Dorman Cuts 2026 Sales Growth Outlook to 2%-3% as Quarterly Gross Margin Narrows

Dorman Products lowered the top of its 2026 sales growth guidance to 3% from 5% on Monday and reported a 20% drop in third-quarter diluted earnings per share, as the aftermarket parts supplier gave back the gross margin it earned a year earlier. Net sales for the quarter ended September 26 rose 3.3% to $561.7 million, diluted EPS was $1.98 against $2.48, and adjusted diluted EPS was $2.08 against $2.62.

Gross margin gives back last year's tariff-pricing benefit

Dorman disclosed the figures in a Form 8-K filed October 26, 2026. Gross profit fell to $221.6 million, or 39.4% of net sales, from $241.4 million, or 44.4% a year earlier, and adjusted gross profit was $221.2 million, also 39.4% of sales, against $241.4 million and 44.4%. Operating expense was not the source of the pressure: SG&A rose to $138.7 million, or 24.7% of net sales, from $135.7 million, or 25.0%, and adjusted SG&A was $132.4 million, or 23.6%, against $129.9 million and 23.9%. Almost all of the five-point margin loss therefore sits in the cost of goods sold line rather than in overhead. Olsen tied the comparison to price timing: “The year-over-year earnings comparison reflects the timing of tariff-related pricing that benefitted the third quarter of 2025.”

Heavy Duty margin falls to zero

Sales grew in every segment, but only Specialty Vehicle improved profitability. Light Duty, by far the largest at $443.7 million against $430.3 million, grew 3% while its segment profit margin dropped to 18.5% from 23.7%, a fall of 520 basis points. Heavy Duty revenue rose 5% to $66.1 million from $63.0 million and its margin went to 0.0% from 4.5%, down 450 basis points, so the segment earned no margin in the quarter. Specialty Vehicle sales were $51.9 million against $50.4 million, up 3%, and its margin improved to 13.1% from 12.8%.

Guidance narrows and the sales ceiling drops

The company now guides full-year 2026 net sales growth of 2% to 3%, against 3% to 5% previously, with diluted EPS of $7.95 to $8.15 against a prior range of $7.93 to $8.23. Adjusted diluted EPS is guided to $8.50 to $8.70 from $8.50 to $8.80, which the company's own table presents as a decline of (4)% to (2)% from 2025, while GAAP EPS is guided to grow 20% to 23%. The tax rate estimate widened to 23.5% to 24.0% from 23.5%. Olsen framed the change around the fourth quarter: “Given our performance through the first nine months of the year and additional pricing actions we expect to take in the fourth quarter, we are narrowing our full-year 2026 guidance.”

Tariff costs and fourth-quarter pricing stay unquantified

The guidance includes the effect of tariffs enacted as of October 26, 2026, and excludes any tariff change after that date, future acquisitions and divestitures, and additional share repurchases. The release does not put a dollar figure on tariff cost, on the pricing actions management says it will take in the fourth quarter, or on the sales those actions are expected to recover. It reports segment profit margins but not segment profit dollars. It also does not reconcile the 2025 GAAP base that makes full-year GAAP EPS guidance a 20% to 23% increase while the adjusted measure is guided lower.

Cash flow, buybacks and the October 27 call

Cash from operating activities was $64.6 million for the quarter, and the repurchase program continued. Olsen said the company “generated $65 million of operating cash flow and repurchased $15 million of our common stock in the quarter”, and that year-to-date repurchases had reached a company record of $112 million. For the first nine months, diluted EPS was $6.33 against $6.26 and adjusted diluted EPS was $6.73 against $6.70, so the year to date is close to flat while the third quarter fell. The release carries no consensus comparison, and this report makes no claim about whether the quarter met expectations. Dorman holds its call on Tuesday, October 27, 2026 at 8:00 a.m. Eastern, and the next hard figures are fourth-quarter and full-year 2026 results.