COLMAR, Pa., April 08, 2020 (GLOBE NEWSWIRE) -- Dorman Products, Inc.(NASDAQ:DORM), a leading supplier in the automotive aftermarket industry, today provided an update on its business operations in light of the ongoing Coronavirus (COVID-19) pandemic.
“First and foremost, the health and safety of our employees, customers, and suppliers remain our utmost priority,” said Kevin Olsen, President and Chief Executive Officer of Dorman. “We are closely monitoring this rapidly evolving situation and are focused on maintaining business continuity across our operations. Although first quarter net sales were robust, we started to see a drop in demand toward the end of March, which we expect to continue during the second quarter, possibly longer, due to government-imposed restrictions that were implemented to slow the spread of COVID-19. We believe the number of miles driven, as well as the number of service appointments, are decreasing as a result of these government-imposed restrictions, which we expect will negatively impact our financial performance until such time as these restrictions are lifted.”
COVID-19: Business and Liquidity Update
Throughout the U.S., automotive repair and the related supply and distribution of parts have generally been classified as essential businesses exempted from government shutdowns. Therefore, the vast majority of Dorman’s retail and wholesale customers are open for business, and in turn, all of Dorman’s U.S. facilities are also open and operating at this time, with modified staffing in certain locations where appropriate. Dorman has taken actions to promote the welfare of its employees by enhancing safety protocols, including encouraging employees to work from home where applicable and implementing social distancing and robust sanitization practices at its facilities. Dorman has also adopted a COVID-19 sick leave policy providing continued salary and benefits to eligible employees. Operationally, Dorman’s global network of parts suppliers is meeting Dorman’s current demand levels, including Dorman’s suppliers in China that experienced a slowdown in the first part of the first quarter of fiscal 2020 due to the pandemic. The Company will continue to closely monitor updates regarding the spread of COVID-19 and adjust its operations according to guidelines from local, state and federal officials.
Dorman exited 2019 with a strong balance sheet and since then, in light of the COVID-19 pandemic, took proactive steps to manage its costs and bolster its balance sheet and cash position, including:
- Drawing down $99 million from its $100 million revolving credit facility, which matures in December 2022;
- Increasing the level of receivables collected under various factoring programs;
- Temporarily suspending its share repurchase program;
- Managing inventories and operating costs to quickly adjust to demand dynamics;
- Limiting non-essential operating expenses; and
- Deferring capital expenditures, as appropriate.
As a result of these actions, the Company increased its cash position and, as of April 7, 2020, the Company had approximately $300 million in cash and cash equivalents. Dorman believes that its asset light model and ample liquidity position it well to navigate the current economic disruption associated with the ongoing COVID-19 pandemic.
2020 Guidance Update
Mr. Olsen also stated, “Given the uncertainty of the current environment, we are withdrawing our previously announced guidance for fiscal 2020, which did not contemplate the impact of the COVID-19 pandemic. While the duration and magnitude of this situation remain uncertain, we believe our strong balance sheet and liquidity position us well to navigate these conditions. Our industry is extremely resilient, and we believe that once the government-imposed lockdowns are lifted, auto and truck repairs will return to more normal levels.”
The Company will provide further insight into COVID-19’s impact on its business operations when it reports its first quarter fiscal 2020 results.
Date to Report First Quarter 2020 Financial Results
Dorman also announced today that it will report its financial results for the first quarter ended March 28, 2020 on April 27, 2020.
2020 Annual Meeting of Shareholders
Sensitive to the public health and travel concerns of its shareholders, and the protocols that public health authorities and federal, state and local governments have imposed or may impose or recommend, Dorman intends to conduct its 2020 annual meeting of shareholders virtually. Additional information will be provided to Dorman’s shareholders in advance of the meeting when Dorman files its proxy materials with the U.S. Securities and Exchange Commission.
About Dorman Products
At Dorman, we give repair professionals and vehicle owners greater freedom to fix cars and trucks by focusing on solutions first. For over 100 years, we have been one of the automotive aftermarket’s pioneering problem solvers, releasing tens of thousands of replacement products engineered to save time and money and increase convenience and reliability.
