Dorman Products, Inc.

Previous wording

In addition, we believe that vehicle owners generally are operating their current vehicles longer than they did several years ago, performing necessary repairs and maintenance to keep those vehicles well-maintained. We believe this trend has supported an increase in VIO, which increased to 302.7 million, a 1% increase in 2025 over 2024. According to data published by Polk, a division of IHS

Current wording

In addition, we believe that vehicle owners generally are operating their current vehicles longer than they did several years ago, performing necessary repairs and maintenance to keep those vehicles well-maintained. We believe this trend has supported an increase in VIO, which increased to 302.7 million, a 1% increase in 2025 over 2024. According to data published by Polk, a division of IHS Automotive, the average age of VIO increased to 12.9 years as of October 2025 from 12.8 years as of October 2024.

Previous wording

Our business is subject to interest rate risk under the terms of our customer accounts receivable sales programs, as a change in the Term Secured Overnight Financing Rate (“Term SOFR”) or alternative discount rate affects the cost incurred to factor eligible accounts receivable. Additionally, our outstanding borrowings under our credit agreement bear interest at variable rates tied to Term SOFR or the applicable base rate. Under the terms of the credit agreement, a change in interest rates affects the rate at which we can borrow funds thereunder and impacts the interest cost on existing borrowings. Interest rates may remain steady at their current levels for prolonged periods or may increase in the future, resulting in increased costs associated with our accounts receivable sales programs and outstanding borrowings. Interest rates generally declined starting in the second half of 2025 and through the first quarter of 2026.

Current wording

Our business is subject to interest rate risk under the terms of our customer accounts receivable sales programs, as a change in the Term Secured Overnight Financing Rate (“Term SOFR”) or alternative discount rate affects the cost incurred to factor eligible accounts receivable. Additionally, our outstanding borrowings under our credit agreement bear interest at variable rates tied to Term SOFR or the applicable base rate. Under the terms of the credit agreement, a change in interest rates affects the rate at which we can borrow funds thereunder and impacts the interest cost on existing borrowings. Interest rates may remain steady at their current levels for prolonged periods or may increase in the future, resulting in increased costs associated with our accounts receivable sales programs and outstanding borrowings. Interest rates generally declined starting in the second half of 2025 and through the first quarter of 2026, before increasing in the third quarter of 2026.

Previous wording

We source the majority of our raw materials and parts from suppliers in various non-U.S. countries. In 2025, approximately 77% of our total volume of product purchases was sourced from suppliers in various non-U.S. countries, with approximately 38% sourced from third-party suppliers in China. In 2025, the U.S. Administration implemented new tariffs that took effect throughout the year. These new tariffs, as well as reactionary tariff adjustments made by other countries, have impacted our business and contributed to cost increases, and we expect these impacts to continue.

Current wording

We source the majority of our raw materials and parts from suppliers in various non-U.S. countries. In 2025, approximately 77% of our total volume of product purchases was sourced from suppliers in various non-U.S. countries, with approximately 38% sourced from third-party suppliers in

Previous wording

We have taken actions designed to mitigate the impact of these cost increases, including, but not limited to, diversifying our supply chain and negotiating cost concessions from our suppliers where possible. In addition, starting in the third quarter of 2025, we implemented price increases to mitigate the cost increases while also considering the competitive dynamic of our parts in the marketplace. We experienced an increase in gross margin in the second half of 2025 due to the timing of price actions taking effect before the higher tariff costs were recognized as an expense in our Statement of Operations and Comprehensive Income. Gross margin decreased beginning in the first quarter of 2026 as we recognized the higher tariff costs in our Statement of Operations and Comprehensive Income.

Current wording

We have taken actions designed to mitigate the impact of these cost increases, including, but not limited to, diversifying our supply chain and negotiating cost concessions from our suppliers where possible. We have also implemented price increases to mitigate the cost increases while also considering the competitive dynamic of our parts in the marketplace.

Previous wording

In February 2026, the U.S. Supreme Court ruled against certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA"). The ruling did not address refunds of IEEPA tariffs paid. However, in March 2026, the Court of International Trade (“CIT”) ordered U.S. Customs and Border Protection (“CBP”) to begin the refund process for all importers who were subject to IEEPA duties. CIT's order may be subject to U.S. government challenge. We are the importer of record for certain products that were previously subject to tariffs under IEEPA. During the three months ended June 27, 2026, we recorded refunds of such previously paid tariffs totaling $98.1 million, including a receivable of $19.7 million for amounts that remained uncollected as of June 27, 2026.

Current wording

In February 2026, the U.S. Supreme Court ruled against certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA"). In March 2026, the Court of International Trade (“CIT”) ordered U.S. Customs and Border Protection (“CBP”) to begin the refund process for all importers who were subject to IEEPA duties. We are the importer of record for certain products that were previously subject to tariffs under IEEPA. During the nine months ended September 26, 2026, we recorded refunds of such previously paid tariffs totaling $98.1 million, including a receivable of $2.1 million for amounts that remained uncollected as of September 26, 2026.

Previous wording

We also recognized interest income of $3.5 million related to the refunds received during the three months ended June 27, 2026, which is included in Other income, net on the Condensed Consolidated Statements of Operations and Comprehensive Income.

Current wording

We also recognized interest income of $0.2 million and $3.7 million related to the refunds received during the three and nine months ended September 26, 2026, which is included in Other income, net on the Condensed Consolidated Statements of Operations and Comprehensive Income.

Previous wording

Gross profit as a percentage of net sales increased 550 basis points compared to the prior year period, primarily due to lower net tariff costs resulting from recognition of IEEPA refunds, which added 820 basis points to gross profit as a percentage of net sales in the current year period.

Current wording

Gross profit as a percentage of net sales decreased 500 basis points compared to the prior year period, primarily due to higher tariff costs in the current period. In addition, prior year gross profit as a percentage of net sales benefited from tariff pricing without the associated higher tariff costs.

Previous wording

Selling, general, and administrative expenses decreased 50 basis points as a percentage of net sales for the three months ended June 27, 2026, compared to the prior year period, due to continued operational improvement and lower factoring costs.

Current wording

Selling, general, and administrative expenses decreased 30 basis points as a percentage of net sales for the three months ended September 26, 2026, compared to the prior year period, due to leverage from higher sales and lower factoring costs, partially offset by higher wage and benefits costs.

Previous wording

Our effective tax rate of 24.0% for the three months ended June 27, 2026, was slightly higher than our effective tax rate of 23.6% for the three months ended June 28, 2025.

Current wording

Our effective tax rate of 23.5% for the three months ended September 26, 2026, was flat compared to the three months ended September 27, 2025.

Previous wording

Net sales increased $24.7 million, or 2.4%, for the six months ended June 27, 2026, compared to the prior year period, primarily driven by tariff-related pricing actions enacted during the second half of 2025 across our segments, partially offset by lower volume when compared to the strong sales in the prior year period, and price concessions.

Current wording

Net sales increased $42.7 million, or 2.7%, for the nine months ended September 26, 2026, compared to the prior year period, primarily driven by tariff-related pricing actions enacted during the second half of 2025 across our segments, partially offset by lower volume when compared to the strong sales in the prior year period.

Previous wording

Gross profit as a percentage of net sales increased 40 basis points compared to the prior year period, primarily due to lower net tariff costs resulting from recognition of IEEPA refunds, which added 110 basis points to gross profit as a percentage of net sales in the current year period.

Current wording

Gross profit as a percentage of net sales decreased 150 basis points compared to the prior year period, primarily due to higher tariff costs in the current year period. In addition, prior year gross profit as a percentage of net sales benefited from tariff pricing without the associated higher tariff costs.

Previous wording

Selling, general, and administrative expenses decreased 40 basis points as a percentage of net sales for the six months ended June 27, 2026, compared to the prior year period, due to favorable leverage from higher net sales and lower factoring costs.

Current wording

Selling, general, and administrative expenses decreased 30 basis points as a percentage of net sales for the nine months ended September 26, 2026, compared to the prior year period, due to favorable leverage from higher net sales and lower factoring costs.

Previous wording

Our effective tax rate of 23.5% for the six months ended June 27, 2026, was slightly higher than our effective tax rate of 23.0% for the six months ended June 28, 2025.

Current wording

Our effective tax rate of 23.5% for the nine months ended September 26, 2026, was slightly higher than our effective tax rate of 23.2% for the nine months ended September 27, 2025.

Previous wording

Heavy Duty net sales increased $4.2 million, or 6.8%, for the three months ended June 27, 2026, compared to the prior year period, primarily reflecting tariff-related pricing actions and business wins in certain categories and channels.

Current wording

Heavy Duty net sales increased $3.1 million, or 4.9%, for the three months ended September 26, 2026, compared to the prior year period, primarily reflecting tariff-related pricing actions and higher volume in certain categories and channels.

Previous wording

Light Duty net sales increased $14.9 million, or 2%, for the six months ended June 27, 2026, compared to the prior year period, primarily due to tariff-related pricing actions enacted during the second half of 2025, partially offset by lower volume when compared to the strong sales in the prior year period.

Current wording

Light Duty net sales increased $28.3 million, or 2.2%, for the nine months ended September 26, 2026, compared to the prior year period, primarily due to a full nine-month benefit from tariff-related pricing actions enacted during the third quarter of 2025, partially offset by lower volume when compared to the strong sales in the prior year period.

Previous wording

Light Duty segment income from operations as a percentage of net sales increased to 24.7% for the three months ended June 27, 2026, from 18.5% for the three months ended June 28, 2025. This increase was primarily driven by lower net tariff costs resulting from recognition of IEEPA refunds, which added 910 basis points to segment income from operations as a percentage of net sales in the current year period, partially offset by higher wage and benefits costs in the current year period.

Current wording

Light Duty segment income from operations as a percentage of net sales decreased to 19.1% for the nine months ended September 26, 2026, from 20.7% for the nine months ended September 27, 2025. This decrease was primarily driven by higher net tariff costs, and higher wage and benefits costs in the current year period, partially offset by lower factoring costs in the current period. In addition, prior year segment income from operations benefited from tariff pricing without the associated higher tariff costs.

Previous wording

Heavy Duty net sales increased $10.3 million, or 9%, for the six months ended June 27, 2026, compared to the prior year period, primarily reflecting tariff-related pricing actions.

Current wording

Heavy Duty net sales increased $13.5 million, or 7.6%, for the nine months ended September 26, 2026, compared to the prior year period, primarily reflecting tariff-related pricing actions, and higher volumes.

Previous wording

Specialty Vehicle net sales were flat for the six months ended June 27, 2026, compared to the prior year period, as tariff-related pricing actions in certain categories were offset by reduced customer demand in the specialty vehicle sector.

Current wording

Specialty Vehicle net sales were up slightly for the nine months ended September 26, 2026, compared to the prior year period, as tariff-related pricing actions in certain categories were partially offset by lower volumes, reflecting reduced customer demand in the specialty vehicle sector.

Previous wording

Specialty Vehicle segment income as a percentage of net sales increased to 26.1% for the three months ended June 27, 2026, from 17.3% for the three months ended June 28, 2025. This increase was primarily driven by lower net tariff costs resulting from recognition of IEEPA refunds, which added 830 basis points to segment income from operations as a percentage of net sales in the current year period.

Current wording

Specialty Vehicle segment income as a percentage of net sales increased to 16.3% for the nine months ended September 26, 2026, from 13.6% for the nine months ended September 27, 2025. This increase was primarily driven by benefits in the current year period from tariff-related pricing and lower expenses in the current year period.

Previous wording

Increases in tariffs accelerate our use of cash, as we pay for the higher costs upon arrival of our goods in the United States, but we collect the cash from any price increases to our customers on a delayed basis, taking into account our inventory turns and payment terms negotiated with those customers. We currently anticipate that additional liquidity needs to cover increased tariffs on imported products can be managed through additional factoring under our accounts receivable sales programs with certain customers, as well as borrowings under our existing revolving credit facility.

Current wording

Increases in tariffs accelerate our use of cash, as we generally pay the higher tariff costs to U.S. Customs and Border Protection before the related products are sold, but we collect the cash from any price increases to our customers on a delayed basis, taking into account our inventory turns and payment terms negotiated with those customers. We currently anticipate that additional liquidity needs to cover increased tariffs on imported products can be managed through additional factoring under our accounts receivable sales programs with certain customers, as well as borrowings under our existing revolving credit facility.

Previous wording

If receivables had not been sold, $1,044.1 million and $1,093.1 million of additional receivables would have been outstanding at June 27, 2026, and December 31, 2025, respectively, based on standard payment terms.

Current wording

If receivables had not been sold, $970.9 million and $1,093.1 million of additional receivables would have been outstanding at September 26, 2026, and December 31, 2025, respectively, based on standard payment terms.

Previous wording

For the six months ended June 27, 2026, cash provided by operating activities increased $136.6 million from the prior year period, primarily due to $81.5 million of IEEPA refunds and related interest received, as well as the benefits of inventory reductions in the current year, partially offset by lower sales of accounts receivable.

Current wording

For the nine months ended September 26, 2026, cash provided by operating activities increased $189.0 million from the prior year period, primarily due to $99.7 million of IEEPA refunds and related interest received, as well as the benefits of inventory reductions in the current year, partially offset by lower sales of accounts receivable.

Previous wording

Investing activities used cash of $10.3 million and $19.4 million during the six months ended June 27, 2026, and June 28, 2025, respectively, reflecting timing of spending on capital investments. The six months ended June 27, 2026, also included $7.2 million of proceeds from the sale of an investment.

Current wording

Investing activities used cash of $22.5 million and $29.8 million during the nine months ended September 26, 2026, and September 27, 2025, respectively, reflecting timing of spending on capital investments. The nine months ended September 26, 2026, also included $7.2 million of proceeds from the sale of an investment, and $4.5 million to purchase certain product line assets and assume certain liabilities from an unaffiliated third party.

Previous wording

Financing activities during the six months ended June 27, 2026, included $97.3 million paid to repurchase 825,213 shares of common stock, as well as $450.0 million of proceeds received from the issuance of our Senior Notes and the repayment of $440.6 million of outstanding borrowings under our credit agreement prior to the amendment. During the six months ended June 28, 2025, we paid $15.3 million to repurchase 122,923 shares of common stock, and repaid $20.2 million of outstanding borrowings under our credit agreement.

Current wording

Financing activities during the nine months ended September 26, 2026, included $113.8 million paid to repurchase 938,333 shares of common stock, as well as $450.0 million of proceeds received from the issuance of our Senior Notes and the repayment of $440.6 million of outstanding borrowings under our credit agreement prior to the amendment. During the nine months ended September 27, 2025, we paid $15.3 million to repurchase 122,923 shares of common stock, and repaid $26.5 million of outstanding borrowings under our credit agreement.