Dorman Products: Light Duty Segment Leads Sales Growth

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].