# To Our Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-cyclical-auto-parts/NASDAQ_DORM_2018/NASDAQ_DORM_2018.mmd` · pages 3-9_

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To Our Shareholders,

This past year will be remembered as a milestone in Dorman's history. From start to finish, 2018 brought dramatic and positive changes for our company that will drive our growth for years to come.

Of course, the fact that I'm writing to you is a change. After a fantastic 19-year career at Dorman, most recently as President and CEO, Matt Barton announced his retirement this past year. Under Matt's leadership, Dorman continued its history as the premier Aftermarket innovator. On behalf of the entire Board of Directors, I'd like to sincerely thank Matt for his substantial contributions towards providing Dorman a foundation of continued profitable growth for years to come.

That was just one of many monumental shifts for our organization. I couldn't possibly capture them all in this letter, but here are some highlights.

• We acquired Flight Systems, a highly respected manufacturer and re-manufacturer of complex electronics based in Lewisberry, Pennsylvania, two hours away from our headquarters. Flight will be essential to growing our electronics capacity as modern vehicles become more technologically advanced.

• Building upon the acquisition of MAS in 2017, we launched a new full chassis line, unveiling the new Dorman Premium, Dorman Premium RD, and MAS brands. Chassis is a key category for Dorman, and we have already earned some major competitive wins.

• We completed construction of a state-of-the-art, 816,000-square-foot new distribution facility in Portland, Tennessee. This amazing new facility will continue to improve our ability to service our customers.

As much as some things changed, others proudly stayed the same:

• We released nearly 5,500 new products in 2018, including 1,700 Aftermarket exclusive solutions. The innovative thinking, design, engineering and quality control that goes into these products has become a Dorman hallmark, and we continue to be the source the Aftermarket checks first whenever they have a repair.

• Our heavy duty business continues to grow significantly year over year. Revenues were up 28% in 2018 as we expand coverage and market awareness. We released 160 new heavy duty parts last year, including nearly 60 Aftermarket exclusives, and still see outstanding opportunities for continued rapid growth.

• Our core categories continued to be highly sought-after by our customers and end users. Sales of our core categories were up 7% last year, with continued strength in our chassis parts, control arms, and window regulators.

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## 2018 Annual Report

Another familiar trend was that we continued to provide long-term value to our shareholders. A \(100 investment in Dorman stock made in January 1999 would be worth over \)4,700 in January 2019. Our net sales increased 8% to \(973.7 million, up from \)903.2 in 2017. Adjusted net income increased 22% to \(139.4 million from \)114.7 million in the prior year, while adjusted diluted earnings per share rose 25% to \(4.20 from \)3.37 in 2017. (Please refer to the Non-GAAP Financial measures found at the end of this annual report for a reconciliation to the corresponding GAAP measures.) And, we have generated a five-year compounded annual growth rate of 8% in net sales and 13% in adjusted EPS.

In addition, we returned \(43.4 million to our shareholders through the repurchase of 622 thousand shares of our common stock in fiscal 2018, and since the program's inception in December 2013, we have returned \)216.7 million to our shareholders.

Our vision for the next five years sees Dorman expanding well beyond our niche, seizing new opportunities and outcompeting any challengers. With particular focus on heavy duty, electronics and strategic acquisitions, we have aggressive plans to pursue profitable growth.

The one key thing that makes all this possible is our Culture of Contribution. We promote and reward courage in pursuing new ideas. We have a deep commitment to deliver value to our customers and we empower and trust each other. We take accountability for the results of our work, and we constantly strive for excellence. These values that steer our Contributors are unique to our company and are what will continue to drive our success.

Thank you for your continued confidence and support.

![](images/4_0.jpg)

![](images/4_1.jpg)

Kevin M. Olsen
President
and Chief Executive Officer