DORM 10-K & 10-Q changes, risk factors and insider trading

In addition to the other information set forth in this report, you should carefully consider the following factors, which could materially affect our business, financial condition, or future results. The risks described belowbelow, which are listed in no particular order, are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially affect our business, financial condition, or results of operations. The risks are listed below in no particular order.

The size of the motor vehicle aftermarket industry depends,depends inon part,factors uponsuch as the number of vehicles on the road, average vehicle age, change in total miles drivendriven, perregulatory year, new or modified environmental and vehicle safety regulations, including fuel-efficiency and emissions reduction standards,changes, pricing of new and used vehicles, vehicle and new vehiclecomponent quality and relatedwarranties warranties.and maintenance programs. We believe the motor vehicle aftermarketthat industry hasdemand beenmay be negatively impacted byas vehicle and component quality improve, which could reduce part replacement frequency. Enhancements to the factduration thator the qualityscope of certain motor vehicles and their component parts (and related warranties) has improved, thereby lengthening the repair cycle. Generally, if parts last longer, there will be less demand for our products, and the average useful life of motor vehicle parts has been steadily increasing in recent years due to innovations in products and technology. In addition, the introduction by original equipment manufacturers of increased warranty and maintenance initiativesprograms hasoffered theby potentialOEMs tomay decreasealso thefurther reduce demand for our products. These factors could have a material adverse effect on our business, financial condition, and results of operations.

The motor vehicle aftermarket industry is highly competitive, and our success depends on our ability to compete with domestic and international suppliers of aftermarket products. Due to the diversity of our product offering, weWe compete against a largebroad cross-sectionrange of aftermarketcompanies companies(public and private, large and small) and brands, including, but not limited to, Cardone Industries, Inc., Standard Motor Products, Inc., Tenneco, Inc., TrakMotive, Bosch Auto Parts, First Brands Group, LLC, Gates Corporation, Continental Automotive Systems, Inc. (VDO), MevoTech LP, ACDelco (owned by General Motors Company), Motorcraft (owned by Ford Motor Company), Cummins Inc. (following its acquisition of Meritor, Inc.), Automann Inc., WARN Industries,Industries (owned by LKQ Corporation), Rocky Mountain ATV/MCMC, and numerous category specific competitors. InWe addition, wealso face competition from original equipment manufacturers, which,OEMs, through their dealersdealer ornetworks, dealerships,and supply many of the same types of parts we sell. Further,from some of our private label customers alsowhose private-label brands compete with us.ours.

SomeCompetitors of our competitors maythat have larger customer bases and greater financial, technical, and marketing resources than we do. These factors may allow our competitors to:

• sell products atoffer lower product prices than we do;

• undertakeexercise more extensivebroader marketing campaigns; and

• makeprovide more attractive offersterms to existing and potential customers and strategic partners.

We cannot assure you that our competitors or others in our industry will not (i) adopt fast follower strategies, based on the Company'sour new product launches, (ii) develop products or services that are equal or superior to our products, or that achieve greater market acceptance than our products, or (iii) expand theirinto operations intoour product lineslines. producedSuch risks may be compounded by the availability and solduse of artificial intelligence ("AI") by us.our competitors. We also cannot assure you that additional entrantscompanies will not enter our industry or that companies in our industry will not consolidate. AnyThese such competitive pressuresevents could pressure us to offer customers better pricing or contract terms to retain business or cause us to lose market shareshare, or could resultwhich, in significant price decreases andturn, could have a material adverse effect on our business, financial condition, and results of operations.

A significant percentage of our sales has been, and is expected to be,are concentrated among a relatively small number of customers. DuringIn 2024,2025, two customers each accounted forrepresented more than 10% of net sales and in the aggregatetogether accounted for approximately 39%40% of net sales. We anticipate that this concentration of sales among these customers willmay continue in the future. The loss of a significant customer, changes in customer buying behaviors, or a substantial decreasereduction in salespurchases to suchor a change in buying behaviors of a significant customer could have a material adverse effect on our sales and operating results. In addition, anyCustomer consolidation among our key customers may further increase our customer concentrationthis risk.

Also, whileAlthough we may enter into long-term agreements with certain of our significant customers, thosethese agreementstypically generally do not containlack purchase commitments,commitments whichand instead arerely set forth inon individual purchase orders submitted by customers based on their then-current or projected needs.orders. We have in the past, and may in the future, lose customers or lose a particular product line of a customer due to the highly competitive conditionscompetition in the motor vehicle aftermarket industry, consolidationcustomer of customers,consolidation, and customer initiatives to buy direct from foreignour supplierssuppliers. or other business considerations. In addition, givenGiven the size and scale of some of our customers, theretheir isability ato risk that they may establish and growforge direct relationships with our suppliers orcould othercause suppliersthose incustomers the marketplace andto reduce their purchases from us or to cease purchasing from us.us altogether. A decision by any significant customer, whether motivated by competitive conditions, financial difficulties, or otherwise,customer to materially decrease the amount of products purchased from us or the number of our product lines they choose to carry, to change their manner of doing business with us, or to stop doing business with us, could have a material adverse effect on our business, financial condition, and results of operations.

Because ourof salesthis arecustomer concentrated,concentration and theintense industry in whichcompetition, we operate is very competitive, weoften are under ongoing pressure from our customers to offer lower prices, extend payment terms, increase marketing and transportation allowances, provide enhanced rebates, discounts, rights of return and creditscredits, and offer customers other terms more favorable toterms. If and when we meet these customers. These customer demandsdemands, havethey putadversely continued pressure onimpact our operating margins and profitability and in the future could have a material adverse effect on our business, financial condition, and results of operations.

ThereOur isindustry substantialfaces intense price competition in our industry,competition, and our success and profitability will partially dependdepends on our ability to maintainmaintaining a competitive cost and price structure.

TheOur inabilitybusiness depends on the ability of our customers to grow their businesses and compete effectively may adversely affect our business.effectively.

FactorsOur that could impact our customers'customers’ growth and competitiveness includecan be affected by, among other things:

•Competitive Pressures: Increased competition from existing or new market entrants (e.g., the growth of e-commerce) could erode our customers' market share, impacting their business performance and, consequently, their demand for our products; andproducts.

•Shelf Space Limitations: TheLimited amount ofretail space available to retailers and other resellers offorces our products is limited, and, therefore, our productsto compete with other motor vehicle aftermarket products,items, someincluding ofunrelated which are entirely dissimilar and otherwise non-competitive (such as car waxes and engine oil), for shelf and floor space.products. The failure of our customers to increase their shelf space or grow in new locations may adversely impact their demand for our products.

If our customers are unable tocannot grow their businesses andor competemaintain effectively,their it could leadability to compete, they may face reduced sales, increased credit risk, and potential loss of businessbusiness, forwhich, thosein customers, whichturn, could have a material adverse effect on our business, financial condition, and results of operations.

The motor vehicle aftermarket industry has been consolidating over the past several years.years, Asresulting ain result of such consolidations, manysome of our non-end user customers havehaving grown larger and therefore havehaving more leverage in negotiating agreements to buy products from us. Such customersThey may requireask us to lower prices, provide extended payment terms, issue customer credits, and accept returns of slow-moving product to obtain new, or retain existing, business. AlthoughWhile we attemptseek to avoid or minimizelimit such concessions, in some cases customer payment terms have been extended, enhanced credits have been issuedissued, and returns of product have exceeded historical levels. The product returnsReturns and customer credits primarily affect ourreduce net sales and profit levelsprofitability, while longer payment term extensionsterms and additional factoring costs generally reduce operating cash flow and require additional capital to finance our business. We expect these trends to continuecontinue, forwhich thecould foreseeablematerially future.adversely affect our business, financial condition, and results of operations.

Our growth in the specialty vehicle category depends upon our continued ability to expand our product sales into specialty vehicles, including, but not limited to, those that require performance-defining products,vehicles and theon expansion of theoverall market for these vehicles.growth.

WithFollowing our acquisition of SuperATV, a portion of our sales are generatedcomes from providing aftermarket parts and accessories for specialty vehicles, such as UTVs and ATVs,ATVs. thatSuccess requirerequires performance-defining products. Our success depends, in part, on the growth of thecontinued market for such vehicles. Such market growth includes theexpansion, creation of new vehicle classes of vehicles that can benefit from our productsproducts, and our ability to createdevelop products for these vehicles.markets. If thesespecialty vehicle markets do not expandstagnate or if they contract due to economic factors,conditions, changes inshifting consumer preferences, or other reasons, factors—or we are unsuccessful in creating new products for these markets or other competitors successfully enter these markets,if we may fail to achieveinnovate futureor competitors gain market share—our growth orcould ourbe limited and sales could decrease,decline, which could havematerially aadversely material adverse effect onaffect our business, financial condition, and results of operations.

We must maintain sufficient in-stockadequate inventory and anticipate future changes in customer demandsdemand to bemeet successful.current Ifand wefuture failneeds. Failure to do so,so could adversely affect our financial resultsresults. couldDemand be adversely affected. Fluctuations in demandfluctuations may result from several factors, including, but not limited to, global economic conditions, globalvehicle pandemics,age the age,and condition, and number of vehicles that need servicing, motor vehicle partspart failure rates, lossintroductions of new products by competitors, market share,share changes, and improvements in product designs that result in enhanced quality and reliability of new vehicle parts.reliability. As a result of these and other factors, we have experienced and expect to continue to experience fluctuating levels of demand that require us to monitor, and, where appropriate, adjust our operations, including our inventory levels and staffing at our facilities. IfInaccurate weforecasting cannotcan accuratelylead forecast future reductions in demand, we may accumulateto excess or obsolete inventory, workforce reductions, or, conversely, inventory shortages and beinsufficient forcedstaffing. to reduce hours or lay off or furlough employees. Conversely, if we cannot accurately forecast future increases in demand, weShortfalls may haveprevent inventoryus shortfallsfrom orfulfilling inadequateorders staffingon levels to meet demand, which maytime, result in ourfill-rate inability to fill orders on a timely basis or at allpenalties, and cause lost sales. These risks could resultmaterially inadversely penalties owed toaffect our customersbusiness, financial condition, and the lossresults of net sales.operations.

Our profitability may be materially adversely affected becauseby ofcustomer overstock inventory-related returns by our customers in excess ofexceeding anticipated amounts.levels.

InWe allow certain instances,customers weto permit overstock returns of inventory that may bereturn new, non-defective, or non-obsolete.non-obsolete Toinventory thewithin extent our customer agreements permit overstock returns, those customers arelimits generally limitedbased to returning overstocked inventory according toon a specified percentage of their annual purchases from us.purchases. We accrue for overstockthese returns as a percentage of net sales, after considering recentusing historical returns.trends While we believe that we make reasonableand estimates for overstock returns in accordance with our revenue recognition policies,policies. However, actual returns may differ from our estimates. ToIf the extent that overstockedoverstock returns materially exceed our projections,accruals and expectations, it could have a material adverse effect on our business, financial condition, and results of operations, and financial condition may be materially adversely affected.operations.

Our operations wouldmay be materially and adversely affected if our suppliers fail to perform or if we cannot manage our supply chain effectively.

Our operations depend on effective supply chain management and supplier performance. We purchase raw materials, finished goods, equipment, and component parts from various suppliers, and failure by these suppliers—due to delivery delays, non-conforming products, insolvency, bankruptcy, or other reasons—could materially adversely affect us. Supplier risks include raw material availability and cost, political instability, tariffs, trade disputes, embargos, new regulations, military conflict, natural disasters, work stoppages, and health crises. Furthermore, because certain products we sell contain parts that are or can be recycled and remanufactured --– parts more commonly referred to in our industry as “core” – our ability to sell those products may be materially and adversely affected if we are unable to obtain those core parts from our suppliers on favorable terms, if at all.

OurReplacing effortsor totransitioning protectsuppliers againstmay cause production delays, quality issues, increased costs, and minimizeinventory these risks may not always be effective. If any of our key suppliers fails to meet our needs or if our relationships with any of our key suppliers are not maintained, it may not be possible to replace such supplier without disruptions in our operations. In addition, we may not be able to consolidate or diversify our supply chain as business needs dictate, and our operations may be adversely impacted as a result.shortages. For example, we may experience delays as new suppliers are qualified or as tooling is moved or replaced. Furthermore, the replacement of a key supplier or transitioning to a new supplier in a different geography may result in production delays, product quality issues, or increased expenses, which could result in inventory shortages or lower profit marginsmargins. Overall, our efforts to mitigate these risks may not always succeed, and disruptions could havematerially aadversely material adverse effect onaffect our business, financial condition, and results of operations.

Changes in U.S. trade policy, including the imposition and enforcement of tariffs and therelated resulting consequences,actions, could adversely affect our business and results of operations.

We have in the past, and expect to continue to, incur significant costs to comply with trade laws imposing tariffs on products imported into the U.S. However, our competitors may not comply and may engage in transshipping to avoid tariffs and import competing products at lower costs than ours. If illegal transshipments are not monitored and enforcement is not effective to limit them, thesewe shipmentsmay not be able to compete effectively, and that could have a material adverse effect on our business, 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 PART II, 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 Regardingon Forward-Looking StatementsInformation” 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 20242023 results to 2023 results. Discussions of 2022 results and comparisons of 2022 results to 20232024 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, 2023.2024.

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, 2024,2025, we marketed approximately 138,000144,000 distinct parts compared to approximately 133,000138,000 as of December 31, 2023,2024, many of which we designed and engineered. This number excludes private labelprivate-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 labelprivate-label brands, or in bulk. We are one of the leading aftermarket suppliers of parts that were traditionally available to consumers only from OE manufacturersOEMs or salvage yards. These parts include, among other parts,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 through their online platforms; dealers; and national, regional, and local warehouse distributors and specialty markets; and salvage yards.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 customerscustomers, 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.

Net sales increased 4%6% to $2,130.3 million in 2025 from $2,009.2 million in 2024 from $1,929.8 million in 2023.2024. Net income increased 47%7% to $204.2 million in 2025 from $190.0 million in 2024 from $129.3 million in 2023.2024. Additionally, in 20242025, we generated $231.0$113.6 million of cash flows from operations, repaid a total of $94.4$42.1 million of outstanding debt obligations, and repurchased 865,283313,334 shares of common sharesstock under aour share repurchase program for $78.9$39.8 million.

New product development is ana importantkey success factor for us and has been a sourcesignificant ofcontributor growthto forour us.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 have been in the form of increased product development resources, increasedadditional customer and end-user awareness programs, and customer service improvements. These investments historically have enabled us to provide an expanding array of new product offerings and grow revenues at levels that generally have exceeded market growth rates.

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 OEoriginal 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,performance. and ourOur 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 OE manufacturersOEMs 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.

A key component of our strategy is growth through acquisitions. On October 4, 2022, we acquired Super ATV, a leading independent supplier to the powersports aftermarket with a family of highly respected brands spanning functional accessories and upgrades, as well as replacement parts for specialty vehicles. See Note 2, "Business Acquisitions and Investments", to the Consolidated Financial Statements, included under ITEM 8 for additional information. We may acquire businesses in the future to supplement our financial growth, increaseexpand our customer base, add to our distribution capabilities, or enhance our product development resources, among other reasons.

The Company’s financial results are also impacted by various industry factors, including, but not limited toto, the number, age, and condition of vehicles in operation at any one time, and the miles driven by those vehicles.

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 resultedled into 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 vehiclesvehicles, 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.well-maintained. We believe this trend has supported an increase in VIO, which increased to 298.5302.7 million, a 1% increase in 20242025 over 2023.2024. 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 from 12.6 years as of October 2023.2024.

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 20242025 increased 1.0% year over year in the light-duty sector. However, global gasoline prices remained high during 20242025 and, if theyhigh continue,prices persist, they may negatively impact miles driven as consumers reduce travel or seek alternative methods of transportation.

We operate in a highly competitive market. As a result, we are continuously evaluating our approach to brand,branding, pricing, and terms tofor our different 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 seeobserve third parties violating our intellectual property rights, including those that violateinfringe on our patents, wrongfully representmisrepresent our products as their own, or use our product images for their own marketing efforts.

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 thatwho 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 mademade, 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 impactaffect both our net sales as well as ourand profit levelslevels, and may require additional capital to financesupport the business. We expect our customers to continue to exert pressure on our margins.

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 relatedassociated towith 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.

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 the claimclaims and the probability of the customer return.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 mademade, when necessary, based upon changes in these factors. We regularly study trends of such claims.

Many of our products and related raw materials and components are purchased from suppliers in a variety of non-U.S. countries. The products are generally are purchasedsourced 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.

Impact of Labor Market and 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;costs, tariffs; and material costs;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.costs, or that the price increases we implement will not make our products uncompetitive or negatively impact customer demand.

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 also impacts the interest cost on existing borrowings. Interest rates may holdremain steady at their current rateslevels for prolonged periods or may increase in the future, resulting in increased costs associated with our accounts receivable sales programs and outstanding borrowings. During the year ended December 31, 2023, we saw significant increases in Term SOFR and other reference rates. Interest rates remained elevated throughout much of 2024, but began to decline starting in the second half of 2024.that year and generally declined throughout 2025.

Net sales increased $79.4$121.1 million, or 4.1%,6.0%, for the year ended December 31, 20242025, compared to the prior year, driven primarilyby 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 volume,reduced includingdemand fromimpacted newby productsoft introductions.market conditions in the heavy duty and specialty vehicle sectors.

Selling, generalgeneral, and administrative expenses (“SG&A”) increased $42.8$28.0 million, orbut 120decreased 20 basis points as a percentage of net sales for the year ended December 31, 2024,2025, compared to the prior year, primarily due to $20.5 million of favorable fairleverage value adjustments in the prior year period to the estimated contingent consideration obligation for an acquisition andon higher compensationnet andsales benefitsthat costsmore than offset additional investments made in the current year period.year.

Light Duty net sales increased $103.1$126.5 million, or 7.1%,8.1%, for the year ended December 31, 20242025, compared to the prior year, primarily due to volumetariff-related increases,pricing includingactions, salesincreased customer demand in the first half of the year, and strong demand for new products launched.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, from 12.8% for the year ended December 31, 2023.2024. This increase was primarily driven by thea sell-throughtiming benefit of lower-costtariff-related inventoryprice andincreases 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,cost partiallysavings, offsetand byfavorable leverage on higher compensationnet and benefits costs.sales.

Heavy Duty net sales decreasedincreased $25.4$1.1 million, or 9.9%,0.5%, for the year ended December 31, 20242025, compared to the prior year. The decreaseincrease in net sales primarily reflects tariff-related pricing actions offset by reduced customer demand from lowercontinued market pressures in freight industrytransportation shipping volumes inand the yeartrucking ended December 31, 2024, as well as sales performance in the year ended December 31, 2023 driven by customers’ inventory restocking at the end of the global pandemic.aftermarket.

Heavy Duty segment income from operations as a percentage of net sales decreased by 28060 basis points for the year ended December 31, 2024,2025, compared to the prior year. This decrease was primarily driven by the deleveraging of fixed costs on lower net salesproductivity, and the impact of investments we made as part of initiatives to grow sales and improve margins on a long-term basis.

Specialty Vehicle net sales increaseddecreased $1.7$6.4 million, or 0.8%,3.0%, for the year ended December 31, 20242025, compared to the prior year, primarily due to volumereduced increases,customer includingdemand across our sales ofchannels, newpartially productsoffset launched.by pricing actions.

Specialty Vehicle segment income from operations as a percentage of net sales increaseddecreased to 13.1% for the year ended December 31, 2025, from 15.2% for the year ended December 31, 2024, from 15.0% for the year ended December 31, 2023.2024. This increasedecrease was primarily driven by the sell-throughdeleverage of lower-costfixed inventorycosts on lower net sales volumes and costhigher savingstariff initiativescosts comparedincurred toon products sold starting in the yearfourth endedquarter Decemberof 31, 2023.2025.

TariffsIncreases increasein tariffs accelerate our use of cashcash, sinceas we pay for the tariffshigher costs upon the arrival of our goods in the United StatesStates, but we collect the cash onfrom any passthroughpass-through price increases fromto our customers on a delayed basisbasis, accordingtaking tointo theaccount 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 customers.accounts receivable sales programs with certain customers, as well as borrowings under our existing revolving credit facility.

Over the past several years, weWe have continuedand may continue to extend payment terms to certain customers asin aresponse result ofto customer requests and market demands. These extended terms have resulted in increased accounts receivable levels and significant usescash of cash.usage. Where available and when we deem appropriate, we participate in accounts receivable sales programs with several customerscustomers. thatThe allowprograms 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 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 usescash of cashusage or increased costs associated with the sales of accounts receivable.

During the years ended December 31, 2024 and 2023, we sold approximately $1,106.4 million and $949.5 million, respectively, under these programs. If receivables had not been sold, $853.6$1,093.1 million and $526.4$853.6 million of additional receivables would have been outstanding at December 31, 20242025 and 2023,2024, 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.

During the years ended December 31, 2024 and 2023, factoring costs associated with these accounts receivable sales programs were $51.3 million and $50.2 million, respectively. The increase in factoring costs year over year was primarily driven by higher accounts receivable sold under these programs.programs, partially offset by lower Term SOFR rates in 2025.

We have a credit agreement whichthat 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.

Investing activities used $39.3$38.0 million and $43.9$39.3 million of cash in the years ended December 31, 20242025, and 2023,2024, respectively. The decrease in cash used in investing activities during the year ended December 31, 2024 compared to the prior year was primarily due to higher additions for property, plant and equipment in the prior year.

FinancingCash used in financing activities induring the year ended December 31, 20242025, decreased $87.3 million from the prior year, due to lower levels of debt repayments and share repurchases in the current year, and included $78.9$39.8 million paid to repurchase 865,283313,334 shares of common stock under our share repurchase plan, and the repaymentsrepayment of $78.8$14.0 million of outstanding borrowings under our revolving credit facility and $15.6$28.1 million of our term loan balance under our credit agreement. During the year ended December 31, 2023,2024, $78.9 million was paid to repurchase 865,283 shares of common stock under our share repurchase plan, and we repaid $146.6$78.8 million of outstanding borrowings under our revolving credit facility and $12.5$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”), andpartially offset by proceeds from the exercise of stock options.

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 historically 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 do not have any off-balance sheet financing that has, or is reasonably likely to have, a material, currentcurrent, or future effect on our financial condition, revenues, expenses, cash flows, results of operations, liquidity, capital expenditures, or capital resources.

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 are a partner in a joint venture with one of our suppliers and own minority interest investments in two other suppliers. Aggregate purchases from both of these companies were $18.4$24.8 million, $22.7$18.4 million, and $24.9$22.7 million in the years ended December 31, 2025, 2024, and 2023, and 2022, respectively.

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 salessales, 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.

As of December 31, 2025, we marketed approximately 144,000 distinct parts compared to approximately 138,000 as of December 31, 2024,parts, 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.

In the threesix months ended MarchJune 28,27, 2026, we introduced 9361,885 new distinct parts to our customers and end-users, including 229528 “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.

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.years. 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.

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 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 through the first quarterhalf of 2026, and, if high prices persist, they may negatively impact miles driven as consumers reduce travel or seek alternative methods of transportation.

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 facilityagreement bear interest at variable rates tied to Term SOFR or the applicable base rate. Under the terms of the credit facility,agreement, 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 generally declined starting in the second half of 2025 and through the first quarter of 2026.

We have taken actions designed to mitigate the impact of these cost increases, 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 price increases to mitigate the cost increases while also considering the competitive dynamic of our parts in the marketplace. We experienced an increase in gross margin in the second half of 2025 due to the timing of price actions taking effect before the higher tariff costs were recognized as an expense in our Statement of Operations and Comprehensive Income. Gross margin decreased beginning in the first quarter of 2026 as we recognized the higher tariff costs in our Statement of Operations and Comprehensive Income.

In February 2026, the U.S. Supreme Court ruled against certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA"). The ruling did not address refunds of IEEPA tariffs paid. However, in March 2026, the Court of International Trade (“CIT”) ordered U.S. Customs and Border Protection (“CBP”) to begin the refund process for all importers who were subject to IEEPA duties. CIT's order may be subject to U.S. government challenge. We are the importer of record for certain products that were previously subject to tariffs under IEEPA. WhileDuring the three months ended June 27, 2026, we intend to pursuerecorded refunds for IEEPA tariffs, there can be no assurance that we will receive all or any portion of such refunds.previously Nopaid adjustmentstariffs havetotaling been$98.1 recordedmillion, inincluding thea accompanyingreceivable unauditedof condensed$19.7 consolidatedmillion financialfor statements.amounts that remained uncollected as of June 27, 2026.

FollowingThe U.S. Administration has taken several tariff-related actions following the Supreme Court’sCourt's decision, theincluding U.S.adopting Administration announced its intention to invoke other laws to collecttemporary tariffs under Section 122 of the Trade Act of 1974, which expired on July 24, 2026, and announcedadopting new tariffs under Section 301 of the Trade Act of 1974 on imports from alla broad range of countries, inwhich additionbecame effective upon the expiration of the Section 122 tariffs. The current tariff environment remains uncertain, and there can be no assurance as 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,imposed or suspended, andwhat the impacts of such actions may be 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.

Three Months Ended MarchJune 28,27, 2026, Compared to Three Months Ended MarchJune 29,28, 2025

Net sales increased $21.1$3.6 million, or 4.2%,0.7%, for the three months ended MarchJune 28,27, 2026, compared to the prior year period, primarily driven by tariff-related pricing actions enacted during the second half of 2025 across our segments, partially offset by lower volume when compared to the strong sales in the priorlight yearduty period.and specialty vehicle sectors, and market-based price concessions.

Gross profit as a percentage of net sales decreasedincreased 490550 basis points compared to the prior year period, primarily due to higherlower net tariff costs resulting from recognition of IEEPA refunds, which added 820 basis points to gross profit as a percentage of net sales in the current year period, partially offset by supplier diversification, productivity, and automation initiatives.period.

Selling, general, and administrative expenses (“SG&A”) decreased 3050 basis points as a percentage of net sales for the three months ended MarchJune 28,27, 2026, compared to the prior year period, due to favorablecontinued leverageoperational from higher net salesimprovement and lower factoring costs.

Our effective tax rate of 22.5%24.0% for the three months ended MarchJune 28,27, 2026, was slightly higher than our effective tax rate of 22.4%23.6% for the three months ended MarchJune 29,28, 2025.

Light Duty net sales increasedwere $14.9 million, or 3.6%,flat for the three months ended MarchJune 28,27, 2026, compared to the prior year period, primarily due to tariff-related pricing actions enacted during the second half of 2025, partially offset by lower volumevolume, when compared to the strong sales in the prior year period.period, and market-based price concessions.

Light Duty segment income from operations as a percentage of net sales decreasedincreased to 14.1%24.7% for the three months ended MarchJune 28,27, 2026, from 19.9%18.5% for the three months ended MarchJune 29,28, 2025. This decreaseincrease was primarily driven by higherlower net tariff costs,costs andresulting from recognition of IEEPA refunds, which added 910 basis points to segment income from operations as a percentage of net sales in the current year period, partially offset by higher wage and benefits costs in the current year period, partially offset by supplier diversification, productivity, and automation initiatives, and lower factoring costs.period.

Heavy Duty net sales increased $6.1$4.2 million, or 11.9%,6.8%, for the three months ended MarchJune 28,27, 2026, compared to the prior year period, primarily reflecting tariff-related pricing actions.actions and business wins in certain categories and channels.

Heavy Duty segment income as a percentage of net sales increased 110340 basis points, to 0.8%4.2% for the three months ended MarchJune 28,27, 2026. This increase was primarily driven by lower net tariff costs resulting from recognition of IEEPA refunds, which added 190 basis points to segment income from operations as a percentage of net sales in the current year period, and favorable leverage onfrom higher net sales.

Specialty Vehicle net sales were flat,flat for the three months ended MarchJune 28,27, 2026, compared to the prior year period, primarily due to tariff-related pricing actions in certain categories that were offset byas reduced customer demand in the specialty vehicle sector.sector was partially offset by tariff-related pricing actions in certain categories.

Specialty Vehicle segment income as a percentage of net sales decreasedincreased to 8.7%26.1% for the three months ended MarchJune 28,27, 2026, from 10.2%17.3% for the three months ended MarchJune 29,28, 2025. This decreaseincrease was primarily driven by higherlower net tariff costs.costs resulting from recognition of IEEPA refunds, which added 830 basis points to segment income from operations as a percentage of net sales in the current year period.

If receivables had not been sold, $1,070.6$1,044.1 million and $1,093.1 million of additional receivables would have been outstanding at MarchJune 28,27, 2026, and December 31, 2025, respectively, based on standard payment terms. Further extensions of customer payment terms would result in additional cash usage or increased costs associated with the sales of accounts receivable.

For the threesix months ended MarchJune 28,27, 2026, cash provided by operating activities decreasedincreased $7.5$136.6 million from the prior year periodperiod, primarily due to $81.5 million of IEEPA refunds and related interest received, as awell result of lower net income and reduced cash from sales of accounts receivable, partially offset byas the benefits of inventory reductions in the current year.year, partially offset by lower sales of accounts receivable.

Investing activities used cash of $8.4$10.3 million and $11.0$19.4 million during the threesix months ended MarchJune 28,27, 2026, and MarchJune 29,28, 2025, respectively, reflecting timing of spending on capital investments. The six months ended June 27, 2026, also included $7.2 million of proceeds from the sale of an investment.

Financing activities during the threesix months ended MarchJune 28,27, 2026, included $50.5$97.3 million paid to repurchase 425,174825,213 shares of common stock, as well as $450.0 million of proceeds received from the issuance of our Senior Notes and the repayment of $440.6 million of outstanding borrowings under our revolving credit agreement ofprior $15.0to million.the amendment. During the threesix months ended MarchJune 29,28, 2025, we paid $11.8$15.3 million to repurchase 93,800122,923 shares of common stock, and repaid $20.3$20.2 million of outstanding borrowings under our credit agreement.