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; 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.

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, China, and the European Union; 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

Our Nissens Automotive Segment was created in the fourth quarter of 2024 following the completion of our previously-disclosed acquisition of Nissens Automotive, a leading European supplier of thermal management and engine efficiency products for the automotive aftermarket. Segment offerings include premium replacement parts within the following major product groups:- (1)Engine Cooling, which includes radiators and oil coolers, electronics, such as electric water pumps and temperature sensors, and related components, such as expansion tanks and fan clutches; (2)Air Conditioning, which includes compressors and condensers, electronics, such as blowers, fans and pressure sensors, and related components, such as evaporators, expansion valves and heaters; and (3)Engine Efficiency, which includes turbochargers and intercoolers, electronics, such as exhaust gas recirculation (EGR) valves and modules, and related components, such as EGR coolers and oil feed pipes.

Current wording

Our Nissens Automotive Segment was created in the fourth quarter of 2024 following the completion of our acquisition of Nissens Automotive, a leading European supplier of thermal management and engine efficiency products for the automotive aftermarket. Segment offerings include premium replacement parts within the following major product groups:- (1)Air Conditioning, which includes compressors and condensers, electronics, such as blowers, fans and pressure sensors, and related components, such as evaporators, expansion valves and heaters; (2) Engine Cooling, which includes radiators and oil coolers, electronics, such as electric water pumps and temperature sensors, and related components, such as expansion tanks and fan clutches; and (3)Engine Efficiency, which includes turbochargers and intercoolers, electronics, such as exhaust gas recirculation (EGR) valves and modules, and related components, such as EGR coolers and oil feed pipes.

Previous 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.

Current wording

Consolidated net sales for the three months ended June 30, 2025 were $493.9 million, an increase of $104 million, or 26.7%, compared to net sales of $389.8 million in the same period in 2024. Net sales increased in all our aftermarket operating segments when compared to the same period in the prior year.

Previous wording

•inclusion of $66.2 million of net sales in our new segment, Nissens Automotive, created with the acquisition of Nissens Automotive in the fourth quarter of 2024,

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•inclusion of $90.5 million of net sales in our new segment, Nissens Automotive, created with the acquisition of Nissens Automotive in the fourth quarter of 2024,

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

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

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•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

Current wording

•continued strong volume of customer orders in our Temperature Control operating segment partly benefiting from warmer than average temperatures in the United States. Overall, full year results at Temperature Control will be dependent upon summer weather conditions and customer inventory levels, offset by

Previous wording

Gross margins, as a percentage of net sales, increased to 30.2% in the first quarter of 2025 compared to 27% in the first quarter of 2024. Overall, the gross margin increase as a percentage of sales in the first quarter of 2025 primarily reflects the positive impact of higher sales volumes leading to higher fixed manufacturing cost absorption, improved operating performance including the impact of cost control measures, as well as, some benefit from movements in foreign currency exchange rates, which more than offset slowing market demand in our Engineered Solutions operating segment. Gross margin percentage in our newly acquired operating segment, Nissens Automotive, was consistent with our expectations and contributed to the higher overall consolidated gross margin percentage. Looking ahead we expect additional tariffs on imports into the United States to begin to impact our business in the second quarter of 2025, which we expect to partially mitigate with a combination of price increases and cost reduction efforts.

Current wording

Gross margins, as a percentage of net sales, increased to 30.6% in the second quarter of 2025 compared to 28.6% in the second quarter of 2024. Overall, the gross margin increase as a percentage of sales in the second quarter of 2025 primarily reflects the positive impact of higher sales volumes leading to higher fixed manufacturing cost absorption, improved operating performance including the impact of cost control measures, as well as, some benefit from movements in foreign currency exchange rates, which more than offset slower market demand in our Engineered Solutions operating segment and the impact of higher tariffs on imports into the United States in our Vehicle Control operating segment. Gross margin percentage in our newly acquired operating segment, Nissens Automotive, was consistent with our expectations and contributed to the higher overall consolidated gross margin percentage.

Previous 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.

Current wording

Operating margin as a percentage of net sales for the three months ended June 30, 2025 increased to 8.7% as compared to 6.4% for the same period in 2024. Included in our operating margin were selling, general and administrative expenses of $107.5 million, or 21.8% of net sales for the three months ended June 30, 2025 compared to $83.9 million, or 21.5% of net sales, for the same period in 2024. The$23.6 million increase inselling, general and administrative expenses in thesecond quarter of 2025 as compared to thesecond quarter of 2024 is principally due to$25.2 million of selling, general and administrative expenses in our newly acquired operating segment, Nissens Automotive; partly offset by lower acquisition-related expenses, and lower expenses associated with the transition to our new distribution facility in Shawnee, Kansas.

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United States Trade Policy

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United States Trade Policy and Tax Law

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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.

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 atsmpcorp.com under “Our Company” and “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 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.

Current wording

Sales. Consolidated net sales for thethree months ended June 30, 2025 were$493.9 million, an increase of $104 million, or 26.7%, compared to$389.8 million in the same period of 2024, with themajority of our net sales to customers located in the United States. Net sales increased in all our aftermarket operating segments when compared to the same period in the prior year.

Previous 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.

Current wording

Temperature Control’s net sales for the three months ended June 30, 2025 increased $6.9 million, or 5.5%, to $131.4 million compared to $124.5 million in the same period of 2024. Temperature Control’s net sales for the second quarter of 2025 reflect continued strong customer demand compared to the same period in 2024 and benefited from warmer than average temperatures. Overall, full year results at Temperature Control will be dependent upon ongoing weather conditions and customer inventory levels.

Previous wording

Nissens Automotive's net sales of $66.2 million for the three months ended March 31, 2025 are consistent with our expectations. We expect Nissens Automotive's net sales to follow a similar annual seasonal pattern as the Temperature Control segment, as demand for many of Nissens Automotive's products increase with warmer weather. We also expect to benefit from revenue synergies resulting from the acquisition starting in 2026 and beyond.

Current wording

Nissens Automotive's net sales of $90.5 million for the three months ended June 30, 2025 are consistent with our expectations. We expect Nissens Automotive's net sales to follow a similar annual seasonal pattern as the Temperature Control segment, as demand for many of Nissens Automotive's products increase with warmer weather. We also expect to benefit from revenue synergies resulting from the acquisition starting in 2026 and beyond.

Previous 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.

Current wording

Engineered Solutions’ net sales for the three months ended June 30, 2025 decreased $6.4 million, or 8.3%, to $70.3 million compared to $76.6 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 slower demand from existing customers.

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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):

Current wording

Gross Margins. Gross margins, as a percentage of consolidated net sales, increased to 30.6% in the second quarter of 2025, compared to 28.6% in the second quarter of 2024. The following table summarizes gross margins by segment for the three months ended June 30, 2025 and 2024, respectively (in thousands):

Previous wording

Compared to the first quarter of 2024, gross margin percentage increased at our Vehicle Control, Temperature Control and Engineered Solutions operating segments by 0.6 percentage points from 31.7% to 32.3%, 3.6 percentage points from 27.5% to 31.1%, and 3 percentage points from 14.7% to 17.7%, respectively. Gross margin percentage at our Nissens Automotive operating segment was 35.1%.

Current wording

Compared to the second quarter of 2024, gross margin percentage at our Temperature Control operating segment increased by 2.8 percentage points from 29.4% to 32.2% and decreased at our Vehicle Control and Engineered Solutions operating segments by 1.7 percentage points from 31.8% to 30.1% and 1.3 percentage points from 19.4% to 18.1%, respectively. Gross margin percentage at our Nissens Automotive operating segment was 38.9%.

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Our Vehicle Control and Temperature Control operating segments primarily benefited from favorable manufacturing cost absorption due to higher production levels, as well as the impact of cost saving measures, and favorable customer sales mix.

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The gross margin percentage at our Temperature Control operating segment primarily benefited from favorable manufacturing cost absorption due to higher production levels, as well as the impact of cost saving measures and favorable customer sales mix.

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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.

Current wording

Restructuring Expenses. Restructuring expenses, primarily consisting of severance and other benefit enhancements, were $0.6 million for thethree months ended June 30, 2025 compared to$2.6 million in the same period of 2024. Restructuring expenses incurred in thesecond quarter of 2025 relate primarily to the Cost Reduction Initiative initiated in the fourth quarter of 2022 and expanded in the first quarter of 2025. We anticipate that the Cost Reduction Initiative will be substantially complete by the end of 2026.

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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.

Current wording

Operating Income. Operating income was$42.8 million, or 8.7% of consolidated net sales, in thesecond quarter of 2025, compared to$25.0 million, or 6.4% of consolidated net sales, in thesecond quarter of 2024. The year-over-year increase in operating income of$17.9 million includes$10 million of operating income from our new operating segment, Nissens Automotive, and the remaining $7.8 million isprimarily driven by higher net sales and lower selling, general and administrative expenses in our legacy operating segments.

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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.

Current wording

Other Non-Operating Income, Net. Other non-operating income, net was$1.9 million in thesecond quarter of 2025, compared to$2.2 million in thesecond quarter of 2024. The year-over-year decrease in other non-operating income, net primarily results from lower equity income from our joint ventures.

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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.

Current wording

Interest Expense. Interest expense was $8.3 million in the second quarter of 2025, compared to $2.8 million in the second quarter of 2024. The year-over-year increase in interest expense primarily reflects the impact of higher average outstanding borrowings in the second quarter of 2025 when compared to the second quarter of 2024 primarily due to borrowings to fund our acquisition of Nissens Automotive in the fourth quarter of 2024.

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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.

Current wording

Income Tax Provision. The income tax provision in the second quarter of 2025 was $9.8 million at an effective tax rate of 27% compared to $6.1 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.

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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.

Current wording

Loss from Discontinued Operations. Loss from discontinued operations, net of income taxes, during the second quarter of 2025 and 2024 of $1.1 million and $0.9 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.

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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.

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 $0.3 million during each of the three months ended June 30, 2025 and 2024.

Previous 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.

Current wording

Vehicle Control’s net sales for the six months ended June 30, 2025 increased $19.8 million, or 5.3%, to $394 million compared to $374.3 million in the same period of 2024. Demand in the Vehicle Control aftermarket segment remains positive across our major product groups.

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The gross margin percentage at our Nissens Automotive operating segment was negatively impacted by $4.6 million of amortization for inventory fair value adjustments related to the application of accounting for business combinations. Amortization of the remaining inventory fair value adjustment will continue through the second quarter of 2025.

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The gross margin percentage at our Nissens Automotive operating segment was negatively impacted by $4.6 million of amortization for inventory fair value adjustments related to the application of accounting for business combinations. The inventory fair value adjustments are fully amortized as of June 30, 2025.

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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.

Current wording

Despite lower net sales, the gross margin percentage in our Engineered Solutions operating segment increased in the first six months 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

Selling, General and Administrative Expenses. Selling, general and administrative expenses were$99.8 million, or 24.2%of consolidated net sales, in thefirst quarter of 2025, as compared to$74.7 million, or 22.6% of consolidated net sales, in thefirst quarter of 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.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses were$207.4 million, or 22.9%of consolidated net sales, in the firstsix months of 2025, as compared to$158.6 million, or 22% of consolidated net sales, in the firstsix months of 2024. The$48.7 million increase inselling, general and administrative expenses in the firstsix months of 2025 as compared to the firstsix months of 2024 is principally due to$45.8 million of selling, general and administrative expenses in our newly acquired operating segment, Nissens Automotive; and (ii) higher selling, general and administrative expenses related to increased net sales, particularly in our Temperature Control operating segment.

Previous 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.

Current wording

Restructuring Expenses. Restructuring expenses, primarily consisting of severance and other benefit enhancements, were $1.3 million for thesix months ended June 30, 2025 compared to$2.8 million in the same period of 2024. Restructuring expenses incurred in the firstsix months of 2025 relate primarily to the Cost Reduction Initiative initiated in the fourth quarter of 2022 and expanded in the first quarter of 2025. We anticipate that the Cost Reduction Initiative will be substantially complete by the end of 2026.

Previous wording

For a detailed discussion on the restructuring and integration costs, see Note 4, “Restructuring and Integration Expenses,” of the notes to our consolidated financial statements (unaudited).

Current wording

For a detailed discussion on the restructuring costs, see Note 4, “Restructuring Expenses,” of the notes to our consolidated financial statements (unaudited).

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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.

Current wording

Operating Activities. During the first six months of 2025, cash used in operating activities was $5.9 million compared to $10.1 million in the same period of 2024.

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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.

Current wording

Net earnings during the first six months of 2025 were $38.3 million compared to $26.4 million in the same period of 2024. The decrease in cash used in operating activities resulted primarily from the higher year-over-year increase in accounts receivable of $108.2 million compared to $81.1 million in the same period of 2024 due to higher net sales, and the lower year-over-year increase in sundry payables and accrued expenses of $15.9 million compared to $30 million in the same period of 2024, partially offset by an increase in accounts payable of $17.1 million as compared to a decrease of $2.2 million in the same period of 2024, also due to higher net sales.

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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.

Current wording

Investing Activities. Cash used in investing activities was $16.3 million during the first six months of 2025, as compared to $22.9 million in the same period of 2024. Investing activities during the six months ended June 30, 2025 and 2024 primarily consisted of capital expenditures of $19.3 million and $22.9 million, respectively. Capital expenditures remain elevated due to continued investment in the start-up of our new distribution facility in Shawnee, Kansas.

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Financing Activities. Cash provided by financing activities was $72.5 million during the first quarter of 2025, as compared to $50.4 million in the same period of 2024. During the first quarter of 2025, we (i) increased our borrowings under our 2024 Credit Agreement by $77.1 million, and (ii) paid dividends to SMP shareholders of $6.8 million. Cash provided by borrowings under our 2024 Credit Agreement in the three months ended March 31, 2025 was primarily used to fund our operating activities and capital expenditures, and pay dividends.

Current wording

Financing Activities. Cash provided by financing activities was $32.6 million during the first six months of 2025, as compared to $28.5 million in the same period of 2024. During the first six months of 2025, we (i) increased our borrowings under our 2024 Credit Agreement by $44.8 million, and (ii) paid dividends to SMP shareholders of $13.6 million. Cash provided by borrowings under our 2024 Credit Agreement in the six months ended June 30, 2025 was primarily used to fund our operating activities, including tariff costs and capital expenditures, and pay dividends.

Previous 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.

Current wording

During the first six months of 2024, we (i) increased our borrowings under our 2022 Credit Agreement by $52 million; and (ii) paid dividends to SMP shareholders of $12.7 million, and (iii) made cash payments for the repurchase of shares of our common stock of $10.4 million. Cash provided by borrowings under our 2022 Credit Agreement in the six months ended June 30, 2024 was primarily used to fund our operating activities and capital expenditures, pay dividends and repurchase shares of our common stock.

Previous 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.

Current wording

Our primary sources of funds are ongoing net cash flows from operating activities and availability under our 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

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.

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 term loan facility in U.S. dollars; and (iv) a 100 million euros 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

The weighted average interest rate under the 2024 Credit Agreement, adjusted for the impact of interest rate swap agreements, was 5.4% and 5.6% at March 31, 2025 and December 31, 2024, respectively, primarily consisting of Term SOFR for borrowings in U.S. dollars and EURIBOR for borrowings in euros.

Current wording

The weighted average interest rate under the 2024 Credit Agreement, adjusted for the impact of interest rate swap agreements, is 5% and 5.6% at June 30, 2025 and December 31, 2024, respectively. Interest rates primarily consist of Term SOFR for borrowings in U.S. dollars and EURIBOR for borrowings in euros.

Previous 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.

Current wording

The Company has an overdraft facility that provides for borrowings of up to Polish zloty 30 million (approximately $8.3 million) if borrowings are solely in Polish zloty, or up to 85% of the Polish zloty 30 million limit (approximately $7.1 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 $2.6 million of borrowings outstanding under the overdraft facility at June 30, 2025.

Previous 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.

Current wording

Pursuant to these agreements, we sold $257.6 million and $442.1 million of receivables during the three and six months ended June 30, 2025, respectively $230.1 million and $400.9 million for the comparable periods in 2024. Receivables presented at financial institutions and not yet collected as of June 30, 2025 were approximately $6.2 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 $12.3 million and $21.6 million related to the sale of receivables was included in selling, general and administrative expenses in our consolidated statements of operations for the three and six months ended June 30, 2025, respectively, and $13.4 million and $23.4 million for the comparable periods in 2024.