Dorman Products Inc. (NASDAQ:DORM) filed Quarterly Report for the period ended 2011-03-26.
Dorman Products Inc. has a market cap of $697.2 million; its shares were traded at around $38.99 with a P/E ratio of 15.3 and P/S ratio of 1.6. Dorman Products Inc. had an annual average earning growth of 14.3% over the past 10 years. GuruFocus rated Dorman Products Inc. the business predictability rank of 4.5-star.
Highlight of Business Operations:Net sales increased 26% to $124.4 million for the thirteen weeks ended March 26, 2011 from $99.0 million for the thirteen weeks ended March 27, 2010. Our revenue growth was primarily driven by overall strong demand for our products and higher new product sales. Approximately 25% of the first quarter 2011 revenue growth was the result of shipments of several large customer line updates.
Selling, general and administrative expenses for the thirteen weeks ended March 26, 2011 increased 19% to $26.2 million from $22.1 million for the thirteen weeks ended March 27, 2010. The increase was the result of higher variable costs as a result of the 26% increase in sales, increased new product development spending and inflationary cost increases.
Historically, we have financed our growth through a combination of cash flow from operations, accounts receivable sales programs provided by certain customers and through the issuance of senior indebtedness through our bank credit facility and senior note agreements. At March 26, 2011, working capital was $229.8 million, while shareholders equity was $276.0 million. Cash and cash equivalents as of March 26, 2011 was $34.1 million.
Over the past several years we have continued to extend payment terms to certain customers as a result of customer requests and market demands. These extended terms have resulted in increased accounts receivable levels and significant uses of cash flow. We participate in accounts receivable sales programs with several customers which allow us to sell our accounts receivable on a non-recourse basis to financial institutions to offset the negative cash flow impact of these payment terms extensions. As of March 26, 2011 and December 25, 2010, we sold $93.1 million and $77.1 million, respectively, in accounts receivable under these programs and removed them from our balance sheets based upon standard payment terms. We expect continued pressure to extend our payment terms for the foreseeable future. Further extensions of customer payment terms will result in additional uses of cash flow or increased costs associated with the sale of accounts receivable.
Cash generated from our operating activities was $9.2 million in the thirteen weeks ended March 26, 2011. Net income adjusted for non-cash depreciation and a $2.8 million increase in accrued compensation and other liabilities were the primary sources of operating cash flow. The primary uses of cash were accounts receivable, which increased by $2.0 million, and inventory, which increased $3.9 million. Both of these increased due to our sales growth during the quarter.
Investing activities used $5.2 million of cash in the thirteen weeks ended March 26, 2011 primarily as a result of additions to property, plant and equipment. Capital spending in the thirteen weeks ended March 26, 2011 consisted of tooling associated with new products, upgrades to information systems and scheduled equipment replacements. In the third quarter of 2010, we began a project to replace our enterprise resource planning system. This project is expected to cost approximately $9.5 million in software and installation services in 2010 through 2012. We spent $1.3 million during the first quarter of 2011, and have spent $3.1 million on the project through March 26, 2011. In addition, we are expanding our distribution facility located in Warsaw, Kentucky. The total cost of this expansion will be approximately $9.0 million, which will be incurred by the end of 2011. We spent $2.7 million on this expansion during the first quarter of 2011, and have spent $4.1 million on the project through March 26, 2011.
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