What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-10-24 compared with 2022-07-25 · 94 added, 79 removed, 196 unchanged (47% of the section changed)

54 unchanged sentences

As of December 25, 2021, we marketed approximately

118,000 distinct parts compared to approximately 81,000 as of December 26, 2020, many of which we designed and engineered.

118,000 distinct parts, many of which we designed and engineered.

This number excludes private label stock keeping units and other variations in how we market, package and distribute our products, includes distinct parts of acquired companies and reflects distinct parts that have been discontinued at the end of their lifecycle.

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

We generate the majority of our net sales from customers in the North American motor vehicle aftermarket industry, primarily in the United States.

We generate most of our net sales from customers in the North American motor vehicle aftermarket industry, primarily in the United States.

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

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

We operate on a 52-53-week period ending on the last Saturday of the calendar year.

Our 2022 fiscal year will be a 53-week period that will end on December 31, 2022 (“fiscal 2022”).

Prior to October 3, 2022, we operated on a 52-53-week period ending on the last Saturday of the calendar year.

Our 2022 fiscal year under this schedule is set to be a 53-week period that will end on December 31, 2022 (“fiscal 2022”).

On October 3, 2022, our Board of Directors approved a change in Dorman’s fiscal year end from the last Saturday in December of each year to December 31 of each year.

This change will result in future years ending on December 31, consistent with fiscal 2022.

Our fiscal 2021 was a 52-week period that ended on December 25, 2021 (“fiscal 2021”).

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These investments historically 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 six months ended June 25, 2022, we introduced 2,596 new distinct parts to our customers and end-users, including 855 “New-to-the-Aftermarket” parts.

In the nine months ended September 24, 2022, we introduced 3,416 new distinct parts to our customers and end-users, including 1,134 “New-to-the-Aftermarket” parts.

We introduced 4,315 new distinct parts to our customers and end-users in the fiscal year ended December 25, 2021, including 990 “New-to-the-Aftermarket” parts.

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A key component of our strategy is growth through acquisitions.

For example, on August 10, 2021, we acquired Dayton Parts, a manufacturer of chassis and other parts designed to serve the heavy-duty vehicle sector of the aftermarket.

See Note 2, Business Acquisitions and Investments under Notes to Condensed Consolidated Financial Statements for

additional information.

On October 4, 2022, we acquired Super ATV, LLC, a leading independent supplier to the powersports aftermarket with a family of highly respected brands spanning

functional accessories and upgrades, as well as replacement parts for specialty vehicles.

O n August 10, 2021, we acquired Dayton Parts, a manufacturer of chassis and other parts designed to serve the heavy-duty vehicle sector of the aftermarket.

See Note 2, Business Acquisitions and Investments under Notes to Condensed Consolidated Financial Statements for additional information.

We may acquire businesses in the future to supplement our financial growth, increase our customer base, add to our distribution capabilities or enhance our product development resources, among other reasons .

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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.

Consequently, subject to any potential impacts from COVID-19, we expect the VIO for vehicles aged 8 to 13 years old to continue to recover over the next several years.

Consequently, we expect the VIO for vehicles aged 8 to 13 years old to continue to recover over the next several years.

Additionally, during 2022, we expect fewer new vehicles to be purchased in the near term, benefitting demand for aftermarket parts, given the lack of availability of new vehicles and increased interest rates.

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.

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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.

According the U.S.

Department of Transportation, the number of miles driven through October 2021 increased 11.2% year over year.

However, global gasoline prices have increased significantly in recent months, which may negatively impact miles driven as consumers reduce travel or seek alternative methods of transportation.

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.

We expect this increase in miles driven may continue, given that certain employers have begun to lift work-from-home policies implemented during the pandemic and, consequently, consumers may return to commuting to work on a more regular basis.

However, global gasoline prices have been volatile in recent months, which may negatively impact miles driven as consumers reduce travel or seek alternative methods of transportation.

Brand Protection

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These discounts can be in the form of “off-invoice” discounts and are immediately deducted from sales at the time of sale.

For those customers that choose to receive a payment on a quarterly or annual basis instead of “off-invoice,” we accrue for such payments as the related sales are made and reduce sales accordingly.

For those customers that choose to receive a payment on a quarterly or annual basis instead of “off-invoice,” we accrue for such payments as the related sales are made and reduce sales

Finally, rebates and discounts are provided to customers to support promotional activities such as advertising and sales force allowances.

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We attempt to avoid or minimize these concessions as much as possible, but we have granted pricing concessions, indemnification rights, extended customer payment terms, and allowed a higher level of product returns in certain cases.

These concessions impact net sales as well as our profit

levels and may require additional capital to finance the business.

These concessions impact net sales as well as our profit levels and may require additional capital to finance the business.

We expect our customers to continue to exert pressure on our margins.

New Customer Acquisition Costs

New customer acquisition costs refer to arrangements under which we incur change-over costs to induce a customer to switch from a competitor’s brand.

We may incur new customer acquisition costs where we incur change-over costs to induce a customer to switch from a competitor’s brand.

Change-over costs include the costs related to removing the new customer’s inventory and replacing it with our inventory, which is commonly referred to as a stock lift.

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Impact of Labor Market and Inflationary Costs

We have experienced broad-based inflationary impacts during the six months ended June 25, 2022 as well as the year ended December 25, 2021, due primarily to global transportation and logistics constraints, which have resulted in significantly higher transportation costs;

We have experienced broad-based inflationary impacts during the nine months ended September 24, 2022 as well as the year ended December 25, 2021, due primarily to global transportation and logistics constraints, which have resulted in significantly higher transportation costs;

material costs;

and wage inflation from an increasingly competitive labor market.

We expect increased freight, higher labor costs and material inflation costs to continue to negatively impact our results through fiscal 2022.

We expect increased freight, higher labor costs and material inflation costs to continue to negatively impact our results through fiscal 2022, despite recent signs of global supply chain constraints easing, which could lead to lower ocean freight and commodity costs.

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

Although we have implemented pass-through price increases to offset inflationary cost impacts, the price increases have often been implemented after we have experienced higher costs resulting in a lag effect to the full recovery of these costs.

Furthermore, pricing increases that we implemented to pass through the increased costs had no added profit dollars and consequently resulted in lower gross and operating margin percentages.

Furthermore, pricing increases that we implemented to pass through the increased costs had no added profit dollars and consequently resulted in lower gross and operating margin

There can be no assurance that we will be successful in implementing pricing increases in the future to recover increased inflationary costs.

Impact of Interest Rates

Our business is subject to interest rate risk under the terms of our accounts receivable sales programs, as a change in LIBOR or alternative discount rates affects the cost incurred to factor eligible accounts receivable.

Additionally, our outstanding borrowings under our revolving credit facility bear interest at variable rates tied to LIBOR or the lender’s base rate.

Under the terms of the revolving credit facility, a change in interest rates affects the rate at which we can

borrow funds thereunder and also impacts the interest cost on existing borrowings.

During the six months ended June 25, 2022, we have seen significant increases in LIBOR which have impacted our results as discussed in Results of Operations that follows.

We expect LIBOR rates will continue to increase throughout the remainder of fiscal 2022, increasing the costs associated with our accounts receivable sales programs and outstanding borrowings.

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

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

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

During the nine months ended September 24, 2022, we have seen significant increases in LIBOR, Term SOFR, and other reference rates, which have impacted our results as discussed in Results of Operations that follows.

We expect interest rates will continue to increase throughout the remainder of fiscal 2022, increasing the costs associated with our accounts receivable sales programs and outstanding borrowings.

In addition, in connection with the potential phaseout of LIBOR, to the extent any financial institutions with which we deal transition from LIBOR to other reference rates, our results of operations may be affected.

While COVID-19 did not adversely affect demand for our products for the six months ended June 25, 2022, during the period we did experience pandemic-related pressures in the global supply network that caused logistical issues, including higher freight costs, supplier lead time delays of products, and inflation with respect to materials and labor costs, which impacted our results.

We currently expect those pressures to continue to exist throughout the remainder of fiscal 2022.

While COVID-19 did not adversely affect demand for our products for the nine months ended September 24, 2022, during the period we did experience pandemic-related pressures in the global supply network that caused logistical issues, including higher freight costs, supplier lead time delays of products, and inflation with respect to materials and labor costs, which impacted our results.

We currently expect those pressures to continue to exist throughout the remainder of fiscal 2022, despite recent signs of global supply chain constraints easing, which could lead to lower ocean freight and commodity costs.

Impact of Tariffs

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Three Months Ended*

Six Months Ended*

Nine Months Ended*

(in thousands, except percentage data)

June 25, 2022

June 26, 2021

June 25, 2022

June 26, 2021

September 24, 2022

September 25, 2021

September 24, 2022

September 25, 2021

Cost of goods sold

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Interest expense, net

Other income, net

Other expense (income), net

Income before income taxes

1 unchanged sentence

* Percentage of sales information may not add due to rounding

Three Months Ended June 25, 2022 Compared to Three Months Ended June 26, 2021

Net sales increased 34% to $417.4 million for the three months ended June 25, 2022 from $310.6 million for the three months ended June 26, 2021.

Three Months Ended September 24, 2022 Compared to Three Months Ended September 25, 2021

Net sales increased 19% to $413.5 million for the three months ended September 24, 2022 from $348.4 million for the three months ended September 25, 2021.

The growth in net sales reflected the addition of Dayton Parts;

a continuation of favorable underlying industry dynamics across our customer channels;

successful new product launches;

and price increases to offset inflationary costs.

Net sales growth for the three months ended September 24, 2022 excluding Dayton Parts was 8%.

Gross profit margin was 31.9% of net sales for the three months ended September 24, 2022 compared to 33.5% of net sales for the three months ended September 25, 2021.

Dayton Parts had a 50-basis-point dilutive impact on gross profit margin for the three months ended September 24, 2022.

Gross margin contraction was also driven by broad-based inflationary cost pressures.

Dorman continued to implement price increases and cost-savings initiatives to offset the inflationary cost pressures experienced during the period, which maintained gross profit dollars but resulted in a lower gross margin percentage.

Selling, general and administrative expenses (“SG&A”) were $89.8 million, or 21.7% of net sales, for the three months ended September 24, 2022 compared to $72.7 million, or 20.9% of net sales, for the three months ended September 25, 2021.

The increase in SG&A expenses as a percentage of net sales was primarily due to the impact of higher interest rates on our customer accounts receivable factoring programs and costs incurred in connection with the SuperATV transaction , partially offset by improved leverage from the increase in net sales noted above and lower wages and benefits expenses.

Dayton Parts had a 100-basis-point dilutive impact on SG&A expenses as a percentage of net sales for the three months ended September 24, 2022.

Our effective tax rate was 22.9% for the three months ended September 24, 2022 compared to 24.0% for the three months ended September 25, 2021.

The decrease in the effective tax rate was primarily the result of favorable discrete items recorded in the three months ended September 24, 2022, partially offset by higher Canadian income tax associated with the Canadian operations acquired as part of the Dayton Parts transaction.

Nine Months Ended September 24, 2022 Compared to Nine Months Ended September 25, 2021

Net sales increased 30% to $1,232.5 million for the nine months ended September 24, 2022 from $947.1 million for the nine months ended September 25, 2021.

The increase in net sales reflected the addition of Dayton Parts;

a continuation of favorable underlying industry dynamics across our customer channels;

increased new product penetration, and price increases to offset rising supply chain costs, wage pressures and commodity inflation.

Net sales growth for the three months ended June 25, 2022 excluding Dayton Parts was 13%.

Gross profit margin was 33.9% of net sales for the three months ended June 25, 2022 compared to 35.5% of net sales for the three months ended June 26, 2021 .

Dayton Parts had a 110-basis-point dilutive impact on gross profit margin for the three months ended June 25, 2022.

Gross margin contraction was also driven by broad-based cost pressures due to global supply chain constraints as well as commodity and wage rate inflation.

Dorman continued to implement cost-savings initiatives and price increases to offset the inflationary cost pressures experienced during the quarter that maintained gross profit dollars but resulted in a lower gross margin percentage.

Selling, general and administrative expenses (“SG&A”) were $92.1 million, or 22.1% of net sales, for the three months ended June 25, 2022 compared to $69.5 million, or 22.4% of net sales, for the three months ended June 26, 2021.

The decrease in SG&A expenses as a percentage of net sales was primarily due to improved leverage from the increase in net sales noted above, partially offset by the impact of higher interest rates on our customer accounts receivable factoring programs, combined with higher wage and benefits inflation.

Dayton Parts had a 100-basis-point dilutive impact on SG&A expenses as a percentage of net sales for the three months ended June 25, 2022.

Our effective tax rate was 21.1% for the three months ended June 25, 2022 compared to 22.3% for the three months ended June 26, 2021.

The decrease to the effective tax rate was primarily the result of favorable discrete items recorded in the three months ended June 25, 2022 related to a change in New Jersey’s combined reporting guidance, partially offset by an increase in state tax expense and higher Canadian income tax associated with the Canadian operations acquired as part of the Dayton Parts transaction.

Six Months Ended June 25, 2022 Compared to Six Months Ended June 26, 2021

Net sales increased 37% to $819.0 million for the six months ended June 25, 2022 from $598.6 million for the six months ended June 26, 2021.

The increase in net sales reflected the addition of Dayton Parts, a continuation of favorable underlying industry dynamics across our customer channels, increased new product penetration, and price increases to offset rising supply chain costs, wage pressures and commodity inflation.

Net sales growth for the six months ended June 25, 2022 excluding Dayton Parts was 17%.

Gross profit margin was 33.5% of net sales for the six months ended June 25, 2022 compared to 35.9% of net sales for the six months ended June 26, 2021.

Dayton Parts had a 130-basis-point dilutive impact on gross profit margin for the six months ended June 25, 2022.

increased new product launches;

and price increases to offset inflationary costs.

Net sales growth for the nine months ended September 24, 2022 excluding Dayton Parts was 14%.

Gross profit margin was 33.0% of net sales for the nine months ended September 24, 2022 compared to 35.0% of net sales for the nine months ended September 25, 2021.

Dayton Parts had a 100-basis-point dilutive impact on gross profit margin for the nine months ended September 24, 2022.

Gross margin contraction was also driven by broad-based cost pressures due to global supply chain constraints as well as commodity and wage rate inflation.

Dorman continued to implement cost-savings initiatives and price increases to offset the inflationary cost pressures experienced during the period that maintained gross profit dollars but resulted in a lower gross margin percentage.

Selling, general and administrative expenses (“SG&A”) were $178.6 million, or 21.8% of net sales, for the six months ended June 25, 2022 compared to $132.4 million, or 22.1% of net sales, for the six months ended June 26, 2021.

Our effective tax rate was 21.9% for the six months ended June 25, 2022 compared to 21.8% for the six months ended June 26, 2021.

The increase in the effective tax rate was due to an increase in state tax expense and higher Canadian income tax associated with the Canadian operations acquired as part of the Dayton Parts transaction, offset by favorable discrete items related to the change in New Jersey’s combined reporting guidance.

Selling, general and administrative expenses (“SG&A”) were $ 268.4 million, or 21.8% of net sales, for the nine months ended September 24, 2022 compared to $ 205.0 million, or 21.7% of net sales, for the nine months ended September 25, 2021 .

SG&A expenses as a percentage of net sales was flat compared to the prior year period as improved leverage from the increase in net sale s noted above was offset by the impact of higher interest rates on our customer accounts receivable factoring programs and higher amortization of intangible assets resulting from the Dayton Parts acquisition in August 2021 .

Our effective tax rate was 22.2% for the nine months ended September 24, 2022 compared to 22.6% for the nine months ended September 25, 2021.

The decrease in the effective tax rate was due to higher favorable discrete items in the nine months ended September 24, 2022 compared to the nine months ended September 25, 2021, partially offset by higher Canadian income tax associated with the Canadian operations acquired as part of the Dayton Parts transaction.

Liquidity and Capital Resources

Historically, our primary sources of liquidity have been our invested cash and the cash flow we generate from our operations, including accounts receivable sales programs provided by certain customers.

Cash and cash equivalents were $52.0 million at June 25, 2022 compared to $58.8 million at December 25, 2021.

During the six months ended June 25, 2022, cash provided from operating activities was offset by share repurchases under our publicly announced repurchase program and capital expenditures.

Working capital was $470.7 million at June 25, 2022 compared to $411.5 million at December 25, 2021.

Cash and cash equivalents were $35.4 million at September 24, 2022 compared to $58.8 million at December 25, 2021.

During the nine months ended September 24, 2022, cash provided from operating activities was offset by share repurchases under our publicly announced repurchase program and capital expenditures.

Working capital was $503.1 million at September 24, 2022 compared to $411.5 million at December 25, 2021.

Based on our current operating plan, we believe that our sources of available capital are adequate to meet our ongoing cash needs for at least the next twelve months.

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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.

Moreover, to the extent that any of these accounts receivable sales programs bear interest rates tied to the London Inter-Bank Offered Rate (“LIBOR”) or other reference rates, increases in these applicable rates increase our cost to sell our receivable.

Moreover, to the extent that any of these accounts receivable sales programs bear interest rates tied to the LIBOR, Term SOFR, or other reference rates, increases in these applicable rates increase our cost to sell our receivable.

Quantitative and Qualitative Disclosures about Market Risk for more information.

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

During the six months ended June 25, 2022 and June 26, 2021, we sold $538.1 million and $433.7 million of accounts receivable, respectively, under these programs.

If receivables had not been sold over the previous twelve months, approximately $784.8 million and $598.8 million of additional accounts receivable would have been outstanding at June 25, 2022 and December 25, 2021, respectively, based on our standard payment terms.

During the nine months ended September 24, 2022 and September 25, 2021, we sold $778.1 million and $690.0 million of accounts receivable, respectively, under these programs.

If receivables had not been sold over the previous twelve months, approximately $783.5 million and $598.8 million of additional accounts receivable would have been outstanding at September 24, 2022 and December 25, 2021, respectively, based on our standard payment terms.

We had capacity to sell more accounts receivable under these programs if the needs of the business warranted.

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

During the six months ended June 25, 2022 and June 26, 2021, factoring costs associated with these accounts receivable sales programs were $13.2 million and $5.5 million, respectively.

During the nine months ended September 24, 2022 and September 25, 2021, factoring costs associated with these accounts receivable sales programs were $23.0 million and $8.6 million, respectively.

The increase in factoring costs year over year was primarily driven by higher LIBOR and other reference rates, and higher accounts receivable sold under these programs.

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On August 10, 2021, in connection with the acquisition of Dayton Parts, we entered into a new credit agreement that provides for a $600 million revolving credit facility, including a letter of credit sub-facility of up to $60 million (the “New Facility”).

The New Facility matures on August 10, 2026, is guaranteed by the Company’s material domestic subsidiaries (together with the Company, the “Credit Parties”) and is supported by a security interest in substantially all of the Credit Parties’ personal property and assets, subject to certain exceptions.

As of June 25, 2022, there was $229.4 million in outstanding borrowings under the New Facility and two outstanding letters of credit for $0.8 million in the aggregate which were issued to secure ordinary course of business transactions.

Net of outstanding borrowings and letters of credit, we had $369.8 million available under the New Facility at June 25, 2022.

The New Facility was scheduled to mature on August 10, 2026, is guaranteed by the Company’s material domestic subsidiaries (together with the Company, the “Credit Parties”) and is supported by a security interest in substantially all of the Credit Parties’ personal property and assets, subject to certain exceptions.

As of September 24, 2022 , there was $2 2 9.4 million in outstanding borrowings under the New Facility and t hree outstanding letters of credit for $ 1.0 million in the aggregate which were issued to secure ordinary course of business transactions.

Net of outstanding borrowings and letters of credit, we had $3 6 9.

6 million available under the New Facility at September 24, 2022 .

Refer to Note 7, “Long-Term Debt” to the Notes to Condensed Consolidated Financial Statements contained in PART II, ITEM 8 of the Company’s Annual Report on Form 10-K for the year ended December 25, 2021, for additional information.

In connection with the acquisition of Super ATV, LLC (“SuperATV”) on October 4, 2022, Dorman entered into an Amendment No.

1 to Credit Agreement (the “Amendment”) which amended the New Facility (as amended by the Amendment, the “Amended Credit Agreement”) by and among Dorman, the lenders from time to time party thereto, and an administrative agent.

The Amendment provides for a $500.0 million term loan facility, which was used to fund the SuperATV acquisition and matures on October 4, 2027.

The Amendment also extended the maturity date of the revolving credit facility to the same date.

Refer to Note 2, “Business Acquisitions and Investments,” in the Notes to the Condensed Consolidated Financial Statements for additional information .

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

Six Months Ended

Nine Months Ended

(in thousands)

June 25, 2022

June 26, 2021

September 24, 2022

September 25, 2021

Cash provided by operating activities

Cash used in investing activities

Cash used in financing activities

Cash (used in) provided by financing activities

Effect of foreign exchange on cash and cash equivalents

Net decrease in cash and cash equivalents

During the six months ended June 25, 2022, cash provided by operating activities was $37.4 million compared to $39.1 million during the six months ended June 26, 2021.

The $1.7 million decrease was driven by higher cash outflows for working capital, partially offset by higher income during the six months ended June 25, 2022, compared to the prior year.

The higher cash outflows for working capital were primarily driven by higher inventory purchases to meet demand partially offset by the benefits of accounts receivable collections from higher factoring during the six months ended June 25, 2022.

Investing activities used cash of $ 15.5 million and $ 10.2 million during the six months ended June 25, 2022 and June 26, 2021 , respectively.

The increase in cash usage during the current year was driven by higher capital expenditures resulting from the addition of Dayton Parts and for added investment in our distribution network.

During the six months ended June 25, 2022 , we received $0.6 million in cash related to the post-closing net working capital adjustment related to the Dayton Parts acquisition.

Financing activities used $28.7 million and $29.0 million of cash during the six months ended June 25, 2022 and June 26, 2021, respectively.

During the six months ended June 25, 2022, we repaid $10.0 million of the New Facility borrowing and paid $16.1 million to repurchase 166,050 shares of common stock under our share repurchase plan.

During the six months ended June 26, 2021, we paid $30.9 million to repurchase 301,889 shares of common stock under our share repurchase plan.

During the nine months ended September 24, 2022, cash provided by operating activities was $29.3 million compared to $77.6 million during the nine months ended September 25, 2021.

The $48.3 million decrease was driven by higher cash outflows for working capital, partially offset by higher income during the nine months ended September 24, 2022, compared to the prior year.

The higher cash outflows for working capital were primarily driven by higher inventory purchases to meet demand and provide safety stock due to global supply chain constraints, partially offset by the benefits of accounts receivable collections from higher factoring during the nine months ended September 24, 2022.

Investing activities used cash of $23.2 million and $360.8 million during the nine months ended September 24, 2022 and September 25, 2021, respectively.

During the nine months ended September 24, 2022, we received $0.6 million in cash related to the post-closing net working capital adjustment related to the Dayton Parts acquisition.

During the nine months ended September 25, 2021, we used $345.5 million to acquire Dayton Parts, net of cash acquired.

In connection with our opening of a new distribution center in Whiteland, Indiana, we expect to have increased capital expenditures in the fourth quarter of 2022 as payments are made for racking and equipment.

Financing activities used cash of $29.4 million and provided cash of $184.9 million during the nine months ended September 24, 2022 and September 25, 2021, respectively.

During the nine months ended September 24, 2022, we repaid $10.0 million of the New Facility borrowing and paid $1.5 million to repurchase 17,400 shares of common stock under our share repurchase plan.

During the nine months ended September 25, 2021, we borrowed $252.4 million under the New Facility to help fund the acquisition of Dayton Parts in August 2021, and subsequently repaid $3.0 million of that borrowing.

Additionally, during the nine months ended September 25, 2021, we paid $54.2 million to repurchase 534,507 shares of common stock under our share repurchase plan.

The remaining uses of cash from financing activities in each period result primarily from the repurchase of our common stock from our 401(k) Plan and shares withheld from participants for income tax withholding purposes in connection with the vesting of restricted stock awards (“RSAs”) and restricted stock units (“RSUs”).

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