What changed in this filing

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Item 1. Financial Statements

2024-08-02 compared with 2024-05-07 · 110 added, 79 removed, 258 unchanged (42% of the section changed)

3 unchanged sentences

AND COMPREHENSIVE INCOME

Three Months Ended

(in thousands, except per share data) March 30, 2024 April 1, 2023

Three Months Ended Six Months Ended

(in thousands, except per share data) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Net sales $ 502,951 $ 480,568 $ 971,652 $ 947,306

4 unchanged sentences

Interest expense, net 10,202 12,565 20,807 24,518

Other expense (income), net 40 ( 357 )

Other (income) expense, net ( 136 ) ( 396 ) ( 96 ) ( 753 )

Income before income taxes 62,386 43,029 106,179 49,547

13 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for share data) March 30, 2024 December 31, 2023

(in thousands, except for share data) June 29, 2024 December 31, 2023

Current assets:

37 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Three Months Ended March 30, 2024

Three Months Ended June 29, 2024

Common Stock Additional Paid-In

2 unchanged sentences

(in thousands, except share data) Shares

Balance at March 30, 2024 31,011,870 $ 310 $ 102,211 $ 1,075,663 $ ( 3,689 ) $ 1,174,495

Exercise of stock options 3,549 — 219 — — 219

Compensation expense under incentive stock plans — — 3,849 — — 3,849

Purchase and cancellation of common stock ( 273,390 ) ( 3 ) ( 492 ) ( 24,509 ) — ( 25,004 )

Issuance of common stock under incentive stock plans, net of cancellations 24,521 1 960 — — 961

Other stock-related activity ( 878 ) — ( 33 ) ( 58 ) — ( 91 )

Change in foreign currency translation adjustment — — — — ( 519 ) ( 519 )

Net income — — — 47,410 — 47,410

Balance at June 29, 2024 30,765,672 $ 308 $ 106,714 $ 1,098,506 $ ( 4,208 ) $ 1,201,320

Three Months Ended July 1, 2023

Common Stock Additional Paid-In

Capital Retained

Earnings Accumulated Other Comprehensive Loss Total

(in thousands, except share data) Shares

Balance at April 1, 2023 31,469,310 $ 315 $ 90,416 $ 961,597 $ ( 3,184 ) $ 1,049,144

Exercise of stock options 1,399 — 81 — — 81

Compensation expense under incentive stock plans — — 3,123 — — 3,123

Purchase and cancellation of common stock ( 4,715 ) — ( 9 ) ( 386 ) — ( 395 )

Issuance of common stock under incentive stock plans, net of cancellations 23,177 — 1,004 — — 1,004

Other stock-related activity ( 1,007 ) — ( 163 ) ( 58 ) — ( 221 )

Change in foreign currency translation adjustment — — — — 566 566

Net income — — — 32,770 — 32,770

Balance at July 1, 2023 31,488,164 $ 315 $ 94,452 $ 993,923 $ ( 2,618 ) $ 1,086,072

Six Months Ended June 29, 2024

Common Stock Additional Paid-In

Capital Retained

Earnings Accumulated Other Comprehensive Loss Total

(in thousands, except share data) Shares

Balance at December 31, 2023 31,299,770 $ 313 $ 101,045 $ 1,069,435 $ ( 2,590 ) $ 1,168,203

Exercise of stock options 9,089 — 559 — — 559

Compensation expense under Incentive Stock Plan — — 2,931 — — 2,931

Compensation expense under incentive stock plans — — 6,780 — — 6,780

Purchase and cancellation of common stock ( 591,322 ) ( 6 ) ( 1,064 ) ( 51,070 ) — ( 52,140 )

Issuance of non-vested stock, net of cancellations 41,357 — — — — —

Other stock-related activity, net of tax ( 16,865 ) — ( 1,533 ) ( 39 ) — ( 1,572 )

Issuance of common stock under incentive stock plans, net of cancellations 65,878 1 960 — — 961

Other stock-related activity ( 17,743 ) — ( 1,566 ) ( 97 ) — ( 1,663 )

Change in foreign currency translation adjustment — — — — ( 1,618 ) ( 1,618 )

Net income — — — 80,238 — 80,238

Balance at March 30, 2024 31,011,870 $ 310 $ 102,211 $ 1,075,663 $ ( 3,689 ) $ 1,174,495

Three Months Ended April 1, 2023

Balance at June 29, 2024 30,765,672 $ 308 $ 106,714 $ 1,098,506 $ ( 4,208 ) $ 1,201,320

Six Months Ended July 1, 2023

Common Stock Additional Paid-In

4 unchanged sentences

Exercise of stock options 17,029 — 1,130 — — 1,130

Compensation expense under Incentive Stock Plan — — 2,312 — — 2,312

Compensation expense under incentive stock plans — — 5,435 — — 5,435

Purchase and cancellation of common stock ( 9,840 ) — ( 18 ) ( 810 ) — ( 828 )

Issuance of non-vested stock, net of cancellations 52,151 1 ( 1 ) — — —

Other stock-related activity, net of tax ( 23,978 ) — ( 1,685 ) ( 532 ) — ( 2,217 )

Issuance of common stock under incentive stock plans, net of cancellations 75,328 1 1,003 — — 1,004

Other stock-related activity ( 24,985 ) — ( 1,848 ) ( 590 ) — ( 2,438 )

Change in foreign currency translation adjustment — — — — 685 685

Net income — — — 38,453 — 38,453

Balance at April 1, 2023 31,469,310 $ 315 $ 90,416 $ 961,597 $ ( 3,184 ) $ 1,049,144

Balance at July 01, 2023 31,488,164 $ 315 $ 94,452 $ 993,923 $ ( 2,618 ) $ 1,086,072

See accompanying Notes to Condensed Consolidated Financial Statements

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

(in thousands) March 30, 2024 April 1, 2023

Six Months Ended

(in thousands) June 29, 2024 July 1, 2023

Cash Flows from Operating Activities:

2 unchanged sentences

Depreciation, amortization and accretion 28,203 26,969

Fair value adjustment to contingent consideration — ( 12,400 )

Provision for doubtful accounts ( 15 ) 2,357

17 unchanged sentences

Payments of long-term debt ( 6,250 ) ( 6,250 )

Payment of deferred acquisition consideration ( 200 ) —

Proceeds from exercise of stock options 559 1,130

3 unchanged sentences

Effect of exchange rate changes on Cash and Cash Equivalents ( 58 ) 39

Net Decrease in Cash and Cash Equivalents ( 2,381 ) ( 12,727 )

Net Increase (Decrease) in Cash and Cash Equivalents 10,653 ( 10,368 )

Cash and Cash Equivalents, Beginning of Period 36,814 46,034

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 30, 2024 AND APRIL 1, 2023

FOR THE THREE AND SIX MONTHS ENDED JUNE 29, 2024 AND JULY 1, 2023

Basis of Presentation

1 unchanged sentence

and its subsidiaries.

Our ticker symbol on the NASDAQ Global Select Market is “DORM.”

Our ticker symbol on The Nasdaq Stock Market LLC is “DORM.”

The accompanying unaudited condensed consolidated financial statements have been prepared under U.S.

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In the opinion of management, all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation have been included.

Operating results for the three months ended March 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024 or any future period.

Operating results for the three and six months ended June 29, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024 or any future period.

We may experience significant fluctuations from quarter to quarter in our results of operations due to the timing of orders placed by our customers and the introduction of new products and product lines to customers.

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Sales of accounts receivable under these agreements, and related factoring costs, which were included in selling, general and administrative expenses, were as follows:

Three Months Ended

(in thousands) March 30, 2024 April 1, 2023

Three Months Ended Six Months Ended

(in thousands) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Sales of accounts receivable $ 251,538 $ 241,937 $ 536,756 $ 479,677

2 unchanged sentences

Inventories were as follows:

(in thousands) March 30, 2024 December 31, 2023

(in thousands) June 29, 2024 December 31, 2023

Raw materials $ 29,614 $ 29,750

8 unchanged sentences

Foreign currency translation — ( 869 ) — ( 869 )

Balance at March 30, 2024 $ 313,704 $ 57,283 $ 72,309 $ 443,296

Balance at June 29, 2024 $ 313,704 $ 57,007 $ 72,309 $ 443,020

Intangible Assets

Intangible assets included the following:

March 30, 2024 December 31, 2023

June 29, 2024 December 31, 2023

Intangible assets subject to amortization Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value

6 unchanged sentences

Total $ 355,317 $ 65,040 $ 290,277 $ 355,317 $ 53,761 $ 301,556

Amortization expense was $ 5.6 million and $ 5.5 million during the three months ended March 30, 2024 and April 1, 2023, respectively.

As of March 30, 2024 and December 31, 2023, the interest rate on the outstanding borrowings under our credit facility was 6.93 % and 6.96 %, respectively.

Segment Information

Amortization expense was $ 5.5 million during both the three months ended June 29, 2024 and July 1, 2023, and $ 11.1 million and $ 11.0 million during the six months ended June 29, 2024 and July 1, 2023, respectively.

As of June 29, 2024 and December 31, 2023, the interest rate on the outstanding borrowings under our credit facility was 6.82 % and 6.96 %, respectively.

Segment and Geographic Information

Segment results are as follows:

For the Three Months Ended

(in thousands) March 30, 2024 April 1, 2023

For the Three Months Ended For the Six Months Ended

(in thousands) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Light Duty $ 385,358 $ 353,839 $ 744,651 $ 701,922

8 unchanged sentences

A reconciliation of segment profit to income before income taxes is as follows:

For the Three Months Ended

(in thousands) March 30, 2024 April 1, 2023

For the Three Months Ended For the Six Months Ended

(in thousands) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Segment profit $ 78,663 $ 54,104 $ 143,636 $ 87,979

1 unchanged sentence

Acquisition-related transaction and other costs ( 448 ) ( 5,866 ) ( 931 ) ( 14,415 )

Executive transaction services expenses — ( 1,779 )

Executive transition services expenses — ( 22 ) — —

Pretax reduction in workforce costs ( 282 ) — ( 4,850 ) ( 1,801 )

Fair value adjustment to contingent consideration — 12,400 — 12,400

Interest expense, net ( 10,202 ) ( 12,565 ) ( 20,807 ) ( 24,518 )

Other (expense) income, net ( 40 ) 357

Other income (expense), net 136 396 96 753

Income before income taxes $ 62,386 $ 43,029 $ 106,179 $ 49,547

The following table presents our net sales by geographic region:

Three Months Ended Six Months Ended

(in thousands) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Net sales to U.S.

customers $ 462,514 $ 438,300 $ 891,369 $ 868,993

Net sales to non-U.S.

customers 40,437 42,268 80,283 78,313

Total $ 502,951 $ 480,568 $ 971,652 $ 947,306

Commitments and Contingencies

1 unchanged sentence

If the remaining performance targets for the acquisitions are fully achieved, the maximum additional contingent payments to be made under the transaction documents would be $ 102.0 million in aggregate.

As of March 30, 2024 and December 31, 2023, we estimated that no payments are expected to become due in connection with the acquisitions, and therefore accrued no liability.

As of June 29, 2024 and December 31, 2023, we estimated that no such contingent payments are expected to become due in connection with the acquisitions, and therefore accrued no liability.

The contingent consideration liability is measured each reporting period and recorded at fair value.

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However, legal matters are subject to inherent uncertainties and there exists the possibility that the ultimate resolution of any of these matters could have a material adverse impact on the Company’s cash flows, financial position or results of operations in the period in which any such effects are recorded.

Revenue Recognition

The following tables present our disaggregated revenue by geography.

Three Months Ended

(in thousands) March 30, 2024 April 1, 2023

Net sales to U.S.

customers $ 428,855 $ 430,693

Net sales to non-U.S.

customers 39,846 36,045

Total $ 468,701 $ 466,738

Stock-Based Compensation

Restricted Stock Awards (“RSAs”) and Restricted Stock Units (“RSUs”)

We issue RSUs, and, prior to January 2020 we issued RSAs, to participants in our equity plans.

Performance-based RSUs granted in the three months ended March 30, 2024 included certain grants that vest based on our total shareholder return ranking relative to the Nasdaq US Benchmark Auto Parts Index over a three-year performance period (market condition), and other grants that vest based

upon achievement of return on invested capital targets over a three-year performance period (performance condition).

Compensation cost related to RSA and RSU grants was $ 2.5 million and $ 1.7 million for the three months ended March 30, 2024 and April 1, 2023, respectively, and was included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

The following table summarizes our RSA and RSU activity for the three months ended March 30, 2024:

We grant RSUs, and prior to January 2020 we granted RSAs, to participants in our equity plans.

Performance-based RSUs granted in the six months ended June 29, 2024 included certain grants that vest based on our total shareholder return ranking relative to the Nasdaq US Benchmark Auto Parts Index over a three-year performance period (market condition), and other grants that vest based upon achievement of return on invested capital targets over a three-year performance period (performance condition).

Compensation cost related to RSA and RSU grants was $ 3.2 million and $ 2.6 million for the three months ended June 29, 2024 and July 1, 2023, respectively, and $ 5.7 million and $ 4.3 million for the six months ended June 29, 2024 and July 1, 2023 respectively, and was included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

The following table summarizes our RSA and RSU activity for the six months ended June 29, 2024:

Shares Weighted

3 unchanged sentences

Canceled ( 27,523 ) $ 112.99

Balance at March 30, 2024 368,974 $ 97.83

For the three months ended March 30, 2024, we granted 32,109 performance-based RSUs containing a market condition with a grant date fair value of $ 138.58 per share.

For the three months ended April 1, 2023, we granted 29,399 performance-based RSUs containing a market condition with a grant date fair value of $ 113.15 per share.

As of March 30, 2024, there was $ 27.4 million of unrecognized compensation cost related to unvested RSA and RSU grants that is expected to be recognized over a weighted average period of 2.4 years.

Balance at June 29, 2024 358,637 $ 98.30

For the six months ended June 29, 2024, we granted 32,109 performance-based RSUs containing a market condition with a grant date fair value of $ 138.58 per share.

For the six months ended July 1, 2023, we granted 29,399 performance-based RSUs containing a market condition with a grant date fair value of $ 113.15 per share.

As of June 29, 2024, there was $ 24.8 million of unrecognized compensation cost related to unvested RSA and RSU grants that is expected to be recognized over a weighted average period of 2.3 years.

Stock Options

From time to time, we grant stock options to participants in our equity plans.

Compensation cost related to stock option grants was $ 0.4 million for both the three months ended March 30, 2024 and April 1, 2023, and was included as selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

The following table summarizes our stock option activity for the three months ended March 30, 2024 :

Compensation cost related to stock option grants was $ 0.4 million and $ 0.6 million for the three months ended June 29, 2024 and July 1, 2023, respectively, and $ 0.8 million and $ 1.0 million for the six months ended June 29, 2024 and July 1, 2023, respectively, and was included as selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

The following table summarizes our stock option activity for the six months ended June 29, 2024 :

Shares Weighted

3 unchanged sentences

Balance at December 31, 2023 311,217 $ 86.52

Canceled ( 6,416 ) $ 94.50

Exercised ( 10,311 ) $ 63.73

Balance at March 30, 2024 305,171 $ 86.99 5.2 $ 3,193

Exercisable at March 30, 2024 195,683 $ 82.99 4.6 $ 2,844

As of March 30, 2024, there was $ 3.3 million of unrecognized compensation cost related to unvested stock options that is expected to be recognized over a weighted average period of 2.3 years.

Balance at June 29, 2024 294,490 $ 87.14 4.9 $ 2,192

Exercisable at June 29, 2024 192,637 $ 83.34 4.3 $ 2,160

As of June 29, 2024, there was $ 2.9 million of unrecognized compensation cost related to unvested stock options that is expected to be recognized over a weighted average period of 2.2 years.

Employee Stock Purchase Plan ("ESPP")

During the three and six months ended June 29, 2024, we issued 13,555 shares under the ESPP.

During the three and six months ended July 1, 2023, we issued 14,975 shares under the ESPP.

Earnings Per Share

2 unchanged sentences

equivalents are calculated using the treasury stock method and are computed based on outstanding stock-based awards.

For the three months ended March 30, 2024 and April 1, 2023, there were approximately 319,000 shares and 237,000 shares, respectively, that were excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive.

For the three months ended June 29, 2024 and July 1, 2023, there were approximately 225,000 shares and 353,000 shares, respectively, and for the six months ended June 29, 2024 and July 1, 2023 there were approximately 272,000 shares and 295,000 shares, respectively, that were excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive.

The following table sets forth the computation of basic earnings per share and diluted earnings per share:

Three Months Ended

(in thousands, except per share data) March 30, 2024 April 1, 2023

Three Months Ended Six Months Ended

(in thousands, except per share data) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Net income $ 47,410 $ 32,770 $ 80,238 $ 38,453

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The following table summarizes the repurchase and cancellation of common stock by the Company for the periods indicated:

Three Months Ended

March 30, 2024 April 1, 2023

Three Months Ended Six Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Shares repurchased and canceled 1,245 4,715 9,004 9,840

4 unchanged sentences

share repurchase program does not obligate us to acquire any specific number of shares.

At March 30, 2024, $ 186.2 million was available for repurchase under this share repurchase program.

At June 29, 2024, $ 161.3 million was available for repurchase under this share repurchase program.

The following table summarizes the repurchase and cancellation of common stock under the share repurchase program:

Three Months Ended

March 30, 2024 April 1, 2023

Three Months Ended Six Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Shares repurchased and canceled 272,145 — 582,318 —

1 unchanged sentence

Average price per share $ 91.46 $ — $ 88.19 $ —

Our effective tax rate was 25.0 % and 12.8 % for the three months ended March 30, 2024 and April 1, 2023, respectively.

The increase in the effective tax rate was primarily due to favorable discrete items applied to a lower income before income taxes in the three months ended April 1, 2023.

At March 30, 2024, we had $ 4.6 million of net unrecognized tax benefits, $ 4.3 million of which would lower our effective tax rate if recognized.

We recognize interest and penalties related to uncertain tax positions in income tax expense.

As of March 30, 2024, accrued interest and penalties related to uncertain tax positions were not material.

At June 29, 2024, we had $ 4.7 million of net unrecognized tax benefits, $ 4.4 million of which would lower our effective tax rate if recognized.

Interest and penalties related to uncertain tax positions are recognized in income tax expense and were not material as of June 29, 2024.

We file income tax returns in the United States, Canada, China, India, and Mexico.

2 unchanged sentences

The statute of limitations for tax years before 2017 is closed for the states in which we filed.

The statute of limitations for tax years before 2020 is closed for income tax purposes in Canada, China and India.

The statute of limitations for tax years before 2021 is closed for income tax purposes in Canada and China.

The statute of limitations for tax years before 2020 is closed for income tax purposes in India.

The statute of limitations for tax years before 2019 is closed for income tax purposes in Mexico.

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Berman, and certain of his family members are owners.

Each lease is a non-cancelable operating lease and expires December 31, 2027.

We also lease our facilities in Madison, IN and Shreveport, LA, from entities in which Lindsay Hunt, our President and Chief Executive Officer, Specialty Vehicle, and certain of her family members are owners.

Each lease is a non-cancelable operating lease.

The leases for our operating facilities in Madison, IN and Shreveport, LA were renewed in October 2022 in connection with the acquisition of SuperATV, 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 Lindsay Hunt, our President and Chief Executive Officer, Specialty Vehicle.

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 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 SuperATV, 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.

These agreements provide for various warehouse and facility-related services at agreed-upon rates.

2 unchanged sentences

(in thousands) December 31, 2024 December 31, 2023

Facility lease with Steven Berman related entities $ 715 $ 2,918

Facility lease with Lindsay Hunt related entities $ 2,757 $ 2,603

Facility leases with Steven Berman related entities $ 715 $ 2,918

Facility leases with Lindsay Hunt related entities $ 2,757 $ 2,603

Service agreements with Lindsay Hunt related entities $ 54 $ 200

12 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements