Key Highlights

  • Dorman Products (NASDAQ:DORM) reported third-quarter net sales of USD 561.7 million on October 26, 2026, up 3.3%, with adjusted diluted EPS of USD 2.08 against USD 2.62 a year earlier, a 21% decline.
  • Gross margin fell to 39.4% from 44.4% because tariff-related pricing had boosted the third quarter of 2025, according to management, while sales grew in all three segments.
  • Full-year net sales growth guidance was cut to 2% to 3% from 3% to 5%, and adjusted EPS guidance was narrowed to USD 8.50 to 8.70 from USD 8.50 to 8.80.
  • The company bought back USD 15 million of stock in the quarter and a record USD 112 million year to date, and held USD 167.0 million of cash.

Results and the Margin Gap

Dorman sells aftermarket replacement parts for cars, trucks and specialty vehicles. Third-quarter net sales rose 3.3% from USD 543.7 million. Light Duty sales were USD 443.7 million, up 3%, Heavy Duty USD 66.1 million, up 5%, and Specialty Vehicle USD 51.9 million, up 3%. Diluted EPS was USD 1.98 against USD 2.48, and adjusted EPS of USD 2.08 beat a consensus of USD 2.00 in published market data even though it fell 21% year over year. Management attributed the decline to the timing of tariff-related pricing that benefited the third quarter of 2025, which lifted the prior-year margin. SG&A rose to USD 138.7 million, or 24.7% of sales, from USD 135.7 million.

Segments, Cash and Guidance

In the segment table, Light Duty margin fell to 18.5% from 23.7%, and Heavy Duty fell to 0.0% from 4.5%, while Specialty Vehicle improved to 13.1% from 12.8%. Operating cash flow was USD 64.6 million in the quarter and USD 260.9 million year to date. Long-term debt rose to USD 440.7 million from USD 402.4 million at year-end 2025. For 2026, net sales growth guidance moved to 2% to 3%, diluted EPS to USD 7.95 to 8.15, and adjusted EPS to USD 8.50 to 8.70, implying a decline of 4% to 2% on 2025. Guidance includes tariffs enacted as of October 26, 2026 but excludes later changes.

Risks and What to Watch

CEO Kevin Olsen called the quarter solid, cited growth across all three segments from new products and business wins, and said the narrowed guidance reflects nine-month performance and expected fourth-quarter pricing actions. The main risk is that tariffs and supplier costs keep margins at Dorman Products (NASDAQ:DORM) below last year's levels while pricing lags. Operating cash flow of USD 260.9 million in nine months gives it room to absorb that pressure. Heavy Duty earned no segment profit, and a lower sales guide suggests demand is slower than planned. The company has capacity to return cash, with USD 167.0 million on hand, but buybacks do not fix margins. Investors will watch fourth-quarter pricing actions and any new tariff changes after October 26, 2026.

Where Things Stand

The answer is that Dorman cut its 2026 sales growth range to 2% to 3% because the tariff pricing benefit it enjoyed in the third quarter of 2025 has not repeated and demand growth is modest. Adjusted EPS of USD 2.08 still beat consensus, and the adjusted EPS range of USD 8.50 to 8.70 implies a fall of up to 4% for the year. Dorman Products (NASDAQ:DORM) has cash and a record buyback pace, but margin recovery depends on fourth-quarter pricing. This is not investment advice.