Dorman Products, Inc.

FOR THE THREE AND SIX MONTHS ENDED JUNE 28, 2025, AND JUNE 29, 2024

1. Basis of Presentation

As used herein, unless the context requires otherwise, “Dorman,” the “Company,” “we,” “us,” or “our” refers to Dorman Products, Inc. and its subsidiaries. Our ticker symbol on The Nasdaq Stock Market LLC is “DORM.”

The accompanying unaudited condensed consolidated financial statements have been prepared under U.S. generally accepted accounting principles (“GAAP”) for interim financial information and under the rules and regulations of the U.S. Securities and Exchange Commission. However, they do not include all the information and footnotes required by GAAP for a complete set of financial statements. In the opinion of management, all adjustments (comprising only normal, recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 28, 2025, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2025, or any future period. We may experience significant fluctuations from quarter to quarter in our results of operations due to the timing of orders placed by our customers and the introduction of new products and product lines to customers. These financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

2. Sales of Accounts Receivable

We have entered into several customer-sponsored programs administered by unrelated financial institutions that permit us to sell (factor) certain accounts receivable at discounted rates to the financial institutions. Transactions under these agreements were accounted for as sales of accounts receivable, and the related accounts receivable were removed from our Condensed Consolidated Balance Sheets when sold. Sales of accounts receivable under these agreements, and associated factoring costs, which were included in selling, general, and administrative expenses, were as follows:

3. Inventories

Inventories include the cost of material, freight, duties, direct labor, and overhead utilized in the processing of our products and are stated at the lower of cost or net realizable value. Inventories were as follows:

4. Goodwill and Intangible Assets

Goodwill

Goodwill included the following:

Intangible Assets

Intangible assets included the following:

Amortization expense was$5.5 million and $5.5 million during the three months ended June 28, 2025, and June 29, 2024, and $11.0 million and$11.1 million during the six months ended June 28, 2025, and June 29, 2024, respectively.

5. Debt

As of June 28, 2025, and December 31, 2024, the interest rate on the outstanding borrowings under our credit facility was 5.68% and 5.71%, respectively.

6. Segment and Geographic Information

Segment results are as follows:

A reconciliation of segment income from operations to consolidated income before income taxes is as follows:

The following table presents our net sales by geographic region:

7. Commitments and Contingencies

We are a party to, or otherwise involved in, legal proceedings that arise in the ordinary course of business, including various claims and legal actions involving contracts, employment disputes, competitive practices, intellectual property infringement, product liability claims, and other matters related to the conduct of our business. In the opinion of management, none of the actions, individually or in the aggregate, taking into account relevant insurance coverage, would likely have a material financial impact on the Company, and we believe the range of reasonably possible losses from current matters, taking into account relevant insurance coverage, is immaterial. However, legal matters are subject to inherent uncertainties, and there exists the possibility that the ultimate resolution of any of these matters could have a material adverse impact on the Company’s cash flows, financial position, or results of operations in the period in which any such effects are recorded.

8. Stock-Based Compensation

Restricted Stock Units (“RSUs”) and Restricted Stock Awards (“RSAs”)

We grant RSUs, and prior to January 2020 we granted RSAs, to participants in our equity plans. Performance-based RSUs granted in the six months ended June 28, 2025, included certain grants that vest based on our total shareholder return ranking relative to the Nasdaq US Benchmark Auto Parts Index over athree-year performance period (market condition), and other grants that vest based upon achievement of return on invested capital targets over athree-year performance period (performance condition).

Compensation cost related to RSU and RSA grants was $4.2 million and $3.2 million for the three months ended June 28, 2025, and June 29, 2024, respectively, and $7.5 million and $5.7 million for the six months ended June 28, 2025, and June 29, 2024, respectively, and was included in selling, general, and administrative expenses in the Condensed Consolidated Statements of Operations.

The following table summarizes our RSU and RSA activity for the six months ended June 28, 2025:

For the six months ended June 28, 2025, we granted 21,948 performance-based RSUs containing a market condition with a grant date fair value of $195.03 per share. For the six months ended June 29, 2024, we granted 32,109 performance-based RSUs containing a market condition with a grant date fair value of $138.58 per share.

As of June 28, 2025, there was $30.0 million of unrecognized compensation cost related to unvested RSU grants that is expected to be recognized over a weighted average period of 2.1 years.

Stock Options

From time to time, we grant stock options to participants in our equity plans. Compensation cost related to stock option grants was $0.3 million and $0.4 million for the three months ended June 28, 2025, and June 29, 2024, respectively, and $0.6 million and $0.8 million for the six months ended June 28, 2025, and June 29, 2024, respectively, and is included as selling, general, and administrative expenses in the Condensed Consolidated Statements of Operations.

The following table summarizes our stock option activity for the six months ended June 28, 2025:

As of June 28, 2025, there was $1.4 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 1.5 years.

Employee Stock Purchase Plan ("ESPP")

During the three and six months ended June 29, 2024, we issued 13,555 shares under the ESPP.

9. Earnings Per Share

Basic earnings per share was calculated by dividing our net income by the weighted average number of shares of common stock outstanding during the period, excluding unvested RSAs which are considered to be contingently issuable. To calculate diluted earnings per share, common stock equivalents are added to the weighted average number of shares of common stock outstanding.

Common stock equivalents are calculated using the treasury stock method and are computed based on outstanding stock-based awards.

For the three months ended June 28, 2025, and June 29, 2024, there were approximately 127,000 shares and 225,000 shares, respectively, and for the six months ended June 28, 2025, and June 29, 2024, there were approximately 83,000 shares and 272,000 shares, respectively, that were excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive.

The following table sets forth the computation of basic earnings per share and diluted earnings per share:

10. Common Stock Repurchases

We periodically repurchase, at the then-current market price, and cancel common stock issued to the Dorman Products, Inc. 401(k) Retirement Plan and Trust (the “401(k) Plan”). 401(k) Plan participants can no longer purchase shares of Dorman common stock as an investment option under the 401(k) Plan. Shares are generally purchased by the Company from the 401(k) Plan when participants sell units as permitted by the 401(k) Plan or elect to leave the 401(k) Plan upon retirement, termination, or other reasons. The following table summarizes the repurchase and cancellation of common stock by the Company for the periods indicated:

Separately, we repurchase shares under share repurchase programs authorized by our Board of Directors. Share repurchases may be made from time to time depending on market conditions, share price, share availability, and other factors at the Company’s discretion. The Company is not obligated to acquire a specific number of shares under the programs.

The following table summarizes the repurchase and cancellation of common stock in the three and six months ended June 28, 2025, and June 29, 2024:

At June 28, 2025, $484.7 million was available for repurchase under the program in effect.

11. Income Taxes

At June 28, 2025, we had $10.5 million of net unrecognized tax benefits, $9.0 million of which would lower our effective tax rate if recognized. We recognize interest and penalties related to unrecognized tax benefits in income tax expense. The total amount of interest and penalties related to unrecognized tax benefits recorded within tax expense were not material for the six months ended June 28, 2025. At June 28, 2025, accrued interest and penalties related to unrecognized tax benefits were $3.9 million.

We file income tax returns in the United States, Canada, China, India, and Mexico. The statute of limitations for tax years before 2021 is closed for U.S. federal income tax purposes. The statute of limitations for tax years before 2017 is closed for the states in which we filed. The statute of limitations for tax years before 2022 is closed for income tax purposes in Canada and China. The statute of limitations for tax years before 2020 is closed for income tax purposes in India and Mexico.

On July 4, 2025, the One Big Beautiful Bill Act (the “Tax Act”) was signed into law, which introduced significant changes to the U.S. federal income tax code. The effects of these changes will be recognized in the period in which the legislation was enacted. We are currently assessing the impacts that the Tax Act may have on our results of operations, financial condition, and cash flows.

12. Related-Party Transactions

We lease a portion of our Lewisberry, PA facility from an entity in which Steven Berman, our Non-Executive Chairman, and certain of his family members are owners. The Lewisberry lease is a non-cancelable operating lease and expires December 31, 2027.

We also lease our facilities in Madison, IN, and Shreveport, LA, from entities in which Lindsay Hunt, our former President, Specialty Vehicle, and certain of her family members are owners. Each lease is a non-cancelable operating lease and will expire on October 31, 2027.

We have service agreements with counterparties that are majority-owned by a family member of Ms. Hunt. These agreements provide for various warehouse and facility-related services at agreed-upon rates.

The following table represents the estimated payments for the year ending December 31, 2025, and actual payments for the year ended December 31, 2024, under the related party agreements described above:

We are a partner in a joint venture withone of our suppliers and own a minority interest intwo other suppliers. Two of these investments are accounted for under the equity method, andone is accounted for under the cost method.

13. Fair Value Disclosures

The carrying values of financial instruments such as cash and cash equivalents, accounts receivable, accounts payable, and other current assets and liabilities approximate their fair value due to the short-term nature of these instruments. The carrying value of borrowings under our credit facility approximates fair value because these borrowings bear interest at rates indexed to a market rate (Term SOFR).

14. Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-09, Improvements to Income Tax Disclosures. The ASU expands disclosures in the income tax rate reconciliations table and cash taxes paid, and is effective for annual periods beginning after December 15, 2024.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. The ASU requires additional disclosures about categories of expenses, including, among other things, quantitative disclosures for employee compensation, depreciation, intangible asset amortization, selling expenses, and purchases of inventory. The updated guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027.

We expect to implement these new standards by their effective dates, and do not anticipate that their adoption will have an impact on our results of operations, financial condition, or cash flows.