Dorman Products, Inc. 10-Q

ITEM 1. Financial Statements DORMAN PRODUCTS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) Three Months Ended Six Months Ended (in thousands, except per share data) June 28, 2025 June 29, 2024 June 28, 2025 June 29, 2024 Net sales $ 540,959 $ 502,951 $ 1,048,651 $ 971,652 Cost of goods sold 321,446 303,550 621,430 590,805 Gross profit 219,513 199,401 427,221 380,847 Selling, general, and administrative expenses 137,032 126,949 264,666 253,957 Income from operations 82,481 72,452 162,555 126,890 Interest expense, net 7,182 10,202 14,540 20,807 Other income, net ( 1,544 ) ( 136 ) ( 2,905 ) ( 96 ) Income before income taxes 76,843 62,386 150,920 106,179 Provision for income taxes 18,134 14,976 34,706 25,941 Net income $ 58,709 $ 47,410 $ 116,214 $ 80,238 Other comprehensive income: Change in foreign currency translation adjustment 2,339 ( 519 ) 2,561 ( 1,618 ) Comprehensive Income $ 61,048 $ 46,891 $ 118,775 $ 78,620 Earnings per share: Basic $ 1.92 $ 1.53 $ 3.80 $ 2.58 Diluted $ 1.91 $ 1.53 $ 3.78 $ 2.58 Weighted average shares outstanding: Basic 30,518 30,957 30,547 31,048 Diluted 30,680 31,071 30,744 31,160 See accompanying Notes to Condensed Consolidated Financial Statements 3 Table of Contents DORMAN PRODUCTS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED ) (in thousands, except for share data) June 28, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 56,845 $ 57,137 Accounts receivable, less allowance for doubtful accounts of $ 2,131 and $ 1,619 532,121 573,787 Inventories 798,211 707,977 Prepaids and other current assets 39,554 30,859 Total current assets 1,426,731 1,369,760 Property, plant, and equipment, net 166,606 164,499 Operating lease right-of-use assets 112,024 118,499 Goodwill 444,334 442,886 Intangible assets, net 267,830 278,213 Deferred tax assets 5,865 5,786 Other assets 48,075 44,878 Total assets $ 2,471,465 $ 2,424,521 Liabilities and shareholders’ equity Current liabilities: Accounts payable $ 221,307 $ 231,814 Accrued compensation 24,083 44,002 Accrued customer rebates and returns 203,167 204,355 Revolving credit facility — 13,960 Current portion of long-term debt 31,250 28,125 Other accrued liabilities 40,267 41,546 Total current liabilities 520,074 563,802 Long-term debt 430,338 439,513 Long-term operating lease liabilities 97,720 105,142 Deferred tax liabilities 3,803 3,700 Other long-term liabilities 19,784 18,894 Commitments and contingencies (Note 7) Shareholders’ equity: Common stock, $ 0.01 par value; 50,000,000 shares authorized; 30,523,887 and 30,565,855 shares issued and outstanding in 2025 and 2024, respectively 305 306 Additional paid-in capital 121,914 119,077 Retained earnings 1,281,741 1,180,862 Accumulated other comprehensive loss ( 4,214 ) ( 6,775 ) Total shareholders’ equity 1,399,746 1,293,470 Total liabilities and shareholders' equity $ 2,471,465 $ 2,424,521 See accompanying Notes to Condensed Consolidated Financial Statements 4 Table of Contents DORMAN PRODUCTS, INC. CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED ) Three Months Ended June 28, 2025 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total (in thousands, except share data) Shares Issued Par Value Balance at March 29, 2025 30,539,334 $ 306 $ 117,190 $ 1,226,461 $ ( 6,553 ) $ 1,337,404 Exercise of stock options 3,521 — 357 — — 357 Compensation expense under incentive stock plans — — 4,524 — — 4,524 Purchase and cancellation of common stock ( 29,123 ) — ( 52 ) ( 3,429 ) — ( 3,481 ) Issuance of common stock under incentive stock plans, net of cancellations 11,031 — — — — — Other stock-related activity ( 876 ) ( 1 ) ( 105 ) — — ( 106 ) Change in foreign currency translation adjustment — — — — 2,339 2,339 Net income — — — 58,709 — 58,709 Balance at June 28, 2025 30,523,887 $ 305 $ 121,914 $ 1,281,741 $ ( 4,214 ) $ 1,399,746 Three Months Ended June 29, 2024 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total (in thousands, except share data) Shares Issued Par Value 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 Six Months Ended June 28, 2025 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total (in thousands, except share data) Shares Issued Par Value Balance at December 31, 2024 30,565,855 $ 306 $ 119,077 $ 1,180,862 $ ( 6,775 ) $ 1,293,470 Exercise of stock options 7,361 — 729 — — 729 Compensation expense under incentive stock plans — — 8,137 — — 8,137 Purchase and cancellation of common stock ( 124,993 ) ( 1 ) ( 225 ) ( 15,335 ) — ( 15,561 ) Issuance of common stock under incentive stock plans, net of cancellations 120,492 1 ( 1 ) — — — Other stock-related activity ( 44,828 ) ( 1 ) ( 5,803 ) — — ( 5,804 ) Change in foreign currency translation adjustment — — — — 2,561 2,561 Net income — — — 116,214 — 116,214 Balance at June 28, 2025 30,523,887 $ 305 $ 121,914 $ 1,281,741 $ ( 4,214 ) $ 1,399,746 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 Issued Par Value 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 plans — — 6,780 — — 6,780 Purchase and cancellation of common stock ( 591,322 ) ( 6 ) ( 1,064 ) ( 51,070 ) — ( 52,140 ) 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 June 29, 2024 30,765,672 $ 308 $ 106,714 $ 1,098,506 $ ( 4,208 ) $ 1,201,320 See accompanying Notes to Condensed Consolidated Financial Statements 5 Table of Contents DORMAN PRODUCTS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended (in thousands) June 28, 2025 June 29, 2024 Cash Flows from Operating Activities: Net income $ 116,214 $ 80,238 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 27,762 28,203 Provision for doubtful accounts 654 ( 15 ) (Benefit) provision for deferred income taxes ( 75 ) 472 Provision for stock-based compensation 8,137 6,780 Changes in assets and liabilities: Accounts receivable 41,185 627 Inventories ( 89,695 ) 16,745 Prepaids and other current assets ( 2,911 ) ( 5,739 ) Other assets ( 4,871 ) ( 3,339 ) Accounts payable ( 10,649 ) ( 12,112 ) Accrued customer rebates and returns ( 1,203 ) ( 806 ) Accrued compensation and other liabilities ( 24,763 ) 4,275 Cash provided by operating activities 59,785 115,329 Cash Flows from Investing Activities: Property, plant, and equipment additions ( 19,435 ) ( 22,690 ) Cash used in investing activities ( 19,435 ) ( 22,690 ) Cash Flows from Financing Activities: Payments of revolving credit line ( 13,960 ) ( 23,300 ) Payments of long-term debt ( 6,250 ) ( 6,250 ) Payment of deferred acquisition consideration — ( 200 ) Proceeds from exercise of stock options 729 559 Purchase and cancellation of common stock ( 15,561 ) ( 52,033 ) Other stock-related activity ( 5,804 ) ( 704 ) Cash used in financing activities ( 40,846 ) ( 81,928 ) Effect of exchange rate changes on Cash and Cash Equivalents 204 ( 58 ) Net (Decrease) Increase in Cash and Cash Equivalents ( 292 ) 10,653 Cash and Cash Equivalents, Beginning of Period 57,137 36,814 Cash and Cash Equivalents, End of Period $ 56,845 $ 47,467 Supplemental Cash Flow Information Cash paid for interest expense $ 11,513 $ 20,332 Cash paid for income taxes $ 42,714 $ 26,374 See accompanying Notes to Condensed Consolidated Financial Statements 6 Table of Contents DORMAN PRODUCTS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 28, 2025, AND JUNE 29, 2024 (UNAUDITED) 1. Basis of Presentation As used herein, unless the context requires otherwise, “Dorman,” the “Company,” “we,” “us,” or “our” refers to Dorman Products, Inc. and its subsidiaries. Our ticker symbol on The Nasdaq Stock Market LLC is “DORM.” The accompanying unaudited condensed consolidated financial statements have been prepared under U.S. generally accepted accounting principles (“GAAP”) for interim financial information and under the rules and regulations of the U.S. Securities and Exchange Commission. However, they do not include all the information and footnotes required by GAAP for a complete set of financial statements. In the opinion of management, all adjustments (comprising only normal, recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 28, 2025, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2025, 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. These financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. 2. Sales of Accounts Receivable We have entered into several customer-sponsored programs administered by unrelated financial institutions that permit us to sell (factor) certain accounts receivable at discounted rates to the financial institutions. Transactions under these agreements were accounted for as sales of accounts receivable, and the related accounts receivable were removed from our Condensed Consolidated Balance Sheets when sold. Sales of accounts receivable under these agreements, and associated factoring costs, which were included in selling, general, and administrative expenses, were as follows: Three Months Ended Six Months Ended (in thousands) June 28, 2025 June 29, 2024 June 28, 2025 June 29, 2024 Sales of accounts receivable $ 354,904 $ 251,538 $ 689,074 $ 536,756 Factoring costs 14,566 12,622 29,154 26,232 3. Inventories Inventories include the cost of material, freight, duties, direct labor, and overhead utilized in the processing of our products and are stated at the lower of cost or net realizable value. Inventories were as follows: (in thousands) June 28, 2025 December 31, 2024 Raw materials $ 28,211 $ 29,233 Bulk product 256,521 246,604 Finished product 502,190 421,734 Packaging materials 11,289 10,406 Total $ 798,211 $ 707,977 7 Table of Contents 4. Goodwill and Intangible Assets Goodwill Goodwill included the following: (in thousands) Light Duty Heavy Duty Specialty Vehicle Consolidated Balance at December 31, 2024 $ 313,704 $ 55,706 $ 73,476 $ 442,886 Measurement period adjustment — — 154 154 Foreign currency translation — 1,294 — 1,294 Balance at June 28, 2025 $ 313,704 $ 57,000 $ 73,630 $ 444,334 Intangible Assets Intangible assets included the following: June 28, 2025 December 31, 2024 Intangible assets subject to amortization Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value (in thousands) Customer relationships $ 173,984 $ 46,570 $ 127,414 $ 173,430 $ 41,358 $ 132,072 Trade names 67,690 17,063 50,627 67,690 14,999 52,691 Product portfolio 107,800 19,876 87,924 107,800 16,522 91,278 Technology 2,167 1,442 725 2,167 1,318 849 Patents and other 2,350 1,210 1,140 2,350 1,027 1,323 Total $ 353,991 $ 86,161 $ 267,830 $ 353,437 $ 75,224 $ 278,213 Amortization expense was $ 5.5 million and $ 5.5 million during the three months ended June 28, 2025, and June 29, 2024, and $ 11.0 million and $ 11.1 million during the six months ended June 28, 2025, and June 29, 2024, respectively. 5. Debt As of June 28, 2025, and December 31, 2024, the interest rate on the outstanding borrowings under our credit facility was 5.68 % and 5.71 %, respectively. 8 Table of Contents 6. Segment and Geographic Information Segment results are as follows: For the Three Months ended June 28, 2025 (in thousands) Light Duty Heavy Duty Specialty Vehicle Total Net sales $ 424,328 $ 62,060 $ 54,571 $ 540,959 Cost of goods sold 248,139 46,705 26,602 321,446 Factoring expense 14,566 — — 14,566 Other segment expenses 83,322 14,833 18,531 116,686 Segment income from operations $ 78,301 $ 522 $ 9,438 $ 88,261 For the Three Months ended June 29, 2024 (in thousands) Light Duty Heavy Duty Specialty Vehicle Total Net sales $ 385,358 $ 61,189 $ 56,404 $ 502,951 Cost of goods sold 230,628 45,185 27,735 303,548 Factoring expense 12,622 — — 12,622 Other segment expenses 76,196 13,283 18,639 108,118 Segment income from operations $ 65,912 $ 2,721 $ 10,030 $ 78,663 For the Six Months ended June 28, 2025 (in thousands) Light Duty Heavy Duty Specialty Vehicle Total Net sales $ 833,184 $ 113,740 $ 101,727 $ 1,048,651 Cost of goods sold 485,138 85,182 51,110 621,430 Factoring expense 29,154 — — 29,154 Other segment expenses 159,098 28,199 36,358 223,655 Segment income from operations $ 159,794 $ 359 $ 14,259 $ 174,412 For the Six Months ended June 29, 2024 (in thousands) Light Duty Heavy Duty Specialty Vehicle Total Net sales $ 744,651 $ 118,998 $ 108,003 $ 971,652 Cost of goods sold 447,113 89,753 53,929 590,795 Factoring expense 26,232 — — 26,232 Other segment expenses 147,599 26,515 36,875 210,989 Segment income from operations $ 123,707 $ 2,730 $ 17,199 $ 143,636 9 Table of Contents A reconciliation of segment income from operations to consolidated income before income taxes is as follows: For the Three Months Ended For the Six Months Ended (in thousands) June 28, 2025 June 29, 2024 June 28, 2025 June 29, 2024 Segment income from operations $ 88,261 $ 78,663 $ 174,412 $ 143,636 Acquisition-related intangible assets amortization ( 5,406 ) ( 5,481 ) ( 10,877 ) ( 10,965 ) Acquisition-related transaction and other costs ( 341 ) ( 448 ) ( 833 ) ( 931 ) Pretax reduction in workforce costs ( 33 ) ( 282 ) ( 147 ) ( 4,850 ) Interest expense, net ( 7,182 ) ( 10,202 ) ( 14,540 ) ( 20,807 ) Other income, net 1,544 136 2,905 96 Consolidated income before income taxes $ 76,843 $ 62,386 $ 150,920 $ 106,179 The following table presents our net sales by geographic region: Three Months Ended Six Months Ended (in thousands) June 28, 2025 June 29, 2024 June 28, 2025 June 29, 2024 Net sales to U.S. customers $ 502,159 $ 462,514 $ 966,613 $ 891,369 Net sales to non-U.S. customers 38,800 40,437 82,038 80,283 Total $ 540,959 $ 502,951 $ 1,048,651 $ 971,652 7. Commitments and Contingencies We are a party to, or otherwise involved in, legal proceedings that arise in the ordinary course of business, including various claims and legal actions involving contracts, employment disputes, competitive practices, intellectual property infringement, product liability claims, and other matters related to the conduct of our business. In the opinion of management, none of the actions, individually or in the aggregate, taking into account relevant insurance coverage, would likely have a material financial impact on the Company, and we believe the range of reasonably possible losses from current matters, taking into account relevant insurance coverage, is immaterial. 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. 8. Stock-Based Compensation Restricted Stock Units (“RSUs”) and Restricted Stock Awards (“RSAs”) 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 28, 2025, 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 RSU and RSA grants was $ 4.2 million and $ 3.2 million for the three months ended June 28, 2025, and June 29, 2024, respectively, and $ 7.5 million and $ 5.7 million for the six months ended June 28, 2025, and June 29, 2024, respectively, and was included in selling, general, and administrative expenses in the Condensed Consolidated Statements of Operations. 10 Table of Contents The following table summarizes our RSU and RSA activity for the six months ended June 28, 2025: Shares Weighted Average Fair Value Balance at December 31, 2024 340,578 $ 97.84 Granted 142,677 $ 140.50 Vested ( 113,057 ) $ 96.22 Canceled ( 9,694 ) $ 104.43 Balance at June 28, 2025 360,504 $ 115.84 For the six months ended June 28, 2025, we granted 21,948 performance-based RSUs containing a market condition with a grant date fair value of $ 195.03 per share. 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. As of June 28, 2025, there was $ 30.0 million of unrecognized compensation cost related to unvested 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 $ 0.3 million and $ 0.4 million for the three months ended June 28, 2025, and June 29, 2024, respectively, and $ 0.6 million and $ 0.8 million for the six months ended June 28, 2025, and June 29, 2024, respectively, and is 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 28, 2025 : Shares Weighted Average Price Weighted Average Remaining Term (years) Aggregate Intrinsic Value (in thousands) Balance at December 31, 2024 234,289 $ 89.44 Canceled ( 1,775 ) $ 88.77 Exercised ( 7,361 ) $ 99.09 Balance at June 28, 2025 225,153 $ 89.12 4.1 $ 7,924 Exercisable at June 28, 2025 174,092 $ 87.92 3.7 $ 6,337 As of June 28, 2025, there was $ 1.4 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 1.5 years. Employee Stock Purchase Plan ("ESPP") During the three and six months ended June 29, 2024, we issued 13,555 shares under the ESPP. 9. Earnings Per Share Basic earnings per share was calculated by dividing our net income by the weighted average number of shares of common stock outstanding during the period, excluding unvested RSAs which are considered to be contingently issuable. To calculate diluted earnings per share, common stock equivalents are added to the weighted average number of shares of common stock outstanding. 11 Table of Contents Common stock equivalents are calculated using the treasury stock method and are computed based on outstanding stock-based awards. For the three months ended June 28, 2025, and June 29, 2024, there were approximately 127,000 shares and 225,000 shares, respectively, and for the six months ended June 28, 2025, and June 29, 2024, there were approximately 83,000 shares and 272,000 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 28, 2025 June 29, 2024 June 28, 2025 June 29, 2024 Numerator: Net income $ 58,709 $ 47,410 $ 116,214 $ 80,238 Denominator: Weighted average basic shares outstanding 30,518 30,957 30,547 31,048 Effect of stock-based compensation awards 162 114 197 112 Weighted average diluted shares outstanding 30,680 31,071 30,744 31,160 Earnings Per Share: Basic $ 1.92 $ 1.53 $ 3.80 $ 2.58 Diluted $ 1.91 $ 1.53 $ 3.78 $ 2.58 10. Common Stock Repurchases We periodically repurchase, at the then-current market price, and cancel common stock issued to the Dorman Products, Inc. 401(k) Retirement Plan and Trust (the “401(k) Plan”). 401(k) Plan participants can no longer purchase shares of Dorman common stock as an investment option under the 401(k) Plan. Shares are generally purchased by the Company from the 401(k) Plan when participants sell units as permitted by the 401(k) Plan or elect to leave the 401(k) Plan upon retirement, termination, or other reasons. 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 28, 2025 June 29, 2024 June 28, 2025 June 29, 2024 Shares repurchased and canceled — 1,245 2,070 9,004 Total cost of shares repurchased and canceled (in thousands) $ — $ 113 $ 261 $ 786 Average price per share $ — $ 90.86 $ 126.08 $ 87.34 Separately, we repurchase shares under share repurchase programs authorized by our Board of Directors. 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. The Company is not obligated to acquire a specific number of shares under the programs. 12 Table of Contents The following table summarizes the repurchase and cancellation of common stock in the three and six months ended June 28, 2025, and June 29, 2024: Three Months Ended Six Months Ended June 28, 2025 June 29, 2024 June 28, 2025 June 29, 2024 Shares repurchased and canceled 29,123 272,145 122,923 582,318 Total cost of shares repurchased and canceled (in thousands) $ 3,482 $ 24,891 $ 15,300 $ 51,354 Average price per share $ 119.56 $ 91.46 $ 124.47 $ 88.19 At June 28, 2025, $ 484.7 million was available for repurchase under the program in effect. 11. Income Taxes At June 28, 2025, we had $ 10.5 million of net unrecognized tax benefits, $ 9.0 million of which would lower our effective tax rate if recognized. We recognize interest and penalties related to unrecognized tax benefits in income tax expense. The total amount of interest and penalties related to unrecognized tax benefits recorded within tax expense were not material for the six months ended June 28, 2025. At June 28, 2025, accrued interest and penalties related to unrecognized tax benefits were $ 3.9 million. We file income tax returns in the United States, Canada, China, India, and Mexico. The statute of limitations for tax years before 2021 is closed for U.S. federal income tax purposes. 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 2022 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 and Mexico. On July 4, 2025, the One Big Beautiful Bill Act (the “Tax Act”) was signed into law, which introduced significant changes to the U.S. federal income tax code. The effects of these changes will be recognized in the period in which the legislation was enacted. We are currently assessing the impacts that the Tax Act may have on our results of operations, financial condition, and cash flows. 12. Related-Party Transactions We lease a portion of our Lewisberry, PA facility from an entity in which Steven Berman, our Non-Executive Chairman, and certain of his family members are owners. The Lewisberry 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 former President, Specialty Vehicle, and certain of her family members are owners. Each lease is a non-cancelable operating lease and will expire on October 31, 2027. We have service agreements with counterparties that are majority-owned by a family member of Ms. Hunt. These agreements provide for various warehouse and facility-related services at agreed-upon rates. The following table represents the estimated payments for the year ending December 31, 2025, and actual payments for the year ended December 31, 2024, under the related party agreements described above: Year Ending Year Ended (in thousands) December 31, 2025 December 31, 2024 Facility leases with entities related to Steven Berman $ 735 $ 715 Facility leases with entities related to Lindsay Hunt $ 2,812 $ 2,757 Service agreements with entities related to Lindsay Hunt $ 46 $ 54 13 Table of Contents We are a partner in a joint venture with one of our suppliers and own a minority interest in two other suppliers. Two of these investments are accounted for under the equity method, and one is accounted for under the cost method. 13. Fair Value Disclosures The carrying values of financial instruments such as cash and cash equivalents, accounts receivable, accounts payable, and other current assets and liabilities approximate their fair value due to the short-term nature of these instruments. The carrying value of borrowings under our credit facility approximates fair value because these borrowings bear interest at rates indexed to a market rate (Term SOFR). 14. Recent Accounting Pronouncements In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-09, Improvements to Income Tax Disclosures. The ASU expands disclosures in the income tax rate reconciliations table and cash taxes paid, and is effective for annual periods beginning after December 15, 2024. In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. The ASU requires additional disclosures about categories of expenses, including, among other things, quantitative disclosures for employee compensation, depreciation, intangible asset amortization, selling expenses, and purchases of inventory. The updated guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. We expect to implement these new standards by their effective dates, and do not anticipate that their adoption will have an impact on our results of operations, financial condition, or cash flows. 14 Table of Contents