Dorman Products, Inc.

Dorman reported second-quarter 2026 net sales of $545 million, up approximately 1% year over year, adjusted diluted EPS of $3.08, up 50%, adjusted gross margin of 46.1% versus last year, and adjusted operating margin of 22.3% versus last year. Excluding the tariff refund benefit, comparable adjusted diluted EPS was $1.90, comparable gross margin was 38%, and comparable adjusted operating margin was 14.2%; Charles said the IEEPA refund contributed approximately $1.18 per share in the quarter. Light Duty sales were flat at $424 million, Heavy Duty sales rose approximately 7% to $66 million, and Specialty Vehicles sales declined 1% to $54 million. Operating cash flow was $153 million, free cash flow was $144 million, and the company repurchased $47 million of stock, retiring approximately 398,000 shares at an average price of approximately $118. Full-year 2026 guidance now calls for net sales growth of 3% to 5% and adjusted diluted EPS of $8.50 to $8.80, with second-half sales growth expected in the mid-single-digit range, full-year adjusted operating margin of approximately 15.5% to 16.5%, and gross margin exiting the year at approximately 40% on a more normalized basis. The company also said the comparable adjusted diluted EPS range is $8.20 to $8.50, with the midpoint of $8.35 up 10% versus last year's comparable base of $7.62.

Kevin Olsen described the quarter as strong and emphasized that Dorman is positioned for medium- to long-term growth thanks to a stabilizing tariff environment, a diversified supplier network, innovation, and a strong balance sheet. He repeatedly framed tariff changes as a pass-through issue and said the company is reducing pricing as tariff costs decline, which should make the financial profile more normalized going into 2027. His tone was confident but practical, stressing that industry fundamentals remain favorable even as DIY demand looks softer than DIFM.

Charles Rayfield highlighted the main financial drivers: record $545 million in sales, adjusted gross margin of 46.1%, adjusted SG&A of 23.8% of sales, and adjusted operating income of $122 million. He quantified the tariff refund benefit at about $1.18 per share in Q2 and said excluding that benefit, comparable gross margin was 38% and comparable adjusted operating margin was 14.2%. He also pointed to $153 million of operating cash flow, $144 million of free cash flow, $47 million of share repurchases, $363 million remaining on the repurchase authorization through 2027, net debt of about $318 million, total liquidity of $931 million, and net leverage of 0.69x adjusted EBITDA. On guidance, he said the full-year sales outlook was lowered because of first-half performance and planned pricing reductions, while EPS and margin guidance increased due primarily to the refund benefit and a more normalized margin structure later in the year.

Analysts focused on the lower pricing actions, asking whether they were tied to the IEEPA refund and whether pricing would normalize in 2027; management said pricing reductions reflect lower tariff costs and that tariffs are still present, but the IEEPA portion is gone. Questions also centered on softer DIY demand, with Kevin saying POS has been stable over the last three quarters and that DIFM has been more resilient, while most of Dorman’s portfolio remains nondiscretionary. On the large customer that had been retrenching, Kevin said ordering has become more normalized. Analysts also asked about the gross margin exit rate and SG&A leverage, and Charles clarified that the 40% gross margin comment refers to Q4 and is intended as a structural rate into 2027, while SG&A may see some deleverage in the back half despite stable dollar spending.