Dorman Products, Inc. (DORM)
SIC breadcrumb: Manufacturing > Transportation Equipment > SIC 3714 Motor Vehicle Parts & Accessories
SEC company page: https://www.sec.gov/edgar/browse/?CIK=868780. Latest filing source: 0000868780-26-000014.
Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
|---|---|---|---|---|
| Revenue | 2,130,319,000 | USD | 2025 | 2026-02-27 |
| Net income | 204,194,000 | USD | 2025 | 2026-02-27 |
| Assets | 2,493,078,000 | USD | 2025 | 2026-02-27 |
Financials
Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-27. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000868780.json. Derived margins are computed from the extracted annual SEC facts.
| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 859,604,000 | 903,221,000 | 973,705,000 | 991,329,000 | 1,092,748,000 | 1,345,249,000 | 1,733,749,000 | 1,929,788,000 | 2,009,197,000 | 2,130,319,000 |
| Net income | 106,049,000 | 106,599,000 | 133,602,000 | 83,762,000 | 106,870,000 | 131,532,000 | 121,549,000 | 129,259,000 | 190,004,000 | 204,194,000 |
| Operating income | 168,601,000 | 176,240,000 | 171,143,000 | 105,828,000 | 133,373,000 | 171,551,000 | 171,048,000 | 214,760,000 | 292,909,000 | 299,547,000 |
| Gross profit | 338,074,000 | 358,649,000 | 373,281,000 | 339,825,000 | 383,116,000 | 462,916,000 | 564,450,000 | 685,423,000 | 806,359,000 | 897,737,000 |
| Diluted EPS | 3.07 | 3.13 | 4.02 | 2.56 | 3.30 | 4.12 | 3.85 | 4.10 | 6.14 | 6.64 |
| Assets | 711,792,000 | 765,924,000 | 978,106,000 | 1,041,072,000 | 1,220,661,000 | 1,673,119,000 | 2,341,786,000 | 2,292,407,000 | 2,424,521,000 | 2,493,078,000 |
| Stockholders' equity | 601,642,000 | 634,807,000 | 727,623,000 | 773,584,000 | 853,559,000 | 932,736,000 | 1,042,631,000 | 1,168,203,000 | 1,293,470,000 | 1,477,075,000 |
| Cash and cash equivalents | 149,121,000 | 71,691,000 | 43,458,000 | 68,353,000 | 155,576,000 | 58,782,000 | 46,034,000 | 36,814,000 | 57,137,000 | 49,436,000 |
| Net margin | 12.34% | 11.80% | 13.72% | 8.45% | 9.78% | 9.78% | 7.01% | 6.70% | 9.46% | 9.59% |
| Operating margin | 19.61% | 19.51% | 17.58% | 10.68% | 12.21% | 12.75% | 9.87% | 11.13% | 14.58% | 14.06% |
Financial Charts
Quarterly
Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-04. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000868780.json.
| Quarter | End Date | Revenue | Net Income | Diluted EPS | Method |
|---|---|---|---|---|---|
| 2022-Q2 | 2022-06-25 | 1.20 | reported discrete quarter | ||
| 2022-Q3 | 2022-09-24 | 0.97 | reported discrete quarter | ||
| 2023-Q1 | 2023-04-01 | 0.18 | reported discrete quarter | ||
| 2023-Q2 | 2023-07-01 | 480,568,000 | 32,770,000 | 1.04 | reported discrete quarter |
| 2023-Q3 | 2023-09-30 | 488,186,000 | 40,522,000 | 1.28 | reported discrete quarter |
| 2023-Q4 | 2023-12-31 | 494,296,000 | 50,284,000 | derived Q4 = FY annual - nine-month YTD | |
| 2024-Q1 | 2024-03-30 | 468,701,000 | 32,828,000 | 1.05 | reported discrete quarter |
| 2024-Q2 | 2024-06-29 | 502,951,000 | 47,410,000 | 1.53 | reported discrete quarter |
| 2024-Q3 | 2024-09-28 | 503,773,000 | 55,253,000 | 1.80 | reported discrete quarter |
| 2024-Q4 | 2024-12-31 | 533,772,000 | 54,513,000 | derived Q4 = FY annual - nine-month YTD | |
| 2025-Q1 | 2025-03-29 | 507,692,000 | 57,505,000 | 1.87 | reported discrete quarter |
| 2025-Q2 | 2025-06-28 | 540,959,000 | 58,709,000 | 1.91 | reported discrete quarter |
| 2025-Q3 | 2025-09-27 | 543,736,000 | 76,420,000 | 2.48 | reported discrete quarter |
| 2025-Q4 | 2025-12-31 | 537,932,000 | 11,560,000 | derived Q4 = FY annual - nine-month YTD | |
| 2026-Q1 | 2026-03-28 | 528,770,000 | 43,551,000 | 1.43 | reported discrete quarter |
Quarterly Charts
Macro Cross-References
- CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- UNRATE - Unemployment Rate
- FEDFUNDS - Federal Funds Effective Rate
- CES0500000003 - Average Hourly Earnings of All Employees, Total Private
- DFEDTARU - Federal Funds Target Range - Upper Limit
- DFEDTARL - Federal Funds Target Range - Lower Limit
- DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
- CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
- CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
- PCEPI - Personal Consumption Expenditures: Chain-type Price Index
- PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- PPIACO - Producer Price Index by Commodity: All Commodities
- T10YIE - 10-Year Breakeven Inflation Rate
- U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- PAYEMS - All Employees, Total Nonfarm
- CIVPART - Labor Force Participation Rate
- EMRATIO - Employment-Population Ratio
- UNEMPLOY - Unemployed
- CE16OV - Employment Level
- ICSA - Initial Claims
- JTSJOL - Job Openings: Total Nonfarm
- JTSQUR - Quits: Total Nonfarm
- GDPC1 - Real Gross Domestic Product
- A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
- INDPRO - Industrial Production: Total Index
- TCU - Capacity Utilization: Total Index
- HOUST - New Privately-Owned Housing Units Started: Total Units
- PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- RSAFS - Advance Retail Sales: Retail Trade
- PCE - Personal Consumption Expenditures
- DSPIC96 - Real Disposable Personal Income
- PSAVERT - Personal Saving Rate
- M2SL - M2
- BOPGSTB - U.S. International Trade in Goods and Services: Balance
- MSPUS - Median Sales Price of Houses Sold for the United States
- HSN1F - New One Family Houses Sold: United States
- RHORUSQ156N - Homeownership Rate in the United States
- TTLCONS - Total Construction Spending: Total Construction in the United States
- RRVRUSQ156N - Rental Vacancy Rate in the United States
- TOTALSL - Total Consumer Credit Owned and Securitized
- REVOLSL - Revolving Consumer Credit Owned and Securitized
- DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
- GDP - Gross Domestic Product
- GPDI - Gross Private Domestic Investment
- GCE - Government Consumption Expenditures and Gross Investment
- PCEC - Personal Consumption Expenditures
- NETEXP - Net Exports of Goods and Services
- GFDEBTN - Federal Debt: Total Public Debt
- GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- FYFSD - Federal Surplus or Deficit
- FGRECPT - Federal Government Current Receipts
- FGEXPND - Federal Government: Current Expenditures
- MANEMP - All Employees, Manufacturing
- USCONS - All Employees, Construction
- USTRADE - All Employees, Retail Trade
- USFIRE - All Employees, Financial Activities
- USGOVT - All Employees, Government
- AWHAETP - Average Weekly Hours of All Employees, Total Private
- DGORDER - Manufacturers' New Orders: Durable Goods
- NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- BUSINV - Total Business Inventories
- EXPGS - Exports of Goods and Services
- IMPGS - Imports of Goods and Services
- IR - Import Price Index (End Use): All Commodities
- PPIFIS - Producer Price Index by Commodity: Final Demand
Latest quarter (10-Q)
Latest 10-Q source: 0000868780-26-000023.
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the condensed consolidated financial statements and related notes thereto included in PART I, ITEM 1 of this Quarterly Report on Form 10-Q. As used herein, unless the context requires otherwise, “Dorman,” the “Company,” “we,” “us,” or “our” refers to Dorman Products, Inc. and its subsidiaries.
Cautionary Statement on Forward-Looking Information
Certain statements in this document constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to net sales, diluted earnings per share, gross profit, gross margin, selling, general, and administrative expenses, income tax expense, income before income taxes, net income, cash and cash equivalents, indebtedness, liquidity, the Company’s share repurchase program, the Company’s outlook, the Company’s growth opportunities and future business prospects, operational costs and productivity initiatives, inflation, tariffs, tariff refunds, supplier diversification, price increases, long-term value, acquisitions and acquisition opportunities, investments, cost offsets, quarterly fluctuations, new product development, customer concessions, and fluctuations in foreign currency. Words such as “may,” “believe,” “demonstrate,” “expect,” “estimate,” “forecast,” “project,” “plan,” “anticipate,” “intend,” “should,” “will,” and “likely” and similar expressions identify forward-looking statements. However, the absence of these words does not mean the statements are not forward-looking. In addition, statements that are not historical should also be considered forward-looking statements. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date the statements were made. Such forward-looking statements are based on current expectations that involve known and unknown risks, uncertainties, and other factors (many of which are outside of our control) that may cause actual events to be materially different from those expressed or implied by such forward-looking statements. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected.
Please refer to “Cautionary Statement on Forward-Looking Information” and “Item 1A. Risk Factors” located in PART I of our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), as updated by our subsequent filings with the SEC, for a description of these and other risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements. The Company is under no obligation to, and expressly disclaims any such obligation to, update any of the information in this document, including but not limited to any situation where any forward-looking statement later turns out to be inaccurate, whether as a result of new information, future events, or otherwise, except as may be required by applicable law.
Introduction
The following discussion and analysis, as well as other sections in this Quarterly Report on Form 10-Q, should be read in conjunction with the unaudited condensed consolidated financial statements and footnotes thereto of Dorman Products, Inc. included in “PART 1, ITEM 1. Financial Statements” of this Quarterly Report on Form 10-Q and with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
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Table of Contents
This Quarterly Report on Form 10-Q contains the registered and unregistered trademarks or service marks of Dorman and are the property of Dorman Products, Inc. and/or its affiliates. This Quarterly Report on Form 10-Q also may contain additional trade names, trademarks, or service marks belonging to other companies. We do not intend our use or display of other parties’ trademarks, trade names, or service marks to imply, and such use or display should not be construed to imply, a relationship with or endorsement or sponsorship of us by these parties.
Overview
We are one of the leading suppliers of replacement and upgrade parts in the motor vehicle aftermarket industry, serving passenger cars, light-, medium-, and heavy-duty trucks, as well as specialty vehicles, including utility terrain vehicles (UTVs) and all-terrain vehicles (ATVs). We operate through three business segments: Light Duty, Heavy Duty, and Specialty Vehicle, consistent with the sectors of the motor vehicle aftermarket industry in which we operate. For more information on our segments, refer to Note 7, “Segment Information,” to the Consolidated Financial Statements, included under Part II, ITEM 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
As of December 31, 2025, we marketed approximately 144,000 distinct parts compared to approximately 138,000 as of December 31, 2024, many of which we designed and engineered. This number excludes private-label stock keeping units and other variations in how we market, package, and distribute our products, includes distinct parts of acquired companies, and reflects distinct parts that have been discontinued at the end of their lifecycle. Our products are sold under our various brand names, under our customers’ private-label brands, or in bulk. We are one of the leading aftermarket suppliers of parts that were traditionally available to consumers only from OEMs or salvage yards. These parts include, among others, leaf springs, intake manifolds, exhaust manifolds, oil filters and coolers, window regulators, radiator fan assemblies, tire pressure monitor sensors, exhaust gas recirculation ("EGR") coolers, driveshafts, UTV windshields, and complex electronics modules.
We generate most of our net sales from customers in North America, primarily in the United States. Our products are sold primarily through aftermarket retailers, including their online platforms; dealers; and national, regional, and local warehouse distributors and specialty markets. We also distribute aftermarket parts outside the United States, with sales primarily into Canada and Mexico, and to a lesser extent, Europe, the Middle East, and Australia.
We may experience significant fluctuations from quarter to quarter in our results of operations due to the timing of our customers' orders, as well as our ability and our suppliers' ability to deliver products ordered by our customers. The introduction of new products and product lines to customers, as well as business acquisitions, may also cause significant fluctuations from quarter to quarter.
Critical Accounting Policies
There have been no material changes to the Company’s critical accounting policies as described in the Annual Report on Form 10-K for the year ended December 31, 2025.
New Product Development
New product development is a key success factor for us and has been a significant contributor to our growth. We have made incremental investments to increase our new product development efforts to grow our business and strengthen our relationships with our customers. The investments have primarily been in the form of increased product development resources, additional customer and end-user awareness programs, and customer service improvements. These investments have enabled us to provide an expanding array of new product offerings and grow revenues at levels that generally have exceeded market growth rates.
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Table of Contents
In the three months ended March 28, 2026, we introduced 936 new distinct parts to our customers and end-users, including 229 “New-to-the-Aftermarket” parts. We introduced 5,560 new distinct parts to our customers and end-users in the fiscal year ended December 31, 2025, including 1,608 “New-to-the-Aftermarket” parts.
One area of focus for the light-duty sector has been our complex electronics program, which capitalizes on the growing number of electronic components being utilized on today’s original equipment platforms. New vehicles contain an average of approximately 100 electronic modules, with some high-end luxury vehicles exceeding that. Our complex electronics products are designed and developed in-house and tested to help ensure consistent performance. Our product portfolio is focused on further developing our leadership position in this category.
Another area of focus has been on products we market for the heavy-duty sector. We believe that this sector provides many of the same growth opportunities that the light-duty sector has provided us. We specialize in offering parts to this sector that were traditionally only available from OEMs or salvage yards, similar to how we approach the light-duty sector.
Within the specialty vehicle sector, we focus on providing performance parts and accessories and nondiscretionary repair parts for UTVs and ATVs. We are dedicated to developing better and more innovative materials that will be compatible across a wide variety of makes and models to maintain as well as to enhance both the performance and appearance of customers’ vehicles.
Acquisitions
A key component of our strategy is growth through acquisitions. We may acquire businesses in the future to supplement our financial growth, expand our customer base, add to our distribution capabilities, or enhance our product development resources, among other reasons.
Industry Factors
The Company’s financial results are also impacted by various industry factors, including, but not limited to, the number, age, and condition of vehicles in operation at any one time, and the miles driven by those vehicles.
Vehicles in Operation
The Company’s products are primarily purchased and installed on a subsegment of the passenger and light-duty vehicles in operation in the United States (“VIO”), specifically weighted towards vehicles aged 7 to 14 years old. Each year, the United States seasonally adjusted annual rate (“US SAAR”) of new vehicles purchased adds a new year to the VIO. According to data from the Auto Care Association (“Auto Care”), the US SAAR experienced a decline from 2008 to 2011 as consumers purchased fewer new vehicles as a result of the Great Recession of 2008. We believe that the declining US SAAR during that period led to a follow-on decline in our primary VIO subsegment (7-to-14-year-old vehicles) commencing in 2016. However, following 2011 and the impact of the Great Recession of 2008, U.S. consumers began to increase their purchases of new vehicles, which over time caused the US SAAR to recover and return to more historical levels. The 7-to-14-year-old vehicle car parc has grown over the past several years, which we believe has expanded demand for aftermarket replacement parts as more vehicles remained in operation.
In addition, we believe that vehicle owners generally are operating their current vehicles longer than they did several years ago, performing necessary repairs and maintenance to keep those vehicles well-maintained. We believe this trend has supported an increase in VIO, which increased to 302.7 million, a 1% increase in 2025 over 2024. According to data published by Polk, a division of IHS
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Automotive, the average age of VIO increased to 12.9 years as of October 2025 from 12.8 years as of October 2024.
Miles Driven
The number of miles driven is another important statistic that impacts our business. Generally, as vehicles accumulate more miles, their parts are more likely to wear or fail, which fuels increased demand for replacement parts, including our products. According to
[Excerpt truncated for page length; source filing is linked above.]
Latest 10-K MD&A
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the Consolidated Financial Statements and related notes thereto included in ITEM 8 of this Annual Report on Form 10-K. The matters discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve significant risks and uncertainties. See the “Cautionary Statement on Forward-Looking Information” above and PART I, ITEM 1A, “Risk Factors” in this Annual Report on Form 10-K for additional information regarding forward-looking statements and the factors that could cause actual results to differ materially from those anticipated in the forward-looking statements. In ITEM 7, we discuss 2025 and 2024 results and comparisons of 2025 results to 2024 results. Discussions of 2023 results and comparisons of 2023 results to 2024 results can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in PART II, ITEM 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Overview
We are one of the leading suppliers of replacement and upgrade parts in the motor vehicle aftermarket industry, serving passenger cars, light-, medium-, and heavy-duty trucks, as well as specialty vehicles, including utility terrain vehicles ("UTVs") and all-terrain vehicles ("ATVs"). We operate through three business segments: Light Duty, Heavy Duty, and Specialty Vehicle, consistent with the sectors of the motor vehicle aftermarket industry in which we operate. For more information on our segments, refer to Note 8, “Segment Information,” to the Consolidated Financial Statements, included under ITEM 8.
As of December 31, 2025, we marketed approximately 144,000 distinct parts compared to approximately 138,000 as of December 31, 2024, many of which we designed and engineered. This number excludes private-label stock keeping units and other variations in how we market, package, and distribute our products, includes distinct parts of acquired companies, and reflects distinct parts that have been discontinued at the end of their lifecycle. Our products are sold under our various brand names, under our customers’ private-label brands, or in bulk. We are one of the leading aftermarket suppliers of parts that were traditionally available to consumers only from OEMs or salvage yards. These parts include, among others, leaf springs, intake manifolds, exhaust manifolds, oil filters and coolers, window regulators, radiator fan assemblies, tire pressure monitor sensors, exhaust gas recirculation ("EGR") coolers, driveshafts, UTV windshields, and complex electronics modules.
We generate most of our net sales from customers in North America, primarily in the United States. Our products are sold primarily through aftermarket retailers, including their online platforms; dealers; and national, regional, and local warehouse distributors and specialty markets. We also distribute aftermarket parts outside the United States, with sales primarily into Canada and Mexico, and to a lesser extent, Europe, the Middle East, and Australia.
We may experience significant fluctuations from quarter to quarter in our results of operations due to the timing of orders placed by our customers, as well as our ability and the ability of our suppliers to deliver products ordered by our customers. The introduction of new products and product lines to customers, as well as business acquisitions, may also cause significant fluctuations from quarter to quarter.
Business Performance Summary
Net sales increased 6% to $2,130.3 million in 2025 from $2,009.2 million in 2024. Net income increased 7% to $204.2 million in 2025 from $190.0 million in 2024. Additionally, in 2025, we generated $113.6 million of cash flows from operations, repaid a total of $42.1 million of outstanding debt obligations, and repurchased 313,334 shares of common stock under our share repurchase program for $39.8 million.
New Product Development
New product development is a key success factor for us and has been a significant contributor to our growth. We have made incremental investments to increase our new product development efforts to grow our business and strengthen our relationships with our customers. The investments have primarily been in the form
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of increased product development resources, additional customer and end-user awareness programs, and customer service improvements. These investments have enabled us to provide an expanding array of new product offerings and grow revenues at levels that generally have exceeded market growth rates.
In 2025, we introduced 5,560 new distinct parts to our customers and end-users, including 1,608 “New-to-the-Aftermarket” parts. Please see ITEM 1, “Business – Product Development” for a year-over-year comparison of new product introductions.
One area of focus for the light-duty sector has been our complex electronics program, which capitalizes on the growing number of electronic components being utilized on today’s original equipment platforms. New vehicles contain an average of approximately 100 electronic modules, with some high-end luxury vehicles exceeding that. Our complex electronics products are designed and developed in-house and tested to help ensure consistent performance. Our product portfolio is focused on further developing our leadership position in this category.
Another area of focus has been on products we market for the heavy-duty sector. We believe that this sector provides many of the same growth opportunities that the light-duty sector has provided us. We specialize in offering parts to this sector that were traditionally only available from OEMs or salvage yards, similar to how we approach the light-duty sector.
Within the specialty vehicle sector, we focus on providing performance parts and accessories and nondiscretionary repair parts for UTVs and ATVs. We are dedicated to developing better and more innovative materials that will be compatible across a wide variety of makes and models to maintain as well as to enhance both the performance and appearance of customers’ vehicles.
Acquisitions
A key component of our strategy is growth through acquisitions. We may acquire businesses in the future to supplement our financial growth, expand our customer base, add to our distribution capabilities, or enhance our product development resources, among other reasons.
Industry Factors
The Company’s financial results are also impacted by various industry factors, including, but not limited to, the number, age, and condition of vehicles in operation at any one time, and the miles driven by those vehicles.
Vehicles in Operation
The Company’s products are primarily purchased and installed on a subsegment of the passenger and light-duty vehicles in operation in the United States (“VIO”), specifically weighted towards vehicles aged 7 to 14 years old. Each year, the United States seasonally adjusted annual rate (“US SAAR”) of new vehicles purchased adds a new year to the VIO. According to data from the Auto Care Association (“Auto Care”), the US SAAR experienced a decline from 2008 to 2011 as consumers purchased fewer new vehicles as a result of the Great Recession of 2008. We believe that the declining US SAAR during that period led to a follow-on decline in our primary VIO subsegment (7-to-14-year-old vehicles) commencing in 2016. However, following 2011 and the impact of the Great Recession of 2008, U.S. consumers began to increase their purchases of new vehicles, which over time caused the US SAAR to recover and return to more historical levels. The 7-to-14-year-old vehicle car parc has continued to grow over the past several years, which we expect will expand demand for aftermarket replacement parts as more vehicles remain in operation.
In addition, we believe that vehicle owners generally are operating their current vehicles longer than they did several years ago, performing necessary repairs and maintenance to keep those vehicles well-maintained. We believe this trend has supported an increase in VIO, which increased to 302.7 million, a 1% increase in 2025 over 2024. According to data published by Polk, a division of IHS Automotive, the average age of VIO increased to 12.9 years as of October 2025 from 12.8 years as of October 2024.
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Miles Driven
The number of miles driven is another important statistic that impacts our business. Generally, as vehicles are driven more miles, the more likely it is that parts will fail and there will be increased demand for replacement parts, including our parts. According to the U.S. Department of Transportation, the number of miles driven through October 2025 increased 1.0% year over year in the light-duty sector. However, global gasoline prices remained high during 2025 and, if high prices persist, they may negatively impact miles driven as consumers reduce travel or seek alternative methods of transportation.
Brand Protection
We operate in a highly competitive market. As a result, we are continuously evaluating our approach to branding, pricing, and terms for our customers and channels. For example, we maintain brand protection policies, which are designed to ensure that certain of our branded products are not advertised below certain approved pricing levels. In addition, we may pursue legal remedies when we observe third parties violating our intellectual property rights, including those that infringe on our patents, misrepresent our products as their own, or use our product images for their own marketing efforts.
Discounts, Allowances, and Incentives
We offer a variety of customer discounts, rebates, defective and slow-moving product returns, and other incentives. We may offer cash discounts for paying invoices in accordance with the specified discount terms of the invoice. In addition, we may offer pricing discounts based on volume purchased from us or other pricing discounts related to programs under a customer’s agreement. These incentives can be in the form of “off-invoice” discounts that are immediately deducted from sales at the time of sale. For those customers who choose to receive their incentives on a quarterly or annual basis instead of “off-invoice,” we provide rebates and accrue for such incentives as the related sales are made, and reduce sales accordingly. Additionally, rebates and discounts are provided to customers to support promotional activities such as advertising and sales force allowances.
Our customers, particularly our larger retail customers, regularly seek more favorable pricing and product return provisions, and extended payment terms when negotiating with us. We attempt to avoid or minimize these concessions as much as possible, but we have granted pricing concessions, indemnification rights, and extended customer payment terms, and allowed a higher level of product returns in certain cases. These concessions affect both our net sales and profit levels, and may require additional capital to support the business. We expect our customers to continue to exert pressure on our margins.
Customer Acquisition Costs
We may incur customer acquisition costs where we incur change-over costs to induce a customer to switch from a competitor’s brand, including expanding new product lines into our existing customers. Change-over costs include the costs associated with removing the customer’s inventory of competitor products and replacing it with our products, which is commonly referred to as a stock lift. Customer acquisition costs are recorded as a reduction to revenue when incurred.
Product Warranty and Overstock Returns
We warrant our products against certain defects in material and workmanship when used as designed on the vehicle on which it was originally installed. We offer a limited lifetime warranty on most of our products in the light-duty parts categories, with more limited warranties for our heavy-duty and specialty vehicle products. In addition to warranty returns, we may permit our customers to return new, undamaged products to us within customer-specific limits if they have overstocked their inventories. At the time products are sold, we accrue a liability for product warranties and overstock returns as a percentage of sales based upon estimates established using historical information on the nature, frequency, and average cost of claims and the probability of customer returns. Significant judgments and estimates must be made and used in connection with establishing the sales returns and other allowances in any accounting period. Revisions to these estimates are made, when necessary, based upon changes in these factors. We regularly study trends of such claims.
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Foreign Currency
Many of our products and related raw materials and components are purchased from suppliers in non-U.S. countries. The products are generally sourced through purchase orders with the purchase price specified in U.S. dollars. Accordingly, we generally do not have exposure to fluctuations in the relationship between the U.S. dollar and various foreign currencies between the time of execution of the purchase order and payment for the product.
To the extent that the U.S. dollar changes in value relative to those foreign currencies in the future, the prices charged by our suppliers for goods under new purchase orders may change in equivalent U.S. dollars. The largest portion of our overseas purchases comes from China. The Chinese yuan to U.S. dollar exchange rate has fluctuated over the past several years. Any future changes in the value of the Chinese yuan relative to the U.S. dollar may result in a change in the cost of goods that we purchase from China. However, the cost of the goods we procure is also affected by other factors, including raw material availability, labor costs, tariffs, and transportation costs.
We have operations located outside the United States with various functional currencies. Because our consolidated financial statements are denominated in U.S. dollars, the assets, liabilities, net sales, and expenses that are denominated in currencies other than the U.S. dollar must be converted into U.S. dollars using exchange rates for the current period. As a result, fluctuations in foreign currency exchange rates may impact our financial results.
Impact of Inflationary Costs
We experienced broad-based inflationary impacts during the year ended December 31, 2023, due primarily to global transportation and logistics constraints, which resulted in significantly higher transportation costs, tariffs and material costs, and wage inflation from an increasingly competitive labor market. Higher labor costs and material inflation resulting from geopolitical events, rising interest rates, disruptions to supply chain and logistics networks, and the trade policies of the U.S. or the countries where we source or sell our products may negatively impact our results in the future. We attempt to offset inflationary pressures with cost-saving initiatives, price increases to customers, and the use of alternative suppliers. There can be no assurance that we will be successful in implementing such cost-saving initiatives, pricing increases, or supplier diversification in the future to offset increased inflationary costs, or that the price increases we implement will not make our products uncompetitive or negatively impact customer demand.
Impact of Interest Rates
Our business is subject to interest rate risk under the terms of our customer accounts receivable sales programs, as a change in the Term Secured Overnight Financing Rate (“Term SOFR”) or alternative discount rate affects the cost incurred to factor eligible accounts receivable. Additionally, our outstanding borrowings under our credit facility bear interest at variable rates tied to Term SOFR or the applicable base rate. Under the terms of the credit facility, a change in interest rates affects the rate at which we can borrow funds thereunder and impacts the interest cost on existing borrowings. Interest rates may remain steady at their current levels for prolonged periods or may increase in the future, resulting in increased costs associated with our accounts receivable sales programs and outstanding borrowings. Interest rates remained elevated throughout much of 2024, but began to decline starting in the second half of that year and generally declined throughout 2025.
Impact of Tariffs
We source the majority of our raw materials and parts from suppliers in various non-U.S. countries. In 2025, approximately 77% of our total volume of purchases of products was sourced from suppliers in various non-U.S. countries, with approximately 38% sourced from third-party suppliers in China. At the beginning of 2025, the U.S. Administration implemented new tariffs that took effect throughout the year, and it continues to engage in trade negotiations with other countries regarding the implementation of additional tariffs. These actions, as well as reactionary tariff adjustments made by other countries, have impacted our business and contributed to inflationary cost increases, and we expect these impacts to continue.
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We have taken actions designed to mitigate the impacts of tariffs, including, but not limited to, diversifying our supply chain and negotiating cost concessions from our suppliers where possible. In addition, starting in the third quarter of 2025, we implemented pass-through price increases to offset the dollar impact of certain new tariff costs. We experienced a temporary increase in gross margin in 2025 due to the price increases taking effect before the increased cost of inventory, reflecting higher tariffs, was recognized as an expense in our statement of operations. We expect gross margin to decrease as we start to recognize these higher tariff costs in our Statement of Operations and Comprehensive Income in 2026.
On February 20, 2026, the U.S. Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA"). The ultimate availability, timing, and amount of any potential refunds of such tariffs remain highly uncertain and are subject to further legal, regulatory, and administrative developments. Following the Supreme Court’s decision, the U.S. Administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs may be imposed, modified, or suspended, and the impacts of such actions on our business. There also remains substantial uncertainty regarding how countries with which the U.S. has negotiated or is in the process of negotiating tariff trade deals will respond to any further tariff actions by the U.S. Administration. We continue to monitor and evaluate these developments and assess their potential impact on our business, financial condition, and results of operations.
Results of Operations
The following table sets forth, for the periods indicated, the dollar value and percentage of net sales represented by certain items in our Consolidated Statements of Operations:
For the Year Ended December 31,
(in thousands, except percentage data)
2025
2024
Net sales
$
2,130,319
100.0
%
$
2,009,197
100.0
%
Cost of goods sold
1,232,582
57.9
%
1,202,838
59.9
%
Gross profit
897,737
42.1
%
806,359
40.1
%
Selling, general, and administrative expenses
541,484
25.4
%
513,450
25.6
%
Goodwill impairment charge
56,706
2.7
%
—
—
%
Income from operations
299,547
14.1
%
292,909
14.6
%
Interest expense, net
28,575
1.3
%
39,727
2.0
%
Other income, net
4,473
0.2
%
3,070
0.2
%
Income before income taxes
275,445
12.9
%
256,252
12.8
%
Provision for income taxes
71,251
3.3
%
66,248
3.3
%
Net income
$
204,194
9.6
%
$
190,004
9.5
%
*Percentage of sales information may not add due to rounding
Year Ended December 31, 2025, Compared to Year Ended December 31, 2024
Net sales increased $121.1 million, or 6.0%, for the year ended December 31, 2025, compared to the prior year, driven by tariff-related pricing actions in our Light Duty and Heavy Duty segments, increased customer demand in the first half of the year, and sales of new products, partially offset by reduced demand impacted by soft market conditions in the heavy duty and specialty vehicle sectors.
Gross profit as a percentage of net sales increased 200 basis points compared to the prior year, primarily due to a timing benefit of tariff-related price increases taking effect before the increased cost of inventory, reflecting higher tariffs, was recognized as an expense in our statement of operations. Additionally, favorable mix from higher sales of new products, as well as supplier diversification, productivity, and automation initiatives, benefited the gross profit percentage during the year.
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Selling, general, and administrative expenses (“SG&A”) increased $28.0 million, but decreased 20 basis points as a percentage of net sales for the year ended December 31, 2025, compared to the prior year, due to favorable leverage on higher net sales that more than offset additional investments made in the current year.
Goodwill impairment charge represents a non-cash charge recorded in the year ended December 31, 2025, for the Heavy Duty reporting unit. As part of our annual goodwill impairment evaluation during the fourth quarter, management concluded that the carrying value of the Heavy Duty reporting unit exceeded its fair value and therefore recorded an impairment charge of $56.7 million, representing the goodwill balance in the Heavy Duty reporting unit as of the measurement date. The Heavy Duty reporting unit has been negatively impacted by continued macroeconomic challenges impacting the heavy-duty aftermarket industry, resulting in reduced projections of cash flows.
Our effective tax rate remained flat at 25.9% in the years ended December 31, 2025, and December 31, 2024. The effective tax rate for the year ended December 31, 2025, reflected the impact of a goodwill impairment charge that increased the rate by 2.1%. The effective tax rate in the prior year included a reserve in connection with a state tax dispute, which increased the rate by approximately 2.5%.
Segment Operating Results
Segment operating results were as follows:
For the Year Ended December 31,
(in thousands)
2025
2024
Net Sales:
Light Duty
$
1,692,055
$
1,565,601
Heavy Duty
232,594
231,515
Specialty Vehicle
205,670
212,081
Total
$
2,130,319
$
2,009,197
Segment income from operations:
Light Duty
$
347,318
$
284,165
Heavy Duty
5,111
6,479
Specialty Vehicle
26,850
32,335
Total
$
379,279
$
322,979
Light Duty
Light Duty net sales increased $126.5 million, or 8.1%, for the year ended December 31, 2025, compared to the prior year, primarily due to tariff-related pricing actions, increased customer demand in the first half of the year, and strong demand for new products.
Light Duty segment income from operations as a percentage of net sales increased to 20.5% for the year ended December 31, 2025, from 18.2% for the year ended December 31, 2024. This increase was primarily driven by a timing benefit of tariff-related price increases taking effect before the increased cost of inventory, reflecting higher tariffs, was recognized as an expense in segment income, favorable mix from higher new product sales, operational excellence initiatives delivering cost savings, and favorable leverage on higher net sales.
Heavy Duty
Heavy Duty net sales increased $1.1 million, or 0.5%, for the year ended December 31, 2025, compared to the prior year. The increase in net sales primarily reflects tariff-related pricing actions offset by reduced customer demand from continued market pressures in freight transportation and the trucking aftermarket.
Heavy Duty segment income from operations as a percentage of net sales decreased by 60 basis points for the year ended December 31, 2025, compared to the prior year. This decrease was primarily driven by lower
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productivity, and the impact of investments we made as part of initiatives to grow sales and improve margins on a long-term basis.
Specialty Vehicle
Specialty Vehicle net sales decreased $6.4 million, or 3.0%, for the year ended December 31, 2025, compared to the prior year, primarily due to reduced customer demand across our sales channels, partially offset by pricing actions.
Specialty Vehicle segment income from operations as a percentage of net sales decreased to 13.1% for the year ended December 31, 2025, from 15.2% for the year ended December 31, 2024. This decrease was primarily driven by the deleverage of fixed costs on lower net sales volumes and higher tariff costs incurred on products sold starting in the fourth quarter of 2025.
Liquidity and Capital Resources
Historically, our primary sources of liquidity have been our invested cash and the cash flow we generate from our operations, including accounts receivable sales programs facilitated by certain customers. The following table presents key liquidity and capital resource metrics as of December 31, 2025, and 2024.
(in thousands)
December 31, 2025
December 31, 2024
Cash and cash equivalents
$
49,436
$
57,137
Working capital
$
1,028,699
$
805,958
Shareholders' equity
$
1,477,075
$
1,293,470
Based on our current operating plan, we believe that our sources of available capital are adequate to meet our ongoing cash needs for at least the next twelve months. However, our liquidity could be negatively affected by extending payment terms to customers, a decrease in demand for our products, higher interest rates, the outcome of contingencies, or other factors. See Note 10, “Commitments and Contingencies”, to the Consolidated Financial Statements, included under ITEM 8, for additional information regarding commitments and contingencies that may affect our liquidity.
At December 31, 2025, our long-term cash requirements under our various contractual obligations include non-cancellable operating leases and outstanding borrowings under our credit agreement as follows:
•Operating leases – total obligations under non-cancellable operating leases were $138.8 million, with $30.0 million due over the next twelve months. Refer to Note 4, “Leases”, to the Consolidated Financial Statements, included under ITEM 8, for additional information regarding our leases.
•Credit agreement – total obligations under our credit agreement were $440.6 million, with $37.5 million due over the next twelve months. Refer to Note 6, “Long-Term Debt”, to the Consolidated Financial Statements, included under ITEM 8, for additional information regarding our credit agreement.
Tariffs
Increases in tariffs accelerate our use of cash, as we pay for the higher costs upon arrival of our goods in the United States, but we collect the cash from any pass-through price increases to our customers on a delayed basis, taking into account our inventory turns and payment terms negotiated with those customers. We currently anticipate that additional liquidity needs to cover increased tariffs on imported products can be managed through additional factoring under our accounts receivable sales programs with certain customers, as well as borrowings under our existing revolving credit facility.
Payment Terms and Accounts Receivable Sales Programs
We have and may continue to extend payment terms to certain customers in response to customer requests and market demands. These extended terms have resulted in increased accounts receivable levels and significant cash usage. Where available and when we deem appropriate, we participate in accounts receivable sales programs with several customers. The programs generally enable us to sell our accounts receivable to financial institutions at discounted rates without recourse to offset the negative cash flow impact of these
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payment term extensions. However, any sales of accounts receivable through these programs ultimately result in us receiving a lesser amount of cash upfront than if we collected those accounts receivable ourselves in due course, resulting in accounts receivable factoring costs. Moreover, since these accounts receivable sales programs bear interest at rates tied to the Term SOFR or other reference rates, increases in these applicable rates increase our cost to sell our receivables and reduce the amount of cash we receive. See ITEM 7A, “Quantitative and Qualitative Disclosures about Market Risk” for more information. Further extensions of customer payment terms would result in additional cash usage or increased costs associated with the sales of accounts receivable.
Sales of accounts receivable under these programs, and related factoring costs, were as follows:
(in thousands)
December 31, 2025
December 31, 2024
Sales of accounts receivable
$
1,387,816
$
1,106,400
Factoring costs
$
58,309
$
51,252
If receivables had not been sold, $1,093.1 million and $853.6 million of additional receivables would have been outstanding at December 31, 2025 and 2024, respectively, based on standard payment terms. We had capacity to sell more accounts receivable under these programs if the needs of the business warranted. Further extensions of customer payment terms would result in additional uses of cash or increased costs associated with the sales of accounts receivable.
The increase in factoring costs year over year was primarily driven by higher accounts receivable sold under these programs, partially offset by lower Term SOFR rates in 2025.
Credit Agreement
We have a credit agreement that consists of a $600.0 million revolving credit facility and a $500.0 million term loan. The credit agreement matures on October 4, 2027, is guaranteed by the Company’s material domestic subsidiaries, and is supported by a security interest in substantially all of the Company’s material domestic subsidiaries’ personal property and assets, subject to certain exceptions. As of December 31, 2025, there were $440.6 million in outstanding borrowings under the term loan. Also on that date, we had outstanding letters of credit for $1.1 million in the aggregate. Net of outstanding borrowings and letters of credit, we had $598.9 million available under the credit agreement as of December 31, 2025.
Our credit agreement contains affirmative and negative covenants. As of December 31, 2025, we were not in default with respect to our credit agreement.
Refer to Note 6, "Long-Term Debt", to the Consolidated Financial Statements, included under ITEM 8, for additional information regarding the credit agreement.
Cash Flows
Below is a table setting forth the key lines of our Consolidated Statements of Cash Flows:
For the Year Ended December 31,
(in thousands)
2025
2024
Cash provided by operating activities
$
113,634
$
231,047
Cash used in investing activities
(37,969)
(39,321)
Cash used in financing activities
(83,689)
(170,979)
Effect of foreign exchange on cash and cash equivalents
323
(424)
Net (decrease) increase in cash and cash equivalents
$
(7,701)
$
20,323
During the year ended December 31, 2025, cash provided by operating activities decreased $117.4 million from the prior year primarily as a result of cash used to fund investments in inventory to meet customer demand and to pay for increased tariffs on imports, partially offset by higher proceeds from selling accounts receivable under our customer-sponsored accounts receivable sales programs.
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Investing activities used $38.0 million and $39.3 million of cash in the years ended December 31, 2025, and 2024, respectively.
Cash used in financing activities during the year ended December 31, 2025, decreased $87.3 million from the prior year, due to lower levels of debt repayments and share repurchases in the current year, and included $39.8 million paid to repurchase 313,334 shares of common stock under our share repurchase plan, and the repayment of $14.0 million of outstanding borrowings under our revolving credit facility and $28.1 million of our term loan balance under our credit agreement. During the year ended December 31, 2024, $78.9 million was paid to repurchase 865,283 shares of common stock under our share repurchase plan, and we repaid $78.8 million of outstanding borrowings under our revolving credit facility and $15.6 million of our term loan balance under our credit agreement. The remaining uses of cash from financing activities in each period resulted primarily from the repurchase of our common stock from our 401(k) Plan and income tax withholding in connection with the vesting of restricted stock awards (“RSAs”) and restricted stock units (“RSUs”), partially offset by proceeds from the exercise of stock options.
Off-Balance Sheet Arrangements
Off-balance sheet arrangements are transactions, agreements, or other contractual arrangements with an unconsolidated entity for which we have an obligation to the entity that is not recorded in our consolidated financial statements. We have not utilized off-balance sheet financial instruments, and currently do not plan to utilize off-balance sheet arrangements in the future to fund our working capital requirements, operations, or growth plans.
We may issue standby letters of credit under our credit agreement. Letters of credit totaling $1.1 million and $1.2 million were outstanding at December 31, 2025, and 2024, respectively. Those letters of credit are issued primarily to satisfy the requirements of workers' compensation, general liability, and other insurance policies. Each of the outstanding letters of credit has a one-year term from the date of issuance.
We do not have any off-balance sheet financing that has, or is reasonably likely to have, a material, current, or future effect on our financial condition, revenues, expenses, cash flows, results of operations, liquidity, capital expenditures, or capital resources.
Related-Party Transactions
Prior to December 1, 2023, we leased our Colmar, PA facility from an entity in which Steven Berman, our Non-Executive Chairman, and certain of his family members are owners. On December 1, 2023, the Colmar facility was sold to a third party, subject to our lease. We currently lease a portion of our Lewisberry, PA facility from an entity in which Mr. Berman and certain of his family members are owners. The Colmar lease was, and the Lewisberry lease is, a non-cancelable operating lease. The Lewisberry lease expires December 31, 2027.
We also lease our facilities in Madison, IN, and Shreveport, LA, from entities in which Lindsay Hunt, our former President, Specialty Vehicle, and certain of her family members are owners. Each lease is a non-cancelable operating lease, was renewed in October 2022 in connection with the acquisition of Super ATV, LLC, a leading supplier to the powersports aftermarket ("SuperATV"), and will expire on October 31, 2027.
We have service agreements with counterparties that are majority-owned by a family member of Ms. Hunt. These agreements provide for various warehouse and facility-related services at agreed-upon rates.
The following table represents the total payments for the years ended December 31, 2025, 2024, and 2023, under the related party agreements described above:
For the Year Ended December 31,
(in thousands)
2025
2024
2023
Facility leases with Steven Berman-related entities
$
735
$
715
$
2,918
Facility leases with Lindsay Hunt-related entities
$
2,812
$
2,757
$
2,603
Service agreements with Lindsay Hunt-related entities
$
46
$
54
$
200
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We are a partner in a joint venture with one of our suppliers and own minority interest investments in two other suppliers. Aggregate purchases from these companies were $24.8 million, $18.4 million, and $22.7 million in the years ended December 31, 2025, 2024, and 2023, respectively.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon the Consolidated Financial Statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities, and the reported amounts of revenues and expenses. Estimates and judgments are based upon historical experience and on various other assumptions believed to be accurate and reasonable under the circumstances. Actual results may differ materially from these estimates due to different assumptions or conditions. The following areas all require the use of subjective or complex estimates, judgments, and assumptions.
Accrued Customer Rebates and Returns. We record estimates for cash discounts, defective and slow-moving product returns, promotional rebates, core return deposits, and other discounts in the period of the sale ("Customer Credits"). The provision for Customer Credits is recorded as a reduction from gross sales, and reserves for Customer Credits are shown as an increase of accrued customer rebates and returns, which is included in current liabilities. Customer Credits are estimated based on contractual provisions, historical experience, and our assessment of current market conditions. Historically, actual Customer Credits have not differed materially from estimated amounts.
Excess and Obsolete Inventory Reserves. We must make estimates of potential future excess and obsolete inventory costs. We provide reserves for discontinued and excess inventory based upon historical demand, forecasted usage, estimated customer requirements, and product line updates. We maintain contact with our customer base to understand buying patterns, customer preferences, and the life cycle of our products. Changes in customer requirements are factored into the reserves, as needed.
Goodwill and Other Acquired Intangible Assets
Goodwill is reviewed for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value of the goodwill may be impaired. For the annual test, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount (“Step 0”). If through the Step 0 test we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount (or if the Company elects to not perform Step 0), then we would perform a quantitative test (“Step 1”) to determine whether an impairment charge was necessary. During 2025 and 2024, we elected to perform a Step 1 test of our goodwill for the purpose of assessing goodwill for impairment.
We estimate the fair value of our reporting units based primarily upon discounted cash flow projections for their underlying operations, which requires us to make significant assumptions regarding estimated cash flows, including long-term revenue and expense forecasts, profit margins, discount rates, and terminal growth rates. We develop these assumptions based on the market risks unique to each reporting unit. In addition to the use of discounted cash flow projections, when appropriate, our estimates of the fair values of our reporting units include the results of applying the guideline company valuation method, which is a market approach. The application of the guideline company valuation method requires us to make judgments regarding (1) the appropriate set of comparable publicly traded guideline peer companies for which observable market multiples should be considered and (2) the appropriate multiple(s) to select from the range of multiples that may be observed for those guideline companies.
For the year ended December 31, 2025, we determined that the carrying value of our Heavy Duty reporting unit exceeded its fair value, and therefore recorded an impairment charge of $56.7 million, representing the balance of goodwill in that reporting unit. For the year ended December 31, 2024, we determined that goodwill was not impaired at that time as part of our annual goodwill impairment review.
Refer to Note 5, "Goodwill and Intangible Assets," in the accompanying consolidated financial statements for additional information on the goodwill impairment charge recorded in 2025.
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Recently Issued Accounting Pronouncements
Refer to Note 1, “Summary of Significant Accounting Policies,” in the accompanying consolidated financial statements for additional information on recently issued accounting pronouncements.