What changed in this filing

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Item 1. Business

2025-02-27 compared with 2024-02-28 · 67 added, 61 removed, 156 unchanged (45% of the section changed)

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We are one of the leading aftermarket suppliers of parts that were traditionally available to professional installers and consumers only from original equipment manufacturers (OEMs) or salvage yards.

These parts include, among other parts, leaf springs, intake manifolds, exhaust manifolds, window regulators, radiator fan assemblies, tire pressure monitor sensors, exhaust gas recirculation (EGR) coolers, UTV windshields, and complex electronics modules.

For fiscal 2023, approximately 78% of our products were sold under brands that we own, and the remainder of our products were sold for resale under customers' private labels, other brands or in bulk.

These parts include, among other parts, leaf springs, intake manifolds, exhaust manifolds, oil filters and coolers, window regulators, radiator fan assemblies, tire pressure monitor sensors, exhaust gas recirculation (EGR) coolers, driveshafts, UTV windshields, and complex electronics modules.

For 2024, approximately 81% of our products were sold under brands that we own, and the remainder of our products were sold for resale under customers' private labels, other brands, or in bulk.

We generate most of our net sales from customers in North America, primarily in the United States.

Our products are sold primarily through aftermarket retailers, including through their on-line platforms;

Our products are sold primarily through aftermarket retailers, including through their online platforms;

national, regional, and local wholesale distributors and specialty markets;

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light-duty, heavy-duty, and powersports (i.e., specialty vehicles).

Combined, we estimate that these three sectors had a total addressable market of over $165 billion in 2024, according to information we have derived from the 2025 Auto Care Association Factbook and other industry data.

Light-Duty Vehicle Sector

The majority of our products are designed for light-duty vehicles, which are passenger cars and light-duty trucks.

The light-duty vehicle sector accounted for projected industry sales of approximately $135.1 billion in 2023, according to information derived from the 2024 Auto Care Association Factbook.

Two distinct groups of end-users buy replacement and upgrade vehicle parts for this sector:

(i) individual consumers, who purchase parts to perform "do-it-yourself" repairs and upgrades on their own vehicles;

and (ii) professional installers, which include individual vehicle repair shops, representing approximately 70% of the total aftermarket vehicle repair industry according to the Motor & Equipment Manufacturers Association, which generally service a variety of OEM vehicle makes and models and sell and install non-OEM aftermarket parts, and dealership service departments, which generally only service specific brands of OEM vehicles and sell and install those same OEM brand aftermarket parts.

and (ii) professional installers.

Professional installers include:

(i) individual vehicle repair shops, representing approximately 70% of the total aftermarket vehicle repair industry according to the Motor & Equipment Manufacturers Association, which generally service a variety of OEM vehicle makes and models and sell and install non-OEM aftermarket parts;

and (ii) dealership service departments, which generally only service specific brands of OEM vehicles and sell and install those same OEM brand aftermarket parts.

Individual consumers typically are supplied through retailers and the retail arms of warehouse distributors.

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discretionary, maintenance, and repair.

Discretionary, such as upgrade accessories and performance, tends to move in line with consumer discretionary spending.

Discretionary, such as upgrade accessories and performance, tends to align with consumer discretionary spending.

Maintenance is composed of products and services, such as oil and oil changes, and tends to be less correlated with discretionary spending.

Repair consists mainly of replacement parts that fail over time and tends to be less cyclical as it is largely comprised of parts necessary for a vehicle to function properly or safely.

The majority of our products fall into the repair category.

The increasing complexity and the number of different makes and models of light-duty vehicles have resulted in a significant increase in the number of products required to service the domestic and foreign automotive fleets.

The requirement to include more products in inventory and the significant consolidation among distributors of automotive replacement parts have in turn resulted in larger distributors.

“Risk Factors – Risks Related to Our Business – Our Industry, Operations and Competition” for information regarding the potential impacts of consolidation on our business.

Repair consists mainly of replacement parts that fail over time.

While some repair work may be influenced by factors such as extreme weather in the summer or winter months, this work tends to be less cyclical as it is largely comprised of parts necessary for a vehicle to function properly or safely.

The majority of our net sales are from products that fall into the repair category.

The requirement to include more products in inventory and the significant consolidation among

distributors of automotive replacement parts have in turn resulted in larger distributors.

See ITEM 1A, “Risk Factors – Risks Related to Our Business – Our Industry, Operations and Competition” for information regarding the potential impacts of consolidation on our business.

Retailers and others who purchase light-duty aftermarket parts for resale often are constrained to a finite amount of space in which to display and stock products.

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Heavy-Duty Vehicle Sector

The heavy-duty vehicle sector, which is focused on medium- and heavy-duty vehicles, accounted for projected industry sales of approximately $21.9 billion in 2023, according to information derived from the 2024 Auto Care Association Factbook.

The largest purchasers of aftermarket parts for this sector are original equipment, or OE, manufacturers, independent distributors, including organizations associated with large buying groups and other distributors, as well as independent component specialists and rebuilders, and auto parts stores.

The heavy-duty vehicle sector is focused on medium- and heavy-duty vehicles.

The largest purchasers of aftermarket parts for this sector are independent distributors, including organizations associated with large buying groups and other distributors, as well as independent component specialists and rebuilders, and auto parts stores.

The service work performed on medium- and heavy-duty vehicles is generally completed by end-user businesses that utilize these vehicles in their operations, fleets, and independent garages and distributors, who buy parts from the purchasers above or in some instances directly from suppliers like us.

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Specialty Vehicle Sector

The specialty vehicle sector, which is focused on powersport and off-road vehicles, accounted for projected industry sales of approximately $8.0 billion in 2023, according to information derived from the 2024 Auto Care Association Factbook.

The specialty vehicle sector generally consists of parts for powersports vehicles, such as UTVs and ATVs, for both functional and upgrade accessories as well as replacement parts.

The specialty vehicle sector generally consists of parts for powersport vehicles, such as UTVs and ATVs, for both functional and upgrade accessories as well as replacement parts.

Functional and upgrade accessories include parts such as engine performance upgrades, lighting and electronics, storage and cargo, tires and wheels, cabs, roofs and windshields, and other cosmetic parts.

Nondiscretionary repair parts consist of brake systems, engine systems, electronics, frame and body parts, and driveline and transmission parts and are critical given the significant wear and tear often placed on those parts during normal use.

Given the critical nature of repair parts to ensure a vehicle to functions properly, purchases of those parts are generally nondiscretionary purchases.

Approximately half of our sales of specialty vehicle parts constitute nondiscretionary repair parts.

Given the critical nature of repair parts to ensure a vehicle functions properly, purchases of those parts are generally nondiscretionary purchases.

Currently, approximately half of our sales of specialty vehicle parts constitute nondiscretionary repair parts.

This sector consists of direct-to-consumer and direct-to-dealer channels through both retail and e-commerce platforms.

Key purchasing decisions of customers in this sector include ease of ordering, ease of installation, the availability of products, delivery times, and overall product quality.

Key purchasing decisions of customers in this sector include ease of ordering, ease of installation, the price and availability of products, delivery times, and overall product quality.

Brands and Products

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We offer bumper-to-bumper aftermarket solutions covering everything from engine, undercar, steering and suspension, body, electronics, and hardware.

Our engine products include intake and exhaust manifolds, fans, thermostat housings, and throttle bodies.

Our engine products include intake and exhaust manifolds, oil filters and coolers, fans, thermostat housings, and throttle bodies.

Our undercar products include fluid lines, fluid reservoirs, connectors, 4-wheel drive components and axles, drain plugs, and other engine, transmission, and axle components.

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We offer a limited lifetime warranty on most of our products in the light- and medium-duty parts categories, with more limited warranties for our heavy-duty and specialty vehicle products.

Our standard warranties limit the end-user’s remedy to the repair or replacement of the part that is defective.

Our standard warranties provide for the repair or replacement of the non-performing part.

Product Development

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We categorize our product development opportunities across three different spectrums:

(1) alternative parts - direct aftermarket replacements for factory parts, (2) upgraded, or what we refer to as "OE FIX" parts – parts with enhanced design, functionality or features based on identifying what made original parts problematic and developing new solutions that address the original failure modes, and (3) new parts - identifying parts that are not available from the OE or in the aftermarket that can enhance vehicle performance and user experience.

Some of these opportunities are brand new to the aftermarket whereas others continue to expand our current portfolio offering.

The following table represents the number of distinct parts we introduced for each of the last three fiscal years:

December 31, 2023 December 31, 2022 December 25, 2021

(1) alternative parts - direct aftermarket replacements for factory parts, (2) upgraded parts (including our "OE FIX" line) – parts with enhanced design, functionality, or features based on identifying what made original parts problematic and developing new solutions that address the original failure modes, and (3) new parts - identifying parts that are not available from the OE or in the aftermarket that can enhance vehicle performance and user experience.

Some of these opportunities are new to the aftermarket whereas others continue to expand our current portfolio offering.

The following table represents the number of distinct parts we introduced for each of the last three years:

Year Ended December 31,

2024 2023 2022

New to the aftermarket 1,659 1,791 1,762

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Total distinct parts introduced 5,335 6,106 5,429

For the light-duty sector, in 2023 we introduced several innovative first-to-the-aftermarket repair solutions designed to fit a wide range of vehicles in the light-duty vehicle sector.

New products included a patent-pending OE FIX engine coolant thermostat housing assembly, an OE FIX intake manifold, and an OE FIX liftgate handle trim kit.

In addition, we continued to invest in our “Emerging Technology” solutions portfolio that helps support repair opportunities for complex automotive electronics components as well as hybrid and electric motor vehicle platforms.

In 2023, we introduced several transmission control modules, variable geometry timing actuators (“VGTA”), and various other control modules and sensors.

We also introduced several new control arms, suspension components, door lock actuators and handles specifically designed for electric vehicles.

In the heavy-duty sector, in 2023 we introduced numerous new products in categories such as air tanks, shock absorbers, and air springs.

Additionally, we commercialized several new, aftermarket exclusive products across engine component, after-treatment, and the cab and body categories, further expanding repair options for both above and below chassis for Class 7 and Class 8 trucks.

In the specialty vehicles sector, in 2023 we released many first to market solutions for 2023 model vehicles along with a new line of glass windshields.

We also completed a new turn signal kit line and focused on adding more break-fix solutions.

In 2024, we introduced a range of innovative, first-to-the-aftermarket repair solutions for the light-duty vehicle sector, designed to fit a wide variety of vehicles.

Our product launches included “OE FIX” solutions such as loaded magnetic strut assemblies, turbo line replacement kits, and fully loaded knuckle assemblies.

We also expanded our investment in our emerging technology solutions portfolio to support repairs for complex automotive electronic components.

This included the release of transmission control modules, electronic power steering racks, and various other control modules and sensors.

Additionally, we made significant additions to our industry-leading lines of turbo accessories, coolers, and chassis components.

In 2024, we significantly expanded our heavy-duty product portfolio, introducing a comprehensive range of brake components—including drums and rotors—along with a new king pin program for connecting trucks and trailers and enhancements to our leaf spring coverage.

Additionally, we launched several aftermarket-exclusive products, including EGR coolers, after-treatment injectors, and engine sensors.

Most notably, we proudly debuted our Dayton Exhaust components line, delivering innovative solutions for both above and below-chassis applications for Class 7 and Class 8 trucks.

In the specialty vehicles sector, in 2024 we released many first-to-the-aftermarket products covering accessories and nondiscretionary repair parts, including a complete line of geared reverse direct replacement transmissions for multiple makes and models of ATVs and UTVs.

We expanded our Ready Fit ® winch line, which is designed to significantly reduce installation time for the customer.

We also continued our investment in innovative solutions to enhance the rider experience like a rear steer kit, driver-adjustable electronic power steering, and creature comfort items that provide improved heat and air flow within the cab, such as our electronic thermostat bypass heaters and roof-mounted fan system.

Sales and Marketing

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Our products are available in our customers’ retail stores, on our website and our customers’ websites, and through dealers and warehouse distributors.

As of December 31, 2023, we had a sales and sales support team of over 300 people selling our products either directly to our customers or, with respect to certain select customers, indirectly through independent manufacturers’ representative agencies worldwide.

As of December 31, 2024, we had a sales and sales support team of approximately 300 people selling our products either directly to our customers or, for certain select customers, indirectly using independent manufacturers’ representative agencies worldwide.

Our sales efforts are not directed merely at selling individual products, but more broadly towards selling our entire product portfolio.

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As of December 31, 2024, we serviced approximately 10,000 active accounts.

During fiscal 2023, three customers each accounted for more than 10% of net sales and in the aggregate accounted for approximately 44% of net sales.

During 2024, two customers each accounted for more than 10% of net sales and in the aggregate accounted for approximately 39% of net sales.

Manufacturing and Procurement

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We engage third-party manufacturers around the world to develop and manufacture products according to our performance and design requirements, oftentimes using tooling that we own.

In fiscal 2023, as a percentage of our total dollar volume of purchases, approximately 30% of our products were purchased from third-party suppliers throughout the United States and the balance of our purchases were from third-party suppliers outside of the United States.

Approximately 50% of our products were purchased from third-party suppliers located in China and Taiwan in fiscal 2023.

Our global supplier network provides access to a broad array of manufacturing capabilities and technologies while limiting our dependency on any single source of supply.

In 2024, as a percentage of our total dollar volume of purchases, approximately 28% of our products were purchased from third-party suppliers throughout the United States and the balance of our purchases were from third-party suppliers outside of the United States.

In 2024, approximately 45% of our products were purchased from third-party suppliers located in China.

Our global supplier network provides access to a broad array of manufacturing capabilities and technologies, and coupled with our diverse product portfolio, limits our dependency on any single source of supply.

While our supplier selection and sourcing programs will continue to leverage our strategic manufacturers for a substantial portion of our product portfolio, we also continue to qualify alternative sources available to provide additional support and capacity, if needed.

We make a concerted effort to build and nurture strong, healthy relationships with our suppliers.

In fiscal 2023, we purchased automotive products in substantial volumes from over 300 suppliers, and no single supplier accounted for more than 10% of our total product purchases.

In 2024, we purchased motor vehicle products in substantial volumes from over 400 suppliers, and no single supplier accounted for more than 10% of our total product purchases.

For more information on risks relating to our supply chain, see ITEM 1A.

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Packaging, Inventory, and Shipping

Finished products acquired from third-party suppliers are received at one or more of our company or third-party-operated facilities in the United States and Canada for sorting and distribution to our customers, depending on the type of part.

Finished products acquired from third-party suppliers or our owned manufacturing sites are received at one or more of our company or third-party-operated facilities in the United States and Canada for sorting and distribution to our customers, depending on the type of part.

It is our practice to inspect samples of shipments based on supplier performance.

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Products are also sold in bulk to automotive parts manufacturers and packagers.

Computerized tracking systems, mechanical counting devices and experienced workers combine

to help ensure that the proper variety and numbers of parts meet the correct packaging materials at the appropriate places and times to produce the required quantities of finished products.

Computerized tracking systems, mechanical counting devices, and experienced

workers combine to help ensure that the proper variety and numbers of parts meet the correct packaging materials at the appropriate places and times to produce the required quantities of finished products.

Packaged inventory is either stocked in the warehouse portions of our facilities or in distribution centers maintained by our third-party logistics providers and is organized to facilitate the most efficient methods of retrieving product to fill customer orders.

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Our core inventory consists of used cores purchased and held in our facilities, used cores that are in the process of being returned from our customers and end-users, and remanufactured cores held in finished goods inventory at our facilities.

Our products that utilize cores include electronic control modules, hybrid batteries and complex mechatronics.

Our products that utilize cores include electronic control modules and complex mechatronics.

We believe our remanufactured parts offer end-users an economical and safe way to maintain their cars on the road, while also reducing the impact on the environment.

The motor vehicle aftermarket industry is highly competitive.

Competitive factors include price, product quality, breadth of product line, range of applications, customer service and the growth of e-commerce.

The motor vehicle aftermarket industry is highly competitive on factors including price, product quality, breadth of product line, range of applications, and customer service.

Substantially all our products are subject to competition with similar products offered by other providers.

Some of these competitors are divisions and subsidiaries of companies much larger than us who possess a longer history of operations and greater financial and other resources than we do.

Some of these competitors are divisions and subsidiaries of companies much larger than ours that possess a longer history of operations and greater financial and other resources than we do.

We also face competition from OE manufacturers who sell through their dealerships many of the same replacement parts that we sell, although these manufacturers generally sell parts only for vehicles they produce.

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Patents, Trademarks, and Other Intellectual Property

We own a number of patents important to our business, and we expect to continue to file patent applications to protect our research and development investments in new products.

In fact, in 2023 we filed more patents than in the previous three years combined.

We own patents important to our business, and we expect to continue to file patent applications to protect our research and development investments in new products.

As of December 31, 2024, we held 127 patents and 94 pending patent applications worldwide.

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We also have licenses to intellectual property for the manufacture, use, and sale of certain of our products.

We obtain patent and other intellectual property rights used in connection with our business when practicable and appropriate.

We obtain patent and other intellectual property rights used in connection with our business when practicable and when we deem it appropriate.

Historically, we have done so organically, through commercial relationships, or in connection with acquisitions.

For more information concerning the risks related to patents, trademarks, and other intellectual property, see ITEM 1A, "Risk Factors – Risks Related to Our Business – Our Intellectual Property and Information Security.”

Product Safety & Regulatory Affairs

Our products and the vehicles in which they are used may be subject to safety laws and regulations promulgated by federal, state/provincial, and local governments around the world.

For example, the National Highway Traffic Safety Administration (“NHTSA”) has federal oversight over product safety issues related to automobiles in the United States, and the Consumer Product Safety Commission (“CPSC”) has federal oversight over product safety issues related to off-road vehicles.

While we are currently managing compliance with these various regulatory schemes and standards, changes in the regulatory climate in any of the jurisdictions where we operate could have a material adverse effect on our business, financial condition, and results of operations.

For a more detailed discussion of these risks, please see ITEM 1A, "Risk Factors – Risks Related to Our Business – Product Development, Acceptance, and Quality and Regulations.”

Human Capital Resources

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We also maintain a human rights policy for the organization outlining our commitment to operating with respect for human rights.

Diversity and Inclusion

We embrace the diversity of our employees, including their unique backgrounds, experiences, thoughts and talents.

Employees are valued and appreciated for their distinct contributions to the growth and sustainability of our business.

We strive to cultivate a culture and vision that supports and enhances our ability to recruit, develop and retain diverse talent at every level.

Our Vice President of Talent Management and Belonging is responsible for leading our diversity and inclusion strategy.

Among other things, we demonstrate our commitment to diversity and inclusion through our biennial “All In” initiative, a summit focused on inviting our employees to think and engage more with ideas such as diversity and inclusion to foster a collaborative environment.

We also embrace diversity on our Board of Directors, where 33% of our independent directors are female and 17% of our independent directors are ethnically diverse.

As part of our commitment to a culture of inclusion, our Contributor Resource Group, or CRG, Program broadens and enhances company-wide interaction opportunities for our employees.

Our CRG Program is open to all and involves activities for employees whose background is the focus of each CRG and those who are supportive of the groups that have been formed.

These company-wide networks build on and coordinate with local teams that are already active in our operations and include groups such as those focused on women, veterans, individuals desiring to learn more about diverse cultural backgrounds and employees who seek to learn more about career growth and leadership opportunities.

Culture of Contribution

We refer to our employees as “Contributors” because we are a team of innovators, collaborators, and problem-solvers working toward meaningful and mutual goals.

We believe our reputation as a leader in the motor vehicle aftermarket industry can be attributed to, among other things, the diverse viewpoints and life experiences of our valued workforce.

We empower and celebrate new ideas throughout our organization because new ideas are integral to our product development process and our evolution as a company.

our Contributors and promoting an environment where they feel valued and empowered is an essential part of our culture.

We believe developing talented, successful people helps drive the long-term performance of our business.

Talent and Development

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We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations, and our leadership team routinely reviews employee turnover rates at various levels of the organization.

Leadership also participates in a robust bi-annual talent review and succession planning process.

Leadership also participates in a robust annual talent review and succession planning process.

In addition, leadership reviews employee engagement surveys to monitor employee morale and receive feedback on a variety of issues.

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We also participate in annual compensation surveys for all positions and strive to compensate our top talent and key roles competitively.

Moreover, we believe our long-term incentives are structured in a manner to provide time-based vesting schedules that are retentive.

Moreover, our equity awards are designed to promote retention of key employees by utilizing vesting schedules that are time-based as well as vesting conditions that are performance-based and tied to the achievement of the Company’s long-term goals.

For information on risks relating to our human capital resources, see ITEM 1A, “Risk Factors – General Risk Factors – Losing the services of our executive officers or other highly qualified and experienced employees, or failing to attract and retain any of such officers or employees, could adversely affect our business.”

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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-K

Item 1. Business