David Lentz

David Lentz asked for confirmation that light-duty segment sales are expected to grow in Q1 2026 and accelerate throughout the year, and how sub-segment performance will contribute to the 7%-9% top-line guidance. He followed up with a question on Dorman's balance sheet strategy for 2026, balancing M&A opportunities (tuck-ins, geographic expansion) with share repurchases.

Answer

Kevin Olsen, Dorman's CEO, reiterated confidence in the 7%-9% growth driven by new products, pricing, and normalizing customer ordering patterns across all three segments. He highlighted 6% growth in heavy duty in Q4, focusing on market share and new product development, and specialty vehicle's focus on market share gains and new product. Regarding capital deployment, Kevin stated the strategy remains unchanged: prioritize debt reduction (current leverage is moderate), invest in organic growth (highest returns), pursue M&A (expecting more activity in 2026), and opportunistically return capital to shareholders via share repurchases (resumed in Q4 2025). He noted 2025 free cash flow was $76 million due to tariffs, but expects normalized levels closer to $200 million in 2026, similar to 2024.

David Lentz inquired about Dorman Products' capital deployment strategy for 2026, specifically balancing M&A opportunities (tuck-ins, geographic expansion) with share repurchases, given the company's healthy balance sheet.

Answer

Kevin Olsen, Dorman's Chief Executive Officer, outlined a consistent capital deployment strategy: prioritizing debt reduction (achieved significant paydown), investing in organic growth (highest returns), pursuing M&A (expecting increased activity in 2026 after a quiet 2025), and opportunistically returning capital to shareholders via share repurchases (resumed in Q4 2025). He projected normalized free cash flow for 2026, similar to 2024 levels of around $200 million.