DORM - NASDAQ

Good morning, and thank you for standing by. Welcome to the Dorman Products Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I'd now like to turn the conference over to Alex Whitelam, Vice President of Investor Relations. Thank you, sir. Please go ahead.

Thank you. Good morning, everyone. Welcome to Dorman's Third Quarter 2025 Earnings Conference Call. I'm joined by Kevin Olsen, Dorman's Chief Executive Officer; and David Hession, Dorman's Chief Financial Officer. Kevin will provide a quick overview, along with an update on each of our business segments and their respective markets. Then David will review the consolidated results and our guidance before turning it back over to Kevin for closing remarks. After that, we'll open the call for questions. 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. We'll 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 in the Investor Relations section of Dorman's website. Finally, during the Q&A portion of today's call, we ask that participants limit themselves to 1 question with 1 follow-up and to rejoin the queue if they have additional questions. And with that, I'll turn the call over to Kevin.

Thanks, Alex. Good morning, and thank you for joining our third quarter 2025 earnings call. As Alex mentioned, I'll start with a high-level review of the results along with an update on our segments and market observations for each before turning it over to David. Let me start on Slide 3. First, I'd like to thank our contributors for all their hard work and dedication this year, which allowed us to execute exceptionally well and deliver for our customers. In the third quarter, we drove strong top and bottom line growth. Consolidated net sales were $544 million for Q3, up 7.9% year-over-year. This growth was primarily driven by tariff-related pricing actions that took effect in the quarter, which we covered in detail during our last earnings call. Additionally, we saw solid POS growth in the quarter which was up mid-single digits year-over-year. As we expected and discussed previously, we delivered strong margin growth in the quarter. This was largely driven by the timing dynamics of pricing and costs associated with tariffs. As a reminder, while the majority of our price increase went into effect in the third quarter, the inventory that we purchased in Q2 comes with higher tariff-related costs that will begin to impact our income statement in the fourth quarter of this year. As a result, we expect a lower gross margin in Q4 compared to Q3. Adjusted operating margin for Q3 2025 was 20.5%, a 340 basis point increase over last year's third quarter. Adjusted diluted EPS grew 34% year-over-year to $2.62 which, again, was driven by our growth, margin expansion and the timing dynamics of pricing and costs related to tariffs. Finally, operating cash flow was $12 million, and free cash flow was $2 million in the quarter. While this is a slight improvement over Q2, our cash flow continues to be impacted by higher tariff costs. David will discuss this in more detail shortly. So while there were some timing subtleties within the quarter, we're pleased with our performance and expect to continue delivering strong year-over-year growth for our shareholders. Next, I'll provide our results for each of our business segments. I'll also dive into our market observations and share some highlights for each. Starting on Slide 4, our Light Duty business had another strong quarter with net sales increasing 9% year-over-year in Q3. The growth was primarily driven by tariff-related pricing actions that took effect in the third quarter. POS more closely aligned with our net sales up mid-single digits year-over-year. And similar to last quarter, we're not seeing any significant oversupply in the inventory data we have from our largest customers. On the margin front, Light Duty delivered a 470 basis point gain in operating margin, driven primarily by tariff-related pricing as well as the impact of our supplier diversification initiatives. Looking across the Light Duty market, macro trends continue to remain positive. The vehicle miles traveled increasing year-over-year. However, uncertainty in the market related to tariffs and trade dynamics continues to persist. We're closely monitoring the environment and continue to work with our suppliers and customers as part of our overall tariff mitigation strategy. And while it appears that inflationary pricing has started to reach our end users, we remain confident in our ability to drive long-term growth as nondiscretionary repair parts have historically performed well through various economic cycles. We also thought it would be helpful to provide some business insights and highlight new products and updates across our segments. In the Light Duty business, we recently launched an electronic power steering rack for specific Ram truck models from 2013 to 2024. This is a first aftermarket part and the only available option in the independent aftermarket that is manufactured new. This product is a great example of our capabilities within complex electronics given the functionality and integration of various systems throughout the vehicle. The EPS rack is an OE fixed component with significant upgrades compared to the original manufacturers part and designed to ensure a long, reliable service life. Electronics within have been redesigned with added service protection and an improved layout to reduce heat and electrical interference. Additionally, protective coatings have been applied to resist contamination from water, salt dust and other harmful contaminants. It has also been designed for simple, seamless installation with no dealer programming needed. This product is a culmination of extensive complex cross-functional work with our engineering teams. So I'd like to congratulate everyone involved. Next, let me turn to Slide 5 for updates on our Heavy Duty business. Net sales grew 6% year-over-year in the third quarter. While market conditions continue to pressure the segment, the team executed on the pricing front and drove volume through new business wins. The benefit of higher net sales growth in the quarter was offset by lower manufacturing productivity, impacting margins, which were flat year-over-year. Longer term, we remain focused on driving a mid-teens operating margin profile for the Heavy Duty segment. Digging more into the broader trucking and freight market, it remains difficult to predict an inflection point. While we're pleased with the recent net sales growth over the last 2 quarters, we continue to see mixed signals across our customer channels, but we're hopeful that the worst is behind us, we'll see a turn in the coming quarters. Despite the headwinds, we continue to execute key initiatives to best position the business for the eventual rebound of the trucking and freight market. As an example, we just launched our redesigned website with an improved e-commerce platform that helps customers identify the right parts for the right applications and get our products to the right locations on time. We expect a new site, which has been designed with the next generation of heavy-duty repair professionals in mind will enable us to scale and be even more competitive with the help of its user-friendly interface and modernize look and feel. On Slide 6, I'll provide an overview of the Specialty Vehicle segment. Top line growth was relatively flat year-over-year with continued market pressures in the quarter, including weak consumer sentiment from tariffs and interest rates remaining at higher levels. Operating margin was impacted by lower manufacturing productivity in the quarter as we proactively reduced production in our Chinese manufacturing facility in Q1 following a ramp-up of production in Q4 of 2024 to get ahead of tariffs. Long term, we are targeting a high-teens margin profile for the business. We remain focused on our innovative strategy and continuing to develop new products for both the current park and next-generation vehicles. Despite the challenging consumer sentiment during the quarter, UTV and ATV ridership remains strong, which is a continuation of the positive trends we've seen in prior quarters. We expect that as the economy continues to stabilize and interest rates further decline, riders will increase their spending on their vehicles. OEs have also commented that machine inventory is starting to normalize, which should bring stability to the end market. Speaking of new products, I wanted to highlight the 4-inch long travel kit that we introduced for Polaris XD 1500 models. This bundle widens the vehicle's wheelbase by a total of 8 inches, providing more stability and control on rough terrain. The kit is designed for more of a utility application, allowing operators to improve the rides that fit the work they do on a daily basis. This is a great example of a solution design for those utilizing their vehicles for work, not just play. We continue to expand our portfolio of nondiscretionary utility-focused products to broaden our reach with new users. With that, I'll turn it over to David to cover our results in more detail. David?

Thanks, Kevin. Let me start with our consolidated results for the third quarter on Slide 7. Net sales in the third quarter were $544 million, up 7.9% year-over-year. As Kevin outlined, our net sales growth was driven primarily by tariff-related pricing initiatives. Positive macro trends in our Light Duty business and the success of our innovation strategy across all 3 segments remain foundational to the strong momentum of the overall business. Adjusted gross margin for the quarter was 44.4%, a 390 basis point increase compared to last year's third quarter. As Kevin mentioned, this margin expansion was driven by the timing dynamics of when price and costs related to tariffs are recognized in our income statement. Additionally, our supplier diversification efforts contributed to margin improvement in the quarter. We remain on track to reach our goal of reducing our overall supply from China to 30% to 40% as we exit 2025. Adjusted SG&A expense as a percentage of net sales was 23.9%, up 50 basis points compared to the same period last year. Adjusted operating income was $111 million for the third quarter, up 30% compared to last year's third quarter. Adjusted operating margin expanded 340 basis points to 20.5%, primarily from the improvement in gross margin I just discussed. Finally, adjusted diluted EPS in the third quarter was $2.62, a 34% increase year-over-year. In addition to the increase in operating income, lower interest expense positively impacted our adjusted diluted EPS growth, offsetting a higher comparable effective tax rate, given favorable discrete items in last year's third quarter. Turning to our cash flow on Slide 8. For the third quarter, our cash flow was impacted by the higher cost inventory, affected by tariffs. This led to operating cash flow of $12 million and free cash flow of $2 million in the quarter, which was a decline from last year, but a modest improvement from last quarter. We expect that free cash flow will rebound in the coming quarters. With tariff and trade uncertainty impacting parts of our business, we maintained our pause on share repurchases through the quarter. As always, we'll continue to monitor market conditions, along with the cash needs of the business and opportunistically repurchase shares to return capital to our shareholders as part of our broader capital allocation strategy, which remains unchanged. We also believe we remain well positioned to fund our strategic growth initiatives, given our strong liquidity position, which I'll cover on the next slide. Slide 9 reiterates what we've been saying for a number of quarters now. Our asset-light nature and long track record of generating strong levels of cash flow have enabled the liquidity position and balance sheet capacity that allow us to manage higher cost inventory while still investing in strategic growth opportunities. As you can see, at the end of the quarter, net debt was $401 million and our net leverage ratio was 0.92x adjusted EBITDA. Additionally, our total liquidity was $654 million at the end of September, up from $642 million at the end of 2024. Again, we expect the strength of our balance sheet will stand as a competitive advantage and a key driver of our success going forward. Finally, let me discuss our guidance for 2025 on Slide 10. With our strong performance through the first 9 months, we have reaffirmed our net sales and EPS guidance ranges for the year. Our guidance for 2025 is based on the tariffs that are currently enacted. Should any material changes to tariffs or trade disruptions significantly impact our business or alter our expectations, we may look to update our guidance prior to year-end. Starting with top line. We expect net sales growth to be in the range of 7% to 9% over 2024. And for adjusted diluted EPS, we expect a range of $8.60 to $8.90 or an increase of 21% to 25% compared to last year. Finally, for modeling purposes and additional clarity on the final quarter of the year, we expect that Q4 will see a reduced gross margin percentage compared to this quarter as tariffs begin to impact our cost of goods sold. Also, we expect the full year tax rate will land at approximately 23.5%. With that, I'll now turn it back over to Kevin to conclude. Kevin?

Thanks, David. Just to finish up, I'd like to commend the team on delivering strong top and bottom line performance in the quarter and year-to-date. Our results reflect the hard work and dedication of our contributors all around the globe who are managing exceptionally well in the dynamic economic environment. Our business is well positioned to deliver strong performance in 2025 and we're pleased with the opportunities ahead. With that, I would now like to open the call up for questions. Operator?

[Operator Instructions] Your first question comes from the line of Scott Stember of ROTH Capital.

Last week, one of your bigger customers commented that they were starting to see some elasticity issues, notably on the DIY side. Are you seeing any change in behavior, whether it's DIY or DIFM related to elasticity? Or is it too soon to say at this point?

Scott, it's Kevin. Good question. Look, I'm not going to comment on what our customers say. But I will tell you how we're looking at it, really solid quarter, growth up 9% in Light Duty, 8% overall. POS was solid in the quarter. New continues to be a strong driver of growth. Macros continue to look solid in terms of the sweet spot of the vehicle, miles, age of the vehicle. But keep in mind that our portfolio differs quite a bit from a lot of our customers and a lot of our other folks in the supplier community, we have a heavy nondiscretionary majority of our parts. So either your car is not going to run or it's not going to run safely. So we have some benchmarks as well. We went through the 2018 and '19 time frame where we had some inflation. We went through the time period of 2023 and -- 2022, '23 when we had that inflationary period, and we raised prices and what we generally see over time is our portfolio is generally inelastic and performs pretty well because of the nondiscretionary nature of it.

Got it. And then last question before I jump back into the queue on margins. Typically, when price increases go through to cover tariffs, usually there's some optical distortion on the margin line. But it seems that you guys at least recently have been comfortable that you could keep margins relatively flat because of some of the self-help stuff that you have going on. Is that narrative still in play? And just trying to get a sense of where we should look at margins as we go forward in the next couple of quarters.

Yes. Look, really strong quarter for margins. We've reached 20% operating margin. But as David said in his prepared remarks, we do expect some compression as we move into the fourth quarter with the dynamic of the tariffs coming through COGS, cost of goods sold. But there are a lot of activities that we've also talked about that we anticipate reading through, whether that be cost initiatives, whether that be productivity improvements in our DCs and throughout the business, frankly. And longer term, we continue to see this business as a high-teens operating margin business.

Your next question comes from the line of Jeff Lick of Stephens Inc.

Congrats on a nice quarter. Kevin, I was wondering if you could just maybe address the trajectory of Light Duty, up 9.3%, with price increases relative to the 10.1% and 13.8% it was up the previous 2 quarters. Just any additional color, clarity on what was driving that? That would be great.

Look, it was -- Jeff, we view it as a very solid quarter in Light Duty, 9% sales growth. POS was very solid in the quarter. New products continue to drive exceptional growth there. We don't see that stopping. As I mentioned before, the macroeconomic environment still looks very good there in terms of the sweet spot of the 7- to 14-year-old vehicle continues to rise. Miles driven continue to increase. I think the age of the vehicle now is around 12.8 years old. So when we step back and we look at it, given the nondiscretionary nature of our portfolio there, we feel really good about driving future growth.

And Jeff, to add a little color. I'm sorry, to add a little color there. The Q3 was 9.3% was real consistent with the second quarter, and it's pretty consistent with the first quarter as well because if you look at the first quarter, it had a very easy comp. So pretty consistent growth through the year on Light Duty business.

Just a quick follow-up on the kind of the dynamics of price increases. I was just curious as let's just say you guys decide, hey, you're going to take a 4% price increase, which obviously goes to your customer, who then, in turn, will pass that along in 1 way, shape or form to the end user. How does that dynamic play out? Is it typically that your customer is going to take your price increase and just pass that on percent -- at the same percentage? Or what's the dynamic there?

Yes. I mean, look, I really can't comment on how our customers are going to react to potential price increase from us or any other -- any other supplier. All I can tell you, Jeff, is kind of how we handle it. It's a multifaceted approach, right? I mean -- and it's really in line with historical practices that I talked about earlier. We've been through this before in '18, '19 and '22, '23. First, we have a very defined strategy to diversify our supply chain, which we've made a lot of progress on over the years. We're a much different company than we were from that respect from 6, 7 years ago. We negotiate with our suppliers, right? I mean, obviously, these are our supply partners around the globe. And so we obviously look to get the best price value combination we can from our supply base. And then as I mentioned earlier, we continue to look at productivity initiatives across the company. And when that's all said and done, we'll work with our customers to strategically implement price increases. But beyond that, Jeff, I really can't comment on what our customers are going to do from that standpoint.

Your next question comes from the line of Tristan Thomas-Martin of BMO Capital Markets.

First Brands has been all over the news. How should we think about kind of like product overlap or any other overlap? And then what could it be potentially in terms of the opportunity for you guys?

Yes. Thanks for the question, Tristan. It's a good one. I'll start out by saying that we don't view ourselves as a comparison to First Brands. And then I'll also point out from the Dorman perspective, we have a very healthy balance sheet and liquidity. And I think we're carrying less than 1x leverage at this point. We don't engage in any off-balance sheet financing. We only participate in the customer-sponsored factoring programs with our largest customers, and frankly, we've been doing that for decades. We do have publicly secured debt, but we haven't speculatively financed our receivables or frankly, any other working capital assets. And to kind of address your question straight on. I mean, we do have some categories that overlap with First Brands, but not in a material way. It's really around the edges. And of course, we stand ready to help our customers that if they need help from this situation as we always do.

Okay. And then just one on specialty vehicles. I was just wondering you introduced the new long travel suspension for the XD1500. Do you see any change in aftermarket attachment rate on newer vehicles, such as the XD 1500, that OEMs are focused a little bit more on factory accessories versus maybe some older more mature vehicles that don't have the same OEM kind of accessory split?

Yes. I mean, clearly, when you have less contented models, that's a good thing for us. And frankly, with price points being what they are, and they've increased so much over the years, we view that as a good dynamic going forward because I think we'll start to see a lot more entry price point models in the future. So I'd tell you that the specialty vehicle market continues. Look, we're very -- we love the business. Rider enthusiasm continues to remain high. We do surveys of dealers and riders consistently. But the discretionary side of that business has definitely felt more impact, which is roughly half the business. And that's why we continue to double down on nondiscretionary repair parts in that business, which we've really expanded that portfolio since the acquisition a few years ago.

Your next question comes from the line of Bret Jordan of Jefferies.

I think you said that your POS was up mid-single digits. Is that units or is that POS dollars out the door of the customer? I guess if we can sort of look at the Q3, how much of the growth was price versus pieces?

Yes, Bret, that's dollars. And we've always quoted POS in dollar terms. Hope you can appreciate that we don't and have never disclosed unit growth for competitive reasons. It could really put us in a situation with some customers that they could triangulate price increases. So we don't disclose that. I'll only say that POS growth in the quarter was very solid, particularly as we look at it compared to Q2. And look, as I said before, the nondiscretionary nature of our portfolio bodes well in a period of increasing inflation. We've seen it before. It's not our first time going through a period like this.

Yes. So I guess when you think about your customers have sort of thrown out same-SKU inflation between 2.5% -- at least 3% and then 4%, where do you sort of [Technical Difficulty] that low mid-single digit, is the right number?

You broke up a little bit there, Bret. I will -- I think I got the gist of your question though. I mean -- at the end of the day, I can't comment on what my -- our customers that are publicly out there have very different product offerings than we do in terms of DIY, and we tend to -- the majority of our portfolio is, as you know, hard parts, much more DIFM, professional content. So it's not a real good compare trying to compare some of our customers to our portfolio.

Okay. And then a question on supply chain. I think you're saying you expect to be 30% to 40% China by year-end. What's the supply chain map going to look like? I mean a few years ago, you were 70% China. Are there other countries that are concentrated, I think, sort of how diverse [Technical Difficulty] too?

Look, right now, yes, I mean, we've said previously that right now, we're about 30% to 40% China depending on the mix, roughly 30% in the U.S. and the balance is rest of the world. I think we're -- as we move forward, you'll probably see a little bit less than that indexing towards China. But to be honest, I think we feel pretty good about the nature of the footprint now. Even with regard to all these very fluid situation around tariffs, we're very diversified. And frankly, we have a very robust supply chain, much more robust than we did 6, 7 years ago. So I think we can handle anything that's thrown at us on the trade front, given where we are and frankly, if we need to pivot, we have the experience to do that. We have the know-how and the tools and the experience to do that.

It seems like some of your margin benefit has been sort of shifting the supply chain. Is the rest of the world cheaper than your prior average? Or is it -- where are you picking up this margin from sort of revamping the supply chain?

Well, I mean there's certainly been some of that as we've -- over the years, Bret, I mean, it seems like we've been in a constant flux since 2018, '19. But listen, we're never going to move to a region where we become uncompetitive. I mean, so that's always a part of the calculus in terms of the cost, but there's a lot of other things that factor in there, too, in terms of the quality, the value that the supplier offers, the lead times. So there's a lot that goes into that equation. But at the end of the day, the moves we made we feel comfortable that we can remain competitive in this environment.

Your next question comes from the line of David Lantz of Wells Fargo.

I guess considering strong Light Duty sales and a sequential improvement in Heavy Duty and Specialty Vehicle trends, curious if you could just talk about your share position across those segments in Q3.

Yes. Sure. I mean, listen, in Light Duty, we continue to believe we're taking share. If you look at the overall market growth statistics that we look at over the years, anywhere between 3% and 4% historically. We've consistently outperformed that. And that's really driven by our new product efforts, particularly new to the aftermarket, where that part only exists in the OE channel the day before we launch it. And that's been a huge driver of growth. I'd say in Heavy Duty, we did see some nice growth in the quarter. So some positive signs. Some of that growth was driven by tariff pricing, but we also had some key customer wins. That -- we have a very small share in a large TAM and heavy duty. So we feel we have a lot of runway to go in that space. And in specialty, again, when you look at our overall share position, it's pretty small in a fairly large market. So we like the runway. It's why we like the space. And I would tell you that just in terms of share performance, we believe we're outperforming the overall market, although we're not happy with flat sales growth, we believe that the rest of the market has been down. So we do believe we're taking share. We think it's a combination of the initiatives that we've undertaken, whether that be expanding our nondiscretionary repair portfolio or geographic expansion. We've seen a lot of success in that regard.

Got it. That's helpful. And then the balance sheet is really healthy. So curious if you could talk about your appetite for M&A and what the pipeline looks like today?

Yes. Great question. Look, we have different acquisition strategies across the different segments. I think if you look at -- and I'll just remind you what those are. In Light Duty, we're always looking for potential technology acquisition as the vehicles continue to technologically advance. We want to make sure we stay ahead of that curve as we have in years past. And geographic expansion remains a priority for that segment. If you look at Specialty Vehicle, a lot -- highly fragmented market. As you know, we have a fairly small share of that market. So we view that as right for brand and product portfolio acquisition plays. And in Heavy Duty, we're still a small player in a very large market. There are a lot of channel -- channel plays where today we have opportunity that acquisition will really help us penetrate some of those channels in a much greater way. I would tell you that the funnel looks very strong. We consistently work the funnel, but I will tell you that targets -- the amount of actionable targets has been a bit slowed. I think it's slowed by the tariff situation. I think a lot of potential sellers are probably waiting to see how the tariffs impact their business, whether that be for pricing or margins or demand, what have you. I think once that shakes out, I think there'll be a lot more activity on the other side of that.

Yes. And just a little comment on the balance sheet. The leverage right now in the quarter was 0.92x. So strong balance sheet. We view that we've got the dry powder to not only absorb the higher cost of inventory but also execute against the M&A program, which Kevin outlined.

Your next question comes from the line of Justin Ages of CJS Securities.

I wanted to follow up on the comment about First Brands. So I think we're aware about the customer-sponsored factory. Have you seen any or had any conversations about terms that you guys -- the terms that might be changing as a result of that? Or completely unrelated and then the terms are pretty clear set?

Yes. Just the terms are pretty clear, and we don't see any indication that there's going to be any change in the terms.

Okay. That's helpful. And then on the Light Duty, can you give us some color on the amount of time, like the lead time for the power steering product that you outlined. Just want to get a sense of from idea to get to market how long that took?

Well, that's a loaded question, but it's also a great question. For that particular product, I mean, we have been in the market with an electronic power steering rack for a different making model, starting about 18 to 24 months ago. But if I look at total development time on a part like that, it's substantial. Certainly a lot longer than a purely mechanical part, as you can imagine. There's a safety component to that part, there's an electronic -- complex electronics component to that part. So it's a much longer cycle time on that part. And obviously, as a result, has a much higher selling price than a pure mechanical part.

Your next question comes from the line of Gary Prestopino with Barrington Research.

Could you guys give us some idea on specialty, what the mix is of nondiscretionary versus discretionary and at this point and how that has shifted since the acquisition?

Gary, sure, absolutely. It's roughly about 50-50 right now, and it was materially less than that when we acquired the business. So it's moved up quite a bit. And I think we're very well positioned for when that market does recover. The pure accessory side and then the brake fix or nondiscretionary repair to drive oversized growth compared to market when we do start seeing the recovery and the geographic expansion, which I talked about before, too, we've seen some great progress there as well.

Yes, that's what I wanted to hit on, too. I mean the geographic expansion, as I recall, you said you were west of the Mississippi, you were pretty light with dealerships. Can you maybe help us out as to how that is going in terms of picking up new dealerships without getting too specific, I mean, overall growth in dealership would be helpful.

Yes, that's a great question, Gary. We have been very focused on that. And we've added -- I'll just -- I'll put it this way. We've added a significant amount of new dealer relationships out West. Now our focus is on driving more share of wallet within those dealerships. So first step, getting in the dealers, getting relationship established and now we're driving share of wallet gains there.

Your last question comes from the line of Scott Stember of ROTH Capital.

Just a quick follow-up on tariffs. Has there been any meaningful change to your exposure from a geographic standpoint, whether it's India, China or any other country, since the last time you guys gave an update?

Boy, Scott, that's a great question. I'm not -- I think the answer is yes. from last quarter. Certainly, we've seen some changes. But there's a lot of headline news around tariffs that actually haven't made their way into law or implementation. So it's hard for me to -- it's changed so much. It's been so fluid, Scott. It's hard for me to pinpoint an exact date. But look, I'll just summarize it this way. Where we sit right now, we feel well positioned to handle the current tariff environment or any other potential changes that might come down the pipe, particularly as we look at how we compare competitive set. We feel like we have a footprint that is as competitive as anyone else out there in the aftermarket. And so I think we can handle any changes that come our way. And I'll characterize it as manageable at this point.

Got it. That's great.