[Executive Summary & Business Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Highlights) [Third Quarter 2024 Performance Highlights](index=1&type=section&id=Third%20Quarter%202024%20Performance%20Highlights) Dorman Products reported strong third quarter 2024 results, with net sales increasing by 3.2% and diluted EPS growing by 41% Q3 2024 Key Financial Highlights | Metric | Q3 2024 | Q3 2023 | Change (%) | | :-------------------- | :------ | :------ | :--------- | | Net sales | $503.8M | $488.2M | 3.2% | | Diluted EPS | $1.80 | $1.28 | 41% | | Adjusted diluted EPS* | $1.96 | $1.40 | 40% | - Repurchased **$27 million** of its shares during the quarter[1](index=1&type=chunk) - Announced a new share repurchase authorization for up to **$500 million**[1](index=1&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) Kevin Olsen, Dorman's President and CEO, highlighted strong Q3 performance driven by mid-single digit net sales growth in the Light Duty segment and the company's innovation strategy - Light Duty segment drove **mid-single digit net sales growth**[2](index=2&type=chunk) - Innovation strategy continues to bolster Dorman's leading portfolio of aftermarket solutions[2](index=2&type=chunk) - Operational excellence initiatives are enabling streamlined workflows, quicker speeds to market, and increased profitability[2](index=2&type=chunk) [Updated Full-Year 2024 Guidance Overview](index=1&type=section&id=Updated%20Full-Year%202024%20Guidance%20Overview) Following strong Q3 results and a positive outlook, Dorman updated and narrowed its full-year 2024 net sales and EPS growth guidance, significantly raising EPS expectations Updated Full-Year 2024 Guidance | Metric | Updated 2024 Guidance | Prior 2024 Guidance | | :---------------------- | :-------------------- | :------------------ | | Net Sales Growth vs. 2023 | 3.5% – 4.5% | 3% – 5% | | Diluted EPS | $6.15 – $6.25 | $5.32 – $5.52 | | Adjusted Diluted EPS* | $6.85 – $6.95 | $6.00 – $6.20 | [Third Quarter Financial Performance](index=1&type=section&id=Third%20Quarter%20Financial%20Performance) [Consolidated Financial Results (Q3)](index=1&type=section&id=Consolidated%20Financial%20Results%20(Q3)) Dorman Products reported a 3.2% increase in net sales for Q3 2024, reaching **$503.8 million**, with gross profit margin improving to **40.5%** and diluted EPS increasing by **41%** to **$1.80** Q3 2024 Consolidated Financial Results | Metric (in thousands) | Q3 2024 | Q3 2023 | Change (%) | | :-------------------- | :------ | :------ | :--------- | | Net sales | $503,773 | $488,186 | 3.2% | | Gross profit | $203,803 | $183,218 | 11.2% | | Gross profit margin | 40.5% | 37.5% | +300 bps | | SG&A expenses | $124,532 | $119,010 | 4.6% | | SG&A as % of net sales | 24.7% | 24.4% | +30 bps | | Net income | $55,253 | $40,522 | 36.3% | | Diluted earnings per share | $1.80 | $1.28 | 40.6% | [Segment Performance (Q3)](index=2&type=section&id=Segment%20Performance%20(Q3)) In Q3 2024, Light Duty net sales grew by **5%**, Heavy Duty sales decreased by **5%**, and Specialty Vehicle sales remained flat, with all segments showing improved profit margins Q3 2024 Segment Results | Segment | Q3 2024 Net Sales ($M) | Q3 2023 Net Sales ($M) | Net Sales Change (%) | Q3 2024 Profit Margin | Q3 2023 Profit Margin | Profit Margin Change (bps) | | :---------------- | :--------------------- | :--------------------- | :------------------- | :-------------------- | :-------------------- | :------------------------- | | Light Duty | 393.6 | 374.7 | 5% | 19.0% | 16.1% | 290 | | Heavy Duty | 59.6 | 62.8 | -5% | 4.5% | 3.0% | 150 | | Specialty Vehicle | 50.6 | 50.6 | 0% | 17.0% | 13.5% | 350 | [Cash Flow and Capital Allocation (Q3)](index=2&type=section&id=Cash%20Flow%20and%20Capital%20Allocation%20(Q3)) During Q3 2024, Dorman generated **$44 million** in operating cash flow, invested **$9 million** in capital expenditures, repaid **$11 million** of debt, and returned **$27 million** to shareholders - Generated **$44 million** in cash from operating activities[7](index=7&type=chunk) - Invested **$9 million** in capital expenditures[7](index=7&type=chunk) - Repaid **$11 million** of debt[7](index=7&type=chunk) - Returned **$27 million** to shareholders through stock repurchases[7](index=7&type=chunk) [Full-Year 2024 Guidance Update](index=2&type=section&id=Full-Year%202024%20Guidance%20Update) Dorman Products updated its full-year 2024 guidance, raising the lower end of its net sales growth range and significantly increasing both diluted and adjusted diluted EPS expectations Updated Full-Year 2024 Guidance | Metric | Updated 2024 Guidance | Prior 2024 Guidance | | :---------------------- | :-------------------- | :------------------ | | Net Sales Growth vs. 2023 | 3.5% – 4.5% | 3% – 5% | | Diluted EPS | $6.15 – $6.25 | $5.32 – $5.52 | | Growth vs. 2023 | 50% – 52% | 30% – 35% | | Adjusted Diluted EPS* | $6.85 – $6.95 | $6.00 – $6.20 | | Growth vs. 2023 | 51% – 53% | 32% – 37% | | Tax Rate Estimate | 24% | 24% | - Guidance excludes potential impacts from future acquisitions/divestitures, supply chain disruptions, significant inflation, interest rate changes, and additional share repurchases[9](index=9&type=chunk) [Share Repurchase Program](index=2&type=section&id=Share%20Repurchase%20Program) Dorman repurchased **$26.7 million** of its common stock in Q3 2024 and announced a new share repurchase program, effective January 1, 2025, authorizing up to **$500 million** in repurchases by the end of 2027 - Repurchased **273,653 shares** for **$26.7 million** at an average price of **$97.70** during Q3 2024[11](index=11&type=chunk) - A new share repurchase program was authorized for up to **$500 million**, effective January 1, 2025, through the end of 2027[12](index=12&type=chunk) - The prior share repurchase plan, with **$134.6 million** remaining, will expire on December 31, 2024[11](index=11&type=chunk)[12](index=12&type=chunk) [Company Overview & Investor Information](index=2&type=section&id=Company%20Overview%20%26%20Investor%20Information) [About Dorman Products](index=3&type=section&id=About%20Dorman%20Products) Dorman Products is a leading global supplier in the motor vehicle aftermarket industry, providing tens of thousands of replacement products for over 100 years, covering a wide range of vehicles and components - Over **100 years** of driving new solutions in the motor vehicle aftermarket industry[14](index=14&type=chunk) - Offers an always-evolving catalog of products covering cars, trucks, and specialty vehicles[15](index=15&type=chunk) - Products range from chassis to body, underhood to undercarriage, and hardware to complex electronics[15](index=15&type=chunk) [Conference Call and Webcast Details](index=2&type=section&id=Conference%20Call%20and%20Webcast%20Details) Dorman Products will host a conference call and webcast for investors on Friday, November 1, 2024, at 8:00 a.m. Eastern time, with a replay available on the company's website - Conference call and webcast scheduled for Friday, November 1, 2024, at **8:00 a.m. Eastern time**[13](index=13&type=chunk) - Access via telephone (U.S.: (888) 440-4182, International: +1 (646) 960-0653, Conference ID: 1698878) or live audio webcast on Dorman Products, Inc. - Events[13](index=13&type=chunk) [Investor Relations Contact](index=3&type=section&id=Investor%20Relations%20Contact) Contact information for Dorman Products' VP of Investor Relations & Risk Management, Alex Whitelam, is provided, along with a link to the company's investor relations website - Investor Relations Contact: Alex Whitelam, VP, Investor Relations & Risk Management[18](index=18&type=chunk) - Email: awhitelam@dormanproducts.com, Phone: (445) 448-9522[18](index=18&type=chunk) - Company website: www.dormanproducts.com, with a dedicated Investor Relations section[18](index=18&type=chunk) [GAAP Financial Statements](index=4&type=section&id=GAAP%20Financial%20Statements) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) [Three Months Ended September 28, 2024 and September 30, 2023](index=4&type=section&id=Three%20Months%20Ended%20September%2028%2C%202024%20and%20September%2030%2C%202023) For the three months ended September 28, 2024, Dorman reported net sales of **$503.8 million**, gross profit of **$203.8 million** (40.5% of sales), and net income of **$55.3 million**, resulting in diluted EPS of **$1.80** Consolidated Statements of Operations (Three Months, in thousands) | Metric | 9/28/2024 | Pct. of Sales | 9/30/2023 | Pct. of Sales | | :----------------------------------- | :-------- | :------------ | :-------- | :------------ | | Net sales | $503,773 | 100.0% | $488,186 | 100.0% | | Cost of goods sold | $299,970 | 59.5% | $304,968 | 62.5% | | Gross profit | $203,803 | 40.5% | $183,218 | 37.5% | | Selling, general and administrative expenses | $124,532 | 24.7% | $119,010 | 24.4% | | Income from operations | $79,271 | 15.7% | $64,208 | 13.2% | | Interest expense, net | $9,762 | 1.9% | $12,215 | 2.5% | | Income before income taxes | $71,124 | 14.1% | $52,598 | 10.8% | | Provision for income taxes | $15,871 | 3.2% | $12,076 | 2.5% | | Net income | $55,253 | 11.0% | $40,522 | 8.3% | | Diluted earnings per share | $1.80 | | $1.28 | | [Nine Months Ended September 28, 2024 and September 30, 2023](index=4&type=section&id=Nine%20Months%20Ended%20September%2028%2C%202024%20and%20September%2030%2C%202023) For the nine months ended September 28, 2024, net sales were **$1,475.4 million**, gross profit was **$584.7 million** (39.6% of sales), and net income was **$135.5 million**, leading to diluted EPS of **$4.37** Consolidated Statements of Operations (Nine Months, in thousands) | Metric | 9/28/2024 | Pct. of Sales | 9/30/2023 | Pct. of Sales | | :----------------------------------- | :-------- | :------------ | :-------- | :------------ | | Net sales | $1,475,425 | 100.0% | $1,435,492 | 100.0% | | Cost of goods sold | $890,775 | 60.4% | $944,291 | 65.8% | | Gross profit | $584,650 | 39.6% | $491,201 | 34.2% | | Selling, general and administrative expenses | $378,489 | 25.7% | $353,681 | 24.6% | | Income from operations | $206,161 | 14.0% | $137,520 | 9.6% | | Interest expense, net | $30,569 | 2.1% | $36,733 | 2.6% | | Income before income taxes | $177,303 | 12.0% | $102,145 | 7.1% | | Provision for income taxes | $41,812 | 2.8% | $23,170 | 1.6% | | Net income | $135,491 | 9.2% | $78,975 | 5.5% | | Diluted earnings per share | $4.37 | | $2.50 | | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of September 28, 2024, Dorman's total assets were **$2,364.1 million**, with total current assets at **$1,316.1 million**, and total liabilities and shareholders' equity matching total assets Consolidated Balance Sheets (in thousands) | Metric | 9/28/2024 | 12/31/2023 | | :-------------------------------- | :-------- | :--------- | | Cash and cash equivalents | $45,127 | $36,814 | | Accounts receivable, net | $571,051 | $526,867 | | Inventories | $665,237 | $637,375 | | Total current assets | $1,316,076 | $1,233,709 | | Property, plant and equipment, net | $165,734 | $160,113 | | Goodwill | $443,340 | $443,889 | | Total assets | $2,364,097 | $2,292,407 | | Total current liabilities | $561,323 | $547,151 | | Long-term debt | $455,038 | $467,239 | | Total shareholders' equity | $1,234,602 | $1,168,203 | | Total liabilities and shareholders' equity | $2,364,097 | $2,292,407 | [Cash Flow Activities (Selected)](index=5&type=section&id=Cash%20Flow%20Activities%20(Selected)) For the nine months ended September 28, 2024, cash provided by operating activities increased to **$159.6 million**, while capital expenditures slightly decreased Selected Cash Flow Activities (in thousands) | Metric | Three Months 9/28/24 | Three Months 9/30/23 | Nine Months 9/28/24 | Nine Months 9/30/23 | | :-------------------------------- | :------------------- | :------------------- | :------------------ | :------------------ | | Cash provided by operating activities | $44,293 | $56,224 | $159,622 | $149,110 | | Depreciation, amortization and accretion | $14,812 | $13,817 | $43,015 | $40,786 | | Capital expenditures | $8,555 | $9,667 | $31,245 | $32,936 | [Non-GAAP Financial Measures](index=6&type=section&id=Non-GAAP%20Financial%20Measures) [Explanation of Non-GAAP Measures](index=6&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Dorman Products uses Non-GAAP financial measures to provide additional insights into its operating performance, profitability trends, and underlying growth, believing they offer useful information to investors when reconciled to GAAP measures - Non-GAAP financial measures provide useful information to investors by offering additional ways of viewing results, profitability trends, and underlying growth[24](index=24&type=chunk) - Adjustments may include charges for fair value adjustments, amortization, transaction costs, severance, accelerated depreciation, and other similar expenses related to acquisitions, as well as other items not related to ongoing performance[24](index=24&type=chunk) - Non-GAAP measures should not be used as a substitute for GAAP measures or considered in isolation[24](index=24&type=chunk) [Adjusted Net Income Reconciliation](index=6&type=section&id=Adjusted%20Net%20Income%20Reconciliation) Dorman reconciles GAAP net income to Adjusted Net Income by adding back pretax acquisition-related intangible assets amortization, transaction and other costs, executive transition services expense, reduction in workforce costs, and adjusting for fair value changes to contingent consideration and related tax impacts Adjusted Net Income Reconciliation (in thousands) | Metric | Three Months 9/28/24 | Three Months 9/30/23 | Nine Months 9/28/24 | Nine Months 9/30/23 | | :------------------------------------------------------- | :------------------- | :------------------- | :------------------ | :------------------ | | Net income (GAAP) | $55,253 | $40,522 | $135,491 | $78,975 | | Pretax acquisition-related intangible assets amortization | $6,173 | $5,485 | $17,138 | $16,336 | | Pretax acquisition-related transaction and other costs | $396 | $465 | $1,327 | $14,880 | | Pretax executive transition services expense | — | — | — | $1,801 | | Pretax fair value adjustment to contingent consideration | — | $(1,000) | — | $(13,400) | | Pretax reduction in workforce costs | $76 | — | $4,926 | — | | Tax adjustment (related to above items) | $(1,654) | $(1,214) | $(5,815) | $(4,891) | | Adjusted net income (Non-GAAP) | $60,244 | $44,258 | $153,067 | $93,701 | Adjusted Diluted EPS Reconciliation | Metric | Three Months 9/28/24 | Three Months 9/30/23 | Nine Months 9/28/24 | Nine Months 9/30/23 | | :------------------------------------------------------- | :------------------- | :------------------- | :------------------ | :------------------ | | Diluted earnings per share (GAAP) | $1.80 | $1.28 | $4.37 | $2.50 | | Pretax acquisition-related intangible assets amortization | $0.20 | $0.17 | $0.55 | $0.52 | | Pretax acquisition-related transaction and other costs | $0.01 | $0.01 | $0.04 | $0.47 | | Pretax executive transition services expense | — | — | — | $0.06 | | Pretax fair value adjustment to contingent consideration | — | $(0.03) | — | $(0.42) | | Pretax reduction in workforce costs | $0.00 | — | $0.16 | — | | Tax adjustment (related to above items) | $(0.05) | $(0.04) | $(0.19) | $(0.16) | | Adjusted diluted earnings per share (Non-GAAP) | $1.96 | $1.40 | $4.93 | $2.97 | [Adjusted Gross Profit Reconciliation](index=7&type=section&id=Adjusted%20Gross%20Profit%20Reconciliation) Adjusted Gross Profit is derived by adding back pretax acquisition-related transaction and other costs to GAAP gross profit, with Q3 2024 adjusted gross profit at **$203.8 million** and a **40.5%** margin Adjusted Gross Profit Reconciliation (in thousands) | Metric | Three Months 9/28/24 | Pct.** | Three Months 9/30/23 | Pct.** | Nine Months 9/28/24 | Pct.** | Nine Months 9/30/23 | Pct.** | | :------------------------------------------------------- | :------------------- | :----- | :------------------- | :----- | :------------------ | :----- | :------------------ | :----- | | Gross profit (GAAP) | $203,803 | 40.5 | $183,218 | 37.5 | $584,650 | 39.6 | $491,201 | 34.2 | | Pretax acquisition-related transaction and other costs | $1 | 0.0 | $6 | 0.0 | $11 | 0.0 | $11,806 | 0.8 | | Adjusted gross profit (Non-GAAP) | $203,804 | 40.5 | $183,224 | 37.5 | $584,661 | 39.6 | $503,007 | 35.0 | [Adjusted SG&A Expenses Reconciliation](index=8&type=section&id=Adjusted%20SG%26A%20Expenses%20Reconciliation) Adjusted SG&A expenses are calculated by excluding pretax acquisition-related intangible assets amortization, transaction and other costs, fair value adjustments to contingent consideration, executive transition services expense, and reduction in workforce costs from GAAP SG&A expenses Adjusted SG&A Expenses Reconciliation (in thousands) | Metric | Three Months 9/28/24 | Pct.** | Three Months 9/30/23 | Pct.** | Nine Months 9/28/24 | Pct.** | Nine Months 9/30/23 | Pct.** | | :------------------------------------------------------- | :------------------- | :----- | :------------------- | :----- | :------------------ | :----- | :------------------ | :----- | | SG&A expenses (GAAP) | $124,532 | 24.7 | $119,010 | 24.4 | $378,489 | 25.7 | $353,681 | 24.6 | | Pretax acquisition-related intangible assets amortization | $(6,173) | (1.2) | $(5,485) | (1.1) | $(17,138) | (1.2) | $(16,336) | (1.1) | | Pretax acquisition-related transaction and other costs | $(395) | (0.1) | $(459) | (0.1) | $(1,316) | (0.1) | $(3,074) | (0.2) | | Executive transition services expense | — | — | — | — | — | — | $(1,801) | (0.1) | | Pretax fair value adjustment to contingent consideration | — | — | $1,000 | 0.2 | — | — | $13,400 | 0.9 | | Pretax reduction in workforce costs | $(76) | (0.0) | — | — | $(4,926) | (0.3) | — | — | | Adjusted SG&A expenses (Non-GAAP) | $117,888 | 23.4 | $114,066 | 23.4 | $355,109 | 24.1 | $345,870 | 24.1 | [Notes to Non-GAAP Adjustments](index=8&type=section&id=Notes%20to%20Non-GAAP%20Adjustments) This section provides detailed explanations for the various adjustments made to reconcile GAAP to Non-GAAP financial measures, including acquisition-related intangible asset amortization, transaction and other costs, executive transition services expense, fair value adjustments to contingent consideration, reduction in workforce costs, and tax adjustments - Pretax acquisition-related intangible asset amortization results from allocating purchase price to acquired tangible and intangible assets and recognizing the cost over the period of benefit[29](index=29&type=chunk) - Pretax acquisition-related transaction and other costs include integration costs, accretion on contingent consideration obligations, inventory fair value adjustments, and facility consolidation and start-up expenses[30](index=30&type=chunk)[31](index=31&type=chunk) - Pretax reduction in workforce costs represent expenses incurred for planned workforce reductions, including severance and other payroll-related costs[34](index=34&type=chunk) [2024 Guidance Reconciliation (Non-GAAP)](index=10&type=section&id=2024%20Guidance%20Reconciliation%20(Non-GAAP)) Dorman provides a reconciliation of its GAAP diluted EPS guidance to Adjusted diluted EPS guidance for 2024, incorporating adjustments for acquisition-related intangible assets amortization, transaction and other costs, reduction in workforce costs, and related tax impacts 2024 Guidance Reconciliation (Non-GAAP) | Metric | Low End ($) | High End ($) | | :------------------------------------------------------- | :---------- | :----------- | | Diluted earnings per share (GAAP) | $6.15 | $6.25 | | Pretax acquisition-related intangible assets amortization | $0.73 | $0.73 | | Pretax acquisition transaction and other costs | $0.05 | $0.05 | | Pretax reduction in workforce costs | $0.15 | $0.15 | | Tax adjustment (related to above items) | $(0.23) | $(0.23) | | Adjusted diluted earnings per share (Non-GAAP) | $6.85 | $6.95 |

Core Insights - Dorman Products, Inc. reported net sales of $503.8 million for Q3 2024, reflecting a 3.2% increase from $488.2 million in Q3 2023 [1][4] - The diluted earnings per share (EPS) rose to $1.80, a 41% increase compared to $1.28 in the same quarter last year [1][7] - The company has updated its full-year guidance for 2024, expecting net sales growth of 3.5% to 4.5% and diluted EPS in the range of $6.15 to $6.25 [3][10] Financial Performance - Gross profit for Q3 2024 was $203.8 million, representing 40.5% of net sales, up from $183.2 million or 37.5% of net sales in Q3 2023 [5] - Selling, general and administrative (SG&A) expenses were $124.5 million, or 24.7% of net sales, compared to $119.0 million, or 24.4% of net sales in the same quarter last year [6] - The company generated $44 million in cash from operating activities during the quarter [7] Segment Performance - Light Duty segment net sales increased to $393.6 million, up 5% from $374.7 million in Q3 2023, with a segment profit margin improvement of 290 basis points [8] - Heavy Duty segment net sales decreased by 5% to $59.6 million, while the Specialty Vehicle segment remained flat at $50.6 million [8][9] Share Repurchase and Guidance - Dorman repurchased $27 million of its shares and announced a new share repurchase authorization for up to $500 million [1][12] - The updated guidance for 2024 includes an increase in diluted EPS expectations to $6.15 to $6.25, up from the previous range of $5.32 to $5.52 [10][3] Cash Flow and Capital Expenditures - The company invested $9 million in capital expenditures during the quarter [7] - Cash provided by operating activities for the nine months ended September 28, 2024, was $159.6 million, compared to $149.1 million for the same period in 2023 [24]

Core Insights - Dorman Products, Inc. has announced the release of hundreds of new aftermarket components and assemblies, expanding its catalog to over 133,000 SKUs, which includes several aftermarket exclusives [1][3] - The new products are designed to provide better repair solutions than original equipment manufacturer (OEM) parts, creating millions of repair opportunities for parts distributors, retailers, and repair shops [1][3] Product Innovations - New Dorman® OE FIX™ products include an exhaust manifold repair clamp for General Motors and Isuzu vehicles, a durable transmission gearshift bracket for Dodge and Ram trucks, and a flexible stainless steel fuel line for select Chevrolet, Pontiac, and Buick vehicles [1][2] - Additional innovations include a loaded brake backing plate for Ford vehicles, turbocharger inlet duct and charge air cooler pipe for Ram trucks, and precision-engineered exhaust manifold kits for Ford Transit vans [2] - The new product solutions collectively offer over 18 million new repair opportunities for repair professionals and vehicle owners [3] Company Overview - Dorman Products has been providing aftermarket replacement products for over 100 years, focusing on solutions that save time and money while increasing convenience and reliability [4][5] - The company is headquartered in the United States and offers a diverse catalog of products covering various vehicle types, from chassis to complex electronics [5]

COLMAR, Pa., Oct. 10, 2024 (GLOBE NEWSWIRE) -- Dorman Products, Inc. (the "Company" or "Dorman") (NASDAQ: DORM) today announced the Company will report its financial results for the third quarter ended September 28, 2024 after the closing of the Nasdaq Stock Market on October 31, 2024. The Company also announced that it is scheduled to conduct a conference call and webcast of its third quarter 2024 financial results on November 1, 2024 at 8 a.m. ET. The conference call can be accessed by dialing (888) 440-4 ...

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Market Overview - Recent market sell-offs are attributed to a combination of factors, leading to a pullback and correction in major indexes, with investors concerned about an economic slowdown and recession due to disappointing economic indicators [1] - Weak jobs data for July, including lower-than-expected job additions and a rise in the unemployment rate, have negatively impacted the U.S. economy's outlook, raising fears about the Federal Reserve's ability to achieve a "soft landing" [2] Geopolitical Factors - Geopolitical tensions, particularly the ongoing conflict between Ukraine and Russia and escalating tensions between Israel and Iran, are contributing to market volatility [3] Investment Strategies - In light of market uncertainty, investors are reassessing their positions and strategies, with a focus on a "relative price strength" strategy to identify stocks outperforming their peers despite broader market weakness [4] - The relative price strength strategy emphasizes the importance of earnings growth and valuation multiples to determine a stock's performance relative to its peers [5] Screening Parameters - Key screening parameters for identifying potential investment opportunities include: - Relative % Price change over 12 weeks, 4 weeks, and 1 week greater than 0 [9] - Positive current-quarter estimate revisions over the last four weeks [9] - Zacks Rank equal to 1 (Strong Buy) for stocks that have historically outperformed the S&P 500 [10] - Current price greater than or equal to $5 and average 20-day volume greater than or equal to 50,000 for liquidity [11] Company Highlights - **Spotify Technology S.A. (SPOT)**: Expected 2024 earnings growth of 314.2% year-over-year, with a market capitalization of $64.4 billion and shares up 143.2% in a year [12] - **Interface, Inc. (TILE)**: Projected 2024 earnings growth of 28%, with a market capitalization of $946.5 million and shares up 58.8% in a year [13] - **Tenet Healthcare Corporation (THC)**: Expected EPS growth rate of 18.3% over three to five years, with shares up 105.1% in a year [15] - **Dorman Products (DORM)**: Projected 2024 earnings growth of 35.5%, with shares increasing by 21.1% in a year [16] - **Matson, Inc. (MATX)**: Expected earnings growth of 18.5%, with shares up 37.4% in a year [17]

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Core Viewpoint - Dorman Products (NASDAQ:DORM) reported strong 2Q24 results with a 4.7% year-over-year increase in net sales, primarily driven by the light duty segment, which grew by 9% year-over-year, while the specialty vehicle and heavy duty segments faced challenges. The company’s outlook remains positive due to increasing vehicle miles traveled and a record-high average vehicle age, supporting demand for aftermarket parts [2][33]. Financial Performance - Dorman Products reported net sales of $503 million in 2Q24, up from $480.6 million in the previous year, marking a 4.7% increase [4]. - The adjusted gross profit margin expanded from 35% to 40%, while the adjusted operating margin increased to 15.6% and the adjusted net income margin rose from 6.6% to 10.3% [5][33]. - Adjusted diluted EPS increased from $1.01 to $1.67, representing a year-over-year growth of approximately 65.3% [24]. Segment Performance - The light duty segment accounted for 77% of total net sales, with sales increasing by 9% year-over-year to $385.4 million [12][25]. - The heavy duty segment saw a decline of 11% year-over-year, with net sales of $61.2 million, attributed to a challenging freight industry [20][26]. - The specialty vehicle segment experienced a modest decline of 2%, with net sales of $56.4 million, impacted by high interest rates and economic uncertainty [22][27]. Market Trends - Total vehicle miles traveled are nearing pre-pandemic levels, which is expected to drive demand for vehicle repairs and aftermarket parts [28][33]. - The average age of vehicles in the U.S. has reached a record high of 12.6 years, which is anticipated to support the aftermarket industry as older vehicles typically require more repairs [30][33]. - The number of vehicles aged between 8 and 13 years remains robust, further bolstering demand for Dorman's products [29][30]. Growth Outlook - Dorman Products raised its guidance for full-year 2024, forecasting net sales growth between 3% to 5% and adjusted diluted EPS guidance increased to a range of $6.00 to $6.20 [31]. - The company’s forward revenue growth rate is projected at 6.50%, significantly outperforming peers' median of 1.55% [31]. - The target share price for Dorman Products has been adjusted to $108.33 based on its strong performance and favorable market conditions [31].

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Financial Data and Key Metrics Changes - Consolidated net sales increased by 5% year-over-year to $503 million, with adjusted operating margin improving by 430 basis points [5][16] - Adjusted diluted EPS rose by 65% compared to the same period last year, reaching $1.67 [6][17] - Free cash flow was $51 million, used to repay $15 million of debt and repurchase $25 million of shares [6][21] Business Segment Data and Key Metrics Changes - Light Duty segment net sales were $385 million, a 9% increase year-over-year, with operating margin improving by 550 basis points to 17.1% [17][18] - Heavy Duty segment net sales decreased by 11% to $61 million, with operating margin at 4.4%, down 50 basis points year-over-year but up 440 basis points sequentially [18][19] - Specialty Vehicle segment net sales were $56 million, a 2% decrease year-over-year, but operating margin increased by 100 basis points to 17.8% [19][20] Market Data and Key Metrics Changes - The Light Duty market showed positive trends with increased vehicle miles traveled and a growing number of older vehicles [6][7] - Heavy Duty market remains soft, expected to continue through early 2025, while Specialty Vehicle market faces challenges but is capturing share [8][23] Company Strategy and Development Direction - The company is focused on innovation and automation to enhance operational efficiency and meet customer demands [12][14] - Investments in new product development and automation are expected to yield significant cost savings and operational benefits [14][24] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term demand for vehicles and parts, anticipating a rebound as economic volatility stabilizes [11][24] - The company raised its full-year earnings guidance, expecting consolidated net sales growth of 3% to 5% and adjusted diluted EPS of $6 to $6.20 [22][24] Other Important Information - The company has invested $14 million in capital for automation and operational improvements, expecting annualized net savings of approximately $8 million [14][15] - The net debt was reduced to $500 million, with a net leverage ratio of 1.44 times adjusted EBITDA [21] Q&A Session Summary Question: Insights on POS growth in Light Duty - Management noted broad-based growth across categories, with a solid quarter driven by new product launches, including 1,700 SKUs, 30% of which were new to the aftermarket [26][27] Question: Expected operating margins for Heavy Duty and Specialty - Management expects Light Duty and Specialty Vehicle margins in the high teens, while Heavy Duty margins are projected in the mid-to-high teens [28] Question: Core SKU performance in Light Duty - Most growth is attributed to new products, with the market growth estimated in the low single-digit range [29] Question: Specialty Vehicle market conditions - The Specialty Vehicle business has been flat, but inventory levels are normalizing, which may help future sales [30][31] Question: Impact of new vehicle sales on Specialty Vehicle sales - A significant portion of sales occurs within the first two years of a new vehicle sale, indicating that drops in new vehicle sales impact the business [32]