Got parts? Dorman does. From its stock of more than 120,000 products, Dorman Products (formerly R&B, Inc.) is a leading supplier of automotive replacement parts, fasteners, and service line products to the automotive aftermarket. It also provides household hardware and organization items to mass merchants. About 85% of revenue comes from parts sold under Dorman's sub-brands, which include AutoGrade, FirstStop, and OE Solutions. Dorman sells to auto aftermarket retailers and warehouse distributors (such as AutoZone, CARQUEST) as well as to parts manufacturers for resale under private labels.
Tough economic conditions in North America have helped to drive demand in the automotive aftermarket and in turn, Dorman's own business in recent years. Faced with tight credit markets and high unemployment rates, many drivers are keeping their cars longer and either taking care of the maintenance and repairs themselves or turning to a professional mechanic. Along with declining new car sales, these conditions have led to fewer original equipment dealers, which has also benefitted Dorman. In 2010 the company's revenue rose to $455 million, a 20% improvement over the previous year's $377 million. Since 2006 sales have climbed steadily from $295 million, a nearly 55% overall improvement. Profits also trended upward during this five-year period, though 2010 marked its largest annual gain; margins grew to $46 million from $26 million, an almost 75% improvement. The bottom-line boost comes as Dorman has lowered materials and freight costs and focused on improving efficiency within its operations. (Dorman recorded a $1 million impairment charge in 2010, related to acquired intangible assets, but this did not significantly affect its earnings.)
Introducing new products to the automotive aftermarket has been central to Dorman's strategy. The company attributes its growth over the years to its development of a wide assortment of parts and accessories, many of which Dorman believes may not have been easily available otherwise and which improve upon the original parts being replaced. As such, the firm has made increased investments in product development resources and marketing programs to strengthen its ties to customers. (Dorman's three biggest clients -- aftermarket retailers AutoZone, Advance Auto Parts, and O'Reilly -- generate nearly 45% of revenues.) Research and development funding has climbed by 35% from around $3 million in 2008 to more than $4 million in 2010.
As it rolls out new products, Dorman has also been disposing of offerings that have been slow to move. In early 2010 the company sold its ignition distributor product line to WAI Global, a manufacturer of electronics and sensors for the automotive aftermarket.
Dorman is looking beyond US borders for continued sales expansion. It has increased international sales through its Dorman Canada unit, which serves customers in Canada, as well as through its Scan-Tech subsidiary, which serves Europe, the Middle East, and Asia.
Richard Berman, the firm's chairman and CEO, died in 2011. He was succeeded by his brother, Steven, formerly COO. The Berman brothers founded Dorman in 1978.
Steven Berman owns a roughly 20% stake in Dorman while Richard's wife, Sharyn, holds about 10%. Royce & Associates owns almost 15% of shares in the company. – less