(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of October ~~26, 2020,~~21, 2021 the registrant had ~~32,286,697~~31,623,755 shares of common stock, par value $0.01 per share, outstanding.

	Three Months Ended					Nine Months Ended				Three Months Ended						Nine Months Ended
(in thousands, except per share data)	September 26, 2020			September 28, 2019		September 26, 2020		September 28, 2019		September 25, 2021			September 26, 2020			September 25, 2021			September 26, 2020
Net sales	$	300,620		$	253,796	$	791,532	$	751,762	$	348,426		$	300,620		$	947,073		$	791,532
Cost of goods sold		192,819			166,872		519,786		490,199		231,572			192,819			615,574			519,786
Gross profit		107,801			86,924		271,746		261,563		116,854			107,801			331,499			271,746
Selling, general and administrative expenses		63,028			59,961		184,288		177,637		72,663			63,028			205,049			184,288
Income from operations		44,773			26,963		87,458		83,926		44,191			44,773			126,450			87,458
Other (expense) income, net		(17	)		33		2,317		90
Interest expense, net											733			63			918			545
Other income, net											(95	)		(46	)		(334	)		(2,862	)
Income before income taxes		44,756			26,996		89,775		84,016		43,553			44,756			125,866			89,775
Provision for income taxes		10,497			5,688		18,856		17,803		10,449			10,497			28,414			18,856
Net income	$	34,259		$	21,308	$	70,919	$	66,213	$	33,104		$	34,259		$	97,452		$	70,919

Earnings per share:
Basic	$	1.06		$	0.66	$	2.19	$	2.03	$	1.04		$	1.06		$	3.06		$	2.19
Diluted	$	1.06		$	0.65	$	2.19	$	2.02	$	1.04		$	1.06		$	3.04		$	2.19
Weighted average shares outstanding:
Basic		32,281			32,522		32,317		32,656		31,692			32,281			31,895			32,317
Diluted		32,371			32,594		32,394		32,738		31,842			32,371			32,039			32,394

(in thousands, except for share data)	September 26, 2020		December 28, 2019		September 25, 2021		December 26, 2020
Assets
Current assets:
Cash and cash equivalents	$	170,502	$	68,353	$	57,263	$	155,576
Accounts receivable, less allowance for doubtful accounts of $1,202 and $957		405,312		391,810
Accounts receivable, less allowance for doubtful accounts of $1,248 and $1,260						463,113		460,878
Inventories		283,292		280,813		475,462		298,719
Prepaids and other current assets		11,769		13,614		17,297		7,758
Total current assets		870,875		754,590		1,013,135		922,931
Property, plant and equipment, net		94,217		101,837		116,309		91,009
Operating lease right-of-use assets		35,925		32,198		57,698		39,002
Goodwill		91,148		74,458		200,026		91,080
Intangible assets, net		26,054		21,305		182,827		25,207
Deferred tax asset, net		4,281		4,336		—		12,450
Other assets		36,333		52,348		45,853		38,982
Total assets	$	1,158,833	$	1,041,072	$	1,615,848	$	1,220,661
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	112,757	$	90,437	$	149,925	$	117,878
Accrued compensation		17,731		9,782		21,081		19,711
Accrued customer rebates and returns		130,592		105,903		180,594		155,751
Revolving credit facility						249,360		—
Other accrued liabilities		18,320		14,380		21,800		29,305
Total current liabilities		279,400		220,502		622,760		322,645
Long-term operating lease liabilities		34,433		29,730		52,530		37,083
Other long-term liabilities		9,629		13,297		4,706		3,555
Deferred tax liabilities, net		4,006		3,959		31,328		3,819
Commitments and contingencies
Shareholders’ Equity:
Common stock, par value $0.01; authorized 50,000,000 shares; issued and outstanding 32,304,686 and 32,558,168 in 2020 and 2019, respectively		324		326
Commitments and contingencies (Note 7)
Shareholders’ equity:
Common stock, $0.01 par value; 50,000,000 shares authorized; 31,658,703 and 32,168,740 shares issued and outstanding in 2021 and 2020, respectively						317		322
Additional paid-in capital		56,893		52,605		73,325		64,085
Retained earnings		774,148		720,653		830,882		789,152
Total shareholders’ equity		831,365		773,584		904,524		853,559
Total liabilities and shareholders' equity	$	1,158,833	$	1,041,072	$	1,615,848	$	1,220,661

																Three Months Ended September 25, 2021
																Common Stock														��
(in thousands, except share data)																Shares Issued			Par Value			Additional Paid-In Capital			Retained Earnings			Total
Balance at June 26, 2021																	31,891,890		$	319		$	71,947		$	820,719		$	892,985
Exercise of stock options																	2,260			—			173			—			173
Compensation expense under Incentive Stock Plan																	—			—			1,721			—			1,721
Purchase and cancellation of common stock																	(234,044	)		(2	)		(421	)		(22,941	)		(23,364	)
Cancellation of non-vested stock, net of issuances																	(537	)		—			—			—			—
Other stock-related activity, net of tax																	(866	)		—			(95	)		—			(95	)
Net income																	—			—			—			33,104			33,104
Balance at September 25, 2021																	31,658,703		$	317		$	73,325		$	830,882		$	904,524

	Three Months Ended September 26, 2020															Three Months Ended September 26, 2020
	Common Stock						Additional									Common Stock
(in thousands, except share data)	Shares Issued			Par Value			Paid-In Capital			Retained Earnings			Total			Shares Issued			Par Value			Additional Paid-In Capital			Retained Earnings			Total
Balance at June 27, 2020		32,440,413		$	326		$	55,406		$	751,400		$	807,132			32,440,413		$	326		$	55,406		$	751,400		$	807,132
Exercise of stock options		2,886			—			—			—			—			2,886			—			—			—			—
Compensation expense under Incentive Stock Plan		—			—			1,248			—			1,248			—			—			1,248			—			1,248
Purchase and cancellation of common stock		(135,787	)		(1	)		(244	)		(11,203	)		(11,448	)		(135,787	)		(1	)		(244	)		(11,203	)		(11,448	)
Issuance of non-vested stock, net of cancellations		(2,937	)		(1	)		—			—			(1	)
Other stock related activity, net of tax		111			—			483			(308	)		175
Cancellation of non-vested stock, net of issuances																	(2,937	)		(1	)		—			—			(1	)
Other stock-related activity, net of tax																	111			—			483			(308	)		175
Net income		—			—			—			34,259			34,259			—			—			—			34,259			34,259
Balance at September 26, 2020		32,304,686		$	324		$	56,893		$	774,148		$	831,365			32,304,686		$	324		$	56,893		$	774,148		$	831,365

	Three Months Ended September 28, 2019
	Common Stock						Additional
(in thousands, except share data)	Shares Issued			Par Value			Paid-In Capital			Retained Earnings			Total
Balance at June 29, 2019		32,781,331		$	328		$	51,514		$	698,490		$	750,332
Exercise of stock options		85			—			—			—			—
Compensation expense under Incentive Stock Plan		—			—			986			—			986
Purchase and cancellation of common stock		—			—			—			—			—
Issuance of non-vested stock, net of cancellations		6,593			—			—			—			—
Other stock related activity, net of tax		(456	)		—			51			(85	)		(34	)
Net income		—			—			—			21,308			21,308
Balance at September 28, 2019		32,787,553		$	328		$	52,551		$	719,713		$	772,592

																Nine Months Ended September 25, 2021
																Common Stock
(in thousands, except share data)																Shares Issued			Par Value			Additional Paid-In Capital			Retained Earnings			Total
Balance at December 26, 2020																	32,168,740		$	322		$	64,085		$	789,152		$	853,559
Exercise of stock options																	19,606			—			909			—			909
Compensation expense under Incentive Stock Plan																	—			—			6,212			—			6,212
Purchase and cancellation of common stock																	(539,075	)		(5	)		(970	)		(53,638	)		(54,613	)
Issuance of non-vested stock, net of cancellations																	19,984			—			2,493			—			2,493
Other stock related activity, net of tax																	(10,552	)		—			596			(2,084	)		(1,488	)
Net income																	—			—			—			97,452			97,452
Balance at September 25, 2021																	31,658,703		$	317		$	73,325		$	830,882		$	904,524

	Nine Months Ended September 26, 2020															Nine Months Ended September 26, 2020
	Common Stock						Additional									Common Stock
(in thousands, except share data)	Shares Issued			Par Value			Paid-In Capital			Retained Earnings			Total			Shares Issued			Par Value			Additional Paid-In Capital			Retained Earnings			Total
Balance at December 28, 2019		32,556,263		$	326		$	52,605		$	720,653		$	773,584			32,556,263		$	326		$	52,605		$	720,653		$	773,584
Exercise of stock options		2,896			—			—		—				—			2,896			—			—			—			—
Compensation expense under Incentive Stock Plan		—			—			3,966		—				3,966			—			—			3,966			—			3,966
Purchase and cancellation of common stock		(234,116	)		(2	)		(421	)		(16,890	)		(17,313	)		(234,116	)		(2	)		(421	)		(16,890	)		(17,313	)
Issuance of non-vested stock, net of cancellations		(14,782	)		—			504		—				504
Cancellation of non-vested stock, net of issuances																	(14,782	)		—			504			—			504
Other stock related activity, net of tax		(5,575	)		—			239			(534	)		(295	)		(5,575	)		—			239			(534	)		(295	)
Net income		—			—			—			70,919			70,919			—			—			—			70,919			70,919
Balance at September 26, 2020		32,304,686		$	324		$	56,893		$	774,148		$	831,365			32,304,686		$	324		$	56,893		$	774,148		$	831,365

Nine Months Ended September 28, 2019

Common Stock

Additional

(in thousands, except share data)

Shares
Issued

Par
Value

Paid-In
Capital

Retained
Earnings

Total

Balance at December 29, 2018

33,004,861

$
330

$
47,861

$
679,432

$
727,623

Exercise of stock options

11,995

—

31

—

31

Compensation expense under Incentive Stock Plan

—

—

3,033

—

3,033

Purchase and cancellation of common stock

(290,274
)

(3
)

(522
)

(23,814
)

(24,339
)
Issuance of non-vested stock, net of cancellations

70,885

1

867

—

868

Other stock related activity, net of tax

(9,914
)

—

1,281

(2,118
)

(837
)
Net income

—

—

—

66,213

66,213

Balance at September 28, 2019

32,787,553

$
328

$
52,551

$
719,713

$
772,592

	Nine Months Ended						Nine Months Ended
(in thousands)	September 26, 2020			September 28, 2019			September 25, 2021			September 26, 2020
Cash Flows from Operating Activities:
Net income	$	70,919		$	66,213		$	97,452		$	70,919
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, amortization and accretion		22,544			21,011			24,931			22,544
Gain on equity method investment		(2,498	)		—			—			(2,498	)
Provision for doubtful accounts		197			33			61			197
Benefit for deferred income taxes		(1,154	)		(302	)		(414	)		(1,154	)
Provision for stock-based compensation		4,069			3,033			6,212			4,069
Payment of contingent consideration								(2,418	)		—
Changes in assets and liabilities:
Accounts receivable		(11,685	)		28,276			20,746			(11,685	)
Inventories		3,093			(12,231	)		(97,156	)		3,093
Prepaids and other current assets		1,360			(10,174	)		(7,216	)		1,360
Other assets		(1,923	)		1,976			(3,639	)		(1,923	)
Accounts payable		20,334			(28,444	)		20,456			20,334
Accrued customer rebates and returns		24,690			(8,312	)		23,786			24,690
Accrued compensation and other liabilities		15,773			(1,429	)		(5,200	)		15,773
Cash provided by operating activities		145,719			59,650			77,601			145,719
Cash Flows from Investing Activities:
Acquisition, net of cash acquired		(14,308	)		—			(345,483	)		(14,308	)
Property, plant and equipment additions		(12,061	)		(24,656	)		(15,274	)		(12,061	)
Cash used in investing activities		(26,369	)		(24,656	)		(360,757	)		(26,369	)
Cash Flows from Financing Activities:
Proceeds of revolving credit line		99,000			—			252,360			99,000
Payments of revolving credit line		(99,000	)		—			(3,000	)		(99,000	)
Other stock related activity		112			57
Payment of contingent consideration								(7,982	)		—
Payment of debt issuance costs								(4,215	)		—
Proceeds from exercise of stock options								909			—
Other stock-related activity								1,055			112
Purchase and cancellation of common stock		(17,313	)		(24,339	)		(54,272	)		(17,313	)
Cash used in financing activities		(17,201	)		(24,282	)
Net Increase in Cash and Cash Equivalents		102,149			10,712
Cash provided by (used in) financing activities								184,855			(17,201	)
Effect of exchange rate changes on Cash and Cash Equivalents								(12	)		-
Net (Decrease) Increase in Cash and Cash Equivalents								(98,313	)		102,149
Cash and Cash Equivalents, Beginning of Period		68,353			43,458			155,576			68,353
Cash and Cash Equivalents, End of Period	$	170,502		$	54,170		$	57,263		$	170,502
Supplemental Cash Flow Information
Cash paid for interest expense	$	680		$	116		$	567		$	680
Cash paid for income taxes	$	19,575		$	28,454		$	37,500		$	19,575

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER ~~26, 2020~~25, 2021 AND SEPTEMBER ~~28, 2019~~26, 2020

As used herein, unless the context requires otherwise, “Dorman,” the “Company,” “we,” “us,” or “our” refers to Dorman Products, Inc. and its subsidiaries. Our ticker symbol on the NASDAQ Global Select Market is “DORM.”

The accompanying unaudited condensed consolidated financial statements have been prepared ~~in accordance with~~under U.S. generally accepted accounting principles (“GAAP”) for interim financial information and ~~in accordance with~~under the rules and regulations of the U.S. Securities and Exchange ~~Commission (“SEC”).~~Commission. However, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September ~~26, 2020~~25, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending ~~2020~~December 25, 2021 or any future period. We may experience significant fluctuations from quarter to quarter in our results of operations due to the timing of orders placed by our customers. The introduction of new products and product lines to customers may cause significant fluctuations from quarter to quarter. These financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the fiscal year ended December ~~28, 2019.~~26, 2020.

~~Certain prior year amounts have been reclassified to conform with current year presentation.~~

On August 10, 2021, we acquired 100% of the equity interests of Dayton Parts, a manufacturer of chassis and other parts designed to serve the heavy-duty vehicle sector of the aftermarket for a purchase price of $345.5 million in cash (net of $8.8 million of acquired cash), subject to certain customary post-acquisition purchase price adjustments.

The acquisition was funded by cash on hand as well as through the refinancing of our revolving credit facility discussed further in Note 6.

The transaction was accounted for as a business combination under the acquisition method of accounting. We have preliminarily allocated the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. We are in the process of completing the valuation of identifiable intangible assets, current and deferred taxes, fixed assets, and pre-acquisition contingencies and, therefore, the fair values set forth below are subject to adjustment upon finalizing the valuations. We expect to complete the purchase price allocation during the fourth quarter of fiscal 2021. The table below details the estimated fair values of the assets acquired and the liabilities assumed at the acquisition date:

The estimated valuation of the intangible assets acquired, and related amortization periods are as follows:

The fair values assigned to intangible assets were estimated by discounting expected cash flows based on the relief from royalty and multiperiod excess earnings valuation methodologies. These valuation methods rely on management judgment, including expected future cash flows resulting from existing customer relationships, customer attrition rates, contributory effects of other assets utilized in the business, royalty rates and other factors.

The goodwill recognized is attributable primarily to strategic and synergistic opportunities related to the Company’s and Dayton Parts’ existing automotive aftermarket businesses, the assembled workforce of Dayton Parts and other factors. The goodwill is not expected to be deductible for tax purposes.

The financial results of the acquisition have been included in the unaudited condensed consolidated financial statements since the date of acquisition. The net sales and net income of Dayton Parts included in the unaudited condensed consolidated financial statements for both the three and nine months ended September 25, 2021 were $27.4 million and $0.3 million, respectively.

The unaudited pro forma information for the periods set forth below gives effect to the Dayton Parts acquisition as if it had occurred as of December 29, 2019, the beginning of the earliest period presented in these financial statements.

The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the acquisition been consummated as of that time.

On January 2, 2020, we acquired the remaining ~~60% of the~~ outstanding stock of ~~Power Train Industries, Inc. (“PTI”), a privately-held supplier of parts to~~PTI not already owned by the ~~automotive aftermarket, based in Reno, Nevada.~~Company. The total ~~consideration paid~~purchase price for PTI was approximately $30.7 million, which included $18.4 million paid for the remaining 60% of the outstanding stock, subject to customary purchase price adjustments, and $12.3 million which represents the fair value of the previously held 40% equity interest in PTI that was acquired by the Company in 2016. As a result of the acquisition, we recorded a gain of ~~approximately~~ $2.5 million in ~~Other~~other (expense) income, net during the ~~nine months~~quarter ended ~~September 26,~~March 28, 2020 from the increase in fair value of ~~the previously owned~~our original 40% interest in PTI. We previously accounted for our 40% interest as an equity-method investment.

The transaction was accounted for as a business combination under the acquisition method of accounting. Accordingly, the assets acquired, and liabilities assumed were recorded at fair value, with the remaining purchase price recorded as goodwill.

In connection with this acquisition, we recorded $16.7 million in goodwill, $7.3 million of identified intangibles, and $6.7 million of other assets, net, consisting of $3.5 million of cash, $2.0 million of accounts receivable, $5.6 million of inventory,~~and ($4.4 million) of net other assets and liabilities.~~

The estimated fair value of the PTI assets acquired and liabilities assumed are provisional as of September 26, 2020 and are based on information that is currently available. Additional information about conditions that existed as of the date of acquisition are being gathered to finalize these provisional measurements, particularly with respect to net working capital and income taxes payable. Accordingly, the measurement of the PTI assets acquired and liabilities assumed may change upon completion of the purchase price allocation, both of which are expected to occur no later than one year from the acquisition date.

~~The valuation of the intangible assets acquired and related amortization periods are as follows:~~

~~The fair values of the customer relationships and trade names were estimated using an income approach based on the present value of future cash flows.~~

The goodwill recognized is attributable primarily to strategic and synergistic opportunities related to existing automotive aftermarket businesses, the assembled workforce of PTI and other factors. The goodwill is not expected to be deductible for tax purposes.

~~The financial results of the acquisition have been included in the condensed consolidated financial statements since the date of acquisition.~~

We have entered several ~~customer sponsored~~customer-sponsored programs administered by unrelated financial institutions that permit us to sell certain accounts receivable at discounted rates to the financial institutions. Transactions under these agreements were accounted for as sales of accounts receivable and the related accounts receivable were removed from our Condensed Consolidated Balance Sheet at the times of the sales transactions. ~~Pursuant to~~Under these agreements, we sold ~~$568.3~~$690.0 million and ~~$530.7~~$568.3 million of accounts receivable during the nine months ended September ~~26, 2020~~25, 2021 and September ~~28, 2019,~~26, 2020, respectively. All credit terms with our customers are 365 days or less. ~~If receivables had not been sold over the previous twelve months, $489.5 million~~Selling, general and ~~$437.9 million of additional accounts receivable would have been outstanding at September 26, 2020 and December 28, 2019, respectively, based on our standard payment terms. Financing~~administrative expenses include financing costs associated with these accounts receivable sales programs ~~were $1.3~~of $3.1 million and ~~$4.3~~$1.3 million during the three months ended September 25, 2021 and September 26, 2020, respectively, and ~~September 28, 2019, respectively. Financing costs associated with these accounts receivable sales programs were $10.9~~$8.6 million and ~~$13.6~~$10.9 million during the nine months ended September 25, 2021 and September 26, 2020, ~~and September 28, 2019,~~ respectively. ~~These costs were classified as selling, general and administrative expense in the Condensed Consolidated Statements of Operations.~~

Inventories include the cost of material, freight, direct labor and overhead utilized in the processing of our products and are stated at the lower of cost or net realizable value. Inventories were as follows:

(in thousands)	September 26, 2020		December 28, 2019		September 25, 2021		December 26, 2020
Raw materials					$	10,467	$	—
Bulk product	$	131,622	$	114,308		198,205		136,726
Finished product		146,967		161,866		257,141		157,484
Packaging materials		4,703		4,639		9,649		4,509
Total	$	283,292	$	280,813	$	475,462	$	298,719

(in thousands)	September 26, 2020		December 28, 2019		September 25, 2021		December 26, 2020
Balance at beginning of period	$	74,458	$	72,606	$	91,080	$	74,458
Goodwill acquired		16,690		—		108,946		16,622
Measurement period adjustments		—		1,852
Balance at end of period	$	91,148	$	74,458	$	200,026	$	91,080

			September 26, 2020						December 28, 2019						September 25, 2021						December 26, 2020
Intangible assets subject to amortization	Weighted Average Amortization Period		Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
(in thousands)
Customer relationships															$	149,150	$	9,140	$	140,010	$	25,050	$	7,141	$	17,909
Trade names		10.8	$	6,760	$	1,432	$	5,328	$	6,060	$	975	$	5,085		17,760		2,075		15,685		6,760		1,585		5,175
Customer relationships		8.9		25,050		6,530		18,520		20,450		4,698		15,752
Product Portfolio																25,300		42		25,258		—		—		—
Technology		7.8		2,167		261		1,906		367		74		293		2,167		508		1,659		2,167		323		1,844
Other		3.6		430		130		300		240		65		175		430		215		215		430		151		279
Total			$	34,407	$	8,353	$	26,054	$	27,117	$	5,812	$	21,305	$	194,807	$	11,980	$	182,827	$	34,407	$	9,200	$	25,207

Amortization expense was $1.2 million and $0.8 million ~~and $0.7 million for~~during the three months ended September 25, 2021 and September 26, 2020, respectively, and ~~September 28, 2019, respectively,~~$2.9 million and $2.5 million ~~and $2.0 million for~~during the nine months ended September 25, 2021 and September 26, 2020, ~~and September 28, 2019, respectively~~respectively..

~~In March 2020, Dorman took proactive steps to increase its cash position and preserve financial flexibility~~On August 10, 2021, in ~~light~~connection with the acquisition of ~~uncertainties from the COVID-19 pandemic by drawing down $99.0~~Dayton Parts, we entered into a new credit agreement that provides for a $600 million ~~from its~~ revolving credit facility, ~~available under its~~including a letter of credit ~~agreement. On June 29, 2020,~~sub-facility of up to $60 million (the “New Facility”). The New Facility replaced our previous $100 million revolving credit facility. The New Facility matures on August 10, 2026 and is guaranteed by the ~~first day of our fiscal third quarter,~~Company’s material domestic subsidiaries (together with the Company, ~~repaid~~ the ~~$99.0 million~~“Credit Parties”) and is supported by a security interest in substantially all of the Credit Parties’ personal property and assets, subject to certain exceptions.

Borrowings under the New Facility bear interest at a rate per annum equal to, at the Company’s option, either a LIBOR rate (subject to a 0.00% floor) or a base rate, in each case plus an applicable margin of, initially (i) in the case of LIBOR rate, 1.250% or (ii) in the case of base rate loans, 0.250%. The applicable margin for (i) base rate loans ranges from 0.000% to 1.000% per annum and (ii) for LIBOR loans ranges from 1.000% to 2.000% per annum, in each case, based on the Total Net Leverage Ratio (as defined in the New Facility). The commitment fee is initially equal to 0.150% and thereafter ranges from 0.125% to 0.250% based on the Total Net Leverage Ratio. As of September 25, 2021, the interest rate on the outstanding borrowings under ~~this revolving credit facility.~~ T~~he average~~the New Facility was 1.33% and the commitment fee was 0.15%.

The New Facility contains affirmative and negative covenants, including, but not limited to, covenants regarding capital expenditures, share repurchases, and financial covenants related to the ratio of consolidated interest ~~rate while~~expense to

ratio of total net indebtedness to consolidated EBITDA, each as defined by the New Facility. As of September 26, 2020, there were 0 borrowings under the credit agreement and 2 outstanding letters of credit for approximately $0.8 million in the aggregate which were issued to secure ordinary course of business transactions. Net of these letters of credit, there was approximately $99.2 million available under the credit agreement at September 26, 2020.

~~As of September 26, 2020,~~25, 2021, we were 0tnot in default inwith respect to the ~~credit agreement and paid $0.2 million and $0.4 million in interest during the three and nine months ended September 26, 2020, respectively.~~New Facility.

~~During 2019, we commenced a voluntary disclosure process in which we committed~~We have contingent consideration related to ~~disclosing to United States Customs & Border Protection (“CBP”)~~ certain product misclassifications and reimbursing CBP for any resulting underpayment of duties that were identified as part of a voluntary internal review conducted by the Company. The Company recorded an estimated liability of $2.8 million in its Statement of Operations for the year ended December 28, 2019, which represents the Company’s estimated underpayment of duties, after deducting its estimated overpayment of duties, to CBP due to misclassifications over the prior five-year period, which is the applicable statute of limitations, plus applicable interest.

~~In June 2020, we completed our internal review and submitted our prior disclosure statement to CBP, along with payment of $2.8 million for underpaid duties and interest. CBP has acknowledged receipt~~ of our prior ~~disclosure submission but has not yet communicated that our prior disclosure submission is closed. We intend~~acquisitions due to ~~work cooperatively with CBP~~the uncertainty of the ultimate amount of payment which will become due as earnout payments if performance targets are achieved. During the nine months ended September 25, 2021, we paid $10.4 million in contingent consideration in connection with ~~its review of our~~ prior ~~disclosure submission.~~acquisitions based upon performance targets. If the performance targets associated with prior acquisitions are fully achieved, the maximum additional contingent payments to be made under the related acquisition agreements would be $3.6 million.

We are a party to or otherwise involved in legal proceedings that arise in the ordinary course of business, such as various claims and legal actions involving contracts, employment claims, competitive practices, intellectual property infringement, product liability claims and other matters arising out of the conduct of our business. In the opinion of management, none of the actions, individually or in the aggregate, taking into account relevant insurance coverage, would likely have a material financial impact on the Company, and we believe the range of reasonably possible losses from current matters, taking into account relevant insurance coverage, is immaterial. However, legal matters are subject to inherent uncertainties, and ~~there exists~~ the possibility exists that the ultimate resolution of any of these matters could have a material adverse impact on the Company’s cash flows, financial position and results of operations in the period in which any such effects are recorded.

Our primary source of revenue is from contracts with and purchase orders from customers. ~~Revenue~~In many instances, our contract with a customer is ~~recognized from product sales when~~the customer’s purchase order. Upon acceptance of the purchase order, a contract exists with a customer as it indicates approval andcommitment of the parties, identifies the rights of both parties, identifies the payment terms, has commercial substance, and makes it probable that we will collect the consideration to which we will be entitled in exchange for the goods ~~are shipped, title and risk of loss and control have been~~ transferred to the customer, and collection is probable. We estimate the transaction price at the inception of a contract or upon fulfilling a purchase order, including any variable consideration, and will update the estimate for changes in circumstances.customer.

We record estimates for cash discounts, defective and slow-moving product returns, promotional rebates, core ~~(i.e., remanufactured parts)~~ return deposits and other discounts ~~(“customer rebates and returns”)~~ in the period the related product revenue is ~~recognized.~~recognized (“Customer Credits”). The provision for ~~customer rebates and returns~~Customer Credits is recorded as a reduction from gross sales, and reserves for Customer Credits are shown as an increase of ~~gross sales. Our obligation associated with customer rebates and returns is classified as a current liability on our condensed consolidated balance sheets (“~~accrued customer rebates and ~~returns”).~~returns. Customer Credits are estimated based on contractual provisions, historical experience, and our assessment of current market conditions. Actual ~~customer rebates and returns~~Customer Credits have not differed materially from estimated amounts for each period presented. Amounts billed to customers for shipping and handling are included in net sales. Costs associated with shipping and handling are included in cost of goods sold. We have concluded that our estimates of variable consideration are not ~~constrained under revenue recognition requirements in accordance with GAAP.~~constrained.

All our revenue was recognized under the point of time approach during the nine months ended September ~~26, 2020~~25, 2021 and September ~~28, 2019, respectively.~~26, 2020. We do not have significant financing arrangements with our customers, as our credit terms are all 365 days or less. Also, we do not receive noncash consideration (such as materials or equipment) from our customers to facilitate the fulfillment of our contracts.

The following tables present our disaggregated net sales by type of major good / product line, and geography.

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
(in thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020
Powertrain	$	120,565	$	104,756	$	323,396	$	299,730	$	136,770	$	120,565	$	386,732	$	323,396
Chassis		87,977		70,787		227,273		228,446		118,273		87,977		302,219		227,273
Automotive body		74,445		65,468		197,624		189,174		78,477		74,445		214,180		197,624
Hardware		17,633		12,785		43,239		34,412		14,906		17,633		43,942		43,239
Net sales	$	300,620	$	253,796	$	791,532	$	751,762	$	348,426	$	300,620	$	947,073	$	791,532

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
(in thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020
Net sales to U.S. customers	$	280,330	$	238,466	$	744,285	$	701,778	$	328,315	$	280,330	$	896,545	$	744,285
Net sales to non-U.S. customers		20,290		15,330		47,247		49,984		20,111		20,290		50,528		47,247
Net sales	$	300,620	$	253,796	$	791,532	$	751,762	$	348,426	$	300,620	$	947,073	$	791,532

Vesting of ~~restricted stock~~RSA and RSU ~~awards~~grants is conditional based on continued employment or service for a specified period and, in certain circumstances, the attainment of performance goals. ~~With respect to restricted stock and RSU awards, we~~We retain the shares underlying the ~~award,~~grant, and any dividends paid thereon, until the vesting conditions have been met. For time-based ~~restricted stock~~RSA and RSU ~~awards,~~grants, compensation cost related to the stock is recognized on a straight-line basis over the vesting period and is calculated using the closing price per share of our common stock on the grant date. For performance-based ~~restricted stock and RSU awards~~RSA grants tied to growth in adjusted pre-tax income, compensation cost related to the award is recognized over the performance period and is calculated using the closing price per share of our common stock on the grant date and an estimate of the probable outcome of the performance conditions at each reporting date. Since ~~2019,~~March 2020, we have ~~granted~~made performance-based ~~restricted stock and~~ RSU ~~awards~~grants that vest based on our total shareholder return ranking relative to the total shareholder return of the companies comprising the S&P Mid-Cap 400 Growth Index over a three-year performance period. For ~~performance-based restricted stock and RSU~~these awards, ~~tied to total shareholder return,~~ compensation cost related to the award is recognized on a straight-line basis over the performance period and is calculated using the simulated fair value per share of our common stock based on the application of a Monte Carlo simulation model. For the nine months ended September 25, 2021, we granted 17,714 performance-based RSUs with a grant date fair value of $131.02 per share.

Compensation cost related to ~~restricted stock~~RSA and RSU ~~awards~~grants was ~~$1.0~~$1.4 million and ~~$0.8~~$1.0 million for the three months ended September 25, 2021 and September 26, 2020, ~~and September 28, 2019,~~ respectively, and~~$3.0~~ $4.5 million and ~~$2.3~~$3.0 million for the nine months ended September 25, 2021 and September 26, 2020, respectively, and ~~September 28, 2019, respectively. The compensation costs~~ were ~~classified as~~included in selling, general and administrative expense in the Condensed Consolidated Statements of Operations.

The following table summarizes our ~~restricted stock~~RSA and RSU ~~award~~ activity for the nine months ended September ~~26, 2020:~~

As of September ~~26, 2020,~~25, 2021, there was $~~7.9~~10.9 million of unrecognized compensation cost related to unvested ~~restricted stock~~RSA and RSU ~~awards~~grants that is expected to be recognized over a ~~weighted-average~~weighted average period of ~~approximately 2.5~~2.3 years.

Cash flows resulting from tax deductions in excess of the tax effect of compensation cost recognized in the financial statements are classified as operating cash flows. The excess tax benefit generated from restricted stock and RSU awards that vested was not significant during the nine months ended September 26, 2020 and September 28, 2019, respectively.

We expense the grant-date fair value of stock options as compensation cost on a straight-line basis over the vesting period for which related services are performed. The compensation cost charged against income was $0.3 million ~~and $0.2 million~~ for each of the three months ended September 25, 2021 and September 26, 2020, and ~~September 28, 2019, respectively,~~$0.9 million and $0.8 ~~million and $0.5~~ million for the nine months ended September 25, 2021 and September 26, 2020, ~~and September 28, 2019,~~ respectively. ~~The compensation~~These costs ~~were classified~~are included as ~~Selling,~~selling, general and administrative expense in the Condensed Consolidated Statements of Operations. ~~NaN cost was capitalized during the nine months ended September 26, 2020 or September 28, 2019.~~

We use the Black-Scholes option valuation model to estimate the fair value of stock options granted. Expected volatility and expected dividend yield are based on the actual historical experience of our common stock. The expected life represents the period ~~of time~~ that options granted are expected to be outstanding and was calculated using historical option exercise data. The risk-free rate was based on a U.S. Treasury security with terms equal to the expected time of exercise as of the grant date. ~~During the nine months ended September 26, 2020 and September 28, 2019, we granted 109,352 and 38,670 stock options, respectively.~~

The following table summarizes our stock option activity for the nine months ended September ~~26, 2020:~~

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Term (In years)		Aggregate Intrinsic Value		Shares			Weighted Average Exercise Price		Weighted Average Remaining Term (In years)		Aggregate Intrinsic Value
Balance at December 28, 2019		181,712		$	70.78
Balance at December 26, 2020											250,779		$	70.21
Granted		109,352		$	63.25						58,393		$	101.47
Forfeited		(8,764	)	$	65.24						(9,457	)	$	79.02
Exercised		(6,630	)	$	56.52						(39,794	)	$	66.11
Balance at September 26, 2020		275,670		$	68.32		4.7	$	4,695,637
Options exercisable at September 26, 2020		99,017		$	65.99		2.2	$	1,917,351
Balance at September 25, 2021											259,921		$	77.54		5.3	$	5,228,021
Options exercisable at September 25, 2021											94,762		$	73.84		3.6	$	2,159,758

O~~ptions to purchase 6,630 and 35,401 shares of common stock were exercised during the nine months ended September 26, 2020 and September 28, 2019, respectively.~~ As of September ~~26, 2020,~~25, 2021, there was ~~$2.7~~$3.0 million of unrecognized compensation cost related to unvested stock options that is expected to be recognized over a ~~weighted-average~~weighted average period of ~~2.9~~2.8 years.

~~Cash received from stock option exercises was not significant~~Employee Stock Purchase Plan

There were 31,462 shares and 10,735 shares purchased during the nine months ended September 25, 2021 and September 26, 2020, ~~and September 28, 2019.~~respectively.

~~There was 0 excess tax benefit generated from stock options exercised in~~During the nine months ended September 25, 2021 and September 26, 2020, ~~or September 28, 2019.~~

In May 2017, our shareholders approved the Dorman Products, Inc. Employee Stock Purchase Plan (the “ESPP”), which provides up to 1,000,000 shares of our common stock for sale to eligible employees. The purpose of the ESPP, which is qualified under Section 423 of the Internal Revenue Service Code of 1986, as amended, is to encourage stock ownership through payroll deductions and limited cash contributions by our employees. These contributions are used to purchase shares of the Company’s common stock at a 15% discount from the lower of the market price at the beginning or end of the purchase window. Therecompensation costs were 0~~shares purchased under the ESPP plan during the three months ended September 26, 2020 and September 28, 2019 as a result ofthe timing of the end of the purchase windows. There were~~ ~~10,735~~ shares and 13,669 shares purchased under the ESPP plan during the nine months ended September 26, 2020, and nine months ended September 28, 2019, respectively. During both the three months ended September 26, 2020 and September 28, 2019, compensation cost under the ESPP was $0.1 million. During both the nine months ended September 26, 2020 and September 28, 2019, compensation cost under the ESPP was $0.3$0.7 million and ~~$0.2~~$0.3 million, respectively.

Basic earnings per share is calculated by dividing our net income by the weighted average number of common shares outstanding during the period, ~~which exclude~~excluding unvested ~~restricted stock~~RSAs and ~~shares of our common stock underlying~~ RSUs ~~and stock options~~ that are considered to be contingently issuable. To calculate diluted earnings per share, common share equivalents are added to the weighted average number of common shares outstanding. Common share equivalents are calculated using the treasury stock method and are computed based on outstanding stock-based awards. Stock-based awards ~~of 141,000 shares and 96,000 shares~~that were excluded from the calculation of diluted earnings per share as ~~of September 26, 2020 and September 28, 2019, respectively, as~~ their effect would have been ~~anti-dilutive.~~anti-dilutive were 19,000 shares and 34,000 shares for the three months ended September 25, 2021 and September 26, 2020, respectively, and 16,000 shares and 141,000 shares for the nine months ended September 25, 2021 and September 26, 2020, respectively.

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(in thousands, except per share data)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020
Numerator
Net income	$	34,259	$	21,308	$	70,919		$	66,213	$	33,104	$	34,259	$	97,452	$	70,919
Denominator:
Weighted average basic shares outstanding		32,281		32,522		32,317			32,656		31,692		32,281		31,895		32,317
Effect of stock-based compensation awards		90		72		77			82		150		90		144		77
Weighted average diluted shares outstanding		32,371		32,594		32,394			32,738		31,842		32,371		32,039		32,394
Earnings Per Share:
Basic	$	1.06	$	0.66	$	2.19		$	2.03	$	1.04	$	1.06	$	3.06	$	2.19
Diluted	$	1.06	$	0.65	$	2.19		$	2.02	$	1.04	$	1.06	$	3.04	$	2.19

We periodically repurchase, at the ~~then current~~then-current market price, and cancel ~~shares of Dorman~~ common stock issued to the Dorman Products, Inc. 401(k) Retirement Plan and Trust (the “401(k) Plan”). Under the 401(k) Plan, participants can no longer purchase shares of Dorman common stock as an

investment ~~option under the 401(k) Plan.~~option. Shares are generally purchased from the 401(k) Plan when participants sell units as permitted by the 401(k) Plan or elect to leave the 401(k) Plan upon retirement, termination or other reasons. ~~For~~The following table summarizes the ~~nine months ended September 26, 2020, we repurchased~~repurchase and ~~cancelled 15,280 shares~~cancellation of common stock ~~held~~ in the 401(k) Plan for $1.1 million at an average price of $73.49 per share. During the year ended December 28, 2019, we repurchased and cancelled 22,380 shares of common stock held in the 401(k) Plan for $1.9 million at an average price of $87.26 per share.Plan:

Our Board of Directors has authorized ~~a share~~the repurchase ~~program~~ of up to ~~$400~~$500 million of our common stock through December 31, ~~2020.~~2022 under a previously announced share repurchase program. Under this program, share repurchases may be made from time to time depending on market conditions, share price, share availability and other factors at our discretion. The share repurchase program does not obligate us to acquire any specific number of shares. For the nine months ended September 26, 2020, we repurchased and cancelled 218,836 shares of common stock for $16.2 million at an average price of $73.99 per share under this program. For the year ended December 28, 2019, we repurchased and cancelled 499,564 shares of common stock for $39.4 million at an average price of $78.84 per share under this program. At September ~~26, 2020, $127.7~~25, 2021, $153.0 million was available for repurchase under this share repurchase program.

~~On October 27, 2020,~~ The following table summarizes the ~~Company’s Board~~repurchase and cancellation of ~~Directors approved a resolution to increase and extend its~~common stock under the share repurchase ~~program by an additional $100 million, raising the aggregate authorization under the program to $500 million and extending it through December 31, 2022.~~program:

We have a non-cancelable operating lease for a facility housing our corporate headquarters and a distribution center with a partnership in which Steven L. Berman, our Executive Chairman, and other members of the Berman family, are partners. Based upon the terms of the lease, payments will be $1.6 million in fiscal 2020 andwere $1.6 million in fiscal 2019. This lease will expire on December 31, 2022. The right-of-use asset and total lease liabilities related to this lease were both $3.5 million as of September 26, 2020. In the opinion of our Audit Committee, the terms and rates of this lease are no less favorable than those which could have been obtained from an unaffiliated party when the lease was renewed in November 2016.

As of September 30, 2020, the beginning of our fourth quarter, another company in which Steven L. Berman, our Executive Chairman, and other members of the Berman family, are owners (the “Berman Real Estate Company”), acquired from an unaffiliated third-party owner the real estate and building which we were leasing from such third-party owner. In connection with the Berman Real Estate Company’s acquisition, we entered into a new non-cancelable operating lease agreement with the Berman Real Estate Company to continue leasing the facility. In the opinion of our Audit Committee, the terms and rates of this lease are no less favorable than those which could have been obtained from an unaffiliated party when the lease was entered into in September 2020.

We also have non-cancelable operating leases with a limited liability company in which certain of the former owners of PTI are members. The leases were entered into prior to the January 2, 2020 acquisition of PTI by the Company, and they are used in the PTI business. Based upon the terms of the leases, aggregate payments thereunder will be $0.3 million in fiscal 2020.

~~We are a partner in a joint venture with one of our suppliers and own minority interests in 2 other suppliers. Each of these investments is accounted for according to the equity method.~~

At September ~~26, 2020,~~25, 2021, we had ~~$1.1~~$1.2 million of net unrecognized tax benefits, ~~$1.0 million~~all of which would lower our effective tax rate if recognized. We recognize interest and penalties related to uncertain tax positions in income tax expense. As of September ~~26, 2020, we had approximately $0.1 million of~~25, 2021, accrued interest and penalties related to uncertain tax ~~positions.~~positions were not material.

We file income tax returns in the United States, Canada, China, India, and Mexico. All years before ~~2016~~2017 are closed for ~~United States~~U.S. federal tax purposes. Tax years before ~~2015~~2016 are closed for the states in which we file. Tax years before ~~2017~~2018 are closed for tax purposes in Canada. Tax years before ~~2016~~2018 are closed for tax purposes in China. Tax years before ~~2015~~2016 are closed for tax purposes in Mexico. All tax years remain open for India.

We lease our Colmar, PA facility and a portion of our Lewisberry, PA facility from entities in which Steven L. Berman, our Executive Chairman, and certain of his family members are owners. Each lease is a non-cancelable operating lease. Total rental payments to those entities under these lease arrangements will be $2.3 million in fiscal 2021 and were $1.8 million in fiscal 2020. The lease for our corporate headquarters in Colmar, PA was renewed during November 2016, effective as of January 1, 2018, and will expire on December 31, 2022. The lease for our Lewisberry, PA operating facility was signed in September 2020 and will expire on December 31, 2027. In the opinion of our Audit Committee, the terms and rates of these leases were no less favorable than those which could have been obtained from an unaffiliated party when the lease for our corporate headquarters in Colmar, PA was renewed during November 2016 and when the lease for our Lewisberry, PA operating facility was signed in September 2020.

We are a partner in a joint venture with 1 of our suppliers and own minority interests in 2 other suppliers. Each of these investments is accounted for under the equity method.

The carrying value of financial instruments such as cash, accounts receivable, accounts payable, debt under our revolving credit facility, and other current assets and liabilities approximate their fair value based on the short-term nature of these instruments.

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Simplifying the Test for Goodwill Impairment~~, which eliminates the need to perform a hypothetical purchase price allocation to measure goodwill impairment. ASU 2017-04 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. We adopted this ASU effective December 29, 2019, the beginning of our 2020 fiscal year. Adoption of this ASU did not have a material impact on our condensed consolidated financial statements and related disclosures.

~~In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses~~, which was subsequently amended in November 2018 through ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments Credit Losses. ASU 2016-13 requires entities to estimate lifetime expected credit losses for trade and other receivables, net investments in leases, financial receivables, debt securities and other instruments, which will result in earlier recognition of credit losses. Further, the new credit loss model will affect how entities in all industries estimate their allowance for loss receivables that are current with respect to their payment terms. ASU 2016-13 is effective for companies beginning with fiscal years beginning after December 15, 2019. We adopted this ASU effective December 29, 2019, the beginning of our 2020 fiscal year. Adoption of this ASU did not have a material impact on our condensed consolidated financial statements and related disclosures.

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~~PART I, ~~Item~~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.

This document contains certain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to the COVID-19 pandemic, 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 and distribution facility costs and productivity initiatives. Words such as “believe,” “demonstrate,” “expect,” “estimate,” “forecast,” “anticipate,” “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 statement was made. Such forward-looking statements are based on current expectations that involve a number of known and unknown risks, uncertainties and other factors (many of which are outside of our control) which may cause actual events to be materially different from those expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include, but are not limited ~~to:~~to (i) the age, condition and number of vehicles that need servicing; (ii) competition in the automotive aftermarket industry; ~~(ii) unfavorable economic conditions;~~ (iii) the loss or decrease in sales among one of our top customers; (iv) ~~customer consolidation in the automotive aftermarket industry;~~price competition; (v) ~~foreign currency fluctuations and our dependence on foreign suppliers; (vi) extending credit to customers; (vii) the loss of a key supplier; (viii)~~ limited customer shelf space; (vi) customer consolidation; (vii) widespread public health epidemics, including COVID-19; (viii) failure to maintain sufficient inventory or anticipate changes in customer demand; (ix) excess overstock inventory-related returns; (x) the inability to purchase raw materials, components and other items from our suppliers; (xi) the availability and cost of third-party transportation providers; (xii) reliance on new product development; ~~(x)~~(xiii) changes in, or restrictions on access to, automotive ~~technology and improvements in the~~technology; (xiv) quality ~~of new vehicle parts; (xi)~~problems with our products; (xv) inability to protect our intellectual ~~property and~~property; (xvi) claims of intellectual property infringement; ~~(xii) quality problems with products after their production and sale~~(xvii) failure to ~~customers; (xiii) loss~~maintain the value of ~~third-party transportation providers on whom we depend; (xiv) unfavorable results of legal proceedings; (xv)~~ our ~~executive chairman and his family owning a significant portion of the Company; (xvi) operations may be subject to quarterly~~brands; (xviii) cyber-attacks; (xix) foreign currency fluctuations and ~~disruptions from events beyond our control; (xvii) cyber-attacks; (xviii) imposition of taxes, duties or tariffs; (xix) the level of our indebtedness;~~dependence on foreign suppliers; (xx) exposure to risks related to accounts receivable; (xxi) changes in U.S. trade policy, including the imposition of tariffs; (xxii) the level of our indebtedness; (xxiii) risks related to accounts receivable sales agreements; (xxiv) the phaseout of LIBOR or the impact of the imposition of a new reference rate; ~~(xxii)~~(xxv) our executive chairman and his family owning a significant portion of the Company; (xxvi) unfavorable economic conditions; (xxvii) quarterly fluctuations and disruptions from events beyond our control; (xxviii) unfavorable results of legal proceedings; (xxix) volatility in the market price of our common stock and potential securities class action litigation; ~~(xxiii)~~(xxx) losing the services of our executive officers or other highly qualified and experienced ~~contributors; (xxiv)~~Contributors; (xxxi) the inability to identify suitable acquisition candidates, complete acquisitions or integrate acquisitions successfully; ~~(xxv) the effects of widespread public health epidemics, including COVID-19; and (xxvi) the failure to maintain sufficient inventory to meet customer demand or failure to anticipate future~~(xxxii) changes in ~~customer demands.~~tax laws; (xxxiii) global climate change and related regulations; (xxxiv) violations of anti-bribery laws; and (xxxv) import and export control and economic sanctions laws and regulations. Should one or more of any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected.

See the “Statement Regarding Forward Looking Statements,” ~~Part~~PART I, ~~Item~~ITEM 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December ~~28, 2019~~26, 2020 and ~~Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q~~the Company’s other filings with the U.S. Securities and Exchange Commission (“SEC”) 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. 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.

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. and its subsidiaries included in ~~“Item~~“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 ~~28, 2019.~~26, 2020.

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.

We are one of the leading suppliers of replacement parts and fasteners for passenger cars, light trucks, and heavy-duty trucks in the automotive aftermarket industry. As of December ~~28, 2019,~~26, 2020, we marketed approximately ~~78,000~~81,000 distinct ~~stock keeping units (“SKU’s”) as compared to approximately 77,000 as of December 29, 2018,~~parts, many of which we designed and engineered. This number excludes private label ~~SKU’s~~stock keeping units and other variations in how we market, package and distribute our products, includes distinct ~~SKU’s~~parts of acquired companies and reflects distinct ~~SKU’s~~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 original equipment (“OE”) “dealer exclusive” parts. OEOriginal equipment “dealer exclusive” parts are those ~~parts~~ which were traditionally available to consumers only from OEoriginal equipment manufacturers or used parts from salvage ~~yards. These parts~~yards and include, among other ~~parts:~~parts, intake manifolds, exhaust manifolds, window regulators, radiator fan assemblies, tire pressure monitor sensors, ~~complex electronics modules and~~ exhaust gas recirculation (EGR) ~~coolers.~~

~~We generate virtually all~~coolers and complex electronics modules. Fasteners include such items as oil drain plugs, wheel bolts, and wheel lug nuts. For the year ended December 26, 2020, approximately 75% of our ~~net sales from customers~~products were sold under brands that we own, and the remainder of our products were sold for resale under customers' private labels, other brands or in ~~the North American automotive aftermarket industry, primarily in the United States.~~bulk. Our products are sold primarily in the United States through automotive aftermarket retailers (such as Advance Auto Parts, Inc., AutoZone, Inc., and O'Reilly Automotive, Inc.), including through their online ~~platforms,~~platforms; national, regional and

local warehouse distributors (such as Genuine Parts Co. – NAPA); and specialty markets, and salvage yards. We also distribute automotive aftermarket parts ~~outside the United States,~~internationally, 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. The introduction of new products and product lines to customers, as well as business acquisitions, also may cause significant fluctuations from quarter to quarter.

Early in 2019, we began the process of transferring operations of our existing distribution facility in Portland, Tennessee to a new, larger facility nearby. The new 800,000 square foot facility became fully operational in October 2019. In the second quarter of 2019, we began incurring additional costs related to start up inefficiencies and duplication of facility overhead and operating costs primarily related to those facility consolidation activities. We began implementing productivity initiatives in the fourth quarter of 2019 to address those inefficiencies and costs while at the same time expanding the facility to cover an aggregate of approximately 1 million square feet, which expansion was completed in June 2020.In the second quarter of 2020, the productivity levels at the new facility improved and costs began returning to typical levels, in-line with our expectations. We expect our distribution costs to continue to moderate back to more typical levels as we move through the remainder of 2020, subject to the impact of COVID-19.

We operate on a fifty-two or fifty-three-week period ending on the last Saturday of the calendar year. Our ~~2020~~2021 fiscal year will be a fifty-two-week period that will end on December ~~26, 2020.~~25, 2021 (“fiscal 2021”). Our fiscal ~~2019~~2020 was a fifty-two-week period that ended on December ~~28, 2019.~~26, 2020 (“fiscal 2020”).

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 26, 2020.

~~The~~While COVID-19 ~~pandemic has resulted~~did not have a material adverse effect on our business operations for the nine months ended September 25, 2021, during the period we did observe pandemic-related pressures on the global supply network that caused logistical issues, including higher freight costs and ~~is expected~~inflation with respect to materials costs, which impacted our results. We currently expect those pressures to continue to result in significant economic disruption. Since COVID-19 was declared a pandemic, state orders shutting down or restricting business operations to contain the spread of COVID-19 have generally exempted automotive repair and the related supply and distribution of parts as those businesses have generally been classified as critical, essential or life-sustaining. Therefore, the vast majority of our retail and wholesale customers have been and currently remain open for business. In turn, all of our U.S. facilities have also remained, and currently remain, open and operating, with modified staffing in certain locations where appropriate. We have taken actions to promote the welfare of our employees by enhancing safety protocols, including requiring administrative employees to work from home where applicable and implementing social distancing and robust sanitization practices at our facilities. We also have adopted a COVID-19 sick leave policy providing continued salary and benefits to eligible employees. We have had to adjust our operations and inventory levels as demand has fluctuated due to government-imposed restrictions being imposed and then subsequently lifted or modified across the United States.

As previously disclosed, in late March, we began experiencing softening customer demand as a result of government-imposed restrictions designed to slow the spread of COVID-19. While customer orders dropped significantly in April due to government-imposed restrictions, we saw a rapid recovery as the second quarter progressed with May orders flat to prior year and June orders up significantly above prior year. We continued to see an increase in orders in the third quarter, where sales performance reached a record highexist for the ~~Company. However,~~remainder of the fiscal year. As countries continue to combat COVID-19, and as government-imposed regulations regarding, among other things, COVID-19 testing, vaccine mandates and related workplace restrictions ~~vary across~~change around the ~~United States and continue to change, it remains difficult to determine the full impact~~world, there is still a risk that the pandemic ~~will have on~~may impact the overall demand ~~environment. Correspondingly, to the extent there may be fluctuations in demand~~environment as ~~a result of the pandemic, it remains difficult to determine the full impact that the pandemic will have on various aspects of our operations, including, but not limited to, inventory levels,~~well as our ability to ~~fulfill contractual requirements and~~maintain staffing at our ~~facilities.~~

~~Dorman’s balance sheet remains healthy~~facilities, to source parts and ~~strong, enabling us~~other materials to ~~take the following actions in the third quarter:~~

~~As a result of these actions, as of September 26, 2020, we had no amounts drawn under our revolving credit facility (excluding $0.8 million of issued but undrawn letters of credit)~~ and ~~approximately $170.5 million in cash and cash equivalents.~~to fulfill contractual requirements. We ~~believe that our asset-light model and level of liquidity position us well to navigate the current economic disruption associated with the ongoing COVID-19 pandemic.~~

~~During the third quarter, we estimate a negative impact of $0.03 to diluted EPS for out-of-pocket costs related to the COVID-19 pandemic.~~

At the time of this filing and as we look ahead, we are unable to determine or predict the overall impact the COVID-19 pandemic will have on our customers, vendors and suppliers or our business, results of operations, liquidity or capital resources. Significant uncertainty still exists concerning the overall magnitude of the impact and the duration of the COVID-19 pandemic. As a result, we will continue to closely monitor updates regarding the spread of COVID-19 and its variants, the distribution of vaccines developed to combat COVID-19, and applicable vaccine mandates, and we will adjust our operations according to guidelines from local, state and federal officials. In light of the foregoing, we may take ~~further~~ actions that alter our business operations or that we determine are in the best interests of our employees, customers, suppliers and shareholders.

New product development is an important success factor for us and traditionally has been our primary vehicle for growth. We have made incremental investments to increase our new product development efforts ~~each year since 2003~~ to grow our business and strengthen our relationships with our customers. The investments primarily have been in the form of increased product development resources, increased 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. ~~As a result of these~~

~~investments, we introduced 2,310 new distinct SKU’s to our customers and end users during~~In the nine months ended September ~~26, 2020, including 1,000 new-to-the-aftermarket SKU’s. We~~25, 2021, excluding Dayton Parts, we introduced ~~5,239~~3,345 new distinct ~~SKU’s~~parts to our customers and ~~end users~~end-users, including 649 “New-to-the-Aftermarket” parts. We introduced 3,479 distinct parts to our customers and end-users in the fiscal year ended December ~~28, 2019,~~26, 2020, including ~~1,625 new-to-the-aftermarket SKU’s.~~1,433 “New-to-the-Aftermarket” parts.

One area of expanded development focus has been our complex electronics program, which ~~capitalizes~~we believe will help us capitalize on the ~~growing number~~increase of ~~electronic~~advanced computing and sensing components being utilized on today’s OE platforms. ~~New~~Current generation vehicles now contain an average of approximately ~~thirty-five~~100 electronic modules, with some high-end luxury vehicles containing over ~~one hundred~~200 modules. Our complex electronics products are designed and developed in-house and tested using proprietary equipment that simulates the on-vehicle operating environment to ~~help ensure consistent performance,~~verify performance. We continue to make investments in technology and people to enhance our electronics design capabilities, expand our complex electronics product portfolio ~~is focused on~~and further ~~developing~~develop our leadership position in the category.

Another area of focus has been on ~~Dorman HD Solutions™, a line of~~ products we market for the ~~medium~~medium- and heavy-duty truck sector of the automotive aftermarket industry. Our recent acquisition of Dayton Parts, a manufacturer of chassis and other parts for medium- and heavy-duty vehicles, is one of the ways in which we have sought to further our strategy of expansion in this sector. We believe that this sector provides many of the same opportunities for growth that the passenger car and light truck sector of the automotive aftermarket industry has provided us. ~~Through Dorman~~For example, through Dorman® HD Solutions™, we specialize in what formerly were “dealer exclusive” parts similar to how we have approached the passenger car and ~~light duty~~light-duty truck sector. During the nine months ended September ~~26, 2020,~~25, 2021, excluding Dayton Parts, we introduced ~~367 SKU’s~~74 distinct parts in this product line. ~~We expect to continue to invest in the medium and heavy-duty product category.~~

Our growth is also impacted by acquisitions. For example, on ~~January 2, 2020,~~August 10, 2021, we acquired ~~the remaining 60% of the outstanding stock of Power Train Industries, Inc. (“PTI”).~~Dayton Parts. See Note 2, Business Acquisitions and Investments under Notes to Condensed Consolidated Financial Statements for additional information. We may acquire businesses in the future to supplement our financial growth, increase 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 economic and industry factors, including, but not limited to the labor market and inflationary costs, the number, age and condition of vehicles in operation ~~(“VIO”)~~ at any one time, and miles driven by those ~~VIO.~~vehicles.

We have experienced broad-based inflationary impacts during the nine months ended September 25, 2021, due primarily to: global transportation and logistics constraints, which have resulted in significantly higher transportation costs; tariffs; and wage inflation from an increasingly competitive labor market. We expect increased freight, higher labor costs and material inflation costs to continue to negatively impact our results for the remainder of the fiscal year. We attempt to offset inflationary pressures with price increases to customers and the use of alternative suppliers. However, there can be no assurance that we will be successful in these efforts.

The Company’s products are primarily purchased and installed on a subsegment of the ~~VIO,~~passenger and light-duty vehicles in operation in the United States (“VIO”), specifically weighted towards vehicles aged ~~eight~~8 to ~~thirteen~~13 years old. Each year, the United States seasonally adjusted annual rate (“US SAAR”) of new vehicles purchased adds a new year to the US 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 resulted in a follow-on decline in our primary US VIO subsegment ~~(eight~~(8 to ~~thirteen-year-old~~13-year-old vehicles) commencing in 2016. However, following 2011 and the impact of the Great Recession of 2008, USU.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. Consequently, subject to any potential impacts from COVID-19, we expect the US VIO for vehicles aged ~~eight~~8 to ~~thirteen~~13 years old to continue to recover over the next several years.

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 ~~in order~~ to keep those vehicles well maintained. We believe this trend has resulted in an increase in VIO. According to data published by Polk, a division of IHS Automotive, the average age of VIO increased to 12.0 years as of October 2020 from 11.9 years as of October 2019 ~~from 11.8 years as of October 2018~~ despite increasing new car sales.

Additionally, while the number of VIO in the United States ~~continues~~decreased 4% in 2020 to ~~increase, growing 2%~~279.8 million from 290.0 million in 2019, ~~to 290.0 million from 285.7 million in 2018. Approximately 57%~~the number of ~~vehicles in operation~~VIO that are 11 years old or ~~older.~~older increased from 57% in 2019 to 60% in 2020. Vehicle scrappage rates have also decreased over the last several years.

The COVID-19 pandemic in general, as well as restrictions imposed by certain states in response to the COVID-19 pandemic, adversely impacted work-related and personal travel throughout 2020 and into early 2021. However, as a result of easing restrictions, the number of miles driven ~~is another important statistic that impacts our business. According~~has shown a recent increase compared to prior year levels. In fact, according the ~~United States~~U.S. Department of Transportation, the number of miles driven through July 2021 has increased ~~each~~12.8% year ~~since 2011 with~~over year. We believe that demand for our products generally correlates to miles driven, ~~having increased 0.9%~~ as ~~of November 2019 as compared to November 2018. Generally, as vehicles are driven~~the more miles a vehicle is driven, the more likely it is that parts will fail.

The ~~COVID-19 pandemic in general, as well as executive orders issued by certain states in response to~~combination of the ~~COVID-19 pandemic are having an adverse impact on work-related and personal travel. In fact, according to~~factors above has accounted for a ~~report cited by the Auto Care Association, data indicates that the number~~portion of miles driven daily was down 44% as of May 1, 2020 when compared to February 2, 2020. However, the low point in the number of miles driven daily was down 57% as of mid-April when compared to February 2, 2020, and the number of miles driven daily has slowly increased since that low point.

~~As a result, while, prior to COVID-19, we might have expected to see additional sales growth due to the VIO and mileage trends referenced above, the impact of COVID-19 may adversely affect~~ our sales growth ~~potential~~ and is expected to impact our future results.

We operate in a highly competitive market. As a result, we are continuously evaluating our approach to brand protection. For example, in the third quarter of 2019, we modified our brand protection policy, which is designed to ensure that certain products bearing the Dorman name are not advertised below certain approved pricing levels.

We offer a variety of customer discounts, rebates, ~~return allowances~~defective and slowing 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 discounts can be in the form of “off-invoice” discounts and are immediately deducted from sales at the time of sale. For those customers that choose to receive a payment on a quarterly or annual basis instead of “off-invoice,” we accrue for such payments as the related sales are made and reduce sales accordingly. Finally, rebates and discounts are provided to customers to support promotional activities such as advertising and sales force ~~allowances, and allowances for warranty and overstock returns may also be provided.~~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, extended customer payment terms, and allowed a higher level of product returns in certain cases. These concessions impact net sales as well as our profit levels and may require additional capital to finance the business. We expect our customers to continue to exert pressure on our margins.

New customer acquisition costs refer to arrangements under which we incur change-over costs to induce a customer to switch from a competitor’s brand. ~~In addition, change-over~~Change-over costs include the costs related to removing the new customer’s existing inventory (purchased from their previous supplier) and replacing it with ~~our~~Dorman inventory, which is commonly referred to as a stock-lift. New customer acquisition costs are recorded as a reduction to revenue when incurred.

Many of our products carry a lifetime limited warranty, which generally covers defects in materials or workmanship and failure to meet specifications. In addition to warranty returns, we also 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 claim and the probability of the customer return. Significant judgments and estimates must be made and used in connection with establishing the sales returns and other allowances in any accounting period. Revision to these estimates is made when necessary, based upon changes in these factors. We regularly study trends of such claims.

Our products are purchased from suppliers in the ~~U.S.~~United States and a variety of non-U.S. countries. The products generally are purchased 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 ~~price of the product~~prices charged by our suppliers for products under new purchase orders may change in equivalent U.S. dollars.

The largest portion of our overseas purchases comes from China. The Chinese ~~Yuan~~yuan to U.S. ~~Dollar~~dollar exchange rate has fluctuated over the past

several years. Any future changes in the value of the Chinese ~~Yuan~~yuan relative to the U.S. ~~Dollar~~dollar may result in a change in the cost of products that we purchase from ~~China.~~China in the future. However, the cost of the products we procure is also affected by other factors including raw material availability, labor cost, and transportation costs.

~~The overall impact of inflation has not resulted~~Since our consolidated financial statements are denominated in ~~a significant change~~U.S. dollars, the assets, liabilities, net sales, and expenses which are denominated in ~~labor costs or~~currencies other than the ~~cost of general services utilized.~~

~~The cost of many commodities that are used in our products has fluctuated over time resulting in increases and decreases in~~U.S. dollar must be converted into U.S. dollars using exchange rates for the ~~cost of our products. In addition, we have periodically experienced increased transportation costs as~~current period. As a result, of higher fuel prices, capacity constraints and other factors. We will attempt to offset cost increases by passing along selling price increases to customers, using alternative suppliers and sourcing purchases from other suppliers. However, there can be no assurance that we will be successfulfluctuations in ~~these efforts.~~foreign currency exchange rates may impact our financial results.

~~Effective~~In the third quarter of 2018, the Office of the United States Trade Representative (USTR) ~~imposed three~~began imposing additional ~~tranches of~~ tariffs on ~~approximately $250 billion worth~~products imported from China, including many of ~~Chinese imports. Tariffs ranged~~our products, ranging from ~~10%~~7.5% to 25% depending on the commodity. Effective for shipments departing China on or after May 10, 2019, the USTR modified the tranches to impose tariffs of 25% for all commodities. In addition, effective September 1, 2019, the USTR imposed the fourth tranche of tariffs on approximately $300 billion worth of Chinese imports with a tariff rate of 15%, which was reduced to 7.5% in February 2020.. The tariffs enacted to date ~~will~~ increase the cost of many of the products that are manufactured for us in China. We ~~are taking~~have taken several actions to mitigate the impact of the tariffs including, but not limited to, price increases to our customers and cost concessions from our suppliers. We expect to continue mitigating the impact of tariffs in fiscal ~~2020~~2021 primarily through selling price increases to offset the higher tariffs incurred. Tariffs are not expected to have a material impact on our net income but are expected to increase net sales and lower our gross and operating profit margins to the extent that these additional costs are passed through to customers.

In January 2020, the U.S. and Chinese governments signed a trade deal that reduced some U.S. tariffs on Chinese goods in exchange for Chinese pledges to, among other things, purchase more of American farm, energy and manufactured goods. In addition, the USTR ~~has~~ granted temporary tariff relief for certain categories of products being imported from China. The tariff relief granted by the USTR expired on most categories of products being imported from China at the end of 2020. However, the USTR has stated it is considering reinstating temporary tariff relief on certain categories of products imported after October 12, 2021 following its review of comments submitted to the USTR prior to December 1, 2021. We expect that we will reverse tariff-related price increases previously passed along to our customers and ~~lose~~ cost concessions previously received from our suppliers ~~on future purchases~~ as ~~such~~ tariffs are reduced or ~~such other~~tariff relief is granted.

The following table sets forth, for the periods indicated, the percentage of net sales represented by certain items in our Condensed Consolidated Statements of Operations:

	Three Months Ended*									Nine Months Ended*								Three Months Ended*										Nine Months Ended*
(in millions)	September 26, 2020					September 28, 2019				September 26, 2020				September 28, 2019				September 25, 2021					September 26, 2020					September 25, 2021					September 26, 2020
Net sales	$	300.6		100.0	%	$	253.8	100.0	%	$	791.5	100.0	%	$	751.8	100.0	%	$	348,426		100.0	%	$	300,620		100.0	%	$	947,073		100.0	%	$	791,532		100.0	%
Cost of goods sold	$	192.8		64.1	%	$	166.9	65.8	%	$	519.8	65.7	%	$	490.2	65.2	%		231,572		66.5	%		192,819		64.1	%		615,574		65.0	%		519,786		65.7	%
Gross profit	$	107.8		35.9	%	$	86.9	34.2	%	$	271.7	34.3	%	$	261.6	34.8	%		116,854		33.5	%		107,801		35.9	%		331,499		35.0	%		271,746		34.3	%
Selling, general and administrative expenses	$	63.0		21.0	%	$	60.0	23.6	%	$	184.3	23.3	%	$	177.6	23.6	%		72,663		20.9	%		63,028		21.0	%		205,049		21.7	%		184,288		23.3	%
Income from operations	$	44.8		14.9	%	$	27.0	10.6	%	$	87.5	11.0	%	$	83.9	11.2	%		44,191		12.7	%		44,773		14.9	%		126,450		13.4	%		87,458		11.0	%
Other (expense) income, net	$	(0.0	)	0.0	%	$	0.0	0.0	%	$	2.3	0.3	%	$	0.1	0.0	%
Interest expense, net																			733		0.2	%		63		0.0	%		918		0.1	%		545		0.1	%
Other income, net																			(95	)	-0.0	%		(46	)	-0.0	%		(334	)	-0.0	%		(2,862	)	-0.4	%
Income before income taxes	$	44.8		14.9	%	$	27.0	10.6	%	$	89.8	11.3	%	$	84.0	11.2	%		43,553		12.5	%		44,756		14.9	%		125,866		13.3	%		89,775		11.3	%
Provision for income taxes	$	10.5		3.5	%	$	5.7	2.2	%	$	18.9	2.4	%	$	17.8	2.4	%		10,449		3.0	%		10,497		3.5	%		28,414		3.0	%		18,856		2.4	%
Net income	$	34.3		11.4	%	$	21.3	8.4	%	$	70.9	9.0	%	$	66.2	8.8	%	$	33,104		9.5	%	$	34,259		11.4	%	$	97,452		10.3	%	$	70,919		9.0	%

* ~~Amounts and percentage~~Percentage of sales information ~~does~~may not add due to rounding

Three Months Ended September ~~26, 2020~~25, 2021 Compared to Three Months Ended September ~~28, 2019~~26, 2020

Net sales increased ~~18.4%~~16% to $348.4 million for the three months ended September 25, 2021 from $300.6 million for the three months ended September 26, ~~2020 from $253.8 million~~2020. The increase in net sales reflected the addition of Dayton Parts as well as robust customer demand across all our product channels. Year-over-year net sales growth for the three months ended September ~~28, 2019. The increase in net sales~~25, 2021 excluding Dayton Parts was ~~primarily organic and driven by increased volumes during the quarter.~~7%.

Gross profit margin was 33.5% of net sales for the three months ended September 25, 2021 compared to 35.9% of net sales for the three months ended September 26, ~~2020 compared~~2020. Dayton Parts had a 150 basis points dilutive impact on gross margin in the three months ended September 25, 2021, primarily due to ~~34.2%~~higher costs in the three months ended September 25, 2021 from fair value adjustments to inventory recorded in connection with the Dayton Parts acquisition. We also experienced broad-based inflationary impacts due to global transportation and logistics constraints. Although pass-through price increases we have implemented are expected to largely offset these inflationary impacts on a go-forward basis, we did not experience a full quarter of these price increases for the three months ended September 25, 2021. Pricing

increases implemented to pass through the increased costs had no added profit and consequently resulted in a lower gross margin.

Selling, general and administrative expenses (“SG&A”) were $72.7 million, or 20.9% of net sales, for the three months ended September ~~28, 2019. The gross profit margin was higher primarily due~~25, 2021 compared to improved productivity at our Portland, TN distribution facility as well as lower provisions for excess and obsolete inventory as our efforts to improve our end-to-end supply chain began to show results.

~~Selling, general and administrative expenses were~~ $63.0 million, or 21.0% of net sales, for the three months ended September 26, ~~2020 compared to $60.0 million, or 23.6% of net sales, for the three months ended September 28, 2019. Approximately 270 basis points of the~~2020. The decrease in ~~selling, general and administrative expense~~SG&A expenses as a percentage of net sales was primarily due to ~~improved~~ leverage from the ~~$47 million~~ increase in net sales, ~~as compared~~partially offset by wage and benefits inflation and costs related to the ~~third quarter~~completion of ~~2019. Additionally,~~ the ~~Company drove operating cost savings from productivity improvements~~Dayton Parts acquisition and subsequent integration activities in ~~our Portland, TN distribution facility, as well as reduced travel expenses stemming from COVID-19 restrictions.~~the three months ended September 25, 2021.

Our effective tax rate was 24.0% for the three months ended September 25, 2021 compared to 23.5% for the three months ended September 26, ~~2020 compared to 21.1%~~2020. The lower effective tax rate for the three months ended September ~~28, 2019. The increase in~~26, 2020 was the result of lower state tax expense and a nontaxable book gain associated with the PTI acquisition.Nondeductible transaction costs related to the Dayton Parts acquisition also contributed to the higher effective tax rate infor the ~~third quarter of 2020 is primarily due to the impact of foreign operations.~~three months ended September 25, 2021.

Nine Months Ended September ~~26, 2020~~25, 2021 Compared to Nine Months Ended September ~~28, 2019~~26, 2020

Net sales increased ~~5.3%~~20% to $947.1 million for the nine months ended September 25, 2021 from $791.5 million for the nine months ended September 26, ~~2020 from $751.8 million~~2020. The increase in net sales reflected the addition of Dayton Parts as well as robust customer demand across all our product channels. Year-over-year net sales growth excluding Dayton Parts for the nine months ended September ~~28, 2019.~~25, 2021 was 16%. The ~~increase in net sales~~absence of the government imposed shut-downs that negatively impacted the nine months ended September 26, 2020 was ~~primarily organic and driven by increased volumes specifically within~~also a significant contributor to the ~~third quarter.~~year-over-year growth.

Gross profit margin was 35.0% of net sales for the nine months ended September 25, 2021 compared to 34.3% of net sales for the nine months ended September 26, ~~2020 compared~~2020. Gross margin expansion was driven by fixed cost leverage from higher sales volume and improved efficiencies as we continued to ~~34.8%~~drive productivity savings in our end-to-end supply chain processes. Additionally, we benefitted from the absence of out-of-pocket costs incurred due to the COVID-19 pandemic in the nine months ended September 26, 2020. These benefits were partially offset by broad-based inflationary impacts due to global transportation and logistics constraints and higher costs from fair value adjustments to inventory recorded in connection with the Dayton Parts acquisition in the nine months ended September 25, 2021.

Selling, general and administrative expenses were $205.0 million, or 21.7% of net sales, for the nine months ended September 28, 2019. The gross profit margin was lower primarily due to incremental costs associated with COVID-19, including costs related to safety measures implemented at our sites and our COVID-19 sick leave policy, and higher customer provisions in 2020 as25, 2021 compared to ~~2019.~~

~~Selling, general and administrative expenses were~~ $184.3 million, or 23.3% of net sales, for the nine months ended September 26, ~~2020 compared~~2020. The decrease in SG&A as a percentage of net sales was due to ~~$177.6~~the operating leverage from the $155.6 million ~~or 23.6% of~~increase in net sales for the nine months ended September ~~28, 2019. The decrease~~25, 2021 as compared to the nine months ended September 26, 2020. Additionally, we saw benefits in ~~selling, general and administrative expense~~SG&A as a percentage of net sales ~~during~~from the ~~period~~absence of out-of-pocket costs related to the COVID-19 pandemic incurred in the nine months ended September 26, 2020. These benefits were partially offset by wage and benefits inflation and costs related to the completion of the Dayton Parts acquisition and subsequent integration activities in the nine months ended September 25, 2021.

Our effective tax rate was ~~primarily due~~22.6% for the nine months ended September 25, 2021 compared to ~~productivity improvements in our Portland distribution facility, as well as reduced travel expenses stemming from COVID-19 restrictions.~~

~~Other Income, net was $2.3 million~~21.0% for the nine months ended September 26, 2020.The lower effective tax rate for the nine months ended September 26, 2020 ~~which includes~~was the result of lower state tax expense, a tax benefit related to a nontaxable book gain ~~of $2.5 million recognized as the difference between the carrying value of our previously held equity method investment in PTI~~ and the ~~implied fair value when we acquired~~write-off of a deferred tax liability associated with PTI ~~fully~~upon our acquisition of the controlling interest in January ~~2020.~~

~~Our~~2020, and a foreign tax credit carry-back claim.Nondeductible transaction costs related to the Dayton Parts acquisition also contributed to the higher effective tax rate ~~was 21.0%~~ for the nine months ended September ~~26, 2020 compared to 21.2% for the nine months ended September 28, 2019.~~25, 2021.

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 ~~provided~~sponsored by our customers. Additionally, we have utilized borrowings under revolving lines of credit, as needed, to fund Company objectives.

Cash and cash equivalents were $57.3 million at September ~~26, 2020 increased~~25, 2021 compared to ~~$170.5 million from $68.4~~$155.6 million at December ~~28, 2019. The increase primarily related to~~26, 2020. During the nine months ended September 25, 2021, strong cash provided from operating ~~activities.~~activities was more than offset by cash used to fund the Dayton Parts acquisition, share repurchases under our publicly announced repurchase program and capital expenditures. Working capital was ~~$591.5~~$390.4 million at September ~~26, 2020~~25, 2021 compared to ~~$534.1~~$600.3 million at December ~~28, 2019.~~26, 2020. 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, the outcome of contingencies or other factors, including the impact of the COVID-19 pandemic. See Note 7, “Commitments and Contingencies”, in the accompanying condensed consolidated financial statements for additional information regarding commitments and contingencies that may affect our liquidity.

Tariffs also increase our uses of cash since we pay for the tariffs upon the arrival of our goods in the United States but collect the cash on any passthrough price increases from our customers on a delayed basis according to the payment terms negotiated with our customers.

Over the past several years we have continued to extend payment terms to certain customers as a result of customer requests and market demands. These extended terms have resulted in increased accounts receivable levels and significant uses of cash flows. We participate in accounts receivable sales programs with several customers that allow us to sell our accounts receivable to financial institutions to offset the negative cash flow impact of these payment terms 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. Moreover, to the extent that any of these accounts receivable sales programs bear interest rates tied to the London Inter-Bank Offered Rate (“LIBOR”)~~, as LIBOR~~ or other reference rates, increases in these applicable rates increase our cost to sell our ~~receivables also increases.~~receivable. See ~~Item~~ITEM 3. Quantitative and Qualitative Disclosures about Market Risk for more information. Further extensions of customer payment terms ~~will~~would result in additional uses of cash flow or increased costs associated with the sales of accounts receivable.

During the nine months ended September 25, 2021 and September 26, 2020, ~~and September 28, 2019,~~ we sold ~~approximately $568.3~~$690.0 million and ~~$530.7~~$568.3 million of accounts receivable, respectively, under these programs. ~~The increase in sales~~If receivables had not been sold over the previous twelve months, approximately $381 million and $505 million of additional accounts receivable ~~reflects~~would have been outstanding at September 25, 2021 and December 26, 2020, respectively, based on our efforts to enhance our liquidity in the second quarter of 2020 in light of COVID-19. In the third quarter of 2020, we decreased the levels of receivables sold under these programs by $104 million, returning to more historical levels.standard payment terms. We ~~have capacity to~~can sell increased levels of accounts receivable under our available programs if liquidity needs arise, whether due to the continued impacts of COVID-19 or other factors.

~~We have~~On August 10, 2021, in connection with the acquisition of Dayton Parts, we entered into a new credit agreement ~~expiring in December 2022,~~ that provides for a $600 million revolving credit facility, including a letter of ~~$100.0~~credit sub-facility of up to $60 million (the “New Facility”). The New Facility replaced our previous $100 million revolving credit facility. The New Facility matures on August 10, 2026 and is guaranteed by the Company’s material domestic subsidiaries (together with the Company, the “Credit Parties”) and is supported by a security interest in substantially all of the Credit Parties’ personal property and assets, subject to certain ~~requirements, gives us the ability to request increases in revolving credit commitments of up to an additional $100.0 million.~~ exceptions.

Borrowings under the credit agreement are on an unsecured basis. At the Company’s election, the interest rate applicable to borrowings under the credit agreement will be either (1) the Prime Rate as announced by Wells Fargo from time to time, (2) an Adjusted LIBOR Market Index Rate as measured by the LIBOR Market Index Rate plus the Applicable Margin which fluctuates between 65 basis points and 125 basis points based on the ratio of the Company’s Consolidated Funded Debt to Consolidated EBITDA, or (3) an Adjusted LIBOR Rate as measured by the LIBOR Rate plus the Applicable Margin which fluctuates between 65 basis points and 125 basis points based on the ratio of the Company’s Consolidated Funded Debt to Consolidated EBITDA. The interest rate at September 26, 2020 was LIBOR plus 65 basis points (0.80%). During the occurrence and continuance of an event of default, all outstanding revolving credit loans willNew Facility bear interest at a rate per annum equal to, ~~2.00%~~at the Company’s option, either a LIBOR rate (subject to a 0.00% floor) or a base rate, in ~~excess~~each case plus an applicable margin of, initially (i) in the ~~greater~~case of ~~(1)~~LIBOR rate, 1.250% or (ii) in the ~~Prime Rate or (2)~~case of base rate loans, 0.250%. The applicable margin for (i) base rate loans ranges from 0.000% to 1.000% per annum and (ii) for LIBOR loans ranges from 1.000% to 2.000% per annum, in each case, based on the ~~Adjusted~~Total Net Leverage Ratio (as defined in the New Facility). The interest rate at September 25, 2021 was LIBOR ~~Market Index Rate then applicable.~~plus 125 basis points (1.33%). The ~~credit agreement also~~commitment fee is initially equal to 0.150% and thereafter ranges from 0.125% to 0.250% based on the Total Net Leverage Ratio.

The New Facility contains affirmative and negative covenants, including, ~~those~~but not limited to, covenants regarding capital expenditures, share repurchases, and financial covenants related to the ratio of ~~certain~~ consolidated ~~fixed charges~~interest expense to consolidated EBITDA ~~capital expenditures,~~ and ~~share repurchases,~~the ratio of total net indebtedness to consolidated EBITDA, each as defined by the credit agreement. The credit agreement also requires us to pay a fee of 0.10% on the average daily unused portion of the facility, provided the fee will not be charged on the first $30 million of the revolving credit facility.

In March 2020, we took proactive steps to increase our cash position and preserve financial flexibility in light of uncertainties from the COVID-19 pandemic by drawing down $99.0 million from the revolving credit facility. Early in the third quarter of 2020, we repaid the $99.0 million of outstanding borrowings under this revolving credit facility.New Facility.

As of September ~~26, 2020,~~25, 2021, we were not in default with respect to the credit agreement. As of September 25, 2021, there ~~were no~~was $249.4 million in outstanding borrowings under the ~~credit agreement~~New Facility and ~~we had~~ two outstanding letters of credit for ~~approximately~~ $0.8 million in the aggregate which were issued to secure ordinary course of business transactions. Net of ~~these~~outstanding borrowings and letters of credit, ~~there was approximately $99.2~~we had $349.8 million available under the ~~credit agreement~~New Facility at September ~~26, 2020.~~

As of September 26, 2020, we were not in default with respect to the credit agreement. We paid $0.2 million and $0.4 million in interest during the three and nine months ended September 26, 2020, respectively.

The following summarizes the activities included in the Condensed Consolidated Statements of Cash Flows:

	Nine Months Ended							Nine Months Ended
(in thousands)	September 26, 2020			September 28, 2019				September 25, 2021			September 26, 2020
Cash provided by operating activities	$	145,719			$	59,650		$	77,601		$	145,719
Cash used in investing activities		(26,369	)			(24,656	)		(360,757	)		(26,369	)
Cash provided by (used in) financing activities		(17,201	)			(24,282	)		184,855			(17,201	)
Net increase (decrease) in cash and cash equivalents	$	102,149			$	10,712
Net (decrease) increase in cash and cash equivalents								$	(98,301	)	$	102,149

During the nine months ended September ~~26, 2020,~~25, 2021, cash provided by operating activities was ~~$145.7~~$77.6 million compared to ~~cash provided by operating activities of $59.7~~$145.7 million during the nine months ended September 26, ~~2019.~~2020. The ~~$86~~$68.1 million ~~increase~~decrease was driven by ~~the favorable effects of~~ higher ~~accounts payable and accrued liabilities, due~~inventory purchases to maintain customer fill rates, as compared to the ~~timing of payments,~~prior year, partially offset by ~~the negative effects of~~ higher proceeds from accounts receivable due to higher sales of accounts receivable in the nine months ended September 25, 2021.

Investing activities used cash of $360.8 million and $26.4 million during the nine months ended September 25, 2021 and September 26, ~~2020.~~

~~Investing activities~~2020, respectively. During the nine months ended September 25, 2021, we used $345.5 million to acquire Dayton Parts, net of cash ~~of $26.4 million~~acquired and ~~$24.7 million~~ during the nine months ended September 26, 2020 ~~and September 28, 2019, respectively. Cash usage for investing activities was $1.7~~we used $14.3 million ~~higher during~~to acquire the ~~nine months ended September 26, 2020, as lower~~remaining 60% of the outstanding equity of PTI, net of cash ~~used for capital expenditures was more than offset by cash used for the acquisition of PTI.~~ acquired.

Financing activities used ~~$17.2~~$184.9 million of cash during the nine months ended September ~~26, 2020~~25, 2021, compared to ~~$24.3~~$17.2 million of cash ~~used~~provided during the nine months ended September ~~28, 2019.~~26, 2020.

During the nine months ended September 25, 2021, we borrowed $252.4 million under the New Facility to help fund the acquisition of Dayton Parts in August 2021, and subsequently repaid $3.0 million of that borrowing during the nine months ended September 25, 2021. Additionally, during the nine months ended September 25, 2021, we paid $54.2million to repurchase 534,507 common shares under our share repurchase plan. During the nine months ended September 26, 2020, we paid $16.2 million to repurchase 218,836 ~~common shares under our share repurchase plan. During the nine months ended September 28, 2019, we paid $22.8 million to repurchase 272,564~~ common shares under the share repurchase plan.

The remaining uses of cash from financing activities in each period result primarily from the repurchase of our common stock from our 401(k) Plan.

In light of COVID-19, during the first quarter of fiscal 2020, we temporarily suspended repurchases under the previously disclosed share repurchase program approved by our board of directors. We resumed our repurchase program in August 2020.

During the nine months ended September 26, 2020, we experienced no material changes to our contractual obligations as disclosed in our Annual Report on Form 10-K for the year ended December 28, 2019.

~~Please refer to Note 15, New and Recently Adopted Accounting Pronouncements, in the Notes to Condensed Consolidated Financial Statements.~~

Our market risk is the potential loss arising from adverse changes in interest rates. All our available credit and accounts receivable sales programs bear interest at rates tied to ~~LIBOR.~~LIBOR or other reference rates. Under the terms of our credit agreement and customer-sponsored programs to sell accounts receivable, a change in either the lender’s base rate, LIBOR or discount rates under the accounts receivable sale programs would affect the rate at which we could borrow funds thereunder. A ~~one percentage point~~one-percentage-point increase in the discount rates under the accounts receivable sales programs would increase our interest expense on our variable rate debt, if any, and our financing costs associated with our sales of accounts receivable by approximately ~~$4.9~~$4 million annually. This estimate assumes that our variable rate debt balance and the level of sales of accounts receivable remains constant for an annual period and the interest rate change occurs at the beginning of the period. The hypothetical changes and assumptions may be different from what ~~actually~~ occurs in the future.

Historically we have not used, and currently do not intend to use, derivative financial instruments for trading or to speculate on changes in interest rates or commodity prices. We are not exposed to any significant market risks, foreign currency exchange risks, or interest rate risks from the use of derivative instruments. ~~We did not hold any foreign exchange forward contracts at September 26, 2020.~~

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, conducted an evaluation, as of the end of the period covered by this report, of the effectiveness of our disclosure controls and procedures, as such term is defined in Exchange Act Rule 13a-15(e). Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures, as defined in Rule 13a-15(e), were effective at the reasonable assurance level.

On August 10, 2021, we completed our acquisition of DPL Holding Corporation (“Dayton Parts”). We are in the process of evaluating the existing controls and procedures of Dayton Parts and integrating Dayton Parts into our internal control over financial reporting. In accordance with SEC Staff guidance permitting a company to exclude an acquired business from management’s assessment of the effectiveness of internal control over financial reporting for a period of one year following the date on which the acquisition is completed, we have excluded Dayton Parts from our assessment of the effectiveness of internal control over financial reporting as of September 25, 2021. Refer to Note 2 to the Condensed Consolidated Financial Statements for additional information.

~~There~~Except for the acquisition of Dayton Parts noted above, there was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act), that occurred during the ~~quarter~~three months ended

September ~~26, 2020,~~25, 2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Control systems, no matter how ~~well conceived~~well-conceived and operated, are designed to provide a reasonable, but not an absolute, level of assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. The Company conducts periodic evaluations of its internal controls to enhance, where necessary, its procedures and controls.

The information set forth under Note 7, “Commitments and Contingencies,” to the Notes to Condensed Consolidated Financial Statements contained in ~~Part~~PART I, ~~Item~~ITEM 1 of this report is incorporated herein by reference.

~~The following items update~~There have been no material changes in our risk factors from the ~~risk factors~~risks previously reported in ~~Part~~PART 1, ~~“Item 1A. Risk~~ITEM 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December ~~28, 2019:~~

Our business, results of operations and financial condition could be materially adversely affected by the effects of widespread public health epidemics, including the novel coronavirus (“COVID-19”), that are beyond our control.

Any outbreaks of contagious diseases, public health epidemics and other adverse public health developments in countries where we, our customers and suppliers, operate could have a material and adverse effect on our business, results of operations and financial condition. The COVID-19 pandemic has adversely impacted, and is expected to continue to adversely impact, our business, and the nature and extent of the impact may be highly uncertain and beyond our control. Uncertain factors relating to COVID-19 include the duration, spread and severity of the virus, the effects of the COVID-19 pandemic on our customers, vendors, suppliers and employees, and the actions, or perception of actions that may be taken, to contain or treat its impact, including declarations of states of emergency, business closures, manufacturing restrictions and a prolonged period of travel, commercial and/or other similar restrictions and limitations.

As a result of COVID-19 and the measures designed to contain its spread, our sales have been, and could continue to be negatively impacted as a result of disruption in demand, which could have a material and adverse effect on our business, results of operations and financial condition. Similarly, our suppliers may not have the materials, capacity, or capability to manufacture our products according to our schedule and specifications. If our suppliers’ operations are impacted, we may need to seek alternate suppliers, which may be more expensive, may not be available or may result in delays in shipments to us and subsequently to our customers, each of which would affect our results of operations. Further, in the event any members of our workforce, or those of our suppliers, contract COVID-19 or are otherwise compelled to self-quarantine, we may experience shortages in labor and services that we require for our operations. Our increased use of remote work environments and virtual platforms in response to the COVID-19 pandemic may also increase our risk of cyber-attacks or data security breaches.

The duration of the disruption to our customers, our supply chain and our employees, and the related financial and operational impacts to us, cannot be estimated at this time. Should any such disruption continue for an extended period of time, the impact could have a material adverse effect on our business, results of operations and financial condition.

~~If we fail to maintain sufficient inventory to meet current customer demands, or if we fail to anticipate future changes in customer demands, our financial results could be adversely affected.~~

We must maintain sufficient in-stock inventory and anticipate future changes in customer demands in order to be successful. If we fail to do so, our financial results could be adversely affected. Fluctuations in demand may result from a number of factors, including, but not limited to, global economic conditions, COVID-19, ~~the age, condition and number of vehicles that need servicing, and improvements in the quality of new vehicle parts~~. 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. If we are unable to forecast accurately future reductions in demand, we may accumulate excess or obsolete inventory and be forced to reduce hours or layoff or furlough employees. Conversely, if we are unable to forecast accurately future increases in demand, we may have inventory shortfalls or inadequate staffing levels to meet demand, which may result in our inability to fill orders on timely basis or at all and could result in penalties owed to our customers and the loss of net sales.

26, 2020. You should carefully consider the factors discussed in ~~Part~~PART I, ~~“Item 1A. Risk~~ITEM 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December ~~28, 2019 and the above risk factors, each of~~26, 2020, which could materially affect our business, financial condition or future results. ~~Such~~The risks described in our Annual Report on Form 10-K 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 adversely affect our business, financial condition and/or operating results.

During the three months ended September ~~26, 2020,~~25, 2021, we purchased shares of our common stock as follows:

Period

Total Number
of Shares
Purchased

Average
Price Paid
per Share

Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs (4)

Maximum
Number
(or Approximate
Dollar Value)
of Shares that
May Yet Be Purchased
Under the Plans or Programs (4)

June 28, 2020 through July 25, 2020 (1)

1,208

$
63.56

—

$
138,465,024

July 26, 2020 through August 22, 2020 (2)

37,250

$
83.85

30,847

$
135,871,785

August 23, 2020 through September 26, 2020 (3)

98,042

$
84.73

96,010

$
127,738,974

Total

136,500

126,857

$
127,738,974

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (3)		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (3)
June 27, 2021 through July 24, 2021		64,000	$	104.52		64,000	$	169,526,376
July 25, 2021 through August 21, 2021 (1)		101,467	$	99.80		99,368	$	159,613,310
August 22, 2021 through September 25, 2021 (2)		69,443	$	95.54		69,250	$	152,997,179
Total		234,910				232,618	$	152,997,179

The Exhibits included in this report are listed in the Exhibit Index on page ~~22,~~25, which is incorporated herein by reference.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Pennsylvania		23-2078856
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

3400 East Walnut Street, Colmar, Pennsylvania		18915
(Address of principal executive offices)		(Zip Code)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.01 per share		DORM		NASDAQ Global Select Market

		Page
~~Part~~PART I — FINANCIAL INFORMATION

~~Item~~ITEM 1.	Financial Statements (unaudited)

	Condensed Consolidated Statements of Operations	3

	Condensed Consolidated Balance Sheets	4

	Condensed Consolidated Statements of Shareholders’ Equity	5

	Condensed Consolidated Statements of Cash Flows	6

	Notes to Condensed Consolidated Financial Statements	7

~~Item~~ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1314

~~Item~~ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	1921

~~Item~~ITEM 4.	Controls and Procedures	1921

~~Part~~PART II — OTHER INFORMATION

~~Item~~ITEM 1.	Legal Proceedings	2023

~~Item~~ITEM 1A.	Risk Factors	2023

~~Item~~ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2023

~~Item~~ITEM 3.	Defaults Upon Senior Securities	2123

~~Item~~ITEM 4.	Mine Safety Disclosures	2123

~~Item~~ITEM 5.	Other Information	2123

~~Item~~ITEM 6.	Exhibits	2124

Exhibit Index		2225

Signatures		2326

(in thousands)
Accounts receivable	$	23,061
Inventories		79,625
Prepaids and other current assets		2,403
Property, plant and equipment		29,861
Goodwill		108,946
Identifiable intangible assets		160,400
Operating lease right-of-use assets		21,248
Other assets		877
Accounts payable		(11,968	)
Accrued compensation		(2,784	)
Other current liabilities		(7,409	)
Long-term operating lease liabilities		(18,444	)
Deferred tax liabilities		(40,333	)
Net cash consideration	$	345,483

	Three Months Ended				Nine Months Ended
(in thousands)	September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020
Net sales	$	371,408	$	345,525	$	1,070,238	$	918,874
Net income	$	37,089	$	36,085	$	108,016	$	62,832
Diluted earnings per share	$	1.16	$	1.11	$	3.37	$	1.94

	Nine Months Ended September 28, 2019
	Common Stock						Additional
(in thousands, except share data)	Shares Issued			Par Value			Paid-In Capital			Retained Earnings			Total
Balance at December 29, 2018		33,004,861		$	330		$	47,861		$	679,432		$	727,623
Exercise of stock options		11,995			—			31			—			31
Compensation expense under Incentive Stock Plan		—			—			3,033			—			3,033
Purchase and cancellation of common stock		(290,274	)		(3	)		(522	)		(23,814	)		(24,339	)
Issuance of non-vested stock, net of cancellations		70,885			1			867			—			868
Other stock related activity, net of tax		(9,914	)		—			1,281			(2,118	)		(837	)
Net income		—			—			—			66,213			66,213
Balance at September 28, 2019		32,787,553		$	328		$	52,551		$	719,713		$	772,592

(in thousands)	Fair Value		Amortization Period (in years)
Customer relationships	$	124,100		20
Product portfolio		25,300		20
Trade names		11,000		10
Total	$	160,400

(in thousands)	Valuation		Amortization Period (in years)
Customer relationships	$	4,600		15
Trade names		700		5
Technology		1,800		8
Other		190		5
Total	$	7,290

	Shares			Weighted Average Price
Balance at December 28, 2019		177,491		$	76.70
Granted		82,905		$	63.02
Vested		(25,314	)	$	70.89
Cancelled		(27,703	)	$	77.41
Balance at September 26, 2020		207,379		$	71.84

	Shares			Weighted Average Fair Value
Balance at December 26, 2020		217,735		$	72.77
Granted		76,984		$	106.23
Vested		(36,042	)	$	67.05
Canceled		(45,451	)	$	74.61
Balance at September 25, 2021		213,226		$	85.42


2.1		Agreement and Plan of Merger, dated June 25, 2021, by and among Dorman Products, Inc., Senators Merger Sub, Inc., DPL Holding Corporation and SBF II Representative Corp., solely in its capacity as Equityholder Representative. Incorporated by reference to Exhibit 2.1 to the company’s Current Report on Form 8-K filed on June 28, 2021.⁺

10.1		Credit Agreement, dated August 10, 2021 by and among Dorman Products, Inc., the lenders from time to time party thereto, and Bank of America, N.A., as administrative agent. ⁺

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished with this report). **

101		The following financial statements from the Dorman Products, Inc. Quarterly Report on Form 10-Q as of and for the quarter ended September ~~26, 2020,~~25, 2021, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations; (ii) the Condensed Consolidated Balance Sheets; (iii) Condensed Consolidated Statements of Shareholders’ Equity; (iv) the Condensed Consolidated Statements of Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements.

104		The cover page from the Company’s Quarterly Report on Form 10-Q as of and for the quarter ended September ~~26, 2020,~~25, 2021, formatted in Inline XBRL (included as Exhibit 101).


+		The schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish a copy of such schedules and exhibits, or any section thereof, to the SEC upon request.

*		Filed herewith

**		Furnished herewith

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Emerging growth company