On this page of StockholderLetter.com we present the 4/4/2023 shareholder letter from Dorman Products, Inc. — ticker symbol DORM. Reading current and past DORM letters to shareholders can bring important insights into the investment thesis.
www.dormanproducts.com Giving repair professionals, enthusiasts and owners greater freedom to fix motor vehicles. 2022 ANNUAL REPORT
ANNUAL REPORT LETTER TO SHAREHOLDERS To Our Fellow Shareholders: Fiscal 2022 was another year of record financial results for Dorman, achieved in a challenging business environment. We successfully navigated unprecedented global supply chain disruptions, COVID-related delays and closures experienced by many of our global suppliers, several quarters of extraordinary inflationary pressures, and rising interest rates. Our team of Contributors faced those challenges straight on and focused on driving efficiencies, controlling costs, and implementing price increases while continuing to execute against our strategic initiatives. Customer demand remained robust throughout 2022, and we leveraged both our long-standing relationships with our global supply chain partners and our internal manufacturing capabilities to ensure that we had the right products at the right location to meet our customers requirements, enabling us to grow faster than the overall market. Our results are a testament to the dedication and resiliency of our Contributors, whose passion and drive made our 2022 financial results possible. In October 2022, we grew the Dorman family with the acquisition of SuperATV, the largest acquisition in our history. SuperATV 2022 ANNUAL REPORT expands our product portfolio into the powersports aftermarket through a family of highly respected brands spanning functional accessories and upgrades, as well as break-fix replacement parts. The combination aligns with our strategy to diversify our customer base and product offering by providing a compelling entry point to the large and rapidly growing powersports industry. We are confident we can leverage Dorman s playbook to further accelerate SuperATV s growth and are excited about the benefits the combined company will generate for our customers and shareholders. Other highlights from 2022 include: Growing net sales by 29% (14% excluding the impact of acquisitions), outpacing the overall estimated market growth. Delivering 3% growth in adjusted diluted earnings per share. Increasing the number of launched New to the Aftermarket skus by 58% year-over-year. Opening a new 827,000 square foot distribution center in Whiteland, IN to increase our capacity. Completing the integration of Dayton Parts, whose financial results exceeded our expectations.
2022 ANNUAL REPORT Publishing our inaugural Environmental, Social and Governance (ESG) report. Innovation and new product development continued to be a strategic focus for Dorman throughout the year, with a customer-first approach keeping owners and installers in mind. Our engineers and designers remained focused on creating differentiated solutions designed to help repair technicians save time and vehicle owners save money. We continued to build our capabilities in advanced technology automotive components with the introduction of several complex electronics modules. We believe that the capabilities we have built in complex electronics over the last decade provide us with a competitive advantage. Our objective is to continue to deliver products that not only drive sales and profits for our customers, but also provide the solutions that professional technicians and do-it-yourselfers want. Being a successful innovator and an aftermarket leader requires increased brand recognition and awareness. As part of our initiative to strengthen Dorman s well-established name and reputation in the industry, we continued to grow our onsite and virtual technician training programs, training over 92,000 automotive repair technicians in 2022. We also increased our investment and presence in marketing and digital media, including social media, influencer relationships, and the distribution of popular content like our annual Dorman OE FIX Guide that promotes our brand and highlights our new products. In 2022, we also launched Shop Press, an online news and idea hub featuring articles targeted at service technicians, do-it-yourselfers, and motor vehicle enthusiasts. As a result of these efforts and our commitment to providing innovative solutions, the Dorman brand is a market leader in awareness, usage, and advocacy. Turning to capital allocation, our strategy remained focused on both internal and external growth opportunities, with organic investment remaining a top priority followed by acquisitions that met our strategic criteria. The acquisition of SuperATV was the M&A highlight of 2022 and was financed with a new credit facility which we believe provides us with the liquidity to execute our strategic growth initiatives. Returning excess cash to shareholders opportunistically through our share buyback program also remained a cornerstone of our capital allocation strategy. In 2022, we repurchased 180,750 shares of our common stock for a total of $17.6 million and had $228.0 million of availability remaining under our current share repurchase authorization as of December 31, 2022. Looking ahead, demand remains robust for our products driven by strong macro fundamentals across the motor vehicle aftermarket. Vehicle miles driven continue to increase, the average age of vehicles continues to rise, the number of cars in our 8 to 13-year-old sweetspot for the aftermarket continues to grow, and a shortage of new vehicles all benefit the aftermarket. We expect these macro demand trends will continue throughout 2023. We are also encouraged by the easing of inflationary costs we have seen over the past several months and anticipate meaningful gross margin improvement as we progress through 2023, approaching historical levels. Further, we anticipate inventory levels to meaningfully decline throughout 2023 due to lower lead times and lower material and freight costs, and in the short term, we plan to utilize excess cash generated from lower inventory requirements to reduce our debt. These developments make us very optimistic about 2023. Overall, while there remains a level of uncertainty in the global environment, I firmly believe that we have the right strategies, processes, tools and, most importantly, people in place to successfully steer our way through whatever opportunities and challenges lie ahead. I believe that our Culture of Contribution is a strategic advantage as our Contributors are passionate about innovation not only in our new product development engine but also in every other facet of the business. The collective creative energy from these efforts will be the fuel that drives Dorman s success in 2023 and beyond. I want to thank our Contributors, customers, suppliers, shareholders and other key stakeholders for your unwavering confidence and support. Kevin M. Olsen President & CEO This letter includes statements that, to the extent they are not recitations of historical fact, constitute forward-looking statements within the meaning of the federal securities laws, and are based on Dorman s current expectations and assumptions. For a discussion identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, see Dorman s filings with the U.S. Securities and Exchange Commission, including, but not limited to, Risk Factors in the Form 10-K portion of this Annual Report. Adjusted diluted earnings per share is a Non-GAAP measure. A reconciliation of adjusted diluted earnings per share to diluted earnings per share is included on the page preceding the inside back cover of this Annual Report. WWW.DORMANPRODUCTS.COM
ANNUAL REPORT THE STORY OF DORMAN PRODUCTS Dorman s story begins with the mass market automobile. The first moving assembly line was introduced in 1913, accelerating car manufacturing and making vehicles more affordable. Early cars offered people the newfound freedom of mobility. However, to maintain this freedom, people now needed to maintain their vehicles. Only a few years later, in 1918, Jack and Lew Dorman, two enterprising brothers from Cincinnati, discovered that many people couldn t find the basic parts they needed to repair their cars. They started a company named Dorman Products, selling hard-to-find automotive hardware sourced from salvaged vehicles. The Dormans soon found success manufacturing star washers, and expanded into selling other hardware, like brake adjusting screws and center spring bolts. Over time, the company s product lines grew to include dozens of different small part categories, like bearings, caps, clamps, fittings, hoses and springs. 2022 ANNUAL REPORT Merchandising was where Dorman really made its mark in the aftermarket. Various assortments and inventory systems revolutionized the small parts business, and many of these vintage orange shelves, trays, bins and display stands are now highly sought-after collector items. In 1978, two other brothers, Richard and Steven Berman, started their own company selling small replacement parts outside Philadelphia. Seeing that there were many simple products that people couldn t buy from anyone else except original equipment manufacturers, they founded R&B Inc. to deliver more convenient and affordable solutions. They became best known under the brand name Motormite Manufacturing, which launched many popular product lines like HELP! and Conduct-Tite . After competing for decades, Motormite acquired Dorman in 1994. In 2006, the two companies further unified under the single Dorman Products brand. Today the company is publicly listed on the Nasdaq stock exchange under the ticker DORM.
2022 ANNUAL REPORT Dorman is now 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 and all-terrain vehicles. Dorman has more than a dozen facilities and 3,786 employees worldwide*. Headquartered in Colmar, Pennsylvania, Dorman offers more than 4,443 distinct products.* As vehicles have evolved, so have we. Far from the early days of simple components, Dorman now delivers some of the most advanced replacement parts in the aftermarket, like ABS modules, electronic throttle bodies and VVT solenoids. Many of our OE FIX parts solve common problems customers have with the OEM alternative, reducing repair cost and installation time, and increasing reliability and serviceability. The original drive of the Dorman and Berman brothers still guides the company today. Just as both sets of brothers saw a need to give people better options for maintaining automobiles, we continue to give repair professionals and vehicle owners greater freedom to fix cars and trucks. Dorman was one of the first companies to provide these solutions, and we continue to be first to market with new solutions every day. Learn more at DormanProducts.com/tour. *As of December 31, 2022. SELECTED CONSOLIDATED FINANCIAL DATA Fiscal Year Ended (in thousands, except per share data) 2022 2021 2020 2019 2018 $1,733,749 $1,345,249 $1,092,748 $991,329 $973,705 28.9% 23.1% 10.2% 1.8% 7.8% 564,450 462,916 383,116 339,825 373,281 Gross profit margin 32.6% 34.4% 35.1% 34.3% 38.3% Income from operations 171,048 171,551 133,373 105,828 171,143 9.9% 12.8% 12.2% 10.7% 17.6% 121,549 131,532 106,870 83,762 133,602 $3.85 $4.12 $3.30 $2.56 $4.02 $4.76 $4.64 $3.45 $2.65 $4.20 Cash and cash equivalents $46,034 $58,782 $155,576 $68,353 $43,458 Outstanding debt under credit agreement 736,238 239,360 Cash provided by operating activities 41,688 100,338 151,966 95,306 78,112 Capital expenditures 37,883 19,840 15,450 29,560 26,106 3,805 80,498 136,516 65,746 52,006 488,956 345,483 14,808 28,040 17,577 61,583 36,781 39,387 43,386 Statement of Operations Data: Net sales Sales Growth Gross profit Operating margin Net income Earnings per share: Diluted Adjusted diluted Balance Sheet and Cash Flow Data: Free cash flow Cash used for acquisitions, net of cash acquired Share repurchases under repurchase program Non-GAAP measures. See NOTE below. NOTE: For additional information regarding the amounts presented above, see the Form 10-K portion of this Annual Report. Reconciliations of adjusted diluted earnings per share to diluted earnings per share and free cash flow to cash provided by operating activities are included on the page preceding the back cover of this Annual Report. WWW.DORMANPRODUCTS.COM
 • shareholder letter icon 4/4/2023 Letter Continued (Full PDF)
 • stockholder letter icon 4/8/2024 DORM Stockholder Letter
 • stockholder letter icon 4/7/2025 DORM Stockholder Letter
 • stockholder letter icon More "Auto Parts" Category Stockholder Letters
 • Benford's Law Stocks icon DORM Benford's Law Stock Score = 85


DORM 4/4/2023 Shareholder/Stockholder Letter Transcript:

www.dormanproducts.com
Giving repair professionals, enthusiasts and owners
greater freedom to fix motor vehicles.
2022
ANNUAL REPORT

ANNUAL REPORT
LETTER TO
SHAREHOLDERS
To Our Fellow Shareholders:
Fiscal 2022 was another year of record financial
results for Dorman, achieved in a challenging
business environment. We successfully
navigated unprecedented global supply chain
disruptions, COVID-related delays and closures
experienced by many of our global suppliers,
several quarters of extraordinary inflationary
pressures, and rising interest rates. Our team of
Contributors faced those challenges straight on
and focused on driving efficiencies, controlling
costs, and implementing price increases while
continuing to execute against our strategic
initiatives. Customer demand remained
robust throughout 2022, and we leveraged
both our long-standing relationships with our
global supply chain partners and our internal
manufacturing capabilities to ensure that we
had the right products at the right location to
meet our customers    requirements, enabling
us to grow faster than the overall market. Our
results are a testament to the dedication and
resiliency of our Contributors, whose passion
and drive made our 2022 financial results
possible.
In October 2022, we grew the Dorman
family with the acquisition of SuperATV, the
largest acquisition in our history. SuperATV
2022 ANNUAL REPORT
expands our product portfolio into the
powersports aftermarket through a family of
highly respected brands spanning functional
accessories and upgrades, as well as break-fix
replacement parts. The combination aligns
with our strategy to diversify our customer base
and product offering by providing a compelling
entry point to the large and rapidly growing
powersports industry. We are confident we
can leverage Dorman   s playbook to further
accelerate SuperATV   s growth and are excited
about the benefits the combined company will
generate for our customers and shareholders.
Other highlights from 2022 include:
    Growing net sales by 29% (14% excluding the
impact of acquisitions), outpacing the overall
estimated market growth.
    Delivering 3% growth in adjusted diluted
earnings per share.
    Increasing the number of launched    New to
the Aftermarket    skus by 58% year-over-year.
    Opening a new 827,000 square foot
distribution center in Whiteland, IN to
increase our capacity.
    Completing the integration of Dayton
Parts, whose financial results exceeded our
expectations.

2022 ANNUAL REPORT
    Publishing our inaugural Environmental, Social and
Governance (ESG) report.
Innovation and new product development continued
to be a strategic focus for Dorman throughout the
year, with a customer-first approach keeping owners
and installers in mind. Our engineers and designers
remained focused on creating differentiated solutions
designed to help repair technicians save time and
vehicle owners save money. We continued to build
our capabilities in advanced technology automotive
components with the introduction of several complex
electronics modules. We believe that the capabilities
we have built in complex electronics over the last
decade provide us with a competitive advantage. Our
objective is to continue to deliver products that not
only drive sales and profits for our customers, but also
provide the solutions that professional technicians
and do-it-yourselfers want.
Being a successful innovator and an aftermarket
leader requires increased brand recognition and
awareness. As part of our initiative to strengthen
Dorman   s well-established name and reputation in the
industry, we continued to grow our onsite and virtual
technician training programs, training over 92,000
automotive repair technicians in 2022. We also
increased our investment and presence in marketing
and digital media, including social media, influencer
relationships, and the distribution of popular
content like our annual Dorman   OE FIX    Guide
that promotes our brand and highlights our new
products. In 2022, we also launched Shop Press, an
online news and idea hub featuring articles targeted
at service technicians, do-it-yourselfers, and motor
vehicle enthusiasts. As a result of these efforts and
our commitment to providing innovative solutions, the
Dorman brand is a market leader in awareness, usage,
and advocacy.
Turning to capital allocation, our strategy remained
focused on both internal and external growth
opportunities, with organic investment remaining
a top priority followed by acquisitions that met our
strategic criteria. The acquisition of SuperATV was
the M&A highlight of 2022 and was financed with
a new credit facility which we believe provides us
with the liquidity to execute our strategic growth
initiatives. Returning excess cash to shareholders
opportunistically through our share buyback program
also remained a cornerstone of our capital allocation
strategy. In 2022, we repurchased 180,750 shares
of our common stock for a total of $17.6 million and
had $228.0 million of availability remaining under
our current share repurchase authorization as of
December 31, 2022.
Looking ahead, demand remains robust for our
products driven by strong macro fundamentals
across the motor vehicle aftermarket. Vehicle
miles driven continue to increase, the average age
of vehicles continues to rise, the number of cars in
our 8 to 13-year-old sweetspot for the aftermarket
continues to grow, and a shortage of new vehicles
all benefit the aftermarket. We expect these macro
demand trends will continue throughout 2023. We
are also encouraged by the easing of inflationary
costs we have seen over the past several months and
anticipate meaningful gross margin improvement as
we progress through 2023, approaching historical
levels. Further, we anticipate inventory levels to
meaningfully decline throughout 2023 due to lower
lead times and lower material and freight costs,
and in the short term, we plan to utilize excess cash
generated from lower inventory requirements to
reduce our debt. These developments make us very
optimistic about 2023.
Overall, while there remains a level of uncertainty
in the global environment, I firmly believe that we
have the right strategies, processes, tools and, most
importantly, people in place to successfully steer our
way through whatever opportunities and challenges
lie ahead. I believe that our Culture of Contribution
is a strategic advantage as our Contributors are
passionate about innovation not only in our new
product development engine but also in every other
facet of the business. The collective creative energy
from these efforts will be the fuel that drives Dorman   s
success in 2023 and beyond. I want to thank our
Contributors, customers, suppliers, shareholders
and other key stakeholders for your unwavering
confidence and support.
Kevin M. Olsen
President & CEO
This letter includes statements that, to the extent they are not recitations of historical fact, constitute forward-looking statements within the meaning of the federal
securities laws, and are based on Dorman   s current expectations and assumptions. For a discussion identifying important factors that could cause actual results to
differ materially from those anticipated in the forward-looking statements, see Dorman   s filings with the U.S. Securities and Exchange Commission, including, but not
limited to,    Risk Factors    in the Form 10-K portion of this Annual Report. Adjusted diluted earnings per share is a Non-GAAP measure. A reconciliation of adjusted diluted
earnings per share to diluted earnings per share is included on the page preceding the inside back cover of this Annual Report.
WWW.DORMANPRODUCTS.COM

ANNUAL REPORT
THE STORY OF
DORMAN PRODUCTS
Dorman   s story begins with the mass market
automobile.
The first moving assembly line was introduced
in 1913, accelerating car manufacturing and
making vehicles more affordable. Early cars
offered people the newfound freedom of mobility.
However, to maintain this freedom, people now
needed to maintain their vehicles.
Only a few years later, in 1918, Jack and Lew
Dorman, two enterprising brothers from
Cincinnati, discovered that many people couldn   t
find the basic parts they needed to repair their
cars. They started a company named Dorman
Products, selling hard-to-find automotive
hardware sourced from salvaged vehicles.
The Dormans soon found success manufacturing
star washers, and expanded into selling other
hardware, like brake adjusting screws and center
spring bolts. Over time, the company   s product
lines grew to include dozens of different small part
categories, like bearings, caps, clamps, fittings,
hoses and springs.
2022 ANNUAL REPORT
Merchandising was where Dorman really made
its mark in the aftermarket. Various assortments
and inventory systems revolutionized the small
parts business, and many of these vintage orange
shelves, trays, bins and display stands are now
highly sought-after collector items.
In 1978, two other brothers, Richard and Steven
Berman, started their own company selling small
replacement parts outside Philadelphia. Seeing
that there were many simple products that people
couldn   t buy from anyone else except original
equipment manufacturers, they founded R&B
Inc. to deliver more convenient and affordable
solutions. They became best known under the
brand name Motormite Manufacturing, which
launched many popular product lines like HELP!  
and Conduct-Tite  .
After competing for decades, Motormite acquired
Dorman in 1994. In 2006, the two companies
further unified under the single Dorman Products
brand. Today the company is publicly listed on the
Nasdaq stock exchange under the ticker DORM.

2022 ANNUAL REPORT
Dorman is now 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 and all-terrain
vehicles. Dorman has more than a dozen facilities and
3,786 employees worldwide*. Headquartered in Colmar,
Pennsylvania, Dorman offers more than 4,443 distinct
products.*
As vehicles have evolved, so have we. Far from the early
days of simple components, Dorman now delivers
some of the most advanced replacement parts in the
aftermarket, like ABS modules, electronic throttle
bodies and VVT solenoids. Many of our OE FIX    parts
solve common problems customers have with the OEM
alternative, reducing repair cost and installation time,
and increasing reliability and serviceability.
The original drive of the Dorman and Berman brothers
still guides the company today. Just as both sets of
brothers saw a need to give people better options for
maintaining automobiles, we continue to give repair
professionals and vehicle owners greater freedom to fix
cars and trucks. Dorman was one of the first companies
to provide these solutions, and we continue to be first to
market with new solutions every day.
Learn more at DormanProducts.com/tour.
*As of December 31, 2022.
SELECTED CONSOLIDATED FINANCIAL DATA
Fiscal Year Ended
(in thousands, except per share data)
2022
2021
2020
2019
2018
$1,733,749
$1,345,249
$1,092,748
$991,329
$973,705
28.9%
23.1%
10.2%
1.8%
7.8%
564,450
462,916
383,116
339,825
373,281
Gross profit margin
32.6%
34.4%
35.1%
34.3%
38.3%
Income from operations
171,048
171,551
133,373
105,828
171,143
9.9%
12.8%
12.2%
10.7%
17.6%
121,549
131,532
106,870
83,762
133,602
$3.85
$4.12
$3.30
$2.56
$4.02
$4.76
$4.64
$3.45
$2.65
$4.20
Cash and cash equivalents
$46,034
$58,782
$155,576
$68,353
$43,458
Outstanding debt under credit
agreement
736,238
239,360



Cash provided by operating
activities
41,688
100,338
151,966
95,306
78,112
Capital expenditures
37,883
19,840
15,450
29,560
26,106
3,805
80,498
136,516
65,746
52,006
488,956
345,483
14,808

28,040
17,577
61,583
36,781
39,387
43,386
Statement of Operations Data:
Net sales
Sales Growth
Gross profit
Operating margin
Net income
Earnings per share:
Diluted
Adjusted diluted

Balance Sheet and Cash Flow Data:
Free cash flow   
Cash used for acquisitions,
net of cash acquired
Share repurchases under
repurchase program

Non-GAAP measures. See NOTE below.
NOTE: For additional information regarding the amounts presented above, see the Form 10-K portion of this Annual Report. Reconciliations of adjusted
diluted earnings per share to diluted earnings per share and free cash flow to cash provided by operating activities are included on the page preceding
the back cover of this Annual Report.
WWW.DORMANPRODUCTS.COM



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