# To Our Fellow Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-cyclical-auto-parts/NASDAQ_DORM_2022/NASDAQ_DORM_2022.mmd` · pages 1-7_

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To Our Fellow Shareholders:

Fiscal 2022 was another year of record financial results for Dorman, achieved in a challenging business environment. We successfully navigated unprecedented global supply chain disruptions, COVID-related delays and closures experienced by many of our global suppliers, several quarters of extraordinary inflationary pressures, and rising interest rates. Our team of Contributors faced those challenges straight on and focused on driving efficiencies, controlling costs, and implementing price increases while continuing to execute against our strategic initiatives. Customer demand remained robust throughout 2022, and we leveraged both our long-standing relationships with our global supply chain partners and our internal manufacturing capabilities to ensure that we had the right products at the right location to meet our customers' requirements, enabling us to grow faster than the overall market. Our results are a testament to the dedication and resiliency of our Contributors, whose passion and drive made our 2022 financial results possible.

In October 2022, we grew the Dorman family with the acquisition of SuperATV, the largest acquisition in our history. SuperATV expands our product portfolio into the powersports aftermarket through a family of highly respected brands spanning functional accessories and upgrades, as well as break-fix replacement parts. The combination aligns with our strategy to diversify our customer base and product offering by providing a compelling entry point to the large and rapidly growing powersports industry. We are confident we can leverage Dorman's playbook to further accelerate SuperATV's growth and are excited about the benefits the combined company will generate for our customers and shareholders.

## Other highlights from 2022 include:

• Growing net sales by 29% (14% excluding the impact of acquisitions), outpacing the overall estimated market growth.

• Delivering 3% growth in adjusted diluted earnings per share.

• Increasing the number of launched "New to the Aftermarket" skus by 58% year-over-year.

• Opening a new 827,000 square foot distribution center in Whiteland, IN to increase our capacity.

• Completing the integration of Dayton Parts, whose financial results exceeded our expectations.

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• Publishing our inaugural Environmental, Social and Governance (ESG) report.

Innovation and new product development continued to be a strategic focus for Dorman throughout the year, with a customer-first approach keeping owners and installers in mind. Our engineers and designers remained focused on creating differentiated solutions designed to help repair technicians save time and vehicle owners save money. We continued to build our capabilities in advanced technology automotive components with the introduction of several complex electronics modules. We believe that the capabilities we have built in complex electronics over the last decade provide us with a competitive advantage. Our objective is to continue to deliver products that not only drive sales and profits for our customers, but also provide the solutions that professional technicians and do-it-yourselfers want.

Being a successful innovator and an aftermarket leader requires increased brand recognition and awareness. As part of our initiative to strengthen Dorman's well-established name and reputation in the industry, we continued to grow our onsite and virtual technician training programs, training over 92,000 automotive repair technicians in 2022. We also increased our investment and presence in marketing and digital media, including social media, influencer relationships, and the distribution of popular content like our annual Dorman \( ^{®} \)  OE FIX \( ^{™} \)  Guide that promotes our brand and highlights our new products. In 2022, we also launched Shop Press, an online news and idea hub featuring articles targeted at service technicians, do-it-yourselfers, and motor vehicle enthusiasts. As a result of these efforts and our commitment to providing innovative solutions, the Dorman brand is a market leader in awareness, usage, and advocacy.

Turning to capital allocation, our strategy remained focused on both internal and external growth opportunities, with organic investment remaining a top priority followed by acquisitions that met our strategic criteria. The acquisition of SuperATV was the M&A highlight of 2022 and was financed with a new credit facility which we believe provides us with the liquidity to execute our strategic growth initiatives. Returning excess cash to shareholders opportunistically through our share buyback program also remained a cornerstone of our capital allocation strategy. In 2022, we repurchased 180,750 shares of our common stock for a total of 17.6 million and had 228.0 million of availability remaining under our current share repurchase authorization as of December 31, 2022.

Looking ahead, demand remains robust for our products driven by strong macro fundamentals across the motor vehicle aftermarket. Vehicle miles driven continue to increase, the average age of vehicles continues to rise, the number of cars in our 8 to 13-year-old sports to the aftermarket continues to grow, and a shortage of new vehicles all benefit the aftermarket. We expect these macro demand trends will continue throughout 2023. We are also encouraged by the easing of inflationary costs we have seen over the past several months and anticipate meaningful gross margin improvement as we progress through 2023, approaching historical levels. Further, we anticipate inventory levels to meaningfully decline throughout 2023 due to lower lead times and lower material and freight costs, and in the short term, we plan to utilize excess cash generated from lower inventory requirements to reduce our debt. These developments make us very optimistic about 2023.

Overall, while there remains a level of uncertainty in the global environment, I firmly believe that we have the right strategies, processes, tools and, most importantly, people in place to successfully steer our way through whatever opportunities and challenges lie ahead. I believe that our Culture of Contribution is a strategic advantage as our Contributors are passionate about innovation not only in our new product development engine but also in every other facet of the business. The collective creative energy from these efforts will be the fuel that drives Dorman's success in 2023 and beyond. I want to thank our Contributors, customers, suppliers, shareholders and other key stakeholders for your unwavering confidence and support.

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Kevin M. Olsen
President & CEO