Q4 2024 Dorman Products Inc Earnings Call
Unknown Executive: Thank you.
Yeah.
Alexander Whitelam: Good morning, everyone. Welcome to Dorman's fourth quarter 2024 earnings conference call.
Speaker Change: Thank you good morning, everyone welcome to Dorman fourth quarter 2024 earnings Conference call I'm joined by Kevin Olson, Chairman and Chief Executive Officer, and David <unk>, <unk> Chief Financial Officer.
Alexander Whitelam: I'm joined by Kevin Olsen, Dorman's Chief Executive Officer, and David Hession, Dorman's Chief Financial Kevin will share updates on the business, then David will review the quarterly results and our guidance for 2025. Kevin will then close our prepared remarks before opening the call for questions.
Speaker Change: Kevin will share updates on the business and David will review the quarterly results and our guidance for 2025.
Kevin Olson: I will then close our prepared remarks before opening the call for questions.
Alexander Whitelam: By now, everyone should have access to our earnings release and earnings call presentation, which are available on the investor relations portion of our website at DormanProducts.com. Before we begin, I'd like to remind everyone that our prepared remarks, earnings release, and investor presentation include forward-looking statements within the meaning of federal securities laws. We advise listeners to review the risk factors and cautionary statements in our most recent 10-Q, 10-K, and earnings release for important material assumptions, expectations, and factors that may cause actual results to differ materially from those anticipated and described in such forward-looking statements.
Kevin Olson: By now everyone should have access to our earnings release and earnings call presentation, which are available on the Investor relations portion of our website at Dorman products Dot com.
Before we begin I'd like to remind everyone that our prepared remarks earnings release and Investor presentation include forward looking statements within the meaning of federal Securities laws, we advise listeners to review the risk factors and cautionary statements in our most recent 10-Q10-K and earnings release for important material assumptions expectations and fat.
Kevin Olson: <unk> that may cause actual results to differ materially from those anticipated and described in such forward looking statements.
Alexander Whitelam: will also reference certain non gap Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are contained in the schedules attached to our earnings release and in the appendix to this earnings call presentation, both of which can be found on the investor relations section of Dorman's website.
Kevin Olson: We will also reference certain non-GAAP measures reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are contained in the schedules attached to our earnings release and in the appendix to this earnings call presentation, both of which can be found on the Investor Relations section of <unk> website.
Alexander Whitelam: Finally, during the Q&A portion of today's call, we ask that participants limit themselves to one question with one follow-up and to rejoin the queue if they have additional questions.
Kevin Olson: Finally during the Q&A portion of today's call, we ask that participants limit themselves to one question with one follow up and to rejoin the queue. If they have additional questions.
Kevin Olsen: And with that, I'll turn the call over to Kevin. Thanks, Alex. Good morning. And thank you for joining our fourth quarter 2024 earnings. As Alex mentioned, I'll start out with a high-level review of the results. I'll also cover the keys to our success and our strategic focus areas for 2025, along with observations within each of our segments. With that, let me begin on slide three with a few highlights from the Our financial performance in 2024 was outstanding. We've surpassed the $2 billion of annual sales mark for the first time in our history, growing net sales by 4.1% year-over-year.
Kevin Olson: With that I'll turn the call over to Kevin.
Kevin Olson: Thanks, Alex Good morning, and thank you for joining our fourth quarter 2024 earnings call.
Kevin Olson: As Alex mentioned I'll start out with a high level review of the results.
Kevin Olson: Also cover the keys to our success and our strategic focus areas for 2025, well with observations within each of our segments.
Kevin Olson: With that let me begin on slide three with a few highlights from the year.
Kevin Olson: Our financial performance in 2024 was outstanding.
Kevin Olson: Past $2 billion of annual sales Mark for the first time in our history growing net sales by four 1% year over year. This net sales growth was driven by strong demand in our light duty segment.
Kevin Olsen: This net sales growth is driven by strong demand and a light-duty segment. benefited from recently introduced new. Market Pressure's weight on the results of our other segment. Specialty Vehicle drove slight growth after a positive sales inflection late in the year and heavy duty invested in improving customer experience and new product development. We also drove significant margin expansion and earnings growth for the enterprise. which led to strong cash flow generation. This allowed us to invest in the business, strengthen our balance sheet for future strategic growth opportunities, and return capital to our shareholders. I'd like to take a minute and thank all of our contributors for all they did.
Kevin Olson: Benefited from recently introduced new products.
Kevin Olson: While market pressures weighed on the results of our other segments, especially vehicle drove slight growth. After a positive sales inflection late in the year and heavy duty invested in improving customer experience and new product development, which positions them well for when the market rebounds.
Kevin Olson: We also drove significant margin expansion and earnings growth for the enterprise, which led to strong cash flow generation.
Kevin Olson: This allowed us to invest in the business strengthen our balance sheet for future strategic growth opportunities and return capital to our shareholders.
Kevin Olson: I'd like to take a minute and thank all of our contributors for all they did this year, we have an exceptionally talented team stepped up and term challenges into successes I'm proud of what we've accomplished together and look forward to the exciting future. We have ahead.
Kevin Olsen: We have an exceptionally talented team that's stepped up and turned challenges into success. proud of what we've accomplished together and look forward to the exciting future we have ahead.
Kevin Olsen: Speaking of talent, I also wanted to welcome Typhoon Uter for our leadership team as head of our light duty. Typhoon brings tremendous experience to the organization and his new role completes our transition to three distinct segments. with leadership structures in place now for each It was an important step following our recent realignment of the business, and we expect this leadership structure will drive significant value for the entire company.
Kevin Olson: Speaking of talent I also want to welcome Typhoon <unk> for our leadership team as head of our light duty segment.
Kevin Olson: Typhoon brings tremendous experience to the organization in his new role completes our transition to three distinct segments.
Kevin Olson: His leadership structures in place now for each of them. It was an important step following our recent realignment of the business and we expect this leadership structure will drive significant value for the entire company.
Kevin Olsen: Turning to slide four, I wanted to briefly touch on the fourth quarter. David will provide more detail, but we exited 2024 with strong momentum. The consolidated net sales for the quarter grew 8% year-over-year to $534 million, as our teams did an excellent job delivering on new product development and customer programs. We also drove solid margin performance. Adjusted operating margin for the quarter was 17.5%. compared to the same period last year. Our Margin Improvement was led by Light Duty as their top-line growth and productivity initiatives fueled a $350 basis point increase in segment profit. As a result, Adjusted Dude EPS increased an impressive 40% to $2.26.
Kevin Olson: Turning to slide four I wanted to briefly touch on the fourth quarter Dave.
Kevin Olson: David will provide more detail, but we exited 2024 with strong momentum.
Kevin Olson: Consolidated net sales for the quarter grew 8% year over year to $534 million as our teams did an excellent job delivering on new product development and customer programs.
Kevin Olson: Also drove solid margin performance adjusted operating margin for the quarter was 17, 5% expanding 210 basis points compared to the same period last year.
Kevin Olson: Our margin improvement was led by light duty as their top line growth and productivity initiatives fueled a 350 basis point increase in segment profit margin.
Kevin Olson: As a result, adjusted diluted EPS increased an impressive 40% to $2 20.
Kevin Olsen: Pre cash flow in the quarter was also strong at 63 million, allowing us to repay $54 million.
Kevin Olson: Free cash flow in the quarter was also strong at $63 million, allowing us to repay $54 million of debt.
Kevin Olsen: All in all, it was an outstanding fourth quarter.
Kevin Olson: All in all it was an outstanding fourth quarter to cap, an incredible year for door that I'm proud of our performance this year and again it speaks to our talent and positive culture that continues to drive results across the organization.
Kevin Olsen: Ducat, an incredible year for Dorman. I'm proud of our performance this year, and again, it speaks to our talent and positive culture that continues to drive results across the organization. David will cover guidance in a moment, but our outlook for 2025 reflects a strong operational model. Strategic Growth Opportunities, Financial Strength, and Positive Marketing.
David: David will cover guidance in a moment, but our outlook for 2025 reflects our strong operational model strategic growth opportunities financial strength and positive market trends.
Kevin Olsen: On slide five, we thought it would be helpful to take a step back and highlight the key factors that drive Dorman's First, as we've covered on recent calls, innovation is a critical part of our DNA and core to our differentiation. Our teams have the creativity, tools, and expertise to deliver new vehicle repair solutions to our customers. Our innovation also enhances the repair experience for installers. to create additional sales opportunities for our customers. drives the introduction of new cost-effective products for our end-users vehicles.
David: On slide five we thought it would be helpful to take a step back and highlight the key factors that drive the Oregon success.
David: First as we've covered on recent calls innovation is a critical part of our DNA and core to our differentiation.
David: Our teams have the creativity tools and expertise to deliver new vehicle repair solutions to our customers. Our innovation also enhances the repair experience for installers, which creates additional sales opportunities for our customers and drive the introduction of new cost effective products for our end users.
David: Vehicles.
Kevin Olsen: Next is operational We're constantly challenging our operations to deliver improved performance and have invested prudently to keep our performance at the forefront of the curve. We're of the mindset that improvement and efficiency gains are always possible. We continue to drive productivity across Through efficient operations and new products driving growth, our asset-light business has been a cash generator, providing both fuel for our growth and a strong financial foundation that is built for long-term success. Strong financial profile and cash generation has allowed us to deploy capital on strategic investments to compound our This proven business model has driven tremendous results for Dorman over the years.
David: Next is operational excellence.
David: Instantly challenging our operations to deliver improved performance to have invested prudently to keep our performance at the forefront of the curve.
David: We're of the mindset that improvement and efficiency gains are always possible and we continue to drive productivity across our footprint.
David: With efficient operations and new products driving growth our asset light business has been a cash generator for valuable fuels for our growth and a strong financial foundation is built for long term success.
David: Our strong financial profile and cash generation has allowed us to deploy capital on strategic investments to compound our growth.
David: This proven business model has driven tremendous results for dorm it over the years.
Kevin Olsen: We believe we are well positioned to deliver continued growth in 2025 and beyond.
David: We believe we are well positioned to deliver continued growth in 2025 and beyond.
Kevin Olsen: As we look ahead, slide 6 lays out our strategic priorities for the year. Again, innovation is a critical focus area for each of our segments. continue to develop new light duty repairs. putting an emphasis on our complex electronics portfolio. continues gaining traction as we discussed on our last call. We're also focused on further expanding heavy-duties category Deploying our OE fix solutions methodology further into the sector. We believe the investments we've made in new product development position the business well.
David: As we look ahead slide six lays out our strategic priorities for the year.
David: Again innovation is a critical focus area for each of our segments.
David: Continue to develop new light duty repair solutions, including an emphasis on our complex electronics portfolio, which continues gaining traction as we discussed on our last call.
So focused on further expanding heavy duty as category coverage.
David: <unk>, our OE fixed solutions methodology further into the sector.
David: We believe the investments we've made in new product development position the business well as the freight recession recovers within specialty vehicle, we remain focused on expanding our non discretionary portfolio and building on the success. We've had in those categories since we've acquired Super ATV.
Kevin Olsen: Great Recession Week. within Specialty Vehicle, we remain focused on expanding our non-discretionary portfolio and building on the success we've had in those categories since we've acquired Super 8 TV. We're also focused on furthering our operational excellence initiatives with productivity and automation. We're pleased with the progress we've made in 2024 on these initiatives. and we see future opportunities across our facility. 2025 will continue to strategically diversify and optimize our supply chain. The team has done an outstanding job over the last few years integrating suppliers across the globe and reducing our country-specific concentrations. Today our supply chain is significantly more flexible and nimble than it was just a few years ago.
David: We're also focused on furthering our operational excellence initiatives through productivity and automation improvements.
David: We were pleased with the progress we made in 2024 on these initiatives.
David: See future opportunities across our facilities.
David: In 2025, we will continue to strategically diversify and optimize our supply chain team has done an outstanding job over the last few years integrating suppliers across the globe and reducing our country specific concentration.
David: <unk>, our supply chain is significantly more flexible and nimble than it was just a few years ago.
Kevin Olsen: We believe this provides a differentiated added value for our provides us access to leading manufacturers around the world. We're also laser focused on continuing to position heavy duty and specialty vehicle for channel expansion. which we believe will lead to improved sales performance as these markets rebound. As I mentioned, our innovation strategy and commercialization efforts are expanding opportunities. Finally, after strengthening our balance sheet in 2024, we have the firepower to capitalize on new growth. Our acquisition pipeline remains robust, and we expect the broader M&A environment to continue improving.
David: We believe this provides a differentiated added value for our customers and provides us access to leading manufacturers around the world.
David: We're also laser focused on continuing to position heavy duty and specialty vehicle for channel expansion, which we believe lead to improved sales performance as these markets rebounded.
David: As I mentioned, our innovation strategy and commercialization efforts are expanding opportunities.
Finally, after strengthening our balance sheet in 2024, we have the firepower to capitalize on new growth opportunities are.
David: Our acquisition pipeline remains robust and we expect the broader M&A environment to continue improving.
Kevin Olsen: Moving to slide seven, let me provide some observations across our three sections. In our light-duty segment, positive macro trends continued through the end of the year. Vehicle miles traveled were again higher year over year in the fourth quarter. POS was strong, a pie single digit. generally consistent with customer Strong customer demand and new product execution drove outperformance for light duty business. We've also made strides in diversifying our supplier base across new geographies and improving margin through productivity.
David: Moving to slide seven let me provide some observations across our three segments.
David: And our light duty segment positive macro trends continued through the end of the year.
David: Vehicle miles traveled were again higher year over year in the fourth quarter.
David: POS was strong up high single digits.
David: Generally consistent with customer shipments.
David: Strong customer demand and new product execution drove outperformance for light duty business.
David: We also made strides in diversifying our supplier base across new geographies and improving margin through productivity initiatives.
Kevin Olsen: In our heavy duty segment, soft market conditions persisted to the end of the year as expected. A recent industry commentary has pointed to a more optimistic out We believe it is still too early to call for the timing of a return to growth. That said, we're seeing encouraging signs from our customers, and we'll look to capture share with a broader portfolio of new products when the market rebounds. Further, we plan to implement additional productivity initiatives to help improve heavy duties margin.
David: There are heavy duty segment soft market conditions persisted through the end of the year as expected.
David: While recent industry commentary has pointed to a more optimistic outlook.
David: We believe it is still too early to call for the timing of a return to growth.
David: That said we are.
David: Seeing encouraging signs from our customers, but we'll look to capture share with a broader portfolio of new products when the market rebounds.
David: Further we plan to implement additional productivity initiatives to help improve heavy duties margin profile.
Kevin Olsen: During the quarter, we saw year-over-year top-line growth for the first time in several quarters for our specialty vehicle segment. on new machine sales remain sluggish as manufacturers continued inventory destocking. Our growth was the result of the investments we've made in innovation and channel expansion. These investments are yielding solid results, and we're excited with what lies ahead for the business.
David: During the quarter, we saw a year over year top line growth for the first time in several quarters for our specialty vehicle segment.
David: While new machine sales remained sluggish as manufacturers continued inventory destocking efforts.
David: Our growth was a result of the investments we've made in innovation and channel expansion.
David: These investments are yielding solid results and we're excited with what lies ahead for the business with.
David Hession: With that, I'll hand off to David to review our Q4 financial Thanks, Kevin. I'd like to echo your comments regarding the team. We have a particularly strong finish to what ended up being an outstanding year. We couldn't have done it without the efforts of our contributors across the organization. So I just wanted to thank our contributors for their hard work and dedication.
David: With that I'll hand off to David to review, our Q4 financial performance.
David: Thanks, Kevin I'd like to Echo your comments regarding the team was a particularly strong finish to what ended up being an outstanding year, we couldnt have done it without the efforts of our contributors across the organization.
David: I just wanted to thank our contributors for their hard work and dedication.
David Hession: Turning to slide eight, let me dive into our Consolidated net sales in the fourth quarter were $534 million. 8% year-over-year driven by strong customer demand. As Kevin mentioned, light-duty drove above-market sales growth in the quarter, given positive macro trends in our new product initiative. In fact, innovation was a key contributor to our success across each of our segments in the quarter. I'll cover them individually in just a moment. The adjusted gross margin for the quarter was 41.7%. 240 basis point increase compared to the prior year period. This margin expansion was primarily driven by higher sales performance and cost savings generated from our supplier diversification efforts, as well as our productivity and automation Additionally, margin benefited from a favorable mix of higher sales of new products and greater leverage on volume.
David: Turning to slide eight let me dive into our results.
David: Consolidated net sales in the fourth quarter were $534 million.
David: Of 8% year over year, driven by strong customer demand.
Speaker Change: Kevin mentioned light duty drove above market sales growth in the quarter given positive macro trends in our new product initiatives. In fact innovation was a key contributor to our success across each of our segments in the quarter.
David: Cover them individually in just a moment.
David: Adjusted gross margin for the quarter was 41, 7%, a 240 basis point increase compared to the prior year period.
David: This margin expansion was primarily driven by higher sales performance and cost savings generated from our supplier diversification efforts as well as our productivity and automation initiatives. Additionally.
David: Additionally margin benefited from a favorable mix of higher sales of new products and greater leverage on volume growth.
David Hession: Adjusted SG&A expense as a percentage of net sales was $24.2 billion. Adjusted operating income was $93 million for the fourth quarter, up 23% compared to the same period last year. Adjusted operating margin expanded 210 basis points to 17.5%, largely from gross margin improvement. Finally, fourth quarter adjusted diluted EPS was $2.20, a 40% compared to the prior year period. along with increased adjusted operating income and lower interest Our effective tax rate benefited from one-time discreet items in the quarter. Finally, our share repurchase program activity during the year contributed to positive EPS.
David: Adjusted SG&A expense as a percentage of net sales was 24, 2%.
David: Adjusted operating income was $93 million for the fourth quarter up 23% compared to the same period last year.
David: Adjusted operating margin expanded 210 basis points to 17, 5% largely from gross margin improvement.
David: Finally fourth quarter adjusted diluted EPS was $2 20.
David: Up 40% compared to the prior year period.
David: Along with increased adjusted operating income and lower interest expense, our effective tax rate benefited from onetime discrete items in the quarter.
David: Finally, our share repurchase program activity during the year contributed to positive EPS growth.
David Hession: Next, let me provide updates on each of our business starting with light duty on slide nine. Our light duty business had an exceptional fourth quarter with net sales increasing 11% compared to the same period last year. POS and shipments were generally aligned in the quarter at a high single digit growth This growth was driven by strong customer demand, particularly with our recently introduced new product.
David: Next let me provide updates on each of our business segments, starting with light duty on slide nine.
David: Our light duty business had an exceptional fourth quarter with net sales, increasing 11% compared to the same period last year.
David: POS and shipments were generally aligned in the quarter at a high single digit growth rate.
David: This growth was driven by strong customer demand, particularly with our recently introduced new products, including complex electronics and our highly successful oil filter housing product.
David Hession: Including Complex Electronics and our highly successful oil filter housing Light duty also drove solid margin improvement during the quarter. segment profit margin increased to 20.1%. 350 basis point increase compared to last year's fourth quarter. This margin expansion benefited from our ongoing automation and productivity. Strong new product sales and customer mix, along with greater leverage on our volume.
David: Light duty also drove solid margin improvement during the quarter.
David: Segment profit margin increased to 21%, a 350 basis point increase compared to last year's fourth quarter.
David: This margin expansion benefited from our ongoing automation and productivity initiatives strong new product sales and customer mix, along with greater leverage on our volumes.
David Hession: slide 10, I'll cover our heavy duty Heavy duty net sales were down 8% year over year as a result of the ongoing market challenges which Kevin covered.
David: On slide 10, I'll cover our heavy duty segment.
Speaker Change: Heavy duty net sales were down 8% year over year as a result of the ongoing market challenges, which Kevin covered.
David Hession: Lower volume had a negative impact on margins, as the business has a larger fixed cost manufacturing footprint compared to our other segments. We also continue to invest in the business as we see long-term growth opportunities. These investments yielded significant new product development during the year, which we expect will position the business well when the market rebounds.
Speaker Change: Lower volume had a negative impact on margins as the business has a larger fixed cost manufacturing footprint compared to our other segments.
Speaker Change: We also continue to invest in the business as we see long term growth opportunities ahead.
Speaker Change: These investments yielded significant new product development during the year, which we expect will position the business well when the market rebounds.
David Hession: Moving to slide 11 for our specialty vehicle segment. We are pleased to see year over year sales growth for our specialty vehicle business as net sales were up 5% in the quarter. Our new product portfolio and expanded dealer network continue to drive solid results for the business.
Speaker Change: Moving to slide 11 for our specialty vehicle segment.
Speaker Change: We were pleased to see year over year sales growth for our specialty vehicle business as net sales were up 5% in the quarter, our new product portfolio and expanded dealer network continue to drive solid results for the business.
David Hession: On the margin front, we continue to invest in the business, which increased variable compensation and benefit expense in the quarter compared to the prior year period. These increases align the specialty vehicle segment with our other two segments. We believe the investments we've made position the segment for long term growth.
Speaker Change: On the margin front, we continue to invest in the business, which increased variable compensation and benefit expense in the quarter compared to the prior year period.
Speaker Change: These increases align the specialty vehicles segment with our other two segments.
Speaker Change: We believe the investments we've made position this segment for long term growth.
David Hession: Turning to our cash flow on slide 12. For the fourth quarter, free cash flow was $63 million. 30% compared to the same period in 2023. This growth was particularly impressive given that we increased our inventory spend in part to mitigate any potential impact from tariff changes. We also use this cash flow to strengthen our balance sheet, repaying $54 million in debt, which, as I'll highlight on the next slide, provides us with the ability to make strategic growth investments.
Speaker Change: Turning to our cash flow on slide 12.
Speaker Change: For the fourth quarter free cash flow was $63 million up 30% compared to the same period in 2023.
Speaker Change: This growth was particularly impressive given that we increased our inventory spend in part to mitigate any potential impact from tariff changes.
Speaker Change: We also use this cash flow to strengthen our balance sheet repaying $54 million in debt, which as a highlight on the next slide provides us with the ability to make strategic growth investments.
David Hession: While we paused our share repurchases during the fourth quarter, given the uncertainty around the election and geopolitical concerns, we remain committed to our share repurchase program as a core component of our capital deployment strategy going forward. In fact, in October, our Board of Directors authorized a new $500 million stock repurchase. That became effective January 1st of this year and expires in December 2022.
Speaker Change: While we paused our share repurchases during the fourth quarter, given the uncertainty around the election and geopolitical concerns we remain committed to our share repurchase program as a core component of our capital deployment strategy going forward in.
Speaker Change: In fact in October our board of directors authorized a new $500 million.
Speaker Change: Stock repurchase plan that became effective January one of this year and expires in December 2027.
David Hession: This performance in the fourth quarter contributed to what was an exceptionally strong year from a cash generation and deployment perspective. Cash flow from operations was an impressive $231 million for the year, allowing us to deploy $39 million in capital expenditure. Repay $94 million in debt and return $78 million to our shareholders through the repurchase of 856,000 shares at an average cost of $91 per share.
Speaker Change: This performance in the fourth quarter contributed to what was an exceptionally strong year from a cash generation and deployment perspective.
Speaker Change: Cash flow from operations was an impressive $231 million for the year, allowing us to deploy $39 million in capital expenditures repaid $94 million in debt and returned $78 million to our shareholders through the repurchase of 856000 shares.
Speaker Change: At an average cost of $91 per share.
David Hession: On slide 13, I'll cover our balance sheet and liquidity. As of December 31st, our net debt was $426 million, or $66 million lower than Q3. Our net leverage ratio was 1.12 times adjusted EBITDA, down from 1.36 times at the end of September and 1.87 times at the end of last year.
Speaker Change: On slide 13, I'll cover our balance sheet and liquidity.
Speaker Change: As of December 31, our net debt was $426 million or <unk> $66 million lower in Q3, our net leverage ratio was 112 times adjusted EBITDA down from 136 times at the end of September and 187 times at the end of <unk>.
Speaker Change: Last year.
David Hession: Our current leverage remains comfortably below our long-term target of two times. Additionally, our total liquidity was $642 million at the end of the quarter, up from $582 million at the end of Q3. Our balance sheet remains strong, and we're pleased with the capacity and flexibility it provides us to continue executing our strategic plan and deploying capital for future growth investments.
Speaker Change: Our current leverage remains comfortably below our long term target of two times.
Speaker Change: Additionally, our total liquidity was $642 million at the end of the quarter up from $582 million at the end of Q3.
Speaker Change: Our balance sheet remains strong and we're pleased with the capacity and flexibility. It provides us to continue executing our strategic plan and deploying capital for future growth investments.
David Hession: Turning to slide 14, I'd like to cover our guidance for 2020. 2024 positioned as well for continued growth through 2025 and beyond. Market trends in our late duty business remain positive, and we see the beginnings of market turnarounds in the heavy duty and specialty vehicle segment. While uncertainty exists around interest rates, tariffs, and other macroeconomic factors, We have the playbook, a more diversified customer and supplier base, and a solid financial position to navigate the various challenges we may face in the market. Specifically on tariffs, our 2025 guidance does not include any impact from the U.S.
Speaker Change: Turning to slide 14, I'd like to cover our guidance for 2025.
Speaker Change: 2024 positioned us well for continued growth through 2025 and beyond.
Speaker Change: Market trends in our light duty business remain positive and we see the beginnings of market turnarounds in the heavy duty and specialty vehicle segments.
Speaker Change: While uncertainty exists around interest rates tariffs and other macroeconomic factors, we have the playbook and more diversified customer and supplier base and a solid financial position to navigate the various challenges we may face in the market.
Speaker Change: Specifically on tariffs our 2025 guidance does not include any impact from the U S tariffs enacted or proposed in 2025 or any potential retaliatory measures from U S trade partners.
David Hession: tariffs enacted or proposed in 2025, or any potential retaliatory measures from U.S. trade The situation remains highly fluid. This is a significant uncertainty regarding what may or may not be implemented in the potential impact on our 2025 results. We are following the evolving trade situation close plan to take actions to manage the impact on our business. will evaluate updating our guidance as the tariff situation gains clarity.
Speaker Change: The situation remains highly fluid.
Speaker Change: With significant uncertainty regarding what may or may not be implemented and the potential impact on our 2025 results were.
Speaker Change: We are following the evolving trade situation closely and plan to take actions to manage the impact on our business.
Speaker Change: We will evaluate updating our guidance as the tariff situation gains clarity.
David Hession: That said, we expect net sales growth to be in the range of 3% to 5% compared to 2024. Looking across our segments, we expect light duty to drive solid sales growth for the year. Our innovation strategy and industry-leading portfolio of new products, along with our enhanced commercialization strategies, are expected to continue driving value for our customers.
Speaker Change: That said, we expect net sales growth to be in the range of 3% to 5% compared to 2024.
Looking across our segments, we expect light duty to drive solid sales growth for the year.
Speaker Change: Our innovation strategy and industry, leading portfolio of new products, along with our enhanced commercialization strategies are expected to continue driving value for our customers.
David Hession: As I mentioned, predicting a market recovery for heavy duty remains difficult. With given market indicators, we expect net sales to be flattish for the year. For a specialty vehicle, we expect net sales to increase modestly as consumer sentiment appears to be improving in that market. On the operational excellence front, we remain focused on driving efficiency through continued productivity and automation. With our sales growth expectations coupled with the efficiency gains, we expect adjusted diluted earnings per share to be in the range of $7.55 to $7.85, representing 6% to 10% growth over 2024.
Speaker Change: As I mentioned predicting a market recovery for heavy duty remains difficult, but given market indicators, we expect net sales to be flattish for the year.
Speaker Change: For specialty vehicle, we expect net sales to increase modestly as consumer sentiment appears to be improving in that market.
Speaker Change: On the operational excellence front, we remain focused on driving efficiencies through continued productivity and automation initiatives.
Speaker Change: With our sales growth expectations, coupled with the efficiency gains we expect adjusted diluted earnings per share to be in the range of $7 <unk>.
Speaker Change: To $7 85.
Speaker Change: Presenting 6% to 10% growth over 2024 now.
Kevin Olsen: Now I'll turn it back over to Kevin to conclude. Thanks, David. As we look forward, I'm confident in our model for long term We will continue driving innovation and building on our industry-leading portfolio of innovative solutions.
Kevin Olson: Now I'll turn it back over to Kevin to conclude Kevin.
Kevin Olson: Thanks, David as we look forward I'm confident in our model for long term success.
Kevin Olson: We'll continue driving innovation and building on our industry, leading portfolio of innovative solutions.
Kevin Olsen: continue to build deep relationships across our diverse and more. Leverage our operational expertise and capitalize on strategic growth opportunities to drive Dorman's future growth.
Kevin Olson: We'll continue to build deep relationships across our diverse end markets.
Kevin Olson: Leverage our operational expertise and capitalize on strategic growth opportunities to drive <unk> future growth.
Kevin Olsen: On behalf of our management team and the board, we thank you for your support.
Kevin Olson: On behalf of our management team and the board and thank you for your support with that.
Unknown Executive: I would now like to open the call up for questions. Operator. Thank you.
Kevin Olson: I would now like to open the call up for questions operator.
Kevin Olson: Thank you.
Unknown Executive: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star 1 on your touch-tone phone and you will hear a prompt that your hand has been raised. Should you wish to withdraw, please press star 1 again. If you are using a speakerphone, please leave the handset before pressing any key.
Kevin Olson: Ladies and gentlemen, we will now begin the question and answer session.
Kevin Olson: Should you have a question. Please press star one on your Touchtone phone any real near pump with Johannesburg.
Kevin Olson: Should you wish to withdraw please press star one again.
Kevin Olson: Speaker phone please place your handset before pressing Inc.
Scott Stember: Our first question comes from the line of Scott Stember from Roth MKN. Sir, please go ahead. Good morning. Thanks for taking my question. Thanks, Scott. Morning, Scott.
Scott Berg: Our first question comes from the line of Scott Berg from Roth <unk>. Sir. Please go ahead.
Scott Berg: Good morning, and thanks for taking my questions.
Speaker Change: Thanks, Scott Good morning, Scott.
Kevin Olsen: Regarding tariffs, which is obviously one of the bigger topics these days. Can you just remind us how far you've come, at least with exposure related to China? I know that. I think we were less than 50% total Asia exposure. maybe as of last year. Can you talk about where we stand right now? And then under the current 10% tariff on China? just trying to get a sense of how manageable that is for you.
Speaker Change: Regarding tariffs, which are obviously one of the bigger topics. These days.
Speaker Change: Could you just remind us how far you've come in at least with exposure related to China I know that.
Speaker Change: I think we were less than 50%.
Speaker Change: Total Asia exposure.
Speaker Change: Maybe as of last year could you talk about where we stand right now and then under the current 10%.
Speaker Change: The tariff on China.
Speaker Change: I'm, just trying to get a sense of how manageable that issue in the near term.
Kevin Olsen: Sure, Scott, it's Kevin. Good, good question. You know, as you point out, the situation remain remains very fluid. I mean, I think we've obviously seen the additional 10% on China imports, and the steel and aluminum tariff, we would characterize those, those two aspects of tariffs is very manageable for us at this point. But obviously, the situation, you know, is very fluid. And it seems like, you know, the reciprocal tariffs, we'll know a lot more about those in the months ahead.
Kevin Olson: Sure Scott, it's Kevin Good question.
Kevin Olson: As you point out the situation remains remains very fluid I mean, I think we've.
Kevin Olson: We've obviously seen the additional 10%.
Kevin Olson: Imports in the steel and aluminum tariffs.
Kevin Olson: We would characterize those those two aspects of tariffs is very manageable for us at this point, but obviously the situation is very fluid.
Kevin Olson: It seems like the reciprocal tariffs, we will know a lot more about those in the months ahead.
Kevin Olsen: I will speak a little bit about the diversity actions that we've taken and that I've spoken about publicly before. You know, we, I will remind you that we have a lot of experience dealing with tariffs, we have a playbook, you know, back in 2018. Since that timeframe, we have undertaken a lot of actions to diversify the supply chain. In 2025, Scott, we estimate that roughly 30% or so of our purchases will come from the US. whether that's from a partner manufacturer or from Dorman Manufacturing Facilities. Roughly 30 to 40% of our sourcing in 2025 is estimated to come from China.
Kevin Olson: I will speak a little bit about.
The diversity.
Kevin Olson: Actions that we've taken in that I've spoken about publicly before.
Kevin Olson: We will remind you that when we have a lot of experience dealing with tariffs we have a playbook.
Kevin Olson: Back in 2018 since that timeframe, we have undertaken a lot of actions to diversify their supply chain.
Kevin Olson: In 2025, Scott, we estimate that roughly 30% or so of our purchases will come from the U S.
Kevin Olson: Whether thats from a.
Partner manufacturer or from German manufacturing facilities.
Kevin Olson: Awfully, 30% to 40% of our sourcing in 2025 is estimated to come from China.
Kevin Olsen: And then outside of that, we're very diverse around the globe. I'll also say Scott that our exposure to Canada and Mexico from a sourcing perspective is immaterial.
Kevin Olson: Outside of that we're very diverse around the globe.
Scott Berg: I'll also say Scott that.
Scott Berg: Our exposure to Canada, and Mexico from a sourcing perspective.
Is it material.
David Hession: Scott, it's David. The other thing to keep in mind is from a but we're on FIFO accounting, right? So you'll see the the impacts as inventory turns probably about two times. But you'll see that six months after we actually incurred as well. Got it. That's very helpful. Thanks.
David: Scott It's David the other thing to keep in mind is from a boy we're on FIFO accounting right. So youll see the impacts.
David: Inventory turns probably about two times, so youll see that six months after we actually incurred as well.
David: Got it.
That's very helpful. Thanks, and then.
Kevin Olsen: And then on the heavy duty side, can you talk about some of the early signs that you're seeing and then maybe talk about the channel expansion opportunities there? Sure, Scott. Good question. Kevin, again, I would say in general, if we look at the heavy duty market, our business is basically tracking with the market. We'll characterize it as somewhat stabilized. You know, as we said in our prepared remarks, we're not really calling for a market turnaround in 2025. And it really is unclear how the trade situation will impact the overall heavy duty market. So, our focus in that sector is going to be to continue on focusing on new products.
David: While the heavy duty side can you talk about some of the early signs that you're seeing and then maybe talk about the channel.
David: Pension opportunities there.
David: Sure Scott Good question, Kevin again, I would say in general if we look at the heavy duty market or our business is basically tracking with the market.
David: Well characterized as somewhat stabilized.
David: As we said in our prepared remarks, we're.
David: We're not really calling for a market turnaround in 2025.
David: Is unclear.
David: The trade situation will impact.
David: The overall heavy duty market.
David: So our focus is.
David: And that sector is going to be to continue on focusing on new products.
Kevin Olsen: We had a record year in terms of new product launches in 2024. We expect to increase on that in 2025. So, the new product engine is really working well. We've got to get that flywheel, you know, primed and going. Eventually, that's going to become a very large growth engine for us, particularly as the market does recover. You know, we're also focused on productivity initiatives across the business in heavy duty. And as we mentioned in the prepared remarks, you know, we're expecting, you know, flattish sales growth for that segment in 2025. Got it.
David: We had a record year in terms of new product launches in 2024, we expect to increase on that in 2025, so the new product engine.
David: It is really working well, we've got to get that flywheel primed and going.
David: Surely that's going to become a very large growth engine for us, particularly as the market does recover.
David: We're also focused on productivity initiatives across the business.
David: Heavy duty.
David: As we mentioned in the prepared remarks, we're expecting.
David: Flattish sales growth for for that segment in 2025.
David: Got it and then just last question.
Kevin Olsen: And then just last question, you talked about the The Pipeline, or M&A, could you maybe just give us an indication of... you know, where you're seeing more opportunities and where we can look for you guys to potentially go. Well, I mean, yeah, Scott, it's Kevin. Good question. You know, the pipeline, I would say, is very robust, really across the three segments. But, you know, I will say that, you know, in the last couple months, it's gone a little bit quiet with all the trade uncertainty. I think once that clears up, we'll start to see some good activity across our funnels.
David: Talked about the.
David: The pipeline for M&A can you maybe just give us.
David: <unk>.
David: Where youre seeing more opportunities and where we can look for you guys to potentially go.
Kevin Olson: Well I mean, yes, Scott it's Kevin good question.
David: Pipeline I would say.
David: It was very robust really across the three segments.
David: But.
David: I will say that in the last couple of months, it's gone a little bit quiet with all the trade uncertainty.
David: I think I think once that clears up we'll start to see.
David: Some good activity across our funnels.
David: Got it.
Scott Stember: That's all I have for now. Thank you. Thanks, Scott.
David: That's all I have for now thank you.
Speaker Change: Thanks, Scott Thanks, Scott.
Gary Prestopino: Thank you. Our next question comes from the line of Gary Prestopino from Berenson Research. Please go ahead. Hey, good morning, all. Morning, Gary.
Speaker Change: Thank you. Our next question comes from the line of Gary Balter P&L from Barrington Research. Please go ahead.
Gary Balter: Hey, good morning, all.
Speaker Change: Good morning, Gary Gary, but I just.
Kevin Olsen: I have I have a question just on the whole heavy duty market. I mean, I understand that it's a, you know, choppy environment out there and all but aren't most of your products going into this market for repair and Is there just a real big diminishment of on the road trucking going on here or are truckers just putting off repairs? I'm just trying to get an understanding of what is driving this market to perform as poorly as it has. Yeah, it's a great question, Gary. And I think you're exactly right. I think the overall market is down.
Speaker Change: I have a question just on the whole heavy duty market.
Speaker Change: I understand that it's a.
Speaker Change: Choppy environment out there and all but.
Speaker Change: Are most of your.
Speaker Change: Products going into this market for repair and.
Speaker Change: Is there just a real big diminishment of on the road trucking going on here or our truckers, just putting off prepares I'm just trying to get an understanding of what is driving this market to perform is.
Speaker Change: Quarterly as it has.
Speaker Change: Yes, it's a great question, Gary and I think Youre exactly right I think the overall market is down we're seeing that across all the freight indexes that we look at it.
Kevin Olsen: We're seeing that across all the freight indexes that we look at. And our parts, as you correctly point out, do primarily go for repair. And we are seeing delayed repairs across the channels that we operate OK. So I guess I just from my understanding on this is there. You know, if the trucks not drivable, they've got to repair it. But is there some kind of delayed maintenance kind of repairs that are needed that they're just putting that off? Yeah, and that happens quite often in this industry, Gary. And I think what you'll see is when the market does start to inflect, you'll start to see a lot of those delayed repairs start coming back online.
Speaker Change: And our parts as you correctly point out due primarily go for repair and we are seeing delayed repairs across the channels that we operate in.
Speaker Change: Okay.
Speaker Change: So I guess just for my understanding on this is there.
Speaker Change: If the trucks not driveable, they've got to repair it but is there some kind of delayed maintenance kind of repairs that are needed.
Speaker Change: They're just putting that off.
Speaker Change: Yeah and that happens quite often in this industry, Gary and I think what Youll see is when the market does start to inflect, you'll start to see a lot of those delayed.
Speaker Change: Delayed repair start coming back online.
Kevin Olsen: Okay, so we're, you know, when that inflection happens, we expect a pretty robust ramp back up.
Okay. So when that inflection happens, we expect a pretty robust ramp back up.
David Hession: And could you remind me in a normalized market for both specialty and heavy duty or just however you want to phrase it, what would be the target operating margins that you could attain or segment margin? Yeah, Gary, the margins. Yeah, David, that's a good question. No, it's good.
Speaker Change: And could you remind me.
Speaker Change: In a normalized market for both specialty and heavy duty or just however, you want to phrase it what would be the target operating margins that you could obtain or segment margins.
Speaker Change: Yes, Gary the margins.
Speaker Change: Yes, David Thats a good question.
David Hession: Okay, we don't give guidance on for guidance, Gary on segment margins. But, you know, we think that is we look forward what's included in the guide is margin performance pretty consistent with, you know, where we are in 2024. The reason that we're not forecasting in the guide a big increase in 2025 is obviously we're not forecasting the growth. In normal environments, you're talking about high teens type margins in specialty vehicle. Although we're currently performing well below that in heavy duty, our target there is to get to mid-teens operating margins.
Speaker Change: Okay, we don't give guidance on forward.
Speaker Change: Forward guidance, Gary on segment margins, but we think that as we look forward. What's included in the guidance margin performance pretty consistent with.
Speaker Change: Where we are in 2024.
Kevin Olson: Yes, Kevin let me add to that I mean.
Kevin Olson: The reason that we're not we're not forecasting in the guide a big increase in 2025 is obviously, we were not forecasting the growth in normal environments you are talking about.
Kevin Olson: High teens type margins in specialty vehicle.
Kevin Olson: Although we are currently performing well below that in heavy duty our target there is to get to mid teens operating margin.
David Hession: That's what my question revolved around, just in a normalized market. There's plenty of upside once these markets do turn in the affirmative. Absolutely correct.
Speaker Change: What Mike that's what my question revolved around just in a normalized market. So there's plenty of upside once these markets do turn in the affirmative.
Kevin Olson: Absolutely correct.
Unknown Executive: Okay, thank you. Thank you.
Speaker Change: Okay. Thank you.
Kevin Olson: Yeah.
Speaker Change: Thank you. Our next question comes from the line of Justin Kim from SK Securities. Sir. Please go ahead.
Justin Ages: Our next question comes from the line of Justin Ages from SJS Securities.
Justin Ages: Sir, please go ahead. Hi, morning all. Morning.
Justin Kim: Hi, good morning, all.
Speaker Change: Good morning.
David Hession: Going back to, you know, there was a question on the M&A pipeline, but, you know, given the strength and balance sheet and strong free cash flow, can you, you know, give us a little indication on capital allocation priorities between share buybacks and M&A and debt pay down? Yeah, Justin, good question. It's David. Yeah, the strong year from a cash flow perspective, you look at our strategy, first area that we look at is debt and where we stand on debt and leverage. Then our ladder takes over from there. First area we look at is internal investment.
Speaker Change: Going back to there was a question on the M&A pipeline, but you know.
Speaker Change: Given the strength in balance sheet and strong free cash flow can you.
Speaker Change: Give us a little indication on capital allocation priorities between share buybacks and M&A and debt Paydown.
Speaker Change: Yes, Jeff Good question David.
Speaker Change: The strong year from a cash flow perspective, if you look at our strategy first area that we look at it that where we stand on debt and leverage.
Speaker Change: Then our ladder takes over from there.
Speaker Change: Look at it is internal investment we get our best growth their best returns M&A second and then third is returning cash cash.
David Hession: We get our best growth there, best returns, M&A is second, and then third is returning cash to shareholders. We do that opportunistically. We paused the buybacks in the Q4, given some of the uncertainty around the election and geopolitical concerns, you know, but we're committed to it. In fact, the board of directors approved a share repurchase plan of $500 million that was effective January 20, January 1 of this year.
Speaker Change: Cash to shareholders and we do that Opportunistically, we pause the buybacks in the Q4, given some of the uncertainty around the election and geopolitical concerns.
Speaker Change: But we're committed to it in fact, the board of directors.
Speaker Change: Approved a share repurchase plan of $500 million that was effective January 'twenty January one of this year. So.
David Hession: That's how we look at the capital allocation, Justin. Alright, that's helpful. Thanks.
Speaker Change: So that's how we look at the capital allocation Johnston.
Speaker Change: Alright Thats helpful. Thanks, and then moving to specialty and talked about the year over year sales growth.
Kevin Olsen: And then moving to specialty and talked about the year over year sales growth in the quarter, just wondering if you could give a little more detail on in specialty vehicle repair versus discretionary and you know, the consumer kind of sentiment that you talked about there. Yeah, it's great question. It's Kevin, I'd say overall, the market in specialty vehicle was was down for 2024. There were certainly some signs of new vehicle sales stabilizing and inventory in the channel stabilizing. But ultimately, inflation and high interest rates are going to, you know, have kept new machine acquisition prices fairly high, which which I've talked publicly about that in the past.
Speaker Change: In the quarter, just wondering if you could give a little more detail on in the specialty vehicle repair versus discretionary and the consumer sentiment that you talked about there.
Speaker Change: Yes, it's great question, it's Kevin I'd say overall the market is.
Speaker Change: Specialty vehicle.
Speaker Change: Which was down for 2024.
Speaker Change: There were certainly some signs of new vehicle sales stabilizing.
Speaker Change: Inventory in the channel stabilizing.
Speaker Change: But ultimately inflation and high interest rates are going to have kept.
Speaker Change: New machine acquisition prices fairly high which impacts us talk publicly about that in the past.
Kevin Olsen: You know, hence, you know, our focus on non discretionary repair parts, something that they were, you know, especially Super ATV was under indexed at the time of acquisition, and channel expansion. You know, we've made a lot of progress on both those fronts, which enabled us to outperform the market in the quarter and for the year in 2024. And we believe we took some some decent market share.
Speaker Change: Hence our focus on.
Speaker Change: Non discretionary repair parts.
Speaker Change: Something that they were especially Super ATV was under indexed at the time of acquisition.
Speaker Change: And channel expansion.
Speaker Change: We've made a lot of progress on both those fronts.
Speaker Change: It's enabled us to outperform the market.
Speaker Change: In the quarter and for the year in 2024.
Speaker Change: And we believe we took some some decent market share.
Justin Ages: You know, it's, it's, it's, it's unclear about when when the market is going to recover fully, you know, particularly with with the trade uncertainty now on top of that. And we are expecting again, modest growth in 2025 for the segment. All right, thanks. I appreciate you taking the question. got it.
Speaker Change: Yes.
Speaker Change: It's it's unclear.
Speaker Change: When the market is.
Speaker Change: To recover fully particularly with the trade uncertainty now on top of that.
Speaker Change: And we are expecting again modest growth in 2025.
Speaker Change: For the segment.
Speaker Change: Alright. Thanks, I appreciate you taking my questions.
Speaker Change: Got it thanks.
Unknown Executive: Thank you.
Bret Jordan: Our last question comes from the line of Bret Jordan from Jefferies. Sir, please go ahead. Hey, good morning, guys. Good morning, Bret. Good morning.
Speaker Change: Thank you our last question comes from the line of Bret Jordan from Jefferies. Sir. Please go ahead.
Bret Jordan: Good morning, guys.
Speaker Change: Good morning, good morning, Brett.
Bret Jordan: Could you talk about the margin profile of complex electronics within light vehicle?
Speaker Change: Hey, good morning could you talk about the margin profile of complex electronics within light vehicle.
Kevin Olsen: Is that a meaningfully higher margin or in line with the category? Hey, Brett, it's Kevin. Good question. We don't typically break out the margin profile of segments within our business segments, you know, so product categories. I will tell you that the overall segment is performed very well when you talk about complex electronics. It certainly outgrew the overall business in 2024, and we continue to predict that'll happen going forward. The margin profile is strong. I mean, typically, as I said in the past, those products have a high balance of new-to-the-aftermarket. So when that product gets launched, the only competitor that we have in the space would be the OE.
Speaker Change: Is that a meaningful.
Speaker Change: <unk> higher margin or or in line with the category.
Kevin Olson: Hey, Brian its Kevin.
Speaker Change: Good question, we don't typically break out the margin profile of segments.
Speaker Change: Within our business segments, So kit product categories I will tell you that the overall segment has performed very well when you talk about complex electronics.
Speaker Change: It certainly outgrew the overall business in 2024 and.
Speaker Change: We continue to predict that will happen going forward. The margin profile is strong I mean, typically yes, as I said in the past.
Speaker Change: Those products.
Speaker Change: Have a high balance of of new to the aftermarket.
Speaker Change: So when that product gets launched.
Speaker Change: The only competitor that we have in this space would be the OE.
Kevin Olsen: So in those cases, typically that's where we have the highest margin profile and we have the highest competitive moat. Right.
Speaker Change: So in those cases, typically that's where we have the highest margin profile.
Speaker Change: We have the highest competitive moat right. So.
Kevin Olsen: So, you know, with the technical difficulty of a lot of these parts, you know, we we typically have a lot more new to the aftermarket and we're exclusive for a lot longer in complex electronics.
Speaker Change: With the tactical dip.
Speaker Change: Difficulty of a lot of these parts.
Speaker Change: We typically have.
Speaker Change: Have a lot more new to the aftermarket or exclusive for a lot longer.
Speaker Change: And complex electronics.
Bret Jordan: Okay, and then I guess on the big, big picture question on the light vehicle side, what do you see as the underlying inflation rate and pricing this year? I, you know, obviously X tariff, but, you know, rates have stayed high. So factoring costs are up.
Speaker Change: Okay, and then I guess on the Big Big Picture question on the light vehicle side.
Speaker Change: Do you see as the underlying inflation rate in pricing this year, obviously ex tariffs.
Speaker Change: Rates have stayed high and so factoring costs are up what would you think you will see Pos for inflation.
Kevin Olsen: What would you think you will see at POS for inflation? Yeah, that's a good question, Bret. And obviously, you know, the elephant in the room is the tariffs, right? So I can't really predict what's going to happen there, given it's so fluid at the moment. Let's assume there were no tariffs. I would say you're probably in that very low single one-ish type percent, because there has been some general inflation outside of tariffs as we, you know, move through 2024.
Bret Jordan: Yes, Thats a good question, Brett and obviously.
Bret Jordan: The elephant in the room is the tariffs right. So I can't really predict what's going to happen there given it's so fluid at the moment, let's assume there were no tariffs.
Speaker Change: I would say youre probably in that.
Speaker Change: Very low single one ish type percent because there has been some general inflation outside of tariffs as we move through 2024.
Bret Jordan: Great.
Unknown Executive: Appreciate it.
Speaker Change: Okay, great appreciate it thank you.
Unknown Executive: Thank you.
Unknown Executive: Got it.
Speaker Change: Got it.
Unknown Executive: Thank you.
Unknown Executive: That concludes our conference call.
Speaker Change: Thank you that concludes our conference call. Thank you for joining today and you may now disconnect.
Unknown Executive: Thank you for joining today and you may now disconnect.
Speaker Change: Okay.
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