What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-04 compared with 2025-10-28 · 98 added, 107 removed, 160 unchanged (56% of the section changed)

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and its subsidiaries.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this document constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to net sales, diluted earnings per share, gross profit, gross margin, selling, general, and administrative expenses, income tax expense, income before income taxes, net income, cash and cash equivalents, indebtedness, liquidity, the Company’s share repurchase program, the Company’s outlook, the Company’s growth opportunities and future business prospects, operational costs and productivity initiatives, inflation, tariffs, supplier diversification, price increases, long-term value, acquisitions and acquisition opportunities, investments, cost offsets, quarterly fluctuations, new product development, customer concessions, and fluctuations in foreign currency.

Cautionary Statement on Forward-Looking Information

Certain statements in this document constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to net sales, diluted earnings per share, gross profit, gross margin, selling, general, and administrative expenses, income tax expense, income before income taxes, net income, cash and cash equivalents, indebtedness, liquidity, the Company’s share repurchase program, the Company’s outlook, the Company’s growth opportunities and future business prospects, operational costs and productivity initiatives, inflation, tariffs, tariff refunds, supplier diversification, price increases, long-term value, acquisitions and acquisition opportunities, investments, cost offsets, quarterly fluctuations, new product development, customer concessions, and fluctuations in foreign currency.

Words such as “may,” “believe,” “demonstrate,” “expect,” “estimate,” “forecast,” “project,” “plan,” “anticipate,” “intend,” “should,” “will,” and “likely” and similar expressions identify forward-looking statements.

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Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected.

Please refer to “Statement Regarding Forward-Looking Statements” and “Item 1A.

Please refer to “Cautionary Statement on Forward-Looking Information” and “Item 1A.

Risk Factors” located in PART I of our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), as updated by our subsequent filings with the SEC, for a description of these and other risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements.

The Company is under no obligation to, and expressly disclaims any such obligation to, update any of the information in this document, including but not limited to any situation where any forward-looking statement later turns out to be inaccurate, whether as a result of new information, future events, or otherwise.

The following discussion and analysis, as well as other sections in this Quarterly Report on Form 10-Q, should be read in conjunction with the unaudited condensed consolidated financial statements and footnotes thereto of Dorman Products, Inc.

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Our products are sold under our various brand names, under our customers’ private-label brands, or in bulk.

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

We are one of the leading aftermarket suppliers of parts that were traditionally available to consumers only from OEMs or salvage yards.

These parts include, among others, 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.

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 online platforms;

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

and salvage yards.

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

and national, regional, and local warehouse distributors and specialty markets.

We also distribute aftermarket parts outside the United States, with sales primarily into Canada and Mexico, and to a lesser extent, Europe, the Middle East, and Australia.

We may experience significant fluctuations from quarter to quarter in our results of operations due to the timing of orders placed by our customers as well as our ability and the ability of our suppliers to deliver products ordered by our customers.

The introduction of new products and product lines to customers, as well as business acquisitions and changes in weather conditions, may also cause significant fluctuations from quarter to quarter.

We may experience significant fluctuations from quarter to quarter in our results of operations due to the timing of our customers' orders, as well as our ability and our suppliers' ability to deliver products ordered by our customers.

The introduction of new products and product lines to customers, as well as business acquisitions, may also cause significant fluctuations from quarter to quarter.

Critical Accounting Policies

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The investments have primarily been in the form of increased product development resources, additional customer and end-user awareness programs, and customer service improvements.

These investments have enabled us to

provide an expanding array of new product offerings and grow revenues at levels that generally have exceeded market growth rates.

In the nine months ended September 27, 2025, we introduced 4,357 new distinct parts to our customers and end-users, including 1,199 “New-to-the-Aftermarket” parts.

These investments have enabled us to provide an expanding array of new product offerings and grow revenues at levels that generally have exceeded market growth rates.

In the three months ended March 28, 2026, we introduced 936 new distinct parts to our customers and end-users, including 229 “New-to-the-Aftermarket” parts.

We introduced 5,560 new distinct parts to our customers and end-users in the fiscal year ended December 31, 2025, including 1,608 “New-to-the-Aftermarket” parts.

One area of focus for the light-duty sector has been our complex electronics program, which capitalizes on the growing number of electronic components being utilized on today’s OE platforms.

One area of focus for the light-duty sector has been our complex electronics program, which capitalizes on the growing number of electronic components being utilized on today’s original equipment platforms.

New vehicles contain an average of approximately 100 electronic modules, with some high-end luxury vehicles exceeding that.

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We believe that this sector provides many of the same growth opportunities that the light-duty sector has provided us.

We specialize in offering parts to this sector that were traditionally only available from OE manufacturers or salvage yards, similar to how we approach the light-duty sector.

We specialize in offering parts to this sector that were traditionally only available from OEMs or salvage yards, similar to how we approach the light-duty sector.

Within the specialty vehicle sector, we focus on providing performance parts and accessories and nondiscretionary repair parts for UTVs and ATVs.

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Industry Factors

The Company’s financial results are also impacted by various industry factors, including, but not limited to, the number, age, and condition of vehicles in operation at any given time, and the miles driven by those vehicles.

The Company’s financial results are also impacted by various industry factors, including, but not limited to, the number, age, and condition of vehicles in operation at any one time, and the miles driven by those vehicles.

Vehicles in Operation

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consumers began to increase their purchases of new vehicles, which over time caused the US SAAR to recover and return to more historical levels.

The 7-to-14-year-old vehicle car parc has continued to grow over the past several years, which we expect will expand demand for aftermarket replacement parts as more vehicles remain in operation.

The 7-to-14-year-old vehicle car parc has grown over the past several years, which we believe has expanded demand for aftermarket replacement parts as more vehicles remained in operation.

In addition, we believe that vehicle owners generally are operating their current vehicles longer than they did several years ago, performing necessary repairs and maintenance to keep those vehicles well-maintained.

We believe this trend has supported an increase in VIO, which increased to 298.5

million, a 1% increase in 2024 over 2023.

According to data published by Polk, a division of IHS Automotive, the average age of VIO increased to 12.8 years as of October 2024 from 12.6 years as of October 2023.

We believe this trend has supported an increase in VIO, which increased to 302.7 million, a 1% increase in 2025 over 2024.

According to data published by Polk, a division of IHS

Automotive, the average age of VIO increased to 12.9 years as of October 2025 from 12.8 years as of October 2024.

The number of miles driven is another important statistic that impacts our business.

Generally, as vehicles are driven more miles, the more likely it is that parts will fail and there will be increased demand for replacement parts, including our parts.

Generally, as vehicles accumulate more miles, their parts are more likely to wear or fail, which fuels increased demand for replacement parts, including our products.

According to the U.S.

Department of Transportation, the number of miles driven through October 2025 increased 1.0% year over year in the light-duty sector.

However, global gasoline prices remained high during 2024 and, if high prices persist, they may negatively impact miles driven as consumers reduce travel or seek alternative methods of transportation.

However, global gasoline prices remained high during 2025 and through the first quarter of 2026, and, if high prices persist, they may negatively impact miles driven as consumers reduce travel or seek alternative methods of transportation.

Brand Protection

We operate in a highly competitive market.

As a result, we continuously evaluate our approach to branding, pricing, and terms for our various customers and channels.

For example, we maintain brand protection policies, which are designed to ensure that certain of our branded products are not advertised below certain approved pricing levels.

As a result, we are continuously evaluating our approach to branding, pricing, and terms for our customers and channels.

For example, we maintain brand protection policies designed to ensure that certain of our branded products are not advertised below certain approved pricing levels.

In addition, we may pursue legal remedies when we observe third parties violating our intellectual property rights, including those that infringe on our patents, misrepresent our products as their own, or use our product images for their own marketing efforts.

Discounts, Allowances, and Incentives

We offer a variety of customer discounts, rebates, returns for defective and slow-moving products, and other incentives.

We offer a variety of customer discounts, rebates, defective and slow-moving product returns, and other incentives.

We may offer cash discounts for paying invoices in accordance with the specified discount terms of the invoice.

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We warrant our products against certain defects in material and workmanship when used as designed on the vehicle on which it was originally installed.

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

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

duty and specialty vehicle products.

In addition to warranty returns, we may permit our customers to return new, undamaged products to us within customer-specific limits if they have overstocked their inventories.

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Significant judgments and estimates must be made and used in connection with establishing the sales returns and other allowances in any accounting period.

Revisions to these estimates are made, when necessary, based on changes in these factors.

Revisions to these estimates are made, when necessary, based upon changes in these factors.

We regularly study trends of such claims.

Foreign Currency

Many of our products and related raw materials and components are sourced from suppliers in various non-U.S.

Many of our products and related raw materials and components are purchased from suppliers in non-U.S.

The products are generally sourced through purchase orders with the purchase price specified in U.S.

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The largest portion of our overseas purchases comes from China.

The exchange rate of the Chinese yuan to the U.S.

dollar has fluctuated over the past several years.

The Chinese yuan to U.S.

dollar exchange rate has fluctuated over the past several years.

Any future changes in the value of the Chinese yuan relative to the U.S.

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As a result, fluctuations in foreign currency exchange rates may impact our financial results.

Impact of Labor Market and Inflationary Costs

We experienced broad-based inflationary impacts during the year ended December 31, 2023, due primarily to global transportation and logistics constraints, which resulted in significantly higher transportation costs, tariffs and material costs, and wage inflation from an increasingly competitive labor market.

Certain of these increased costs in the second half of 2023 impacted our results of operations in the first half of 2024.

Higher labor costs and material inflation resulting from geopolitical events, rising interest rates, disruptions to supply chain and logistics networks, and the trade policies of the U.S.

or the countries where we source or sell our products may negatively impact our future results.

We attempt to offset inflationary pressures with cost-saving initiatives, price increases to customers, and the use of alternative suppliers.

There can be no assurance that we will be successful in implementing such cost-saving initiatives, pricing increases, or supplier diversification in the future to offset increased inflationary costs.

Impact of Inflationary Costs

Geopolitical events, higher labor and material costs, rising interest rates, disruptions to supply chain and logistics networks, and the trade policies of the U.S.

or the countries where we source or sell our products may negatively impact our results in the future.

We attempt to offset these types of inflationary pressures with cost-saving initiatives, price increases to customers, and the use of alternative suppliers.

There can be no assurance that we will be successful in implementing such cost-saving initiatives, pricing increases, or supplier diversification in the future to offset increased inflationary costs, or that the price increases we implement will not make our products uncompetitive or negatively impact customer demand.

Impact of Interest Rates

Our business is subject to interest rate risk under the terms of our customer accounts receivable sales programs, as a change in the Term Secured Overnight Financing Rate (“Term SOFR”) or

alternative discount rate affects the cost incurred to factor eligible accounts receivable.

Our business is subject to interest rate risk under the terms of our customer accounts receivable sales programs, as a change in the Term Secured Overnight Financing Rate (“Term SOFR”) or alternative discount rate affects the cost incurred to factor eligible accounts receivable.

Additionally, our outstanding borrowings under our credit facility bear interest at variable rates tied to Term SOFR or the applicable base rate.

Under the terms of the credit facility, a change in interest rates affects the rate at which we can borrow funds thereunder and impacts the interest cost on existing borrowings.

Interest rates may remain steady at their current levels for prolonged periods or may increase in the future, resulting in increased costs associated with our accounts receivable sales programs and outstanding borrowings.

Interest rates remained elevated throughout much of 2024, but began to decline starting in the second half of that year.

Interest rates remained relatively stable throughout the first quarter of 2025, but declined subsequently.

Interest rates may remain steady at their current levels for prolonged periods or may increase in the future, resulting in increased costs associated with our accounts receivable sales programs and

outstanding borrowings.

Interest rates generally declined starting in the second half of 2025 and through the first quarter of 2026.

Impact of Tariffs

We source the majority of our raw materials and parts from suppliers in various non-U.S.

In 2024, approximately 72% of our products were sourced from suppliers in various non-U.S.

countries, with approximately 45% of our products sourced from third-party suppliers in China.

The current U.S.

administration recently implemented new tariffs, announced additional tariffs that are expected to take effect in the coming months, and indicated that further tariff changes are possible depending on the outcome of trade negotiations with other countries.

We expect these actions and any reactionary tariff adjustments made by other countries will impact our business and contribute to inflationary cost increases.

We have taken actions designed to mitigate the potential impacts of these tariffs, including, but not limited to, diversifying our supply chain and negotiating cost concessions from our suppliers where possible.

In addition, starting in the third quarter of 2025, we implemented pass-through price increases to offset the dollar impact of certain new tariff costs.

We have started to experience a temporary increase in gross and operating margin percentages in 2025 due to the price increases taking effect before the increased cost of inventory, reflecting higher tariffs, is recognized as an expense in our statement of operations.

We expect margins to decrease as we start to recognize these higher tariff costs in our Statement of Operations and Comprehensive Income in the fourth quarter of 2025.

Absent any changes in trade regulations, we anticipate inflationary cost increases due to these tariffs, as well as any resulting impact on macroeconomic conditions and our business, to continue throughout the remainder of 2025.

In 2025, approximately 77% of our total volume of product purchases was sourced from suppliers in various non-U.S.

countries, with approximately 38% sourced from third-party suppliers in China.

In 2025, the U.S.

Administration implemented new tariffs that took effect throughout the year.

These new tariffs, as well as reactionary tariff adjustments made by other countries, have impacted our business and contributed to cost increases, and we expect these impacts to continue.

We have taken actions designed to mitigate the impact of these cost increases, including, but not limited to, diversifying our supply chain and negotiating cost concessions from our suppliers where possible.

In addition, starting in the third quarter of 2025, we implemented price increases to mitigate the cost increases while also considering the competitive dynamic of our parts in the marketplace.

We experienced an increase in gross margin in the second half of 2025 due to the timing of price actions taking effect before the higher tariff costs were recognized as an expense in our Statement of Operations and Comprehensive Income.

Gross margin decreased in the first quarter of 2026 as we recognized the higher tariff costs in our Statement of Operations and Comprehensive Income.

In February 2026, the U.S.

Supreme Court ruled against certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA").

The ruling did not address refunds of IEEPA tariffs paid.

However, in March 2026, the Court of International Trade (“CIT”) ordered U.S.

Customs and Border Protection (“CBP”) to begin the refund process for all importers who were subject to IEEPA duties.

CIT's order may be subject to U.S.

government challenge.

We are the importer of record for certain products that were previously subject to tariffs under IEEPA.

While we intend to pursue refunds for IEEPA tariffs, there can be no assurance that we will receive all or any portion of such refunds.

No adjustments have been recorded in the accompanying unaudited condensed consolidated financial statements.

Following the Supreme Court’s decision, the U.S.

Administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs.

There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs may be imposed, modified, or suspended, and the impacts of such actions on our business.

There also remains substantial uncertainty regarding how countries with which the U.S.

has negotiated or is in the process of negotiating tariff trade deals will respond to any further tariff actions by the U.S.

Administration.

We continue to monitor and evaluate these developments and assess their potential impact on our business, financial condition, and results of operations.

Results of Operations

The following table sets forth, for the periods indicated, the percentage of net sales represented by certain items in our Condensed Consolidated Statements of Operations and Comprehensive Income:

Three Months Ended* Nine Months Ended*

(in thousands, except percentage data) September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024

Three Months Ended*

(in thousands, except percentage data) March 28, 2026 March 29, 2025

Net sales $ 528,770 100.0 % $ 507,692 100.0 %

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* Percentage of sales information may not add due to rounding

Three Months Ended September 27, 2025, Compared to Three Months Ended September 28, 2024

Net sales increased $40.0 million, or 7.9%, for the three months ended September 27, 2025, compared to the prior year period, primarily driven by tariff-related pricing actions in our Light Duty and Heavy Duty segments, and new business wins in our Heavy Duty segment.

Gross profit as a percentage of net sales increased 390 basis points compared to the prior year period, primarily due to the sales growth noted above resulting from pricing actions enacted on inventory purchased before higher tariffs took effect earlier this year.

Gross margin also benefited from a favorable mix from higher sales of new products and supplier diversification.

Selling, general, and administrative expenses (“SG&A”) increased 30 basis points as a percentage of net sales, for the three months ended September 27, 2025, compared to the prior year period, due to higher factoring costs and additional investments made, partially offset by favorable leverage from higher sales.

Interest expense, net, decreased $2.6 million for the three months ended September 27, 2025, compared to the prior year period.

The decrease was driven by lower outstanding principal on our revolving credit facility and term loan, resulting from repayments over the last several quarters, as well as lower average Term SOFR rates during the current year period.

Our effective tax rate of 23.5% for the three months ended September 27, 2025 was higher than our effective tax rate of 22.3% for the three months ended September 28, 2024 because the three months ended September 28, 2024 benefited from favorable discrete items.

Nine Months Ended September 27, 2025, Compared to Nine Months Ended September 28, 2024

Net sales increased $117.0 million, or 7.9%, for the nine months ended September 27, 2025, compared to the prior year period, driven by increased customer demand and sales of new products and tariff-related pricing actions in our Light Duty and Heavy Duty segments, partially offset by reduced demand impacted by soft market conditions in the heavy duty and specialty vehicle sectors.

Gross profit as a percentage of net sales increased 240 basis points for the nine months ended September 27, 2025, compared to the prior year period, primarily due to the sales growth noted above and favorable mix from higher sales of new products, as well as supplier diversification, productivity, and automation initiatives, that delivered cost savings.

Selling, general, and administrative expenses (“SG&A”) decreased 60 basis points as a percentage of net sales, for the nine months ended September 27, 2025, compared to the prior year period, due to favorable leverage on higher net sales that more than offset additional investments made in the current year period.

Interest expense, net, decreased $8.8 million for the nine months ended September 27, 2025, compared to the prior year period.

Three Months Ended March 28, 2026, Compared to Three Months Ended March 29, 2025

Net sales increased $21.1 million, or 4.2%, for the three months ended March 28, 2026, compared to the prior year period, primarily driven by tariff-related pricing actions enacted during the second half of 2025 across our segments, partially offset by lower volume when compared to the strong sales in the prior year period.

Gross profit as a percentage of net sales decreased 490 basis points compared to the prior year period, primarily due to higher tariff costs in the current year period, partially offset by supplier diversification, productivity, and automation initiatives.

Selling, general, and administrative expenses (“SG&A”) decreased 30 basis points as a percentage of net sales for the three months ended March 28, 2026, compared to the prior year period, due to favorable leverage from higher net sales and lower factoring costs.

Interest expense, net, decreased $1.6 million for the three months ended March 28, 2026, compared to the prior year period.

Our effective tax rate of 23.2% for the nine months ended September 27, 2025 was lower than our effective tax rate of 23.6% for the nine months ended September 28, 2024 due to tax deductions related to the vesting of restricted stock units in the current year period.

Our effective tax rate of 22.5% for the three months ended March 28, 2026, was slightly higher than our effective tax rate of 22.4% for the three months ended March 29, 2025.

Segment Operating Results

Segment operating results were 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

For the Three Months Ended

(in thousands) March 28, 2026 March 29, 2025

Light Duty $ 423,739 $ 408,856

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Total $ 64,199 $ 86,151

Three Months Ended September 27, 2025, Compared to Three Months Ended September 28, 2024

Light Duty net sales increased $36.7 million, or 9.3%, for the three months ended September 27, 2025, compared to the prior year period, primarily due to tariff-related pricing actions.

Light Duty segment income from operations as a percentage of net sales increased to 23.7% for the three months ended September 27, 2025, from 19.0% for the three months ended September 28, 2024.

This increase was primarily driven by the sales growth noted above from pricing actions enacted on inventory purchased before higher tariffs went into effect earlier this year and supplier diversification initiatives.

Heavy Duty net sales increased $3.4 million, or 5.7%, for the three months ended September 27, 2025, compared to the prior year period.

The increase in net sales primarily reflects tariff-related pricing actions and new business wins.

Heavy Duty segment income as a percentage of net sales remained stable at 4.5% for the three months ended September 27, 2025, and September 28, 2024, as the benefit of higher net sales was offset by lower manufacturing productivity.

Specialty Vehicle

Specialty Vehicle net sales decreased slightly, for the three months ended September 27, 2025, compared to the prior year period, primarily due to reduced customer demand.

Specialty Vehicle segment income as a percentage of net sales decreased to 12.8% for the three months ended September 27, 2025, from 17.0% for the three months ended September 28, 2024.

This decrease was primarily driven by lower manufacturing productivity in the first quarter of 2025, as we proactively reduced production in our Chinese manufacturing facility following our ramp up of production in the fourth quarter of 2024 in advance of tariff increases.

Nine Months Ended September 27, 2025, Compared to Nine Months Ended September 28, 2024

Light Duty net sales increased $125.3 million, or 11.0%, for the nine months ended September 27, 2025, compared to the prior year period, primarily due to increased customer demand and sales of new products, as well as tariff-related pricing actions.

Light Duty segment income from operations as a percentage of net sales increased to 20.7% for the nine months ended September 27, 2025, from 17.4% for the nine months ended September 28, 2024.

This increase was primarily driven by the sales growth noted above from pricing actions enacted on inventory purchased before higher tariffs went into effect earlier this year, favorable mix from higher new product sales, operational excellence initiatives delivering cost savings, and favorable leverage on higher net sales.

Heavy Duty net sales decreased $1.8 million, or 1.0%, for the nine months ended September 27, 2025, compared to the prior year period.

The decrease in net sales primarily reflects reduced customer demand from continued market pressures in freight transportation and the trucking aftermarket, partially offset by tariff-related pricing actions and new business wins.

Heavy Duty segment income as a percentage of net sales decreased to 1.8% for the nine months ended September 27, 2025, from 3.0% for the nine months ended September 28, 2024.

This decrease was primarily driven by the deleverage of fixed costs on lower net sales volumes, lower manufacturing productivity, and the impact of investments we made as part of initiatives to grow sales and improve margins on a long-term basis.

Light Duty net sales increased $14.9 million, or 3.6%, for the three months ended March 28, 2026, compared to the prior year period, primarily due to tariff-related pricing actions enacted during the second half of 2025, partially offset by lower volume when compared to the strong sales in the prior year period.

Light Duty segment income from operations as a percentage of net sales decreased to 14.1% for the three months ended March 28, 2026, from 19.9% for the three months ended March 29, 2025.

This decrease was primarily driven by higher tariff costs, and higher wage and benefits costs in the current year period, partially offset by supplier diversification, productivity, and automation initiatives, and lower factoring costs.

Heavy Duty net sales increased $6.1 million, or 11.9%, for the three months ended March 28, 2026, compared to the prior year period, primarily reflecting tariff-related pricing actions.

Heavy Duty segment income as a percentage of net sales increased 110 basis points, to 0.8% for the three months ended March 28, 2026.

This increase was primarily driven by favorable leverage on higher net sales.

Specialty Vehicle

Specialty Vehicle net sales decreased $6.5 million, or 4.1%, for the nine months ended September 27, 2025, compared to the prior year period, primarily due to reduced customer demand.

Specialty Vehicle segment income as a percentage of net sales decreased to 13.6% for the nine months ended September 27, 2025, from 16.3% for the nine months ended September 28, 2024.

decrease was primarily driven by the deleverage of fixed costs on lower net sales volumes and lower manufacturing productivity.

Specialty Vehicle net sales were flat, for the three months ended March 28, 2026, compared to the prior year period, primarily due to tariff-related pricing actions in certain categories that were offset by reduced customer demand in the specialty vehicle sector.

Specialty Vehicle segment income as a percentage of net sales decreased to 8.7% for the three months ended March 28, 2026, from 10.2% for the three months ended March 29, 2025.

This decrease was primarily driven by higher tariff costs.

Liquidity and Capital Resources

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Key components of our liquidity and capital resources were as follows:

(in thousands) September 27, 2025 December 31, 2024

(in thousands) March 28, 2026 December 31, 2025

Cash and cash equivalents $ 43,056 $ 49,436

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See Note 7, “Commitments and Contingencies”, in the accompanying condensed consolidated financial statements for additional information regarding commitments and contingencies that may affect our liquidity.

Increases in tariffs accelerate our use of cash, as we pay for the higher costs upon arrival of our goods in the United States, but we collect the cash on any pass-through price increases from our customers on a delayed basis, taking into account our inventory turns and payment terms negotiated with our customers.

Increases in tariffs accelerate our use of cash, as we pay for the higher costs upon arrival of our goods in the United States, but we collect the cash from any price increases to our customers on a delayed basis, taking into account our inventory turns and payment terms negotiated with those customers.

We currently anticipate that additional liquidity needs to cover increased tariffs on imported products can be managed through additional factoring under our accounts receivable sales programs with certain customers, as well as borrowings under our existing revolving credit facility.

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These extended terms have resulted in increased accounts receivable levels and significant cash usage.

Where available and when we deem appropriate, we participate in accounts receivable sales programs with several customers that enable us to sell our accounts receivable to financial institutions to offset the negative cash flow impact of these payment term extensions.

Where available and when we deem appropriate, we participate in accounts receivable sales programs with several customers that enable us to sell our accounts receivable to financial institutions at discounted rates without recourse to offset the negative cash flow impact of these payment term extensions.

However, any sales of accounts receivable through these programs ultimately result in us receiving a lesser amount of cash upfront than if we collected those accounts receivable ourselves in due course, resulting in accounts receivable factoring costs.

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Sales of accounts receivable under these programs, and related factoring costs, were as follows:

Three Months Ended Nine Months Ended

(in thousands) September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024

Three Months Ended

(in thousands) March 28, 2026 March 29, 2025

Sales of accounts receivable $ 305,147 $ 334,170

Factoring costs 12,708 14,588

If receivables had not been sold, $1,028.5 million and $853.6 million of additional receivables would have been outstanding at September 27, 2025, and December 31, 2024, respectively, based on standard payment terms.

If receivables had not been sold, $1,070.6 million and $1,093.1 million of additional receivables would have been outstanding at March 28, 2026, and December 31, 2025, respectively, based on standard payment terms.

Further extensions of customer payment terms would result in additional cash usage or increased costs associated with the sales of accounts receivable.

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The credit agreement matures on October 4, 2027, is guaranteed by the Company’s material domestic subsidiaries, and is supported by a security interest in substantially all of the Company’s material domestic subsidiaries’ personal property and assets, subject to certain exceptions.

As of September 27, 2025, there was $456.3 million in outstanding borrowings under the term loan.

As of March 28, 2026, there was $15.0 million in outstanding borrowings under the revolving credit facility, and $440.6 million in outstanding borrowings under the term loan.

Also on that date, we had outstanding letters of credit for $1.1 million in aggregate.

Net of outstanding borrowings and letters of credit, we had $598.9 million available under the credit facility at September 27, 2025.

Net of outstanding borrowings and letters of credit, we had $583.9 million available under the credit facility at March 28, 2026.

Our credit agreement contains affirmative and negative covenants.

As of September 27, 2025, we were not in default with respect to our credit agreement.

As of March 28, 2026, we were not in default with respect to our credit agreement.

Refer to Note 6, “Long-Term Debt” to the Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, for additional information.

The following summarizes the activities included in the Condensed Consolidated Statements of Cash Flows:

Nine Months Ended

(in thousands) September 27, 2025 September 28, 2024

Three Months Ended

(in thousands) March 28, 2026 March 29, 2025

Cash provided by operating activities $ 43,759 $ 51,237

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Net (decrease) increase in cash and cash equivalents $ (6,380) $ 3,475

For the nine months ended September 27, 2025, cash provided by operating activities decreased $87.6 million from the prior year period as a result of cash used to fund investments in inventory to meet customer demand and increased tariffs on imports, partially offset by higher proceeds from accounts receivable.

Investing activities used cash of $29.8 million and $31.2 million during the nine months ended September 27, 2025, and September 28, 2024, respectively, reflecting timing of spending on capital investments.

Financing activities during the nine months ended September 27, 2025, included $15.3 million paid to repurchase 122,923 shares of common stock and $26.5 million to repay outstanding borrowings under our credit agreement.

During the nine months ended September 28, 2024, we paid $78.1 million to repurchase 855,971 shares of common stock, and repaid $40.4 million of outstanding borrowings under our credit agreement.

For the three months ended March 28, 2026, cash provided by operating activities decreased $7.5 million from the prior year period as a result of lower net income and reduced cash from sales of accounts receivable, partially offset by the benefits of inventory reductions in the current year.

Investing activities used cash of $8.4 million and $11.0 million during the three months ended March 28, 2026, and March 29, 2025, respectively, reflecting timing of spending on capital investments.

Financing activities during the three months ended March 28, 2026, included $50.5 million paid to repurchase 425,174 shares of common stock, as well as proceeds received from borrowings under our revolving credit agreement of $15.0 million.

During the three months ended March 29, 2025, we paid $11.8 million to repurchase 93,800 shares of common stock, and repaid $20.3 million of outstanding borrowings under our credit agreement.

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 2. Management’s Discussion and Analysis