Dorman Products, Inc. 10-Q

ITEM 1. Financial Statements DORMAN PRODUCTS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) Three Months Ended Nine Months Ended (in thousands, except per share data) September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Net sales $ 543,736 $ 503,773 $ 1,592,387 $ 1,475,425 Cost of goods sold 302,309 299,970 923,739 890,775 Gross profit 241,427 203,803 668,648 584,650 Selling, general, and administrative expenses 135,677 124,532 400,343 378,489 Income from operations 105,750 79,271 268,305 206,161 Interest expense, net 7,207 9,762 21,747 30,569 Other income, net ( 1,385 ) ( 1,615 ) ( 4,290 ) ( 1,711 ) Income before income taxes 99,928 71,124 250,848 177,303 Provision for income taxes 23,508 15,871 58,214 41,812 Net income $ 76,420 $ 55,253 $ 192,634 $ 135,491 Other comprehensive income: Change in foreign currency translation adjustment ( 996 ) 651 1,565 ( 967 ) Comprehensive Income $ 75,424 $ 55,904 $ 194,199 $ 134,524 Earnings per share: Basic $ 2.50 $ 1.81 $ 6.31 $ 4.39 Diluted $ 2.48 $ 1.80 $ 6.26 $ 4.37 Weighted average shares outstanding: Basic 30,546 30,570 30,546 30,888 Diluted 30,782 30,739 30,757 31,019 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) September 27, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 55,505 $ 57,137 Accounts receivable, less allowance for doubtful accounts of $ 1,775 and $ 1,619 520,594 573,787 Inventories 899,904 707,977 Prepaids and other current assets 40,986 30,859 Total current assets 1,516,989 1,369,760 Property, plant, and equipment, net 168,463 164,499 Operating lease right-of-use assets 114,599 118,499 Goodwill 443,840 442,886 Intangible assets, net 262,229 278,213 Deferred tax assets — 5,786 Other assets 46,406 44,878 Total assets $ 2,552,526 $ 2,424,521 Liabilities and shareholders’ equity Current liabilities: Accounts payable $ 215,088 $ 231,814 Accrued compensation 25,517 44,002 Accrued customer rebates and returns 198,060 204,355 Revolving credit facility — 13,960 Current portion of long-term debt 34,375 28,125 Other accrued liabilities 43,676 41,546 Total current liabilities 516,716 563,802 Long-term debt 421,063 439,513 Long-term operating lease liabilities 99,318 105,142 Deferred tax liabilities 12,426 3,700 Other long-term liabilities 20,422 18,894 Commitments and contingencies (Note 7) Shareholders’ equity: Common stock, $ 0.01 par value; 50,000,000 shares authorized; 30,561,782 and 30,565,855 shares issued and outstanding in 2025 and 2024, respectively 306 306 Additional paid-in capital 129,534 119,077 Retained earnings 1,357,951 1,180,862 Accumulated other comprehensive loss ( 5,210 ) ( 6,775 ) Total shareholders’ equity 1,482,581 1,293,470 Total liabilities and shareholders' equity $ 2,552,526 $ 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 September 27, 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 June 28, 2025 30,523,887 $ 305 $ 121,914 $ 1,281,741 $ ( 4,214 ) $ 1,399,746 Exercise of stock options 26,254 — 2,463 — — 2,463 Compensation expense under incentive stock plans — — 4,287 — — 4,287 Purchase and cancellation of common stock ( 1,593 ) — ( 3 ) ( 210 ) — ( 213 ) Issuance of common stock under incentive stock plans, net of cancellations 14,553 — 1,065 — — 1,065 Other stock-related activity ( 1,319 ) 1 ( 192 ) — — ( 191 ) Change in foreign currency translation adjustment — — — — ( 996 ) ( 996 ) Net income — — — 76,420 — 76,420 Balance at September 27, 2025 30,561,782 $ 306 $ 129,534 $ 1,357,951 $ ( 5,210 ) $ 1,482,581 Three Months Ended September 28, 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 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 Compensation expense under incentive stock plans — — 3,767 — — 3,767 Purchase and cancellation of common stock ( 276,063 ) ( 3 ) ( 497 ) ( 26,499 ) — ( 26,999 ) Issuance of common stock under incentive stock plans, net of cancellations 17,177 — — — — — Other stock-related activity ( 5,296 ) — ( 596 ) ( 1 ) — ( 597 ) Change in foreign currency translation adjustment — — — — 651 651 Net income — — — 55,253 — 55,253 Balance at September 28, 2024 30,516,759 $ 305 $ 110,595 $ 1,127,259 $ ( 3,557 ) $ 1,234,602 Nine Months Ended September 27, 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 33,615 — 3,192 — — 3,192 Compensation expense under incentive stock plans — — 12,424 — — 12,424 Purchase and cancellation of common stock ( 126,586 ) ( 1 ) ( 228 ) ( 15,545 ) — ( 15,774 ) Issuance of common stock under incentive stock plans, net of cancellations 135,045 1 1,064 — — 1,065 Other stock-related activity ( 46,147 ) — ( 5,995 ) — — ( 5,995 ) Change in foreign currency translation adjustment — — — — 1,565 1,565 Net income — — — 192,634 — 192,634 Balance at September 27, 2025 30,561,782 $ 306 $ 129,534 $ 1,357,951 $ ( 5,210 ) $ 1,482,581 Nine Months Ended September 28, 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 24,358 — 1,766 — — 1,766 Compensation expense under incentive stock plans — — 10,547 — — 10,547 Purchase and cancellation of common stock ( 867,385 ) ( 9 ) ( 1,561 ) ( 77,569 ) — ( 79,139 ) Issuance of common stock under incentive stock plans, net of cancellations 83,055 1 960 — — 961 Other stock-related activity ( 23,039 ) — ( 2,162 ) ( 98 ) — ( 2,260 ) Change in foreign currency translation adjustment — — — — ( 967 ) ( 967 ) Net income — — — 135,491 — 135,491 Balance at September 28, 2024 30,516,759 $ 305 $ 110,595 $ 1,127,259 $ ( 3,557 ) $ 1,234,602 See accompanying Notes to Condensed Consolidated Financial Statements 5 Table of Contents DORMAN PRODUCTS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended (in thousands) September 27, 2025 September 28, 2024 Cash Flows from Operating Activities: Net income $ 192,634 $ 135,491 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 41,798 43,015 Provision for doubtful accounts 374 74 Provision for deferred income taxes 14,845 694 Provision for stock-based compensation 12,424 10,547 Changes in assets and liabilities: Accounts receivable 52,928 ( 44,304 ) Inventories ( 191,562 ) ( 27,962 ) Prepaids and other current assets ( 2,389 ) ( 4,450 ) Other assets ( 4,193 ) ( 406 ) Accounts payable ( 16,518 ) 29,067 Accrued customer rebates and returns ( 6,303 ) 3,784 Accrued compensation and other liabilities ( 22,048 ) 14,072 Cash provided by operating activities 71,990 159,622 Cash Flows from Investing Activities: Property, plant, and equipment additions ( 29,818 ) ( 31,245 ) Cash used in investing activities ( 29,818 ) ( 31,245 ) Cash Flows from Financing Activities: Payments of revolving credit line ( 13,960 ) ( 31,000 ) Payments of long-term debt ( 12,500 ) ( 9,375 ) Payment of deferred acquisition consideration — ( 200 ) Proceeds from exercise of stock options 3,192 1,766 Purchase and cancellation of common stock ( 15,773 ) ( 79,923 ) Other stock-related activity ( 4,929 ) ( 1,301 ) Cash used in financing activities ( 43,970 ) ( 120,033 ) Effect of exchange rate changes on Cash and Cash Equivalents 166 ( 31 ) Net (Decrease) Increase in Cash and Cash Equivalents ( 1,632 ) 8,313 Cash and Cash Equivalents, Beginning of Period 57,137 36,814 Cash and Cash Equivalents, End of Period $ 55,505 $ 45,127 Supplemental Cash Flow Information Cash paid for interest expense $ 18,381 $ 26,865 Cash paid for income taxes $ 54,049 $ 39,761 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 NINE MONTHS ENDED SEPTEMBER 27, 2025, AND SEPTEMBER 28, 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 nine months ended September 27, 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 Nine Months Ended (in thousands) September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Sales of accounts receivable $ 341,011 $ 254,657 $ 1,030,085 $ 791,413 Factoring costs 14,590 11,939 43,744 38,171 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) September 27, 2025 December 31, 2024 Raw materials $ 34,170 $ 29,233 Bulk product 277,625 246,604 Finished product 575,824 421,734 Packaging materials 12,285 10,406 Total $ 899,904 $ 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 — 800 — 800 Balance at September 27, 2025 $ 313,704 $ 56,506 $ 73,630 $ 443,840 Intangible Assets Intangible assets included the following: September 27, 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 $ 49,326 $ 124,658 $ 173,430 $ 41,358 $ 132,072 Trade names 67,690 18,087 49,603 67,690 14,999 52,691 Product portfolio 107,800 21,544 86,256 107,800 16,522 91,278 Technology 2,167 1,504 663 2,167 1,318 849 Patents and other 2,350 1,301 1,049 2,350 1,027 1,323 Total $ 353,991 $ 91,762 $ 262,229 $ 353,437 $ 75,224 $ 278,213 Amortization expense was $ 5.4 million and $ 6.3 million during the three months ended September 27, 2025, and September 28, 2024, respectively, and $ 16.4 million and $ 17.4 million during the nine months ended September 27, 2025, and September 28, 2024, respectively. 5. Debt As of September 27, 2025, and December 31, 2024, the interest rate on the outstanding borrowings under our credit facility was 5.67 % and 5.71 %, respectively. 8 Table of Contents 6. Segment and Geographic Information Segment results are as follows: For the Three Months ended September 27, 2025 (in thousands) Light Duty Heavy Duty Specialty Vehicle Total Net sales $ 430,316 $ 63,025 $ 50,395 $ 543,736 Cost of goods sold 229,612 47,004 25,693 302,309 Factoring expense 14,590 — — 14,590 Other segment expenses 83,953 13,166 18,240 115,359 Segment income from operations $ 102,161 $ 2,855 $ 6,462 $ 111,478 For the Three Months ended September 28, 2024 (in thousands) Light Duty Heavy Duty Specialty Vehicle Total Net sales $ 393,577 $ 59,615 $ 50,581 $ 503,773 Cost of goods sold 231,938 43,562 24,469 299,969 Factoring expense 11,939 — — 11,939 Other segment expenses 75,068 13,393 17,488 105,949 Segment income from operations $ 74,632 $ 2,660 $ 8,624 $ 85,916 For the Nine Months ended September 27, 2025 (in thousands) Light Duty Heavy Duty Specialty Vehicle Total Net sales $ 1,263,500 $ 176,765 $ 152,122 $ 1,592,387 Cost of goods sold 714,750 132,186 76,803 923,739 Factoring expense 43,744 — — 43,744 Other segment expenses 243,051 41,365 54,598 339,014 Segment income from operations $ 261,955 $ 3,214 $ 20,721 $ 285,890 For the Nine Months ended September 28, 2024 (in thousands) Light Duty Heavy Duty Specialty Vehicle Total Net sales $ 1,138,228 $ 178,613 $ 158,584 $ 1,475,425 Cost of goods sold 679,051 133,315 78,398 890,764 Factoring expense 38,171 — — 38,171 Other segment expenses 222,667 39,908 54,363 316,938 Segment income from operations $ 198,339 $ 5,390 $ 25,823 $ 229,552 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 Nine Months Ended (in thousands) September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Segment income from operations $ 111,478 $ 85,916 $ 285,890 $ 229,552 Acquisition-related intangible assets amortization ( 5,442 ) ( 6,173 ) ( 16,319 ) ( 17,138 ) Acquisition-related transaction and other costs ( 286 ) ( 396 ) ( 1,119 ) ( 1,327 ) Pretax reduction in workforce costs — ( 76 ) ( 147 ) ( 4,926 ) Interest expense, net ( 7,207 ) ( 9,762 ) ( 21,747 ) ( 30,569 ) Other income, net 1,385 1,615 4,290 1,711 Consolidated income before income taxes $ 99,928 $ 71,124 $ 250,848 $ 177,303 The following table presents our net sales by geographic region: Three Months Ended Nine Months Ended (in thousands) September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Net sales to U.S. customers $ 502,525 $ 464,132 $ 1,469,138 $ 1,355,501 Net sales to non-U.S. customers 41,211 39,641 123,249 119,924 Total $ 543,736 $ 503,773 $ 1,592,387 $ 1,475,425 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 nine months ended September 27, 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 $ 3.8 million and $ 3.4 million for the three months ended September 27, 2025, and September 28, 2024, respectively, and $ 11.3 million and $ 9.1 million for the nine months ended September 27, 2025, and September 28, 2024, respectively, and was included in selling, general, and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income. 10 Table of Contents The following table summarizes our RSU and RSA activity for the nine months ended September 27, 2025: Shares Weighted Average Fair Value Balance at December 31, 2024 340,578 $ 97.84 Granted 155,518 $ 138.59 Vested ( 124,829 ) $ 97.18 Canceled ( 24,616 ) $ 119.97 Balance at September 27, 2025 346,651 $ 115.60 As of September 27, 2025, there was $ 24.9 million of unrecognized compensation cost related to unvested RSU grants that is expected to be recognized over a weighted average period of 2.0 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 $ 0.3 million for the three months ended September 27, 2025, and September 28, 2024, respectively, and $ 0.9 million and $ 1.1 million for the nine months ended September 27, 2025, and September 28, 2024, respectively, and is included as selling, general, and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income. The following table summarizes our stock option activity for the nine months ended September 27, 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 ( 3,352 ) $ 90.83 Exercised ( 33,615 ) $ 94.96 Balance at September 27, 2025 197,322 $ 88.47 3.8 $ 13,187 Exercisable at September 27, 2025 147,838 $ 86.87 3.4 $ 10,116 As of September 27, 2025, there was $ 1.1 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 1.3 years. Employee Stock Purchase Plan ("ESPP") During the three and nine months ended September 27, 2025, we issued 10,216 shares under the ESPP. During the nine months ended September 28, 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. Common stock equivalents are calculated using the treasury stock method and are computed based on outstanding stock-based awards. For the three months ended September 27, 2025, and September 28, 2024, there were approximately 20,000 shares and 214,000 shares, respectively, and for the nine months ended 11 Table of Contents September 27, 2025, and September 28, 2024, there were approximately 62,000 shares and 253,000 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 Nine Months Ended (in thousands, except per share data) September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Numerator: Net income $ 76,420 $ 55,253 $ 192,634 $ 135,491 Denominator: Weighted average basic shares outstanding 30,546 30,570 30,546 30,888 Effect of stock-based compensation awards 236 169 211 131 Weighted average diluted shares outstanding 30,782 30,739 30,757 31,019 Earnings Per Share: Basic $ 2.50 $ 1.81 $ 6.31 $ 4.39 Diluted $ 2.48 $ 1.80 $ 6.26 $ 4.37 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 Nine Months Ended September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Shares repurchased and canceled 1,593 2,410 3,663 11,414 Total cost of shares repurchased and canceled (in thousands) $ 212 $ 262 $ 473 $ 1,048 Average price per share $ 133.24 $ 108.70 $ 129.19 $ 91.85 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. The following table summarizes the repurchase and cancellation of common stock in the three and nine months ended September 27, 2025, and September 28, 2024: Three Months Ended Nine Months Ended September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Shares repurchased and canceled — 273,653 122,923 855,971 Total cost of shares repurchased and canceled (in thousands) $ — $ 26,737 $ 15,300 $ 78,091 Average price per share $ — $ 97.70 $ 124.47 $ 91.23 At September 27, 2025, $ 484.7 million was available for repurchase under the program in effect. 12 Table of Contents 11. Income Taxes At September 27, 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 nine months ended September 27, 2025. At September 27, 2025, accrued interest and penalties related to unrecognized tax benefits were $ 4.1 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 2021 is closed for income tax purposes in India. The statute of limitations for tax years before 2020 is closed for income tax purposes in Mexico. House Resolution 1, commonly referred to as the One Big Beautiful Bill Act, was enacted into law on July 4, 2025. The tax regulations included in the Act did not have a material impact on the Company’s effective tax rate for the periods presented, and the Company does not expect the Act to have a material impact on its effective tax rate for 2025. The Company is currently evaluating the impact that the tax regulations may have on its financial statements in future years. 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 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 13 Table of Contents 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