Dorman Products (DORM) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01Our business is impacted by the age, condition, and number of vehicles that need servicing and by improvements in the quality of new vehicle parts
2. 02Our industry is highly competitive, and our success depends on our ability to compete with suppliers of motor vehicle aftermarket products, some of which may have greater financial, marketing, and other resources than we do
3. 03The loss or decrease in sales among one of our top customers, or a material change in the terms on which they are willing to buy from us, could have a substantial negative impact on our sales and operating results
4. 04There is substantial price competition in our industry, and our success and profitability will partially depend on our ability to maintain a competitive cost and price structure
5. 05The inability of our customers to grow their businesses and compete effectively may adversely affect our business
6. 06Customer consolidation in the motor vehicle aftermarket industry may lead to customer contract terms less favorable to us, which may negatively impact our financial results
7. 07Our growth in the specialty vehicle category depends upon our continued ability to expand our product sales into specialty vehicles, including, but not limited to, those that require performance-defining products, and the expansion of the market for these vehicles
8. 08If 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
9. 09Our profitability may be materially adversely affected because of overstock inventory-related returns by our customers in excess of anticipated amounts
10. 10Our operations would be materially and adversely affected if our suppliers fail to perform or if we cannot manage our supply chain effectively
11. 11Our operating results are sensitive to the availability and cost of third-party logistics providers, which are important in the manufacture and transport of our products
12. 12Significant inflation could adversely affect our business and financial results
13. 13Changes in U.S. trade policy, including the imposition and enforcement of tariffs and the resulting consequences, could adversely affect our results of operations
14. 14Our business, results of operations, and financial condition could be materially adversely affected by the effects of widespread public health pandemics that are beyond our control
15. 15If we do not continue to develop new products and bring them to market, our business, financial condition, and results of operations could be materially impacted
16. 16We may be adversely impacted by changes in, or restrictions on access to, motor vehicle technology
17. 17Design and quality problems with our products could damage our reputation and adversely affect our business
18. 18Failure to comply with safety regulations could result in regulatory enforcement, litigation, and product recalls that damage our reputation and adversely affect our business
19. 19Cyber-attacks or other breaches of information technology security could adversely impact our business and operations
20. 20We are dependent, in part, on our intellectual property. If we are not able to protect our proprietary rights or if those rights are invalidated or circumvented, our business may be adversely affected
21. 21Claims of intellectual property infringement by original equipment manufacturers and others could adversely affect our business and negatively impact our ability to develop new products
22. 22Failure to maintain the value of our brands could have an adverse effect on our reputation, cause us to incur significant costs, and negatively impact our business

Risks Related to Our Capital Structure and Finances

1. 23Increasing our indebtedness could negatively affect our financial health
2. 24outstanding borrowings under the revolving portion of the credit agreement, and as of such date, we had three outstanding letters of credit for $1.2 million in the aggregate
3. 25Our credit agreement contains covenants that restrict our operational flexibility. If we cannot comply with these covenants, we may be in default under our credit agreement
4. 26We are exposed to risks related to accounts receivable sales agreements
5. 27Interest rate increases may adversely affect our financial condition and results of operations
6. 28outstanding borrowings under our credit agreement would have increased our interest expense by approximately $5.6 million for the year ended December 31, 2024
7. 29We extend credit to our customers, some of whom may be unable to pay in the future
8. 30Our business may be negatively impacted by our dependence on foreign suppliers and by foreign currency fluctuations
9. 31f.disease, epidemics, and health-related concerns could result in closed factories, reduced workforces, scarcity of raw materials, and scrutiny and embargoing of goods produced in infected areas
10. 32Dorman’s Non-Executive Chairman and his family members own a significant portion of the Company
11. 33Unfavorable economic conditions may adversely affect our business
12. 34Our operations, revenues, and operating results, and the operations of our third-party manufacturers, suppliers, warehouse and distribution providers, and customers, may be subject to quarter-over-quarter fluctuations and disruptions from events beyond our or their control
13. 35Unfavorable results of legal proceedings could materially adversely affect us
14. 36The market price of our common stock may be volatile and could expose us to securities class action litigation and increased shareholder activism
15. 37Losing the services of our executive officers or other highly qualified and experienced employees or failing to attract and retain any of such officers or employees could adversely affect our business
16. 38Our growth may be impacted by acquisitions. We may not be able to identify suitable acquisition candidates, complete acquisitions or integrate acquisitions successfully
17. 39Changes in tax laws or exposure to additional income tax liabilities could have a material adverse effect on our business, financial condition, and results of operations
18. 40Global climate change and related regulations could negatively affect our business
19. 41We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar anti- bribery laws around the world
20. 42Our products are subject to import and export controls and economic sanctions laws and regulations in various jurisdictions, and violations could adversely affect us