STANDARD MOTOR PRODUCTS, INC.

Previous 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.

Current wording

Consolidated net sales for the three months ended September 30, 2025 were $498.8 million, an increase of $99.6 million, or 24.9%, compared to net sales of $399.3 million in the same period in 2024.

Previous wording

•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,

Current wording

•inclusion of $84.5 million of net sales in our new operating segment, Nissens Automotive, created with the acquisition of Nissens Automotive in the fourth quarter of 2024,

Previous wording

•decreased net sales in our Engineered Solutions operating segment as growth from business wins and successful cross-selling efforts was more than offset by general softness in end markets.

Current wording

•flat net sales in our Engineered Solutions operating segment as growth from business wins and successful cross-selling efforts was more than offset by general softness in end markets.

Previous 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.

Current wording

Gross margins, as a percentage of net sales, increased to 32.4% in the third quarter of 2025 compared to 30.4% in the third quarter of 2024. Overall, the gross margin increase as a percentage of sales in the third quarter of 2025 primarily reflects the positive impact of higher sales volumes leading to higher fixed manufacturing cost absorption and improved operating performance including the impact of cost control measures, which more than offset slower market demand in our Vehicle Control and Engineered Solutions operating segments 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 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.

Current wording

Operating margin as a percentage of net sales for the three months ended September 30, 2025 increased to 9.5% as compared to 9.3% for the same period in 2024. Included in our operating margin were selling, general and administrative expenses of $113.4 million, or 22.7% of net sales for the three months ended September 30, 2025 compared to $81.2 million, or 20.3% of net sales, for the same period in 2024. The$32.2 million increase inselling, general and administrative expenses in thethird quarter of 2025 as compared to thethird quarter of 2024 is principally due to$24.0 million of selling, general and administrative expenses in our newly acquired operating segment, Nissens Automotive, higher distribution expenses in our Vehicle Control operating segment and higher Corporate general and administrative expenses; partly offset by lower acquisition-related expenses.

Previous wording

United States Trade Policy and Tax Law

Current wording

United States Trade Policy

Previous wording

Since February 2025, the United States government imposed new tariffs on imports to the United States from certain countries and regions, including Canada, Mexico, China, the European Union and many other countries. Certain foreign governments have implemented retaliatory actions in response to the change in United States trade policy. We operate manufacturing plants in, and rely on imports from Canada, Mexico, China and the European Union to serve our customers in the United States, and therefore, we are exposed to the adverse impacts of higher tariffs on imported raw materials, components and finished goods. In response, we have taken, and will continue to take actions to optimize our operations to minimize the impact of such tariffs and maintain our profitability through cost and pricing measures. We believe our diverse global footprint provides a competitive advantage and resiliency within our supply chain. More than one-half of our sales in the United States are from products manufactured in North America, which are currently mostly exempt from tariffs under the United States-Mexico-Canada Agreement. Products sourced from China represent approximately one-quarter of our sales in the United States, with the remainder of our sales in the United States from products sourced from other regions of the world which are currently subject to lower tariffs. Furthermore, our recent acquisition of Nissens Automotive provides sales diversification outside of the United States. The extent and duration of tariffs and the resulting impact on macroeconomic conditions and on our business are uncertain and may depend on various factors, including negotiations between the United States and affected countries, retaliation imposed by other countries, tariff exemptions, and decisions to pause, reimpose or increase tariffs. We will continue to actively monitor international trade developments and evaluate the potential impact on our results of operations and financial condition.

Current wording

Since February 2025, the United States government imposed new tariffs on imports to the United States from certain countries and regions, including Canada, Mexico, China, the European Union and many other countries. Certain foreign governments have implemented retaliatory actions in response to the change in United States trade policy. We operate manufacturing plants in, and rely on imports primarily from Canada, Mexico, China and the European Union to serve our customers in the United States, and therefore, we are exposed to the adverse impacts of higher tariffs on imported raw materials, components and finished goods. In response, we have taken, and will continue to take actions to optimize our operations to minimize the impact of such tariffs and maintain our profitability through cost and pricing measures. We believe our diverse global footprint provides a competitive advantage and resiliency within our supply chain. More than one-half of our sales in the United States are from products manufactured in North America, which are currently mostly exempt from tariffs under the United States-Mexico-Canada Agreement. Products sourced from China represent approximately one-quarter of our sales in the United States, with the remainder of our sales in the United States from products sourced from other regions of the world which are currently subject to lower tariffs. Furthermore, our recent acquisition of Nissens Automotive provides sales diversification outside of the United States. The extent and duration of tariffs and the resulting impact on macroeconomic conditions and on our business are uncertain and may depend on various factors, including negotiations between the United States and affected countries, retaliation imposed by other countries, tariff exemptions, and decisions to pause, reimpose or increase tariffs. We will continue to actively monitor international trade developments and evaluate the potential impact on our results of operations and financial condition.

Previous 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.

Current wording

Sales. Consolidated net sales for thethree months ended September 30, 2025 were$498.8 million, an increase of $99.6 million, or 24.9%, compared to$399.3 million in the same period of 2024, with themajority of our net sales to customers located in the United States.

Previous wording

The following table summarizes consolidated net sales by segment and by major product group within each segment for the three months ended June 30, 2025 and 2024 (in thousands):

Current wording

The following table summarizes consolidated net sales by segment and by major product group within each segment (in thousands):

Previous 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.

Current wording

Temperature Control’s net sales for the three months ended September 30, 2025 increased $18.7 million, or 14.8%, to $144.7 million compared to $126.0 million in the same period of 2024. Temperature Control’s net sales for the third quarter of 2025 reflect continued strong customer demand compared to the same period in 2024 benefiting from growth in certain product categories and gains in market share.

Previous 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.

Current wording

Nissens Automotive's net sales of $84.5 million for the three months ended September 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 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.

Current wording

Engineered Solutions’ net sales for the three months ended September 30, 2025 decreased $0.2 million, or 0.3%, to $72.2 million compared to $72.4 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.

Previous 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):

Current wording

Gross Margins. Gross margins, as a percentage of consolidated net sales, increased to 32.4% in the third quarter of 2025, compared to 30.4% in the third quarter of 2024. The following table summarizes gross margins by segment (in thousands):

Previous 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%.

Current wording

Compared to the third quarter of 2024, gross margin percentage at our Temperature Control operating segment increased by 2.3 percentage points from 33.6% to 35.9% and decreased at our Vehicle Control and Engineered Solutions operating segments by 1.2 percentage points from 32.7% to 31.4% and 0.7 percentage points from 18.5% to 17.8%, respectively. Gross margin percentage at our Nissens Automotive operating segment was 41.2%.

Previous wording

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.

Current wording

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

Previous wording

The gross margin percentage at our Vehicle Control operating segment decreased in the second quarter of 2025 when compared to the same period in 2024 primarily due to the impact of higher tariffs on imports into the United States. We expect the impact of higher tariffs at our Vehicle Control operating segment to lessen in the second half of 2025 as cost saving measures and price increases with customers take effect.

Current wording

The gross margin percentage at our Vehicle Control operating segment decreased in the third quarter of 2025 when compared to the same period in 2024 primarily due to the impact of passing higher tariffs on imports into the United States through to customers at cost. We expect the impact of higher tariffs at our Vehicle Control operating segment to continue during the fourth quarter of 2025 as cost saving measures and price increases with customers take effect in 2026.

Previous wording

The gross margin percentage at our Engineered Solutions operating segment decreased in the second quarter of 2025 when compared to the same period in 2024 reflecting continuing softness in demand from customers. 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

The gross margin percentage at our Engineered Solutions operating segment decreased in the third quarter of 2025 when compared to the same period in 2024 reflecting continuing softness in demand from customers. While we anticipate continued margin pressure resulting from tariffs and market competition, 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 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.

Current wording

Restructuring Expenses. Restructuring expenses, primarily consisting of severance and other benefit enhancements, were $0.8 million for thethree months ended September 30, 2025 compared to$3.0 million in the same period of 2024. Restructuring expenses incurred in thethird 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.

Previous wording

Restructuring expenses of$2.6 million in thesecond quarter of 2024 relate to the Separation Program initiated inthe second quarter of 2024. We anticipate that the program will be substantially complete by the end of 2027.

Current wording

Restructuring expenses of$3.0 million in thethird quarter of 2024 primarily relate to the Separation Program initiated inthe second quarter of 2024. We anticipate that the program will be substantially complete by the end of 2027.

Previous 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.

Current wording

Operating Income. Operating income was$47.6 million, or 9.5% of consolidated net sales, in thethird quarter of 2025, compared to$37.1 million, or 9.3% of consolidated net sales, in thethird quarter of 2024. The year-over-year increase in operating income of$10.5 million is primarily driven by the inclusion of$10.8 million of operating income from our new operating segment, Nissens Automotive and an increase of $10.7 million in our Temperature Control operating segment driven by higher gross margins and cost saving measures, partly offset by higher selling, general and administrative expenses in ourlegacy operating segment.

Previous 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.

Current wording

Other Non-Operating Income, Net. Other non-operating income, net was$1.7 million in thethird quarter of 2025, compared to$2.1 million in thethird quarter of 2024. The year-over-year decrease in other non-operating income, net primarily results from unfavorable foreign exchange rates.

Previous 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.

Current wording

Interest Expense. Interest expense was $7.4 million in the third quarter of 2025, compared to $3.1 million in the third quarter of 2024. The year-over-year increase in interest expense primarily reflects the impact of higher average outstanding borrowings in the third quarter of 2025 when compared to the third quarter of 2024 primarily 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 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.

Current wording

Income Tax Provision. The income tax provision in the third quarter of 2025 was $12.0 million at an effective tax rate of 28.5% compared to $9.3 million at an effective tax rate of 25.7% 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 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.

Current wording

Loss from Discontinued Operations. Loss from discontinued operations, net of income taxes, during the third quarter of 2025 and 2024 of $34.2 million and $22.8 million, respectively, reflects information contained in the actuarial studies performed as of August 31, 2025 and 2024, 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 2025 and 2024 primarily consists of a $44.4 million and $29.3 million pre-tax provision, respectively, to increase our indemnity liability in line with the August 31, 2025 and 2024 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.

Previous 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.

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 and $0.3 million during the three months ended September 30, 2025 and 2024, respectively.

Previous wording

Comparison of the Six Months Ended June 30, 2025 to the Six Months Ended June 30, 2024

Current wording

Comparison of the Nine Months Ended September 30, 2025 to the Nine Months Ended September 30, 2024

Previous wording

Sales. Consolidated net sales for thesix months ended June 30, 2025 were$907.2 million, an increase of $186.0 million, or 25.8%, compared to$721.2 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.

Current wording

Sales. Consolidated net sales for thenine months ended September 30, 2025 were$1,406.1 million, an increase of $285.6 million, or 25.5%, compared to$1,120.5 million in the same period of 2024, with themajority of our net sales to customers located in the United States.

Previous wording

The following table summarizes consolidated net sales by segment and by major product group within each segment for the six months ended June 30, 2025 and 2024 (in thousands):

Current wording

The following table summarizes consolidated net sales by segment and by major product group within each segment (in thousands):

Previous 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.

Current wording

Vehicle Control’s net sales for the nine months ended September 30, 2025 increased $16.6 million, or 2.9%, to $591.7 million compared to $575.1 million in the same period of 2024. Demand in the Vehicle Control operating segment remains stable across our major product groups, except for wire sets which are in secular decline.

Previous wording

Temperature Control’s net sales for the six months ended June 30, 2025 increased $24.2 million, or 12.3%, to $220.2 million compared to $196.1 million in the same period of 2024. Temperature Control’s net sales reflect strong customer demand 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 nine months ended September 30, 2025 increased $42.8 million, or 13.3%, to $364.9 million compared to $322.1 million in the same period of 2024. Temperature Control’s net sales reflect strong customer demand compared to the same period in 2024 in part due to customers expanding store footprint and benefiting from growth in certain product categories and gains in market share.

Previous wording

Nissens Automotive's net sales of $156.7 million for the six months ended June 30, 2025 are consistent with our expectations and include some benefit from favorable foreign exchange translation. 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 $241.3 million for the nine months ended September 30, 2025 are consistent with our expectations and include some benefit from favorable foreign exchange translation. 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 six months ended June 30, 2025 decreased $14.7 million, or 9.7%, to $136.2 million compared to $150.9 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.

Current wording

Engineered Solutions’ net sales for the nine months ended September 30, 2025 decreased $14.9 million, or 6.7%, to $208.4 million compared to $223.3 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 slower demand from existing customers.

Previous wording

Gross Margins. Gross margins, as a percentage of consolidated net sales, increased to 30.4% in the first six months of 2025, compared to 27.9% in the six months ended June 30, 2024. The following table summarizes gross margins by segment for the six months ended June 30, 2025 and 2024, respectively (in thousands):

Current wording

Gross Margins. Gross margins, as a percentage of consolidated net sales, increased to 31.1% in the first nine months of 2025, compared to 28.8% in the nine months ended September 30, 2024. The following table summarizes gross margins by segment (in thousands):

Previous wording

Compared to the first six months of 2024, gross margin percentage increased at our Temperature Control and Engineered Solutions operating segments by 3.1 percentage points from 28.7% to 31.8%, and 0.8 percentage points from 17.1% to 17.9%, respectively. The gross margin percentage decreased at our Vehicle Control operating segments by 0.6 percentage points from 31.8% to 31.2%. Gross margin percentage at our Nissens Automotive operating segment was 37.3%.

Current wording

Compared to the first nine months of 2024, gross margin percentage increased at our Temperature Control and Engineered Solutions operating segments by 2.8 percentage points from 30.6% to 33.4%, and 0.3 percentage points from 17.6% to 17.9%, respectively. The gross margin percentage decreased at our Vehicle Control operating segment by 0.8 percentage points from 32.1% to 31.3%. Gross margin percentage at our Nissens Automotive operating segment was 38.7%.

Previous wording

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. However, the offsetting impact of higher tariffs on imports into the United States was greater in our Vehicle Control operating segment resulting in a lower gross margin percentage compared to the same period in 2024. We expect the impact of higher tariffs on imports into the United States to lessen in the second half of 2025 as cost saving measures and price increases with customers take effect.

Current wording

The gross margin percentage at our Vehicle Control operating segment also benefited from higher sales volume leading to favorable manufacturing cost absorption due to higher production levels, however, the offsetting impact of higher tariffs on imports into the United States passed through to customers at cost was greater in our Vehicle Control operating segment, resulting in a lower gross margin percentage compared to the same period in 2024. We expect the impact of higher tariffs on imports into the United States to lessen in 2026 as cost saving measures and price increases with customers take effect.

Previous wording

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.

Current wording

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 were fully amortized as of June 30, 2025.

Previous 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.

Current wording

Despite lower net sales, the gross margin percentage in our Engineered Solutions operating segment increased in the first nine 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 and market competition, 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$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.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses were$320.8 million, or 22.8%of consolidated net sales, in the first nine months of 2025, as compared to$239.8 million, or 21.4% of consolidated net sales, in the first nine months of 2024. The$80.9 million increase inselling, general and administrative expenses in the first nine months of 2025 as compared to the first nine months of 2024 is principally due to$69.8 million of selling, general and administrative expenses in our newly acquired operating segment, Nissens Automotive, higher distribution expenses in our Vehicle Control operating segment and higher Corporate general and administrative expenses; partly offset by lower acquisition-related expenses.

Previous 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.

Current wording

Restructuring Expenses. Restructuring expenses, primarily consisting of severance and other benefit enhancements, were $2.0 million for thenine months ended September 30, 2025 compared to$5.8 million in the same period of 2024. Restructuring expenses incurred in the first nine 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

Restructuring expenses of$2.8 million in the firstsix months of 2024 relate primarilyto the Separation Program initiated inthe second quarter of 2024. We anticipate that the program will be substantially complete by the end of 2027.

Current wording

Restructuring expenses incurred in the first nine months of 2024 relate primarilyto the Separation Program initiated inthe second quarter of 2024. We anticipate that the program will be substantially complete by the end of 2027.