Dorman Products (DORM) Q4 2025 earnings summary

Executive summary

• Achieved record sales from new products and launched thousands of new SKUs, especially in complex electronics, supporting long-term growth initiatives.

• Advanced operational excellence through automation and supply chain diversification, reducing China sourcing below 40% and targeting 30% in 2026.

• Delivered on strategic priorities in innovation, operational excellence, supply chain optimization, and channel expansion, driving growth across diverse end markets.

• Net sales for 2025 reached $2.13 billion, up 6% year-over-year, with strong light-duty demand and effective tariff-related pricing.

• Q4 diluted EPS dropped 79% to $0.38 due to a $51.1M non-cash goodwill impairment in the Heavy Duty segment; adjusted EPS was $2.17, down 1%.

Financial highlights

• Q4 2025 net sales were $538 million, up 0.8% year-over-year, but below internal expectations due to a major customer’s order pattern shift.

• Adjusted gross margin for Q4 was 42.6%, up 90 basis points year-over-year, driven by pre-tariff inventory and productivity gains.

• Full-year adjusted diluted EPS was $8.87, up 24% year-over-year; operating income rose 17% and operating margin expanded 170 basis points to 17.8%.

• Operating cash flow for Q4 was $42 million, improving $30 million sequentially; full-year operating cash flow was $114 million.

• Net debt at year-end was $391 million, net leverage ratio at 0.89x adjusted EBITDA, and total liquidity at $648 million.

Outlook and guidance

• 2026 net sales growth expected at 7%-9% across all segments, driven by volume improvement and full-year pricing impact.

• Adjusted diluted EPS guidance for 2026 is $8.10-$8.50, representing a 4%-9% decrease year-over-year.

• Operating margin expected at 15%-16% for 2026, with normalization to high teens by year-end as tariff impacts subside.

• Guidance assumes no net change in tariff impacts and excludes potential tariff refunds, future M&A, and share repurchases.

• Estimated 2026 tax rate: 23.5%.