Financial Analysis

"Commitments and Contingencies Shareholders Agreement . A shareholders agreement was entered into in September 1990 and amended and restated on July 1, 2006. Under the agreement, each of the late Richard Berman, Steven Berman, Jordan Berman, Marc Berman, Fred Berman, Deanna Berman, and additional shareholders named in the agreement has, among other things, granted the others of them rights of first refusal, exercisable on a pro-rata basis or in such other proportions as the exercising shareholders may agree, to purchase shares of our common stock which any of them, or upon their deaths their respective estates, proposes to sell to third parties. We have agreed with these shareholders that, upon their deaths, to the extent that any of their shares are not purchased by any of these surviving shareholders and may not be sold without registration under the Securities Act of 1933, as amended (the ""1933 Act""), we will use our best efforts to cause those shares to be registered under the 1933 Act. The expenses of any such registration will be borne by the estate of the deceased shareholder. The additional shareholders that are a party to the agreement are trusts affiliated with the late Richard Berman, Steven Berman, Jordan Berman, Marc Berman, or Fred Berman, or each persons respective spouse or children. Acquisitions. We have contingent consideration related to a prior acquisition due to the uncertainty of the ultimate amount of any payments that will become due as earnout payme …

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The following table presents our disaggregated net sales by geography. For the Year Ended December 31, (in thousands) 2025 2024 2023 Net Sales to U.S. Customers $ 1,966,330 $ 1,848,420 $ 1,772,092 Net Sales to Non-U.S. Customers 163,989 160,777 157,696 Net Sales $ 2,130,319 $ 2,009,197 $ 1,929,788

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"Goodwill and Intangible Assets Goodwill Goodwill included the following: (in thousands) Light Duty Heavy Duty Specialty Vehicle Consolidated Balance at December 31, 2023 $ 313,704 $ 57,876 $ 72,309 $ 443,889 Goodwill acquired 1,167 1,167 Foreign currency translation (2,170) (2,170) Balance at December 31, 2024 313,704 55,706 73,476 442,886 Measurement period adjustment 154 154 Foreign currency translation 1,000 1,000 Goodwill impairment charge (56,706) (56,706) Balance at December 31, 2025 (1) $ 313,704 $ $ 73,630 $ 387,334 (1) Accumulated impairment losses were $56.7 million as of December 31, 2025, all within the Heavy-Duty segment. As discussed in Note 1, ""Summary of Significant Accounting Policies"", to the Consolidated Financial Statements, we perform our annual goodwill impairment analysis in the fourth quarter of each year. We determined fair values for each of the reporting units using a combination of the income approach and market approach. Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted using a risk-adjusted rate. We use our internal forecasts to estimate future cash flows and include an estimate of long-term future growth rates based on our expectation for the long-term outlook for each business. Actual future results may differ materially from those assumed in our forecasts. We derive our discount rates using a capital asset pricing model and analyze published rates for industries relevan …

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Income Taxes The components of the provision for income taxes are as follows: For the Year Ended December 31, (in thousands) 2025 2024 2023 Current: Federal $ 52,419 $ 56,879 $ 34,600 State 11,094 17,907 5,602 Foreign 1,586 2,300 2,002 65,099 77,086 42,204 Deferred: Federal 7,755 (7,407) (1,936) State (850) (2,618) (338) Foreign (753) (813) (686) 6,152 (10,838) (2,960) Provision for income taxes $ 71,251 $ 66,248 $ 39,244 A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows: For the Year Ended December 31, (in thousands, except percentage data) 2025 2024 2023 U.S federal statutory tax rate $ 57,843 21.0 % $ 53,813 21.0 % $ 35,386 21.0 % State and local income tax, net of federal income tax effect (1) 7,159 2.6 % 6,219 2.4 % 3,255 1.9 % Foreign tax effects 1,298 0.5 % 311 0.1 % 550 0.3 % Effect of cross-border tax laws (979) (0.4) % (891) (0.3) % (380) (0.2) % Tax credits (1,450) (0.5) % (1,584) (0.6) % (1,304) (0.8) % Nontaxable or nondeductible items: Goodwill impairment charge 5,845 2.1 % % % Other 1,099 0.4 % 813 0.3 % 825 0.5 % Changes in unrecognized tax benefits 741 0.3 % 7,497 2.9 % 598 0.4 % Other adjustments (305) (0.1) % 70 0.1 % 314 0.2 % Effective tax rate $ 71,251 25.9 % $ 66,248 25.9 % $ 39,244 23.3 % (1) The state and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect …

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Leases We determine whether an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys the right to control the use of an identified fixed asset explicitly or implicitly for a period of time in exchange for consideration. Control of an underlying asset is conveyed if we obtain the rights to direct the use of the asset and to obtain substantially all of the economic benefit from its use. We have operating leases for distribution centers, sales offices, and certain warehouse and office equipment. Our operating leases have remaining lease terms of 1 to 8 years, many of which include one or more renewal options. We consider these renewal options in determining the lease term used to establish our right-of-use assets and lease liabilities when it is determined that it is reasonably certain that the renewal option will be exercised. Substantially all of our equipment leases and some of our real estate leases have terms of less than one year. Some of our operating lease agreements include variable lease costs, primarily taxes, insurance, common area maintenance, or increases in rental costs related to inflation. Operating leases are included in the right-of-use lease assets, other current liabilities, and long-term lease liabilities on the Consolidated Balance Sheet. Right-of-use assets and lease liabilities are recognized at each leases commencement date based on the present values of its lease payments over its respective lease …

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Long-Term Debt We have a credit agreement which consists of a $600.0 million revolving credit facility and a $500.0 million term loan. The credit agreement matures on October 4, 2027, is guaranteed by the Companys material domestic subsidiaries , and is supported by a security interest in substantially all of the Companys material domestic subsidiaries personal property and assets, subject to certain exceptions . Borrowings under the credit agreement bear interest at a rate per annum equal to, at our option, either a term Secured Overnight Financing Rate (Term SOFR) or a base rate (as defined in the credit agreement), in each case plus an applicable margin, based on the Total Net Leverage Ratio (as defined in the credit agreement). Unutilized revolving credit facility capacity incurs a commitment fee based on the Total Net Leverage Ratio (as defined in the credit agreement). As of December 31, 2025, the interest rate on the outstanding borrowings under the credit agreement was 5.07% and the commitment fee was 0.15%. The term loan portion of the credit agreement contains mandatory repayment provisions that require quarterly principal amortization payments. The following table presents the principal amortization payments and maturities on the term loan for each of the years noted, as of December 31, 2025: (in thousands) December 31, 2025 2026 $ 37,500 2027 403,125 Total $ 440,625 Long-term debt on the consolidated balance sheets is presented net of unamortized debt issuance cos …

LongTermDebtTextBlock · excerpt; the full note is in the filing

"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. We adopted this guidance effective as of December 31, 2025, on a retrospective basis. The adoption of this standard had no material impact on our results of operations, financial condition, or cash flows. Refer to Note 9 ""Income Taxes,"" for the additional disclosures required under this standard. 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 this new standard by its effective date, and do not anticipate that its adoption will have an impact on our results of operations, financial condition, or cash flows."

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"Related Party Transactions Prior to December 1, 2023, we leased our Colmar, PA facility from an entity in which Steven Berman, our Non-Executive Chairman, and certain of his family members are owners. On December 1, 2023, the Colmar facility was sold to a third party, subject to our lease. We also lease a portion of our Lewisberry, PA facility from an entity in which Mr. Berman and certain of his family members are owners. The Colmar lease was, and the Lewisberry lease is, a non-cancelable operating lease. The Lewisberry lease 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, was renewed in October 2022 in connection with the acquisition of Super ATV, LLC, a leading supplier to the powersports aftermarket (""SuperATV""), 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 total payments for the years ended December 31, 2025, 2024, and 2023, under the related party agreements described above: For the Year Ended December 31, (in thousands) 2025 2024 2023 Facility leases with Steven Berman-related entities $ 735 $ 715 $ 2,918 Facility leases with Lin …

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"Revenue Recognition Our primary source of revenue is from contracts with and purchase orders from customers. In most instances, our contract with a customer is the customers purchase order. Upon acceptance of the purchase order, a contract exists with a customer, as a sales agreement indicates the approval and commitment of the parties, identifies the rights of both parties, identifies the payment terms, and has commercial substance. At this point, we believe it is probable that we will collect the consideration to which we will be entitled in exchange for the goods transferred to the customer. For certain customers, we may also enter into a sales agreement that outlines pricing considerations as well as the framework of terms and conditions that apply to future purchase orders for that customer. In these situations, our contract with the customer is both the sales agreement as well as the specific customer purchase order. As our contract with a customer is typically for a single transaction or customer purchase order, the duration of the contract is typically one year or less. As a result, we have elected to apply certain practical expedients and omit certain disclosures of remaining performance obligations for contracts that have an initial term of one year or less as permitted by GAAP. Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, in an amount representing the consideration the Company expects to receive in …

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"Segment Information We operate and report our results in three business segments, Light Duty, Heavy Duty, and Specialty Vehicle, consistent with the three sectors of the motor vehicle aftermarket industry in which we participate. The Light Duty segment designs and markets replacement parts and fasteners primarily for passenger cars and light trucks with sales to retailers and wholesale distributors who primarily serve passenger car and light truck customers. The Heavy Duty segment designs and markets replacement parts primarily for medium and heavy trucks with sales to independent distributors, independent component specialists and rebuilders, and auto parts stores that focus on the heavy-duty market. The Specialty Vehicle segment designs, markets, and manufactures aftermarket parts and accessories for the powersports market with sales through direct-to-consumer, dealers, and installers. The Company's chief operating decision maker (""CODM"") is the chief executive officer. The CODM uses income from operations to assess segment performance. The CODM utilizes this measure for each segment in the annual budget and forecasting cycles and considers performance against established targets for purposes of allocating Company resources to each segment and in the determination of compensation for certain employees. We measure segment income from operations based on income from operations excluding acquisition-related intangible assets amortization, acquisition-related transaction and …

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"Summary of Significant Accounting Policies Dorman Products, Inc. (""Dorman"", the ""Company"", we, us, or our) is a supplier of replacement and upgrade parts in the motor vehicle aftermarket industry, serving passenger cars, light-, medium-, and heavy-duty trucks as well as specialty vehicles, including utility terrain vehicles (""UTVs"") and all-terrain vehicles (""ATVs""). We operate through three business segments: Light Duty, Heavy Duty, and Specialty Vehicle, consistent with the sectors of the motor vehicle aftermarket industry in which we operate. For more information on our segments, refer to Note 7, ""Segment Information,"" to the Consolidated Financial Statements. Principles of Consolidation . The Consolidated Financial Statements include our accounts and the accounts of our wholly owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates in the Preparation of Financial Statements . The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents . We consider all highly liquid sho …

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Capital Stock Controlling Interest by Officers, Directors and Family Members . As of December 31, 2025, and 2024, Steven Berman, the Non-Executive Chairman of the Company, and members of his family beneficially owned approximately 13% and 15%, respectively, of the outstanding shares of our common stock, and could influence matters requiring approval of shareholders, including the election of the Board of Directors and the approval of significant transactions. Undesignated Stock . We have 50,000,000 shares authorized of undesignated capital stock for future issuance. The designation, rights, and preferences of such shares will be determined by our Board of Directors. Incentive Stock Plan . Prior to May 16, 2018, we issued stock compensation grants under our 2008 Stock Option and Stock Incentive Plan. On May 16, 2018, our shareholders approved our 2018 Stock Option and Stock Incentive Plan (the 2018 Plan or the Plan), which superseded our 2008 Stock Option and Stock Incentive Plan. Under the terms of the Plan, our Board of Directors may grant up to 1,200,000 shares of common stock in the form of shares of restricted stock, restricted stock units, stock appreciation rights, and stock options, or combinations thereof, to officers, directors, employees, consultants, and advisors. Grants under the Plan must be made on or before the tenth anniversary of the date the Plan was approved. Stock options are exercisable upon the terms set forth in each grant agreement approved by the Boar …

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Subsequent Events (Unaudited) On February 20, 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act (IEEPA) does not authorize the President of the U.S. to impose tariffs, thereby invalidating prior IEEPA-based tariff programs previously announced by the current U.S. Administration. Following the decision, the President issued an Executive Order directing that the collection of such IEEPA-based duties end as soon as practicable. Although the Supreme Court ruling may allow importers to claim refunds of such previously paid IEEPA-related duties, no refund mechanism has been established, and recovery may require administrative proceedings or litigation, with timing and outcomes uncertain. On the same date, the U.S. Administration announced new temporary global tariffs under Section 122 of the Trade Act of 1974 to take effect February 24, 2026. The Company is assessing the effects of these developments. No asset or gain related to potential tariff refunds has been recognized due to uncertainty regarding eligibility, amount, and timing. …

SubsequentEventsTextBlock · excerpt; the full note is in the filing