Dorman Products (NASDAQ:DORM) reported record second-quarter sales, earnings and cash flow for 2026, while lowering its full-year revenue growth outlook to reflect reduced pricing tied to a more stable tariff environment.
Second-quarter net sales rose about 1% from a year earlier to a record $545 million. Adjusted diluted earnings per share increased 50% to a record $3.08, though results included a one-time benefit from refunds of tariffs assessed under the International Emergency Economic Powers Act, or IEEPA.
“Our tariff philosophy has always been to treat this as a pass-through cost,” Olsen said during the call. He said the replacement of IEEPA tariffs with Section 301 tariffs created a lower ongoing tariff environment for much of the company’s portfolio, particularly because Section 301 tariffs do not stack on top of Section 232 auto-parts and steel-and-aluminum tariffs in the same way.
Guidance Updated for Pricing Changes
Dorman now expects 2026 net sales growth of 3% to 5%, compared with its previous outlook for 7% to 9% growth. Chief Financial Officer Charles Rayfield said the revised forecast reflects first-half performance, including lower volume in certain businesses, as well as pricing reductions expected through the remainder of the year.
The company raised its full-year adjusted diluted EPS outlook to a range of $8.50 to $8.80, from prior guidance of $8.10 to $8.50. The increase primarily reflects an approximately $0.30 benefit related to the recovery of IEEPA tariff costs recognized in the fourth quarter of 2025.
Excluding that benefit, Dorman expects comparable adjusted diluted EPS of $8.20 to $8.50. Rayfield said the midpoint of that range would represent 10% growth over the company’s 2025 comparable base.
For the second half, Dorman expects sales growth in the mid-single-digit range, driven largely by volume from new business wins and product introductions. The company expects Light Duty sales to grow in that range, Heavy Duty sales to grow slightly faster, and Specialty Vehicle sales to grow slightly slower.
Dorman expects full-year adjusted operating margin of approximately 15.5% to 16.5%, compared with its prior outlook of 15% to 16%. Rayfield said gross margin is expected to exit the year at a more normalized rate of about 40% in the fourth quarter.
Tariff Refund Boosted Quarterly Profitability
Adjusted gross margin reached 46.1% in the second quarter, up 550 basis points from a year earlier. Excluding the tariff-refund benefit, comparable gross margin was 38%.
Adjusted operating income was $122 million, and adjusted operating margin was 22.3%, up 600 basis points year over year. Excluding the refund benefit, comparable adjusted operating margin was 14.2%, down 210 basis points from the prior-year period, which Rayfield attributed largely to volume deleverage in the Light Duty segment.
The IEEPA tariff refund added about $1.18 to second-quarter adjusted diluted EPS, representing recovery of tariff costs recognized during the fourth quarter of 2025 and the first quarter of 2026. Excluding the refund, comparable adjusted EPS was $1.90 for the quarter.
Operating cash flow totaled $153 million, while free cash flow was $144 million. Excluding the IEEPA refund, Dorman generated approximately $62 million in comparable free cash flow, aided by working-capital improvements.
The company spent $47 million on share repurchases during the quarter, retiring about 398,000 shares at an average price of roughly $118 per share. Dorman had $363 million remaining under its repurchase authorization, which runs through 2027.
Dorman also refinanced its debt during the quarter, expanding its revolving credit facility to $800 million from $600 million and extending its maturity to 2031. The company issued $450 million of senior unsecured notes due in 2034 and used the proceeds to repay a prior term loan. It ended the quarter with approximately $318 million of net debt, $931 million of total liquidity and net leverage of 0.69 times adjusted EBITDA.
Segment Trends Remained Mixed
Light Duty sales were flat at $424 million, as lower pricing offset other factors and volume declined against a strong comparison in the prior-year quarter. Olsen noted that Light Duty had posted 10% year-over-year growth in the second quarter of 2025. Point-of-sale dollars among top customers remained up in the mid-single-digit range, he said.
The company continued to see modest pressure in relatively discretionary, do-it-yourself-oriented categories, though Olsen said those products represent a smaller part of Dorman’s portfolio. The larger, predominantly non-discretionary do-it-for-me portion of the business was more stable. Dorman cited the average light-duty vehicle age of 12.9 years and rising vehicle miles traveled as supportive of long-term replacement-part demand.
Heavy Duty sales increased about 7% to $66 million, helped by the full-year effect of prior pricing actions and business wins in certain categories and channels. The segment’s operating margin rose to 4.2%; excluding the refund benefit, comparable margin was 2.3%, up 150 basis points.
Olsen said freight-market conditions remain difficult and Dorman does not expect meaningful growth in trucking mileage or tonnage during 2026. However, the company is pursuing opportunities with original-equipment dealers seeking additional service-center revenue and is expanding its above-frame product offerings.
Specialty Vehicle sales declined 1% to $54 million as softer customer demand was partly offset by pricing initiatives. Excluding the tariff-refund benefit, comparable adjusted operating margin was 17.8%, up 50 basis points year over year. Dorman said higher fuel prices and inflation weighed on consumer demand, while sales of both high-end cab models and lower-priced entry-level vehicles created different accessory and repair opportunities.
Olsen said the company remains focused on product innovation, supplier diversification, automation and productivity initiatives, while its balance sheet provides capacity for investments, acquisitions and additional share repurchases.
About Dorman Products (NASDAQ:DORM)
Dorman Products, Inc is a leading independent global supplier of automotive aftermarket parts and hardware. Headquartered in Colmar, Pennsylvania, the company specializes in the design, manufacture and distribution of replacement components for passenger cars, light trucks and commercial vehicles. Dorman’s offerings span both mechanical and electrical systems, providing solutions that help repair shops and retailers address wear-out and collision-related failures on domestic and import vehicles.
The company’s extensive product portfolio includes steering and suspension components, brake system parts, engine management and cooling products, exterior and body hardware, and an array of fasteners, clips and brackets.
