Dorman Products Inc (DORM) Reports 18% Increase in Net Sales for Q3 2023
Net sales for Q3 2023 reached $488.2 million, marking an 18% increase compared to the same period last year.
Diluted earnings per share (EPS) hit a record $1.28, up 32% from $0.97 in Q3 2022.
Adjusted diluted EPS also set a record at $1.40, up 20% compared to $1.17 in Q3 2022 and up 39% compared to Q2 2023.
The company generated $56 million of cash from operating activities and repaid $50 million of debt.
On October 31, 2023, Dorman Products Inc (NASDAQ:DORM) released its financial results for the third quarter ended September 30, 2023. The company reported net sales of $488.2 million, marking an 18% increase compared to net sales of $413.5 million in Q3 2022. This growth was primarily driven by the addition of SuperATV, price increases to offset inflation, and the introduction of new products to the market. Excluding acquisitions, net sales growth was 6% compared to Q3 2022.
Financial Highlights
Gross profit for Q3 2023 was $183.2 million, or 37.5% of net sales, compared to $131.9 million, or 31.9% of net sales, for the same quarter last year. The 550-basis-point increase in adjusted gross margin is primarily due to sales of lower-cost inventory, price increases, and the addition of SuperATV, which has a higher gross margin percentage than the company average.
Selling, general and administrative (SG&A) expenses were $119.0 million, or 24.4% of net sales, in Q3 2023 compared to $89.8 million, or 21.7% of net sales, for the same quarter last year. The increase in adjusted SG&A expenses as a percentage of net sales compared to Q3 2022 was due primarily to the addition of SuperATV, which has higher SG&A expenses as a percentage of net sales than the company average, an increase in variable compensation expense, and the impact of higher interest rates on customer accounts receivable factoring programs.
Net Income and EPS
Net income for Q3 2023 was $40.5 million, or $1.28 per diluted share, compared to $30.6 million, or $0.97 per diluted share, in the prior-year quarter. Adjusted net income in Q3 2023 was $44.3 million, or $1.40 per diluted share, compared to $37.0 million, or $1.17 per diluted share, in the prior-year quarter.
CEO Commentary
Kevin Olsen, Dormans President and Chief Executive Officer, stated, We delivered strong top line growth, record profits and robust cash flow in the third quarter, and I am proud of the hard work from our contributors to deliver these results. These results were driven by the continued improvement of our adjusted gross margin, which increased 240 basis points over the second quarter of 2023, and 550 basis points year-over-year. As a result, we achieved record third quarter adjusted diluted EPS, which increased 20% over last year and 39% over the second quarter."
Updated 2023 Guidance
The company updated its full-year 2023 guidance, which includes the impact of the SuperATV acquisition but excludes any potential impacts from future acquisitions, additional supply chain disruptions, significant interest rate increases, or share repurchases. The updated net sales forecast for 2023 is between $1.925 billion and $1.945 billion, with diluted EPS between $3.75 and $3.95, and adjusted diluted EPS between $4.35 and $4.55.
Explore the complete 8-K earnings release (here) from Dorman Products Inc for further details.
This article first appeared on GuruFocus.
