.5 million, or 34.0% of net sales, in Q2 2023. Selling, general, and administrative (SG&A) expenses were $126.9 million, or 25.2% of net sales, up from $108.3 million, or 22.5% of net sales, in the same quarter last year. The company generated $63 million in cash from operating activities, repaid $15 million in debt, and repurchased $25 million of its shares during the quarter.
Balance Sheet and Cash Flow
As of June 29, 2024, Dorman Products Inc reported total assets of $2.29 billion, with cash and cash equivalents of $47.5 million. The company's total liabilities stood at $1.08 billion, and shareholders' equity was $1.20 billion. The company invested $12 million in capital expenditures during the quarter.
Updated 2024 Guidance
Given the strong performance in the first half of the year, Dorman Products Inc has raised its full-year 2024 guidance. The company now expects diluted EPS to be in the range of $5.32 to $5.52, up from the previous guidance of $4.71 to $5.01. Adjusted diluted EPS is projected to be between $6.00 and $6.20, compared to the prior range of $5.40 to $5.70.
Management Commentary
"We are pleased with our results in the second quarter, achieving a significant increase in EPS over the prior year. Net sales growth was led by our Light Duty segment with high-single digit growth driven by continuing positive industry fundamentals and our new product introductions. This growth was partially offset by declines in our Heavy Duty and Specialty Vehicle segments, which were negatively impacted by continued sector softness in those businesses," said Kevin Olsen, Dorman’s President and Chief Executive Officer.
Conclusion
Dorman Products Inc's strong Q2 2024 performance, driven by robust sales in the Light Duty segment and effective cost management, has positioned the company well for the remainder of the year. The raised full-year guidance reflects management's confidence in sustaining this momentum. Investors and stakeholders will be keenly watching how the company navigates the challenges in its Heavy Duty and Specialty Vehicle segments in the coming quarters.
Explore the complete 8-K earnings release (here) from Dorman Products Inc for further details.
