STANDARD MOTOR PRODUCTS, INC.

Previous wording

This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements in this Report are indicated by words such as “anticipates,” “expects,” “believes,” “intends,” “plans,” “estimates,” “projects,” “strategies” and similar expressions. These statements represent our expectations based on current information and assumptions and are inherently subject to risks and uncertainties. Our actual results could differ materially from those which are anticipated or projected as a result of certain risks and uncertainties, including, but not limited to, changes or loss in business relationships with our major customers and in the timing, size and continuation of our customers’ programs; changes in our supply chain financing arrangements, such as changes in terms, termination of contracts and/or the impact of rising interest rates; the ability of our customers to achieve their projected sales; competitive product and pricing pressures; increases in production or material costs, including procurement costs resulting from higher tariffs, and inflationary cost increases in raw materials, labor and transportation, that cannot be recouped in product pricing; the performance of the automotive aftermarket and/or other end-markets that we supply; changes in the product mix and distribution channel mix; economic and market conditions; successful integration of acquired businesses; our ability to achieve benefits from our cost savings initiatives; product liability matters (including, without limitation, those related to asbestos-related contingent liabilities); the effects of disruptions in the supply chain caused by geopolitical risks; as well as other risks and uncertainties, such as those described under Risk Factors, Quantitative and Qualitative Disclosures About Market Risk and those detailed herein and from time to time in the filings of the Company with the SEC. Forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. In addition, historical information should not be considered as an indicator of future performance. The following discussion should be read in conjunction with the unaudited consolidated financial statements, including the notes thereto, included elsewhere in this Report.

Current wording

This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements in this Report are indicated by words such as “anticipates,” “expects,” “believes,” “intends,” “plans,” “estimates,” “projects,” “strategies” and similar expressions. These statements represent our expectations based on current information and assumptions and are inherently subject to risks and uncertainties. Our actual results could differ materially from those which are anticipated or projected as a result of certain risks and uncertainties, including, but not limited to, changes or loss in business relationships with our major customers and in the timing, size and continuation of our customers’ programs; changes in our supply chain financing arrangements, such as changes in terms, termination of contracts and/or the impact of rising interest rates; increases in production or material costs, including procurement costs resulting from higher customs duties and tariffs; the ability of our customers to achieve their projected sales; competitive product and pricing pressures, and inflationary cost increases in raw materials, labor and transportation, that cannot be recouped in product pricing; the performance of the automotive aftermarket and/or other end-markets that we supply; changes in the product mix and distribution channel mix; economic and market conditions; successful integration of acquired businesses; our ability to achieve benefits from our cost savings initiatives; product liability matters (including, without limitation, those related to asbestos-related contingent liabilities); the effects of disruptions in the supply chain caused by geopolitical risks;uncertainties in U.S. trade policy, particularly as it relates to Mexico, Canada and China; as well as other risks and uncertainties, such as those described under Risk Factors, Quantitative and Qualitative Disclosures About Market Risk and those detailed herein and from time to time in the filings of the Company with the SEC. Forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. In addition, historical information should not be considered as an indicator of future performance. The following discussion should be read in conjunction with the unaudited consolidated financial statements, including the notes thereto, included elsewhere in this Report.

Previous wording

We are a leading manufacturer and distributor of premium replacement parts in the automotive aftermarket and a custom-engineered solutions provider to vehicle and equipment manufacturers in diverse non-aftermarket end markets. Our business is organized into three operating segments. Our automotive aftermarket business is comprised of two segments, Vehicle Control and Temperature Control, while our Engineered Solutions Segment offers a broad array of conventional and future-oriented technologies. We sell our products primarily to retailers, warehouse distributors, original equipment manufacturers and original equipment service part operations in the United States, Canada, Europe, Asia, Mexico and other Latin America countries.

Current wording

We are a leading manufacturer and distributor of premium replacement parts in the automotive aftermarket and a custom-engineered solutions provider to vehicle and equipment manufacturers in diverse non-aftermarket end markets. Our business is organized into four operating segments. Our automotive aftermarket business is comprised of three segments, Vehicle Control, Temperature Controland Nissens Automotive while our Engineered Solutions Segment offers a broad array of conventional and future-oriented technologies. We sell our products primarily to retailers, warehouse distributors, original equipment manufacturers and original equipment service part operations in the United States, Europe, Canada, Mexico, and other foreign countries.

Previous wording

Our Temperature Control operating segment services our core automotive aftermarket customers with thermal products, and is poised to benefit from the broader adoption of air conditioning and other thermal systems. These systems will provide passenger comfort regardless of the vehicles’ powertrain, and are being developed to cool batteries and other products used on electric vehicles. Segment offerings include sales from thermal products in the aftermarket business under two major product groups:– (1)AC System Components, which includes compressors, connecting lines, heat exchangers, and expansion devices; and

Current wording

Our Temperature Control operating segment services our core automotive aftermarket customers with thermal products, and is poised to benefit from the broader adoption of more complex air conditioning and other thermal systems. These systems will provide passenger comfort regardless of the vehicles’ powertrain, and are being developed to cool batteries and other products used on electric vehicles. Segment offerings include sales from thermal products in the aftermarket business under two major product groups:– (1)AC System Components, which includes compressors, connecting lines, heat exchangers, and expansion devices; and (2)Other Thermal Components, which includes parts that provide engine, transmission, electric drive motor, and battery temperature management.

Previous wording

Consolidated net sales for the three months ended September 30, 2024 were $399.3 million, an increase of $12.9 million, or 3.3%, compared to net sales of $386.4 million in the same period in 2023. Net sales increased in all our operating segments, when compared to the same period in the prior year.

Current wording

Consolidated net sales for the three months ended March 31, 2025 were $413.4 million, an increase of $82 million, or 24.7%, compared to net sales of $331.4 million in the same period in 2024. Net sales increased in all our operating segments, except for our Engineered Solutions operating segment, when compared to the comparable period in the prior year.

Previous wording

Temperature Control’s net sales for the nine months ended September 30, 2024 increased $29.0 million, or 9.9%, to $322.1 million compared to $293.1 million in the same period of 2023. Temperature Control’s net sales for the first nine months of 2024 reflect the impact of warmer seasonal weather conditions driving customer orders in 2024 as compared to the first nine months of 2023. Overall, full year results at Temperature Control will be dependent upon ongoing weather conditions and customer inventory levels.

Current wording

•earlier timing and strong volume of pre-season customer orders in our Temperature Control operating segment. Overall, full year results at Temperature Control will be dependent upon summer weather conditions and customer inventory levels, and

Previous wording

•stable demand in the automotive aftermarket business across our major product groups,

Current wording

•stable demand in the automotive aftermarket business across our major product groups in our Vehicle Control operating segment, offset by

Previous wording

Operating margin as a percentage of net sales for the three months ended September 30, 2024 increased to 9.3% as compared to 9.0% for the same period in 2023. Included in our operating margin were selling, general and administrative expenses of $81.2 million, or 20.3% of net sales for the three months ended September 30, 2024 compared to $79.8 million, or 20.6% of net sales, for the same period in 2023. The$1.4 million increase inselling, general and administrative expenses in the third quarter of 2024 as compared to the third quarter of 2023 is principally due to (1) increased rent and incremental expenses of approximately $1.1 million as we transition away from our Edwardsville, Kansas distribution center to our new distribution facility in Shawnee, Kansas, (2) higher distribution and freight costs of $0.5 million related to higher sales, and (3) higher interest related costs of $0.3 million incurred in our supply chain financing arrangements, (4) partially offset by $1.0 million of derivative gains from forward foreign exchange contracts executed during the third quarter to economically hedge the purchase price on the pending Nissens Automotive acquisition.

Current wording

Operating margin as a percentage of net sales for the three months ended March 31, 2025 increased to 5.9% as compared to 4.4% for the same period in 2024. Included in our operating margin were selling, general and administrative expenses of $99.8 million, or 24.2% of net sales for the three months ended March 31, 2025 compared to $74.7 million, or 22.6% of net sales, for the same period in 2024. The$25.1 million increase inselling, general and administrative expenses in thefirst quarter of 2025 as compared to thefirst quarter of 2024 is principally due to (i)$20.7 million of selling, general and administrative expenses in our newly acquired operating segment, Nissens Automotive, and (ii) higher general and administrative expenses in the remainder of our business.

Previous wording

Overall, our core automotive aftermarket business remains stable, and we continue to be optimistic about the long-term growth potential of the complementary markets served in our Engineered Solutions operating segment.

Current wording

Overall, our core automotive aftermarket business remains strong, and we are both excited and optimistic for the growth potential in our newly acquired operating segment, Nissens Automotive, and the long-term growth potential of the complementary markets served in our Engineered Solutions operating segment.

Previous wording

We continue to look for opportunities to reduce our operating cost structure to remain competitive while continuing to grow our business.

Current wording

Expenses incurred pursuant to the program are recorded in restructuring and integration expenses in our statements of operations. We continue to realize the benefits of these programs through reduced operating costs in 2025 and continue to look for opportunities to reduce our operating cost structure to remain competitive while continuing to grow our business.

Previous wording

With each year, we intend to further our commitment to sustainability initiatives, improving our environmental stewardship, finding ways to give back to our communities, and enhancing the diversity and inclusion of our workforce while offering opportunities for development. Information on our sustainability initiatives can be found in our most current sustainability report and on our corporate website atir.smpcorp.com under “Sustainability” and atsmpcares.smpcorp.com. Information in our sustainability report and on our corporate websites regarding our sustainability initiatives are referenced for general information only and are not incorporated by reference in this Report.

Current wording

With each year, we seek to enhance our commitment to sustainability initiatives, improve our employee engagement, and find ways to give back to our communities. Information on our sustainability initiatives can be found in our most current sustainability report and on our corporate website atir.smpcorp.com under “Sustainability” and atsmpcares.smpcorp.com. Information in our sustainability report and on our corporate websites regarding our sustainability initiatives are referenced for general information only and are not incorporated by reference in this Report.

Previous wording

Sales. Consolidated net sales for the three months ended September 30, 2024 were$399.3 million, an increase of $12.9 million, or 3.3%, compared to $386.4 million in the same period of 2023, with the majority of our net sales to customers located in the United States. Net sales increased in all our operating segments, when compared to the comparable period in the prior year.

Current wording

Sales. Consolidated net sales for thethree months ended March 31, 2025 were$413.4 million, an increase of $82.0 million, or 24.7%, compared to$331.4 million in the same period of 2024, with the majority of our net sales to customers located in the United States. Net sales increased in all our operating segments, except for our Engineered Solutions operating segment, when compared to the comparable period in the prior year.

Previous wording

Vehicle Control’s net sales for the three months ended September 30, 2024 increased $9.9 million, or 5.2%, to $200.9 million compared to $190.9 million in the same period of 2023. Demand in the Vehicle Control aftermarket segment remains relatively stable across our major product groups.

Current wording

Vehicle Control’s net sales for the three months ended March 31, 2025 increased $6.8 million, or 3.7%, to $192.3 million compared to $185.5 million in the same period of 2024. Demand in the Vehicle Control aftermarket segment remains stable across our major product groups.

Previous wording

Temperature Control’s net sales for the three months ended September 30, 2024 increased $2.3 million, or 1.9%, to $126 million compared to $123.6 million in the same period of 2023. Temperature Control’s net sales for the third quarter of 2024 reflects continued strong customer orders due to warmer seasonal weather compared to the same period in 2023. Overall, full year results at Temperature Control will be dependent upon ongoing weather conditions and customer inventory levels.

Current wording

Temperature Control’s net sales for the three months ended March 31, 2025 increased $17.3 million, or 24.1%, to $88.9 million compared to $71.6 million in the same period of 2024. Temperature Control’s net sales for the first quarter of 2025 reflect the earlier timing of and strong pre-season customer orders compared to the same period in 2024. Overall, full year results at Temperature Control will be dependent upon ongoing weather conditions and customer inventory levels.

Previous wording

Engineered Solutions’ net sales for the three months ended September 30, 2024 increased $0.6 million, or 0.8%, to $72.4 million compared to $71.8 million in the same period of 2023. Overall, net sales in our Engineered Solutions operating segment showed year-over-year improvement driven by business wins as well as successful cross-selling efforts.

Current wording

Engineered Solutions’ net sales for the three months ended March 31, 2025 decreased $8.3 million, or 11.2%, to $66 million compared to $74.3 million in the same period of 2024. Overall, net sales in our Engineered Solutions operating segment declined year-over-year as growth from business wins and successful cross-selling efforts was more than offset by slowing demand from existing customers.

Previous wording

Gross Margins. Gross margins, as a percentage of consolidated net sales, increased to 30.4% in the third quarter of 2024, compared to 29.7% in the third quarter of 2023. The following table summarizes gross margins by segment for the three months ended September 30, 2024 and 2023, respectively (in thousands):

Current wording

Gross Margins. Gross margins, as a percentage of consolidated net sales, increased to 30.2% in the first quarter of 2025, compared to 27.0% in the first quarter of 2024. The following table summarizes gross margins by segment for the three months ended March 31, 2025 and 2024, respectively (in thousands):

Previous wording

While all segments benefited from favorable manufacturing cost absorption due to higher production levels, the gross margin percentage increase in our Vehicle Control operating segment also reflects the impact of increased pricing and saving initiatives, despite lingering inflationary increases in material and labor costs. The gross margin percentage increase in our Temperature Control operating segment also results from the impact of higher sales volumes, customer mix and the impact of cost control measures. Gross margins as a percentage of net sales in our Engineered Solutions operating segment decreased in the third quarter of 2024 when compared to the comparable period in 2023 driven primarily by inflationary cost increases. While we anticipate continued margin pressure resulting from inflationary headwinds, we believe that our annual cost savings initiatives should help to offset much of this impact to our gross margins.

Current wording

Despite lower net sales, the gross margin percentage in our Engineered Solutions operating segment increased in the first quarter of 2025 when compared to the comparable period in 2024 primarily due to favorable customer sales mix and foreign exchange movements. While we anticipate continued margin pressure resulting from tariffs, market competition and lingering inflation, we believe that our cost savings initiatives and pricing actions should help to offset much of this impact to our gross margins.

Previous wording

Restructuring and Integration Expenses. Restructuring and integration expenses were $3.0 million for the three months ended September 30, 2024 compared to $0.2 million in the same period of 2023. Restructuring and integration expenses incurred in the third quarter of 2024 relate primarily to the Separation Program announced in the second quarter of 2024 and expanded to encompass involuntary separations in the third quarter of 2024 as part of our commitment to optimizing our cost structure and providing professional development opportunities to our employees. Expenses in the third quarter of 2024 of approximately$3.0 million related to the program consists of severance and other benefit enhancements.

Current wording

Restructuring and Integration Expenses. Restructuring and integration expenses, primarily consisting of severance and other benefit enhancements, were $0.7 million for thethree months ended March 31, 2025 compared to$0.2 million in the same period of 2024. Restructuring and integration expenses incurred in thefirst quarter of 2025 relate primarily to the Separation Program initiated in the second quarter of 2024. We anticipate that the program will be substantially complete by the end of 2027.

Previous wording

Restructuring and integration expenses of $0.2 million in the third quarter of 2023 relate to the Cost Reduction Initiative announced in the fourth quarter of 2023. We anticipate that the Cost Reduction Initiative will be substantially completed by the end of 2024.

Current wording

Restructuring and integration expenses of$0.2 million in thefirst quarter of 2024 relate to the Cost Reduction Initiative initiated in the fourth quarter of 2022. We anticipate that the Cost Reduction Initiative will be substantially complete by the end of 2026.

Previous wording

Operating Income. Operating income was$37.1 million, or 9.3% of consolidated net sales, in the third quarter of 2024, compared to $34.8 million, or 9% of consolidated net sales, in the third quarter of 2023. The year-over-year increase in operating income of$2.3 million is primarily the result of higher net sales and gross margin percentage, offset, in part, by higher restructuring and integration expenses, and selling, general and administrative expenses.

Current wording

Operating Income. Operating income was$24.5 million, or 5.9% of consolidated net sales, in thefirst quarter of 2025, compared to$14.6 million, or 4.4% of consolidated net sales, in thefirst quarter of 2024. The year-over-year increase in operating income of$9.8 million is primarily the result of higher net sales and gross margin percentage, partly offset by higher selling, general and administrative expenses.

Previous wording

Other Non-Operating Income, Net. Other non-operating income, net was$2.1 million in the third quarter of 2024, compared to $1.7 million in the third quarter of 2023. The year-over-year increase in other non-operating income, net primarily results from the favorable impact of changes in foreign currency exchange rates.

Current wording

Other Non-Operating Income, Net. Other non-operating income, net was$2.2 million in thefirst quarter of 2025, compared to$0.8 million in thefirst quarter of 2024. The year-over-year increase in other non-operating income, net primarily results from the favorable impact of changes in foreign currency exchange rates in addition to higher equity income from our joint ventures.

Previous wording

Interest Expense. Interest expense decreased to $3.1 million in the third quarter of 2024, compared to $3.6 million in the third quarter of 2023. The year-over-year decrease in interest expense reflects the impact of lower average outstanding borrowings in the third quarter of 2024 when compared to the third quarter of 2023, partially offset by the write off of $1.3 million of unamortized financing costs related to the refinancing of our 2022 Credit Agreement.

Current wording

Interest Expense. Interest expense was $7.8 million in the first quarter of 2025, compared to $2.1 million in the first quarter of 2024. The year-over-year increase in interest expense primarily reflects the impact of higher average outstanding borrowings in the first quarter of 2025 when compared to the first quarter of 2024 due to borrowings to fund our acquisition of Nissens Automotive in the fourth quarter of 2024.

Previous wording

Income Tax Provision. The income tax provision in the third quarter of 2024 was $9.3 million at an effective tax rate of 25.7% compared to $8 million at an effective tax rate of 24.3% for the same period in 2023. The increase in the effective tax rate is primarily due to higher earnings and taxes in foreign jurisdictions and taxes withheld on cash repatriated from foreign jurisdictions.

Current wording

Income Tax Provision. The income tax provision in the first quarter of 2025 was $5.1 million at an effective tax rate of 26.8% compared to $3.3 million at an effective tax rate of 25% for the same period in 2024. The increase in the effective tax rate is due to higher earnings and taxes in foreign jurisdictions, primarily related to the inclusion of our new operating segment, Nissens Automotive.

Previous wording

Loss from Discontinued Operations. Loss from discontinued operations, net of income taxes, during the third quarter of 2024 and 2023 of $22.8 million and $18.2 million, respectively, reflects information contained in the actuarial studies performed as of August 31, 2024 and 2023, other information available and considered by us, and legal expenses associated with our asbestos related liability. The loss from discontinued operations for the third quarter of 2024 and 2023 primarily consists of a $29.3 million and $23.8 million pre-tax provision, respectively, to increase our indemnity liability in line with the August 31, 2024 and 2023 actuarial studies; As discussed more fully in Note 18, “Commitments and Contingencies” in the notes to our consolidated financial statements (unaudited), we are responsible for certain future liabilities relating to alleged exposure to asbestos containing products.

Current wording

Loss from Discontinued Operations. Loss from discontinued operations, net of income taxes, during the first quarter of 2025 and 2024 of $1.1 million and $1.0 million, respectively, reflects legal and other administrative expenses associated with our asbestos-related liability. As discussed more fully in Note 18, “Commitments and Contingencies” in the notes to our consolidated financial statements (unaudited), we are responsible for certain future liabilities relating to alleged exposure to asbestos containing products.

Previous wording

Net Earnings Attributable to Noncontrolling Interest. Net earnings attributable to noncontrolling interest relates to the minority shareholders’ interest in our 70% owned joint venture in Hong Kong, with operations in Shanghai and Wuxi, China (“Trombetta Asia, Ltd.”) and, in our 80% ownership in Gwo Yng, commencing in July 2023 upon the completion of our step acquisition. Net earnings attributable to the noncontrolling interest were $0.3 million and $0.1 million during the three months ended September 30, 2024 and 2023, respectively.

Current wording

Net Earnings Attributable to Noncontrolling Interest. Net earnings attributable to noncontrolling interest relates to the minority shareholders’ interest in Trombetta Asia, Ltd., our 70% owned joint venture in Hong Kong, with operations in China and, in Foshan GWO YNG SMP Vehicle Climate Control & Cooling Products Co. Ltd., our 80% owned joint venture in China. Net earnings attributable to noncontrolling interest were $0.2 million during each of the three months ended March 31, 2025 and 2024, respectively.

Previous wording

Our primary cash requirements include working capital, capital expenditures, regular quarterly dividends, stock repurchases, principal and interest payments on indebtedness and acquisitions. The following table summarizes our primary sources of funds including ongoing net cash flows from operating activities and availability under our Credit Agreement.

Current wording

Our primary cash requirements include working capital, capital expenditures, quarterly dividend payments, stock repurchases, principal and interest payments on indebtedness and acquisitions. The following table summarizes our primary sources of funds including ongoing net cash flows from operating activities and borrowing availability under our credit agreement ("2024 Credit Agreement") (in thousands):

Previous wording

Operating Activities. During the first nine months of 2024, cash provided by operating activities was $78.2 million compared to $132.9 million in the same period of 2023.

Current wording

Operating Activities. During the first quarter of 2025, cash used in operating activities was $60.2 million compared to $45.7 million in the same period of 2024.

Previous wording

The decrease in cash provided by operating activities resulted primarily from the lower year-over-year decrease in inventory of $2.9 million compared to $54.3 million in the same period of 2023, the larger increase in accounts receivable of $59.0 million compared to $38.9 million in the same period of 2023 due to higher net sales, and the lower year-over-year increase in accounts payable of $4.5 million compared to $15.9 million in the same period of 2023, partially offset by a larger increase in sundry receivables and accrued expenses of $45.5 million compared to $12.3 million in the same period of 2023.

Current wording

Net earnings during the first quarter of 2025 were $12.7 million compared to $9 million in the same period of 2024. The decrease in cash provided by operating activities resulted primarily from the higher year-over-year increase in accounts receivable of $68.9 million compared to $44 million in the same period of 2024 due to higher net sales, partially offset by an increase in accounts payable of $1 million as compared to a decrease of $9.3 million in the same period of 2024, also due to higher net sales.

Previous wording

During the year ended December 31, 2023, we generated significant operating cash flow by reducing our inventory to more normalized levels while actively managing our accounts receivable and accounts payable. We continue to actively manage our working capital to maximize our operating cash flow.

Current wording

During the year ended December 31, 2024, we generated operating cash flow by actively managing our payables and accounts receivable despite increased inventories due to higher sales. We continue to actively manage our working capital to maximize our operating cash flow.

Previous wording

Investing Activities. Cash used in investing activities was $34.1 million in the first nine months of 2024, compared to $15.1 million in the same period of 2023. Investing activities during the first nine months of 2024 and 2023 primarily consisted of capital expenditures of $34.1 million and $18.0 million, respectively. The year-over-year increase in capital expenditures primarily relates to the implementation of upgraded automation equipment, racking and other equipment, as we invest in the start-up of our new distribution facility in Shawnee, Kansas.

Current wording

Investing Activities. Cash used in investing activities was $6.2 million during the first quarter of 2025, as compared to $10.1 million in the same period of 2024. Investing activities during the three months ended March 31, 2025 and 2024 primarily consisted of capital expenditures of $9.1 million and $10.1 million, respectively. Capital expenditures remain elevated due to continued investment in the start-up of our new distribution facility in Shawnee, Kansas.

Previous wording

During the first nine months of 2023, we (1) reduced our borrowings under our 2022 Credit Agreement by $92.1 million; and (2) paid dividends to SMP shareholders of $18.8 million. Cash provided by our operating activities in the nine months ended September 30, 2023 was used to reduce our borrowings under our 2022 Credit Agreement, fund our investing activities and pay dividends.

Current wording

During the first quarter of 2024, we (i) increased our borrowings under our 2022 Credit Agreement by $58.7 million; and (ii) paid dividends to SMP shareholders of $6.4 million. Cash provided by borrowings under our 2022 Credit Agreement in the three months ended March 31, 2024 was primarily used to fund our operating activities and capital expenditures, and pay dividends.

Previous wording

Our primary sources of funds are ongoing net cash flows from operating activities and availability under our 2024 Credit Agreement (as detailed below).

Current wording

Our primary sources of funds are ongoing net cash flows from operating activities and availability under our available financing arrangements, primarily our 2024 Credit Agreement, as described below and further in Note 9, “Credit Facilities and Long-Term Debt,” of the notes to our consolidated financial statements (unaudited) and Note 11 of the Notes to our Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2024.

Previous wording

In September 2024, the Company refinanced its existing 2022 Credit Agreement with a new five-year Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of lenders (“2024 Credit Agreement”). The 2024 Credit Agreement matures on September 16, 2029 and provides for an approximately $750 million credit facility, comprised of a $430 million multi-currency revolving credit facility ("global tranche"); (ii) a $10 million multi-currency revolving credit facility, that will be available to one or more wholly-owned Danish subsidiaries of the Company ("Danish tranche"); (iii) a $200 million delayed draw term loan facility in U.S. dollars; and (iv) a 100 million euros delayed draw term loan facility. The revolving credit facility has a $25 million sublimit for the issuance of letters of credit, and a $30 million sublimit for the borrowing of swingline loans.

Current wording

Our 2024 Credit Agreement matures in September 2029 and provides for an approximately $750 million credit facility, comprised of (i) a $430 million multi-currency revolving credit facility ("global tranche"); (ii) a $10 million multi-currency revolving credit facility, available to one or more wholly-owned Danish subsidiaries of the Company ("Danish tranche"); (iii) a $200 million delayed draw term loan facility in U.S. dollars; and (iv) a 100 million euros delayed draw term loan facility. The revolving credit facility has a $25 million sublimit for the issuance of letters of credit, and a $30 million sublimit for the borrowing of swingline loans.

Previous wording

Borrowings under the 2024 Credit Agreement were used to repay all outstanding borrowings under the 2022 Credit Agreement and will be used for general corporate purposes of the Company and its subsidiaries, and to finance the Company’s acquisition of Nissens Automotive and related transaction costs. The term loans amortize in quarterly installments of 1.25% in each of the first two years following the funding, 1.875% for the next two years, and 2.50% in each quarter thereafter. The Company may request up to two one-year extensions of the maturity date.

Current wording

The term loans amortize in quarterly installments of 1.25% in each of the first two years following the funding in 2024, 1.875% for the next year, and 2.50% in each quarter thereafter. The Company may request up to two one-year extensions of the maturity date.

Previous wording

Outstanding borrowings at September 30, 2024 under the credit agreements were $140 million of long-term debt and at December 31, 2023 were $156 million, consisting of current borrowings of $5 million and long-term debt of $151 million. Letters of credit outstanding under the credit agreements were $2.3 million at September 30, 2024 and December 31, 2023.

Current wording

Outstanding borrowings at March 31, 2025 under the 2024 Credit Agreement were $631 million, net of deferred financing costs, consisting of current borrowings of $19.1 million and long-term debt of $611.9 million; while outstanding borrowings at December 31, 2024 were $545.4 million, net of deferred financing costs, consisting of current borrowings of $25.2 million and long-term debt of $520.1 million. Letters of credit outstanding under the credit agreements were $2.5 million at both March 31, 2025 and December 31, 2024.

Previous wording

The 2024 Credit Agreement contains customary covenants limiting, among other things, the incurrence of additional indebtedness, the creation of liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other payments in respect of equity interests, acquisitions, investments, loans and guarantees, subject, in each case, to customary exceptions, thresholds and baskets. The 2024 Credit Agreement also contains customary events of default.

Current wording

The 2024 Credit Agreement contains customary covenants limiting, among other things, the incurrence of additional indebtedness, the creation of liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other payments in respect of equity interests, acquisitions, investments, loans and guarantees, subject, in each case, to customary exceptions, thresholds and baskets. The Company is in compliance with its debt covenants. The 2024 Credit Agreement also contains customary events of default.

Previous wording

In November 2023, our Polish subsidiary, SMP Poland sp. z.o.o., further amended its overdraft facility with HSBC Continental Europe (Spolka Akcyjna) Oddzial w Polsce. The overdraft facility, as amended, provides for borrowings under the facility in euros and U.S. dollars. Under the amended terms, the overdraft facility provides for borrowings of up to Polish zloty 30 million (approximately $7.5 million) if borrowings are solely in Polish zloty, or up to 85% of the Polish zloty 30 million limit (approximately $6.4 million) if borrowings are in euros and/or U.S. dollars. The overdraft facility had an original maturity date in March 2024, with automatic three-month renewals until June 2027, subject to cancellation by either party, at its sole discretion, at least 30 days prior to the commencement of the three-month renewal period. The facility automatically renewed in September 2024 to a December 2024 maturity date. Borrowings under the amended overdraft facility will bear interest at a rate equal to (1) the one month Warsaw Interbank Offered Rate (“WIBOR”) + 1.0% for borrowings in Polish zloty, (2) the one month Euro Interbank Offered Rate (“EURIBOR”) + 1.0% for borrowings in euros, and (3) the Mid-Point of the Fed Target Range + 1.25% for borrowings in U.S. dollars. Borrowings under the overdraft facility are guaranteed by Standard Motor Products, Inc., the ultimate parent company. There were $1.3 million in borrowings outstanding under the overdraft facility at September 30, 2024 no borrowings outstanding at December 31, 2023.

Current wording

The Company has an overdraft facility that provides for borrowings of up to Polish zloty 30 million (approximately $7.8 million) if borrowings are solely in Polish zloty, or up to 85% of the Polish zloty 30 million limit (approximately $6.6 million) if borrowings are in euros and/or U.S. dollars. The overdraft facility automatically renews every three months until June 2027, subject to cancellation by either party, at its sole discretion, at least 30 days prior to the commencement of the three-month renewal period. There were no borrowings outstanding under the overdraft facility at March 31, 2025.

Previous wording

Pursuant to these agreements, we sold $285.4 million and $686.3 million of receivables during the three and nine months ended September 30, 2024, respectively, and $260.4 million and $643 million for the comparable periods in 2023. Receivables presented at financial institutions and not yet collected as of September 30, 2024 were approximately $1.8 million and remained in our accounts receivable balance as of that date. All receivables sold were reflected as a reduction of accounts receivable in the consolidated balance sheet at the time of sale. A charge in the amount of $14.9 million and $38.3 million related to the sale of receivables was included in selling, general and administrative expense in our consolidated statements of operations for the three and nine months ended September 30, 2024, respectively, and $14.6 million and $36.1 million for the comparable periods in 2023.

Current wording

Pursuant to these agreements, we sold $184.6 million and $170.8 million of receivables during the three months ended March 31, 2025 and 2024, respectively. Receivables presented at financial institutions and not yet collected as of March 31, 2025 were approximately $4.7 million and remained in our accounts receivable balance as of that date. All receivables sold were reflected as a reduction of accounts receivable in the consolidated balance sheet at the time of sale. A charge in the amount of $9.3 million and $10 million related to the sale of receivables was included in selling, general and administrative expenses in our consolidated statements of operations for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

In July 2022, our Board of Directors authorized the purchase of up to $30 million of our common stock under a stock repurchase program. Stock will be purchased from time to time in the open market, or through private transactions, as market conditions warrant. Under this program, there were no repurchases of common stock during the three months ended September 30, 2024. In the nine months ended September 30, 2024, we repurchased 321,229 shares of our common stock at a total cost of $10.4 million. As of September 30, 2024, there was approximately $19.6 million available for future stock purchases under the program. From the end of the third quarter through October 28, 2024, there have been no additional repurchases of our common stock under the program.

Current wording

In 2022, our Board of Directors authorized the purchase of up to $30 million of our common stock under a stock repurchase program. Stock will be purchased from time to time in the open market, or through private transactions, as market conditions warrant. Under this program, there were no repurchases of common stock during the three months ended March 31, 2025. In the three months ended March 31, 2024, we repurchased 79,922 shares of our common stock at a total cost of $2.6 million. As of March 31, 2025, there was approximately $19.6 million available for future stock purchases under the program.

Previous wording

Material cash commitments as of September 30, 2024 consist of required cash payments to service our outstanding borrowings of $140 million under our Credit Agreement with JPMorgan Chase Bank, N.A., as agent, the future minimum cash requirements of $126.7 million through 2034 under operating leases, and expected future cash payments relating to our restructuring activities of $7.1 million with approximately $3.3 million paid in the remainder of 2024, approximately $3.2 million in 2025 and approximately $0.6 million thereafter. All of our other known cash commitments as of September 30, 2024 are not material. For additional information related to our material cash commitments, see Note 4, “Restructuring and Integration Expenses”, Note 8, “Leases,” and Note 9, “Credit Facilities and Long-Term Debt,” in the notes to our consolidated financial statements (unaudited).

Current wording

Material cash commitments as of March 31, 2025 consist of required cash payments to service our outstanding borrowings of $631 million under our 2024 Credit Agreement, the future minimum cash requirements of $147.4 million through 2034 under operating leases, and expected future cash payments relating to our restructuring activities of $4.2 million with approximately $3.7 million paid in the remainder of 2025, approximately $0.4 million in 2026 and approximately $0.1 million thereafter. All of our other known cash commitments as of March 31, 2025 are not material. For additional information related to our material cash commitments, see Note 4, “Restructuring and Integration Expenses”, Note 8, “Leases,” and Note 9, “Credit Facilities and Long-Term Debt,” in the notes to our consolidated financial statements (unaudited).

Previous wording

We anticipate that our cash flow from operations, available cash, and available borrowings under our Credit Agreement will be adequate to meet our future liquidity needs for at least the next twelve months. Significant assumptions underlie this belief, including, among other things, that we will be able to mitigate the future impact, if any, of disruptions in the supply chain caused by geo-political risks, future increases in interest rates, and significant inflationary cost increases in raw materials, labor and transportation that we are unable to pass through our customers, macroeconomic uncertainty, and that there will be no material adverse developments in our business, liquidity or capital requirements. If material adverse developments were to occur in any of these areas, there can be no assurance that our business will generate sufficient cash flow from operations, or that future borrowings will be available to us under our Credit Agreement in amounts sufficient to enable us to pay the principal and interest on our indebtedness, or to fund our other liquidity needs. In addition, if we default on any of our indebtedness, or breach any financial covenant in our Credit Agreement, our business could be adversely affected.

Current wording

We anticipate that our cash flow from operations, available cash, and available borrowings under our 2024 Credit Agreement will be adequate to meet our future liquidity needs for at least the next twelve months. Significant assumptions underlie this belief, including, among other things, that we will be able to mitigate the future impact, if any, of disruptions in the supply chain caused by geo-political risks, future increases in interest rates, and significant inflationary cost increases in raw materials, labor and transportation that we are unable to pass through our customers, macroeconomic uncertainty, and that there will be no material adverse developments in our business, liquidity or capital requirements. If material adverse developments were to occur in any of these areas, there can be no assurance that our business will generate sufficient cash flow from operations, or that future borrowings will be available to us under our 2024 Credit Agreement in amounts sufficient to enable us to pay the principal and interest on our indebtedness, or to fund our other liquidity needs.