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What: Shares of auto-parts maker Dorman Products (NASDAQ: DORM) were looking rusty today, falling as much as 12%, on a disappointing earnings report.
So what: The automotive aftermarket parts supplier said that revenue decreased 1%, to $135 million, and earnings per share shrank from $0.46, to $0.42. Analysts had expected a $0.52 per-share profit and $158 million in sales. The loss of a week in the calendar was partly to blame for the drop, but analysts had figured that into their projections. Without the calendar shift and a one-time inventory adjustment, sales would have increased 7%. CEO Steven Berman was still optimistic about 2013 despite the poor fourth quarter, and noted that earnings and sales still grew by double digits during all of 2012, the fourth year in a row the company has done so.
Now what: Dorman missed estimates by a considerable margin, and there are reasons to believe that this was just a temporary misstep. Gross profit actually improved in the quarter by 140 basis points, to 38.4%, and management said the increase in operating expenses was the result of increased product development and incentive compensation. Look for Dorman to bounce back next quarter.
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