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What is Dorman's gross profit margin?

What were the key takeaways from Dorman's earnings call?

Did Dorman beat or miss consensus estimates last quarter?

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- **Revenue Beat**: Q3 net sales $544M (+7.9% YoY), driven by tariff pricing and mid-single-digit POS growth. Light Duty up 9%, Heavy Duty 6%.
- **Margin Strength**: Operating margin 20.5% (+340 bps), gross margin 44.4% (+390 bps). Q4 margin warning due to tariff costs.
- **EPS Growth**: $2.62 EPS (+34%), with 2025 guidance $8.60-$8.90 EPS (+21-25%).
- **Supply Chain Shift**: China supply reduced to 30-40%, diversification supporting long-term margin targets.
- **M&A Opportunity**: Strong balance sheet ($654M liquidity) enables strategic acquisitions in fragmented markets.

**【CEO Summary Section】**
- **Revenue Growth**: Consolidated net sales of $544 million, up 7.9% YoY, driven by tariff-related pricing and mid-single-digit POS growth. Light Duty segment grew 9%, Heavy Duty 6%, and Specialty Vehicle was flat.
- **Margin Expansion**: Adjusted operating margin improved 340 bps to 20.5%, with gross margin up 390 bps to 44.4%. Q4 gross margin expected to decline due to higher tariff costs in inventory.
- **Earnings**: Adjusted EPS of $2.62, up 34% YoY. Operating cash flow $12 million, free cash flow $2 million, impacted by tariffs.
- **Segment Highlights**: Light Duty benefited from new products like electronic power steering racks. Heavy Duty saw net sales growth but flat margins. Specialty Vehicle maintained strong UTV/ATV ridership despite market challenges.

**【CFO Financial Commentary】**
- **Financial Performance**: Net sales growth 7.9%, driven by pricing and diversification. Adjusted operating income $111 million, up 30%. Tax rate expected 23.5% for the year.
- **Supply Chain**: China supply reduced to 30-40%, with U.S. and rest-of-world diversification. Free cash flow expected to rebound post-Q4 tariff impact.
- **Guidance**: 2025 net sales growth 7-9%, EPS $8.60-$8.90 (21-25% growth). Q4 gross margin warning due to tariff pass-through timing.

**【Q&A Highlights】**
- **Elasticity**: DIFM (nondiscretionary) parts show inelastic demand, while DIY faces headwinds. Dorman's portfolio focus on DIFM supports margin resilience.
- **Margin Outlook**: Q4 margin compression expected, but long-term targets (mid-teens Heavy Duty, high-teens Specialty) remain intact.
- **M&A**: Active pipeline across segments, with balance sheet strength ($654M liquidity) supporting strategic acquisitions.
- **Tariff Strategy**: Diversification and supplier negotiations mitigate risk, with 30-40% China exposure by year-end.

Dorman Products, Inc. (DORM) Q3 2025 Earnings Call Transcript

- **Revenue Growth**: 8% YoY to $541M, driven by 10% light-duty expansion and new product launches. EPS up 23% to $2.06.
- **Margin Expansion**: Operating margin 16.3% (up 70 bps), gross margin 40.6% (up 100 bps) from cost savings and product mix.
- **Tariff Mitigation**: Surgical price increases offset $40M in tariffs, with Q3 gross margin boost expected. Liquidity at $656M supports resilience.
- **Segment Outlook**: Light-duty poised for sustained growth; heavy-duty cautious but improving; specialty vehicle expects recovery with economic stabilization.

**【CEO Summary Section】**
- **Q2 2025 Results**: Consolidated net sales grew 8% YoY to $541 million, driven by 10% growth in the light-duty segment. Adjusted operating margin expanded 70 bps to 16.3%, with adjusted EPS up 23% to $2.06.
- **Tariff Mitigation**: Implemented multifaceted strategy including supplier diversification, cost savings, and surgical price increases effective Q3. Guidance updated to 7-9% net sales growth and $8.60-$8.90 EPS, up from prior 3-5% and $7.55-$7.85.
- **Segment Outlook**: Light-duty benefits from aging vehicles (12.8 years avg age) and new products; heavy-duty cautious amid trucking sector uncertainty; specialty vehicle expects recovery with economic stabilization.

**【CFO Financial Commentary】**
- **Gross Margin**: 40.6% (up 100 bps YoY) driven by new products and cost initiatives. SG&A as % of sales rose 30 bps to 24.3%, reflecting investments in customer experience.
- **Segment Performance**: Light-duty operating margin 18.5% (up 140 bps); heavy-duty 1% growth vs. 80 bps margin; specialty vehicle down 3% but strong engagement in UTV/ATV markets.
- **Cash Flow**: Q2 operating cash flow $9M (vs. $63M YoY) due to tariff costs and inventory build. Free cash flow positive, with $656M liquidity supporting resilience.

**【Q&A Key Highlights】**
- **Heavy-Duty Margins**: Incremental margins >50% per dollar of sales recovery; normalized margins ~mid-teens. Current 1% growth reflects new business wins amid soft market.
- **Tariff Impact**: Light-duty least affected due to diversified supply chain; heavy-duty and specialty vehicle exposure offset by U.S. manufacturing. Surgical price increases implemented Q3 to offset costs.
- **Light-Duty Dynamics**: POS growth in line with sell-in, no significant overstocking. New products (e.g., OE flaw fixes) drive higher margins, with pipeline as strong as ever.
- **Capital Allocation**: Prioritize debt management, internal investments, M&A, and share buybacks. Long-term strategy unchanged despite near-term tariff challenges.

Dorman Products, Inc. (DORM) Q2 2025 Earnings Call Transcript

- **Revenue Growth**: 8% YoY sales growth to $508M, driven by light duty segment and new products.
- **Margin Expansion**: 310 bps operating margin improvement to 17%, with light duty margin up 380 bps.
- **Tariff Mitigation**: 30-40% China sourcing, 30% U.S. manufacturing, and diversified supply chain reduce risk.
- **Financial Strength**: $660M liquidity and 1.01x net leverage enable tariff cost absorption.
- **Guidance Reaffirmed**: 2025 sales growth 3-5%, EPS $7.55-$7.85.

**【CEO Summary Section】**
- Q1 2025 net sales grew 8% YoY to $508 million, driven by strong demand in light duty segment and new product launches.
- Adjusted operating margin expanded 310 bps to 17%, with light duty segment operating margin up 380 bps to 19.9%.
- Free cash flow of $40 million used to repay $20 million debt and repurchase $12 million in shares.
- Tariff mitigation strategy includes 30-40% China sourcing, 30% U.S. manufacturing, and diversified global supply chain.
- Nondiscretionary product portfolio resilient to economic uncertainty; 2025 guidance reaffirmed at 3-5% sales growth and $7.55-$7.85 EPS.

**【CFO Financial Commentary】**
- Adjusted gross margin improved 220 bps to 40.9%, driven by new product mix, supplier diversification, and automation initiatives.
- SG&A expenses as % of sales declined 100 bps to 23.9%, reflecting operational efficiency gains.
- Heavy duty segment sales down 11% YoY due to freight market softness, but specialty vehicle ridership remains healthy.
- Net debt reduced to $402 million, with liquidity at $660 million, enabling tariff-related inventory cost absorption.

**【Q&A Key Takeaways】**
- **Tariff Impact**: 30-40% of products sourced from China, but diversified supply chain (30% U.S., rest global) mitigates risk. Tariffs may take 6+ months to flow through inventory.
- **Customer Behavior**: No evidence of pre-tariff buying; focus on nondiscretionary parts limits demand elasticity.
- **Competitive Position**: Lower China exposure (vs. 70%+ in 2018) and U.S. manufacturing scale provide competitive advantage.
- **New Product Contribution**: Outperforms market growth, with light duty POS up high single digits vs. low teens sell-in growth.
- **Financial Resilience**: 1.01x net leverage ratio and $660M liquidity provide flexibility to manage tariff-related costs.

Dorman Products (DORM)-6 May 25-2025 Q1 Earnings call transcript

- **Record Performance**: 2024 sales surpass $2.0 billion, Q4 sales up 8% YoY to $534 million, with light-duty leading at 11% growth.
- **Profitability Boost**: Q4 adjusted EPS of $2.20 (+40% YoY), free cash flow of $63 million, and net debt reduced by $54 million.
- **Strategic Focus**: Innovation in complex electronics, supply chain diversification, and M&A pipeline support 2025 growth targets of 3-5% sales and 6-10% EPS expansion.
- **Risk Management**: Tariff exposure mitigated via 30% U.S. sourcing; heavy-duty market recovery expected to benefit from new product pipeline.
- **Balance Sheet Strength**: Net leverage at 1.12x, $500M share buyback program active, and $642 million liquidity for strategic investments.

**【CEO Summary Section】**
- Achieved record annual sales of $2.0 billion in 2024, driven by 4.1% YoY growth, with light-duty segment leading at 11% Q4 sales growth.
- Introduced new leadership structure with Tayfun Uner as Head of Light Duty, enhancing segment focus and strategic alignment.
- Q4 consolidated net sales reached $534 million (+8% YoY), with adjusted operating margin expanding 210bps to 17.5%.
- Heavy-duty segment faced market challenges but maintained R&D investment for future recovery, while specialty vehicle saw 5% YoY growth from new products and channel expansion.

**【CFO Financial Commentary】**
- Q4 adjusted diluted EPS of $2.20 (+40% YoY), driven by margin expansion and debt repayment of $54 million.
- Free cash flow of $63 million (+30% YoY) supported balance sheet strength, with net debt reduced to $426 million (1.12x net leverage).
- 2025 guidance: 3-5% net sales growth, with light-duty leading and flattish heavy-duty sales; EPS target of $7.55-$7.85 (+6-10% YoY).
- Tariff exposure managed through diversified supply chain (30% U.S., 30-40% China, minimal Canada/Mexico sourcing).

**【Q&A Highlights】**
- **Tariffs & Supply Chain**: 30% U.S. sourcing and 30-40% China diversification mitigate tariff risks; FIFO accounting delays margin impact by 6 months.
- **Heavy-Duty Strategy**: Focused on new product launches (+50% in 2024) and productivity initiatives to improve margins despite market softness.
- **M&A Pipeline**: Robust opportunities across segments, with activity expected to resume post-trade clarity; $500M share buyback program remains active.
- **Specialty Vehicle**: Non-discretionary repair parts drive growth, with 2025 modest sales increase expected despite new machine sales headwinds.
- **Light-Duty Margin**: Complex electronics products deliver high margins due to new-to-market exclusivity, outpacing overall segment growth.

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