What changed in this filing

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Item 1. Financial Statements

2024-11-01 compared with 2024-08-02 · 65 added, 63 removed, 305 unchanged (30% of the section changed)

3 unchanged sentences

AND COMPREHENSIVE INCOME

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(in thousands, except per share data) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Net sales $ 503,773 $ 488,186 $ 1,475,425 $ 1,435,492

4 unchanged sentences

Interest expense, net 9,762 12,215 30,569 36,733

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

Other income, net 1,615 605 1,711 1,358

Income before income taxes 71,124 52,598 177,303 102,145

13 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(in thousands, except for share data) September 28, 2024 December 31, 2023

Current assets:

37 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Three Months Ended June 29, 2024

Three Months Ended September 28, 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

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

Exercise of stock options 15,269 — 1,207 — — 1,207

5 unchanged sentences

Net income — — — 55,253 — 55,253

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

Balance at September 28, 2024 30,516,759 $ 305 $ 110,595 $ 1,127,259 $ ( 3,557 ) $ 1,234,602

Three Months Ended September 30, 2023

Common Stock Additional Paid-In

2 unchanged sentences

(in thousands, except share data) Shares

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

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

Exercise of stock options 460 — 37 — — 37

5 unchanged sentences

Net income — — — 40,522 — 40,522

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

Six Months Ended June 29, 2024

Balance at September 30, 2023 31,487,494 $ 315 $ 97,342 $ 1,034,268 $ ( 3,832 ) $ 1,128,093

Nine Months Ended September 28, 2024

Common Stock Additional Paid-In

10 unchanged sentences

Net income — — — 135,491 — 135,491

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

Balance at September 28, 2024 30,516,759 $ 305 $ 110,595 $ 1,127,259 $ ( 3,557 ) $ 1,234,602

Nine Months Ended September 30, 2023

Common Stock Additional Paid-In

10 unchanged sentences

Net income — — — 78,975 — 78,975

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

Balance at September 30, 2023 31,487,494 $ 315 $ 97,342 $ 1,034,268 $ ( 3,832 ) $ 1,128,093

See accompanying Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

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

Nine Months Ended

(in thousands) September 28, 2024 September 30, 2023

Cash Flows from Operating Activities:

37 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 28, 2024 AND SEPTEMBER 30, 2023

Basis of Presentation

7 unchanged sentences

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 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.

Operating results for the three and nine months ended September 28, 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.

4 unchanged sentences

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 Six Months Ended

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

Three Months Ended Nine Months Ended

(in thousands) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Sales of accounts receivable $ 254,657 $ 233,513 $ 791,413 $ 713,190

2 unchanged sentences

Inventories were as follows:

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

(in thousands) September 28, 2024 December 31, 2023

Raw materials $ 28,975 $ 29,750

8 unchanged sentences

Foreign currency translation — ( 549 ) — ( 549 )

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

Balance at September 28, 2024 $ 313,704 $ 57,327 $ 72,309 $ 443,340

Intangible Assets

Intangible assets included the following:

June 29, 2024 December 31, 2023

September 28, 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 $ 353,317 $ 69,179 $ 284,138 $ 355,317 $ 53,761 $ 301,556

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.

Amortization expense was $ 6.3 million and $ 5.5 million during the three months ended September 28, 2024 and September 30, 2023, and $ 17.4 million and $ 16.5 million during the nine months ended September 28, 2024 and September 30, 2023, respectively.

As of September 28, 2024 and December 31, 2023, the interest rate on the outstanding borrowings under our credit facility was 6.60 % and 6.96 %, respectively.

Segment and Geographic Information

Segment results are as follows:

For the Three Months Ended For the Six Months Ended

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

For the Three Months Ended For the Nine Months Ended

(in thousands) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Light Duty $ 393,577 $ 374,697 $ 1,138,228 $ 1,076,619

8 unchanged sentences

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

For the Three Months Ended For the Six Months Ended

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

For the Three Months Ended For the Nine Months Ended

(in thousands) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Segment profit $ 85,916 $ 69,158 $ 229,552 $ 157,137

1 unchanged sentence

Acquisition-related transaction and other costs ( 396 ) ( 465 ) ( 1,327 ) ( 14,880 )

Executive transition services expenses — ( 22 ) — —

Pretax reduction in workforce costs ( 76 ) — ( 4,926 ) ( 1,801 )

1 unchanged sentence

Interest expense, net ( 9,762 ) ( 12,215 ) ( 30,569 ) ( 36,733 )

Other income (expense), net 136 396 96 753

Other income, net 1,615 605 1,711 1,358

Income before income taxes $ 71,124 $ 52,598 $ 177,303 $ 102,145

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

Three Months Ended Nine Months Ended

(in thousands) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Net sales to U.S.

6 unchanged sentences

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 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.

As of September 28, 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.

10 unchanged sentences

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:

Performance-based RSUs granted in the nine months ended September 28, 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 $ 3.4 million and $ 2.4 million for the three months ended September 28, 2024 and September 30, 2023, respectively, and $ 9.1 million and $ 6.7 million for the nine months ended September 28, 2024 and September 30, 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 nine months ended September 28, 2024:

Shares Weighted

3 unchanged sentences

Canceled ( 28,792 ) $ 112.06

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.

Balance at September 28, 2024 343,706 $ 98.56

For the nine months ended September 28, 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 nine months ended September 30, 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 September 28, 2024, there was $ 21.7 million of unrecognized compensation cost related to unvested RSA and RSU grants that is expected to be recognized over a weighted average period of 2.1 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 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 :

Compensation cost related to stock option grants was $ 0.3 million and $ 0.5 million for the three months ended September 28, 2024 and September 30, 2023, respectively, and $ 1.1 million and $ 1.5 million for the nine months ended September 28, 2024 and September 30, 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 nine months ended September 28, 2024 :

Shares Weighted

5 unchanged sentences

Exercised ( 25,580 ) $ 72.88

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.

Balance at September 28, 2024 274,701 $ 87.42 4.7 $ 7,187

Exercisable at September 28, 2024 174,775 $ 83.34 4.1 $ 5,284

As of September 28, 2024, there was $ 2.5 million of unrecognized compensation cost related to unvested stock options that is expected to be recognized over a weighted average period of 2.1 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.

During the nine months ended September 28, 2024, we issued 13,555 shares under the ESPP.

During the nine months ended September 30, 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 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.

For the three months ended September 28, 2024 and September 30, 2023, there were approximately 214,000 shares and 294,000 shares, respectively, and for the nine months ended September 28, 2024 and September 30, 2023 there were approximately 253,000 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 Six Months Ended

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

Three Months Ended Nine Months Ended

(in thousands, except per share data) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Net income $ 55,253 $ 40,522 $ 135,491 $ 78,975

11 unchanged sentences

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Shares repurchased and canceled 2,410 2,010 11,414 11,850

1 unchanged sentence

Average price per share $ 108.70 $ 89.99 $ 91.85 $ 85.11

Separately, our Board of Directors has authorized the repurchase of up to $ 600 million of our common stock through December 31, 2024 under a previously announced share repurchase program and subsequent authorizations.

Under this program, share repurchases may be made from time to time depending on market conditions, share price, share availability and other factors at our discretion.

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

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 Six Months Ended

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

Separately, our Board of Directors previously authorized the repurchase of up to $ 600 million of our common stock through December 31, 2024 under a share repurchase program and subsequent authorizations (the “Existing Program”).

At September 28, 2024, $ 134.6 million was available for repurchase under the Existing Program.

The Existing Program will expire on December 31, 2024, along with all amounts that remain available for use under the Existing Program as of that date.

In October 2024, the Company’s Board of Directors authorized the purchase of up to $ 500 million of our common stock under a new share repurchase program that is effective from January 1, 2025 through December 31, 2027 (the “New Program”).

Under each of the Existing Program and the New Program, share repurchases may be made from time to time depending on market conditions, share price, share availability and other factors at the

Company’s discretion.

These share repurchase programs do not obligate us to acquire any specific number of shares.

The following table summarizes the repurchase and cancellation of common stock under the Existing Program:

Three Months Ended Nine Months Ended

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Shares repurchased and canceled 273,653 — 855,971 —

1 unchanged sentence

Average price per share $ 97.70 $ — $ 91.23 $ —

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.

At September 28, 2024, we had $ 3.4 million of net unrecognized tax benefits, all 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 September 28, 2024.

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

13 unchanged sentences

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.

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.

19 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