Dorman Products, Inc. (DORM) Q4 2024 Earnings Summary

Executive Summary

Q4 2024 delivered solid top-line and margin expansion: net sales $533.8M (+8% YoY), gross margin 41.5% (+220 bps YoY), operating margin 16.3% (+70 bps YoY); GAAP EPS $1.77 (+11% YoY) and adjusted EPS $2.20 (+40% YoY) .
Segment mix drove results: Light Duty net sales +11% with margin +350 bps; Specialty Vehicle +5% with margin -350 bps; Heavy Duty -8% with margin -470 bps as market remained soft .
2025 guidance introduced: net sales growth 3–5%; GAAP EPS $7.00–$7.30; adjusted EPS $7.55–$7.85; tax rate 24%; guidance excludes 2025 tariff impacts and potential retaliatory measures, acquisitions/divestitures, and share repurchases .
Cash generation and balance sheet strength: Q4 cash from operations $71.4M; free cash flow $63M; repaid $54M debt in Q4; FY24 CFO $231.0M and $78M share repurchases; net leverage 1.12x and liquidity $642M, enabling opportunistic M&A and buybacks .
Catalyst watch: clarity on tariff outcomes (guidance explicitly excludes impacts), continued complex electronics outperformance in Light Duty, and signs of recovery in Heavy Duty/Specialty Vehicle could drive estimate revisions and stock reaction .

What Went Well and What Went Wrong

What Went Well

Light Duty outperformed: net sales +11% YoY, segment profit margin up 350 bps to 20.1%, supported by new product execution and productivity/automation gains .
Adjusted operating margin expanded to 17.5% (+210 bps YoY), driven by supplier diversification, productivity/automation, and favorable mix of new product sales .
Management emphasis on innovation and asset-light model fueling cash generation: “Our success in 2024 was the direct result of our innovation strategy, operational excellence initiatives… With our proven business model… we remain well-positioned” .

What Went Wrong

Heavy Duty softness persisted: net sales -8% YoY; margin compressed 470 bps due to lower volume and larger fixed manufacturing footprint; outlook “flattish” for 2025 .
Specialty Vehicle margin down 350 bps despite +5% sales, reflecting ongoing investment and higher variable comp/benefit expense; consumer sentiment and high rates still weigh on new machines .
Tariff uncertainty: guidance excludes 2025 tariff impacts; management highlighted fluid situation and FIFO timing of impacts; current 10% China/steel/aluminum manageable, but reciprocal actions remain uncertain .

Financial Results

Quarterly Trend

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($USD Millions)	$502.951	$503.773	$533.772
Gross Margin %	39.6%	40.5%	41.5%
Adjusted Gross Margin %	39.6%	40.5%	41.7%
Operating Margin %	14.4%	15.7%	16.3%
Diluted EPS ($)	$1.53	$1.80	$1.77
Adjusted Diluted EPS ($)	$1.67	$1.96	$2.20

YoY Comparison (Q4 2024 vs Q4 2023)

Metric	Q4 2023	Q4 2024
Revenue ($USD Millions)	$494.296	$533.772
Gross Margin %	39.3%	41.5%
Operating Margin %	15.6%	16.3%
Diluted EPS ($)	$1.60	$1.77
Adjusted Diluted EPS ($)	$1.57	$2.20
SG&A % of Sales (GAAP)	23.7%	25.3%
Adjusted SG&A % of Sales	23.9%	24.2%
Cash from Operations ($USD Millions)	$59.648	$71.425

Consensus vs Actuals (Q4 2024)

Metric	Consensus (Q4 2024)	Actual (Q4 2024)
Revenue ($USD Millions)	N/A (S&P Global data unavailable due to request limit)	$533.772
Diluted EPS ($)	N/A (S&P Global data unavailable due to request limit)	$1.77
Adjusted Diluted EPS ($)	N/A (S&P Global data unavailable due to request limit)	$2.20

Note: Wall Street consensus via S&P Global was unavailable due to a temporary request limit; will update when accessible.

Segment Breakdown (Q4 2024 vs Q4 2023)

Segment	Net Sales Q4 2023 ($MM)	Net Sales Q4 2024 ($MM)	YoY Change	Segment Profit Margin Q4 2023	Segment Profit Margin Q4 2024	Change
Light Duty	$385.9	$427.4	+11%	16.6%	20.1%	+350 bps
Heavy Duty	$57.4	$52.9	-8%	6.8%	2.1%	-470 bps
Specialty Vehicle	$51.0	$53.5	+5%	15.7%	12.2%	-350 bps

KPIs

KPI	Q4 2024	FY 2024
Cash from Operations ($USD Millions)	$71.425	$231.047
Free Cash Flow ($USD Millions)	$63	N/A
Debt Repaid ($USD Millions)	$54 (Q4)	$94 (FY)
Net Debt ($USD Millions)	$426 (as of 12/31/24)	N/A
Net Leverage (x Adj. EBITDA)	1.12x	N/A
Liquidity ($USD Millions)	$642 (12/31/24)	N/A
Capex ($USD Millions)	$8.176 (Q4)	$39.421 (FY)
Share Repurchases	Paused in Q4; new $500M authorization effective 1/1/25	$78M in FY24 (856k shares at $91 avg)
Discrete Tax Adjustment	$8.1M (Q4)	$8.1M (FY)

Non-GAAP note: Adjusted EPS adds back pretax amortization (Q4 +$0.17), transaction/other costs (+$0.04), workforce reduction (+$0.00), and includes a discrete state tax adjustment (+$0.26), net of tax adjustments (-$0.05) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales Growth vs 2024	FY 2025	N/A	3%–5%	Introduced
Diluted EPS (GAAP)	FY 2025	N/A	$7.00–$7.30	Introduced
Adjusted Diluted EPS	FY 2025	N/A	$7.55–$7.85	Introduced
Tax Rate	FY 2025	N/A	24%	Introduced
Diluted EPS (GAAP)	FY 2024	$5.32–$5.52 (Q2 update)	$6.15–$6.25 (Q3 update)	Raised
Adjusted Diluted EPS	FY 2024	$6.00–$6.20 (Q2 update)	$6.85–$6.95 (Q3 update)	Raised
Segment Outlook	FY 2025	N/A	Light Duty: solid growth; Heavy Duty: flattish; Specialty Vehicle: modest increase	Introduced

Guidance exclusions: 2025 outlook excludes impacts from U.S. tariffs enacted/proposed in 2025 and potential retaliatory measures, future M&A, supply chain disruptions, significant inflation/interest rate changes, and share repurchases .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 2024)	Current Period (Q4 2024)	Trend
Supply chain diversification	Not highlighted; operational improvements/mix drove margin expansion	“Strategically diversify and optimize our supply chain… significantly more flexible and nimble; reduced country-specific concentration”	Improving
Tariffs/macro	No tariff-specific guidance; raised FY24 EPS twice	Guidance excludes tariff impacts; 10% China/steel/aluminum manageable; situation fluid; FIFO timing of impacts	Uncertain risk
Light Duty product innovation (complex electronics)	Growth led by Light Duty; new product introductions ; Light Duty +5% sales, margin +290 bps	Complex electronics outgrew overall; strong margin with OE exclusivity/new-to-aftermarket advantage	Positive
Heavy Duty market conditions	-11% sales; margin -50 bps	-8% sales; margin -470 bps; delayed repairs; flattish 2025 outlook	Stabilizing but soft
Specialty Vehicle channel/portfolio	-2% sales (Q2); flat (Q3)	+5% sales; focus on non-discretionary repair; modest 2025 growth	Gradual improvement
Capital allocation	Raised FY24 guidance; announced $500M buyback authorization effective 1/1/25	Paused buybacks in Q4; committed to program; $500M plan approved; ladder: debt, internal, M&A, buybacks	Balanced and opportunistic

Management Commentary

CEO: “We finished the year with outstanding results in the fourth quarter… Our success in 2024 was the direct result of our innovation strategy, operational excellence initiatives…” .
CFO: “Adjusted gross margin… +240 bps… driven by supplier diversification efforts as well as our productivity and automation initiatives… favorable mix of higher sales of new products…” .
CEO (Light Duty complex electronics): “It certainly outgrew the overall business in 2024… margin profile is strong… highest competitive moat… often exclusive for longer” .
CEO (Heavy Duty): “We’ll characterize it as somewhat stabilized… delayed repairs across the channels… flattish sales growth for that segment in 2025” .
CFO (Tariffs in guidance): “Our 2025 guidance does not include any impact from U.S. tariffs enacted or proposed in 2025… highly fluid… we’ll evaluate updating our guidance as the tariff situation gains clarity” .

Q&A Highlights

Tariff exposure and manageability: ~30–40% sourcing from China in 2025; ~30% from U.S.; current 10% China/steel/aluminum manageable; impacts flow through with FIFO and inventory turns (~two times/year) .
Heavy Duty dynamics: Delayed maintenance is evident; repair deferrals expected to unwind when market inflects; margin targets mid-teens in normalized environment over time .
Capital allocation priorities: Ladder approach—debt/leverage, internal investments, M&A, then buybacks; $500M repurchase program effective Jan 1, 2025, paused in Q4 due to election/geopolitics .
Specialty Vehicle mix: Focus shifting to non-discretionary repair parts and channel expansion, enabling outperformance despite broader market downtrend; modest growth expected in 2025 .
Light Duty margin drivers: Complex electronics carry higher margin/new-to-aftermarket exclusivity; POS up high single digits; shipments aligned .

Estimates Context

Wall Street consensus via S&P Global for Q4 2024 EPS and revenue was unavailable due to a temporary request limit at the time of analysis; we will update comparisons when accessible. Management’s 2025 EPS guidance ($7.00–$7.30 GAAP; $7.55–$7.85 adjusted) implies 14–19% GAAP EPS growth and 6–10% adjusted growth vs 2024, which may necessitate upward revisions to forward EPS estimates if tariff impacts remain manageable .

Key Takeaways for Investors

Light Duty strength and complex electronics momentum are the core earnings engine, driving margin expansion and offering sustained competitive moat; watch continued new product cadence .
Heavy Duty remains a drag near term; however, evidence of repair deferrals suggests upside torque when freight activity rebounds; margin recovery path tied to volume and productivity initiatives .
Specialty Vehicle is stabilizing with strategic pivot to non-discretionary parts; modest growth expected in 2025 as sentiment improves and inventory destocking abates .
Balance sheet and cash generation support capital deployment: net leverage at 1.12x and $642M liquidity; $500M repurchase authorization provides downside support and EPS accretion capacity .
Tariff outcome is the swing factor: guidance excludes impacts; current measures manageable, but reciprocal actions could affect margins; monitor management updates for guidance revisions .
Near-term trading: strong Q4 print and 2025 EPS growth guide are supportive; stock sensitivity likely to tariff headlines and evidence of Heavy Duty/Specialty inflection .
Medium-term thesis: innovation-led growth, supply chain diversification, and operational excellence underpin multi-year margin resilience; M&A pipeline remains robust, potentially accelerating growth as macro uncertainty clears .