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Dorman Products, Inc. (DORM) Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered top- and bottom-line growth; net sales rose to $541.0M (+7.6% YoY) and diluted EPS was $1.91 (+25% YoY), with adjusted diluted EPS at $2.06 (+23% YoY) .
  • Results beat Wall Street consensus: EPS $2.06 vs $1.80 and revenue $540.96M vs $517.13M; EPS beat by $0.26 and revenue beat by $23.83M (S&P Global and transcript summaries) . Values retrieved from S&P Global.*
  • Guidance raised materially to net sales growth 7–9% (from 3–5%) and diluted EPS $8.05–$8.35 (from $7.00–$7.30); adjusted EPS $8.60–$8.90 (from $7.55–$7.85), tax rate maintained at 24% .
  • Management flagged continued cost savings from supply chain diversification, productivity, and automation, and noted tariff pricing/cost timing dynamics; call commentary highlighted adjusted operating margin of 16.3%, +70 bps YoY, and Light Duty strength as the key driver .

What Went Well and What Went Wrong

What Went Well

  • Strong Light Duty performance: segment net sales +10% YoY to $424.4M and margin expanded +140 bps to 18.5% . “Strong demand in our Light Duty business drove total net sales growth of 7.6%...” — Kevin Olsen .
  • Cost actions expanding profitability: gross margin improved YoY to 40.6% (+100 bps); adjusted operating margin referenced at 16.3% (+70 bps YoY) on supply chain diversification and automation .
  • Guidance raised decisively on improved H1 performance and tariff timing dynamics (pricing and costs recognition), lifting 2025 sales and EPS ranges .

What Went Wrong

  • Heavy Duty profitability compressed: margin fell to 0.8% (down 360 bps YoY) despite slight net sales growth (+1% YoY) .
  • Specialty Vehicle softness: net sales declined 3% YoY to $54.5M and margin dipped 50 bps to 17.3%; management cited weak consumer sentiment affecting the segment .
  • Cash generation was soft in the quarter: cash provided by operating activities fell to $8.5M vs $63.3M in the prior-year quarter; inventories increased sequentially to $798.2M (Q1: $734.6M; 12/31/24: $708.0M) .

Financial Results

Consolidated P&L (GAAP and Non-GAAP)

MetricQ4 2024Q1 2025Q2 2025
Net Sales ($USD Millions)$533.8 $507.7 $541.0
Gross Margin %41.5% 40.9% 40.6%
Income from Operations Margin %16.3% 15.8% 15.2%
Diluted EPS ($)$1.77 $1.87 $1.91
Adjusted Diluted EPS ($)$2.20 $2.02 $2.06

Segment Net Sales and Profitability

SegmentQ4 2024 Net Sales ($M)Q4 2024 Margin %Q1 2025 Net Sales ($M)Q1 2025 Margin %Q2 2025 Net Sales ($M)Q2 2025 Margin %
Light Duty$427.4 20.1% $408.8 19.9% $424.4 18.5%
Heavy Duty$52.9 2.1% $51.7 -0.3% $62.1 0.8%
Specialty Vehicle$53.5 12.2% $47.2 10.2% $54.5 17.3%

KPIs and Balance Sheet Highlights

MetricQ4 2024Q1 2025Q2 2025
Cash from Operations ($USD Millions)$71.4 $51.2 $8.5
Capital Expenditures ($USD Millions)$8.2 $11.0 $8.5
Inventories ($USD Millions)$707.98 $734.58 $798.21
Long-term Debt ($USD Millions)$439.51 $439.61 $430.34

Q2 2025 Actual vs Consensus

MetricQ2 2025 ActualQ2 2025 Consensus
Revenue ($USD Millions)$540.96 $517.13*
Primary EPS ($)$2.06 $1.80*
# of EPS Estimates—4*
# of Revenue Estimates—4*
Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales Growth vs. 2024FY 20253% – 5% 7% – 9% Raised
Diluted EPSFY 2025$7.00 – $7.30 $8.05 – $8.35 Raised
Adjusted Diluted EPSFY 2025$7.55 – $7.85 $8.60 – $8.90 Raised
Tax Rate EstimateFY 202524% 24% Maintained

Earnings Call Themes & Trends

TopicQ4 2024 (Prior-2)Q1 2025 (Prior-1)Q2 2025 (Current)Trend
Operating efficiency and marginsHighlighted innovation and operational excellence; gross margin 41.5%, op margin 16.3% Gross margin 40.9%, op margin 15.8%; cost discipline maintained Adjusted operating margin 16.3%, +70 bps YoY; continued supply diversification, productivity, automation Improving YoY on cost initiatives
Light Duty demandStrong end to 2024; segment sales +11% YoY Led growth; +14% YoY Primary growth driver; +10% YoY Sustained strength
Heavy DutyYoY decline; margin compression Sales -11%, margin ~flat to slightly negative Slight sales growth (+1%) but margin down to 0.8%; new business wins cited Mixed: volume stabilizing, margin pressure persists
Specialty Vehicle+5% sales; margin 12.2% -9% sales; margin 10.2% -3% sales; margin 17.3%; weak consumer sentiment noted Stabilizing sales with improved margin; demand still soft
Tariffs & pricing/cost timing2025 guidance excluded tariff effects Reaffirmed guidance excluding tariffs; highlighted diversification and resilience Guidance raised; “timing dynamics” for price/cost recognition from tariffs emphasized Increased visibility, proactive pricing actions
Capital allocationStrong cash generation; debt reduction $51M CFO, $20M debt repaid, $12M buybacks CFO weak in Q2 ($8.5M); inventories up; focus remains on efficiency Near-term working capital build weighs on CFO

Management Commentary

  • “We had an outstanding second quarter, with top- and bottom-line growth exceeding our expectations… continued to drive cost savings across the enterprise through our supply chain diversification, productivity, and automation initiatives” — Kevin Olsen .
  • “With our strong performance through the first half of the year… and the timing dynamics of when pricing and costs will be recognized from tariffs, we are raising our net sales and diluted EPS guidance ranges” — Kevin Olsen .
  • Call highlights: adjusted operating margin 16.3% (+70 bps YoY), Light Duty a primary driver; heavy-duty showed slight YoY growth from new wins; specialty vehicle impacted by weak consumer sentiment .

Q&A Highlights

  • Tariffs: Analysts probed pricing pass-through and timing of cost recognition; management emphasized tariff timing dynamics underpinning guidance raise .
  • Segment mix and margins: Questions on Heavy Duty profitability compression and sustainability of Light Duty margin improvements; management pointed to new business wins in Heavy Duty and ongoing productivity gains .
  • Specialty Vehicle demand: Clarifications on consumer demand softness and margin resilience; team managing through downturn and positioning for future growth .
  • Capital allocation/tactics: Discussion around working capital and inventory levels; near-term CFO softness acknowledged with a focus on operational efficiency .

Estimates Context

  • Q2 2025 EPS of $2.06 vs consensus $1.80; revenue of $540.96M vs consensus $517.13M; both beats were highlighted in third-party transcript summaries (EPS +$0.26, revenue +$23.83M) . Values retrieved from S&P Global.*
  • Consensus coverage was light (4 estimates on EPS and revenue)*; expect upward revisions to FY 2025 following guidance raise and demonstrated Light Duty momentum .

Key Takeaways for Investors

  • Material guidance raise is a catalyst: FY 2025 sales growth lifted to 7–9% and EPS to $8.05–$8.35; adjusted EPS to $8.60–$8.90; tax rate steady at 24% .
  • Light Duty is the growth engine; segment net sales +10% YoY and margin +140 bps; focus on product innovation and supply diversification supports continued outperformance .
  • Heavy Duty stabilizing on volume but margin compression warrants monitoring (0.8%, -360 bps YoY); watch for pricing, mix, and new business ramp to recover profitability .
  • Specialty Vehicle demand is soft, but margin resilience emerged in Q2; narrative hinges on consumer sentiment recovery and disciplined execution .
  • Near-term cash flow headwind tied to inventory build (inventories $798.2M) and working capital; operational improvements and H2 cadence are key for CFO normalization .
  • Cost-savings programs continue to underpin margin expansion (gross margin 40.6%); management reiterated productivity and automation initiatives as structural drivers .
  • Tariff pricing/cost timing is now reflected in guidance; monitor further tariff developments and pass-through efficiency as potential swing factors .
Note: Consensus figures marked with * are values retrieved from S&P Global.

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