10q10k10q10k.net

What changed in STANDARD MOTOR PRODUCTS, INC.'s 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of STANDARD MOTOR PRODUCTS, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+229 added−224 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-28)

Top changes in STANDARD MOTOR PRODUCTS, INC.'s 2025 10-K

229 paragraphs added · 224 removed · 177 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

47 edited+4 added−5 removed61 unchanged
Biggest changeIn the automotive aftermarket, we compete primarily on the basis of product quality, availability (including order turn-around time and fill rate), coverage and price, and value-added services. Our primary competitors are full-line suppliers, short- or value-line suppliers, tier suppliers and service part operations of original equipment manufacturers, including car dealerships, and the direct import programs of certain retailers.
Biggest changeOur primary competitors are full-line suppliers, short- or value-line suppliers, tier suppliers and service part operations of original equipment manufacturers, including car dealerships, and the direct import programs of certain retailers. 9 Index In our Engineered Solutions segment, we compete on the basis of product quality, price and availability (including order turn-around time and fill rate), technical expertise (including product design, development and innovation), and lean process improvements.
Talent Development. We invest significant resources to develop the talent of our high potential employees. We deliver employee workshops and mentoring programs, training opportunities, rotational assignments, continuous learning and development, and implement processes to manage performance, provide feedback and develop talent, all designed to provide employees with the resources they need to achieve their career goals and build skills.
We invest significant resources to develop the talent of our high potential employees. We deliver employee workshops and mentoring programs, training opportunities, rotational assignments, continuous learning and development, and implement processes to manage performance, provide feedback and develop talent, all designed to provide employees with the resources they need to achieve their career goals and build skills.
Through our training program, we typically teach approximately 60,000 technicians annually how to diagnose and repair vehicles equipped with complex systems related to our products, and we have approximately 16,000 technicians and 7,000 of our customers’ store employees and sales team members who are registered to participate in such sessions through our online platform. 8 Index Basic Manufacturing .
Through our training program, we typically teach approximately 60,000 technicians annually how to diagnose and repair vehicles equipped with complex systems related to our products, and we have approximately 16,000 technicians and 7,000 of our customers’ store employees and sales team members who are registered to participate in such sessions through our online platform. 7 Index Basic Manufacturing .
Engineered Solutions customers are many of the largest original equipment manufacturers and their tier suppliers, system integrators, and original equipment service part operations, such as: BRP; Caterpillar; CNH; Daimler Truck; Eberspacher; Ford; General Motors; Harley-Davidson; IVECO; John Deere; Mobile Climate Control; Polaris; Scania; Volvo/Mack Truck; and Woodward.
Engineered Solutions customers are many of the largest original equipment manufacturers and their tier suppliers, system integrators, and original equipment service part operations, such as: BRP; Caterpillar; CNH; Daimler Truck; Eberspacher; Ford; General Motors; Harley-Davidson; IVECO; John Deere; Mobile Climate Control; Polaris; Scania; and Volvo/Mack Truck.
(2) Sensors , covering applications in speed, position, temperature, pressure, level and particulate matter, among others. (3) Switches , covering applications in electrical performance, position, temperature, pressure, tilt and fluid levels, among others. (4) Power Distribution , covering applications in power switching, industrial solenoids, and voltage regulators.
(2) Sensors , covering applications in speed, position, temperature, pressure, level and particulate matter, among others. 4 Index (3) Switches , covering applications in electrical performance, position, temperature, pressure, tilt and fluid levels, among others. (4) Power Distribution , covering applications in power switching, industrial solenoids, and voltage regulators.
Product categories include electrical switches and actuators, chassis and drivetrain sensors such as anti-lock brake and vehicle speed sensors, fluid level sensors, pressure sensors such as tire pressure monitoring, temperature sensors, and sensors for advanced driver assistance systems (ADAS), along with battery cables, pigtails, sockets and a wide range of electrical wire, terminals, connectors, and tools for servicing a vehicle’s electrical system.
Product categories include electrical switches and actuators, chassis and drivetrain sensors such as anti-lock brake and vehicle speed sensors, fluid level sensors, pressure sensors 3 Index such as tire pressure monitoring, temperature sensors, and sensors for advanced driver assistance systems (ADAS), along with battery cables, pigtails, sockets and a wide range of electrical wire, terminals, connectors, and tools for servicing a vehicle’s electrical system.
In some cases, we have successfully identified and implemented improvements in the durability of our products through the evaluation and analysis of OE product failures in the field. 6 Index Premium Brands . We believe that our brands are a key component of our value proposition, and serve to distinguish our premium products from those of our competitors.
In some cases, we have successfully identified and implemented improvements in the durability of our products through the evaluation and analysis of OE product failures in the field. 5 Index Premium Brands . We believe that our brands are a key component of our value proposition, and serve to distinguish our premium products from those of our competitors.
As the complexity of these systems continues to develop and proliferate, we expect to benefit from increased demand for our sensors, switches, actuators, valves, solenoids and related parts, which are designed to function with these systems. We also expect to benefit from government regulations regarding vehicle safety and emissions.
As the complexity of these systems continues to develop and proliferate, we expect to benefit from increased demand for our sensors, switches, actuators, valves, solenoids and related parts, which are designed to function with these systems. We also expect to benefit from government regulations regarding vehicle safety, emissions and fuel economy.
Our growth strategy is long-term, and we do not expect growth to be linear given the lengthy nature of design engineering and validation, and the period of time between the awarding of new business and the start of production, which often occurs 1-2 years after business is awarded.
Our growth strategy is long-term, and we do not expect growth to be linear given the lengthy nature of design engineering and validation, and the period of time between the awarding of new business and the start of production, which often occurs 1-3 years after business is awarded.
We continue to work closely with our suppliers and customers to implement actions designed to mitigate the impact of these events on our business, including cost savings initiatives, the vertical integration of production processes and price negotiations.
We continue to work closely with our suppliers and customers to implement actions designed to mitigate the impact of these events on our business, 10 Index including cost savings initiatives, the vertical integration of production processes and price negotiations.
Our annual review process encourages manager and employee conversations throughout the year to enhance growth and development. 12 Index Employee satisfaction and engagement are important elements in our talent retention strategy.
Our annual review process encourages manager and employee conversations throughout the year to enhance growth and development. Employee satisfaction and engagement are important elements in our talent retention strategy.
Product availability, including order turn-around time and fill rates, are critical measures of performance in the automotive aftermarket, and we partner with our suppliers and customers, to implement focused initiatives designed to achieve high levels of performance against these key metrics.
Supply Chain Excellence . Product availability, including order turn-around time and fill rates, are critical measures of performance in the automotive aftermarket, and we partner with our suppliers and customers, to implement focused initiatives designed to achieve high levels of performance against these key metrics.
In addition to wages and salaries, these programs include annual incentive based compensation, a 401(k) Plan, employee stock ownership plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, fertility benefits, family care resources, tuition reimbursement, inclusive benefits, medicare and retirement planning, perimenopause and menopause support, mental health resources and employee assistance programs.
In addition to wages and salaries, these programs include annual incentive based compensation, a 401(k) Plan, employee stock ownership plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, fertility benefits, family care resources, tuition reimbursement, inclusive benefits, medicare and retirement planning, perimenopause and menopause support, mental health resources and employee assistance programs. 11 Index Talent Development.
We focus on expanding our product coverage in advanced powertrain technologies, including start and stop technology, cylinder deactivation, variable valve timing, turbochargers, electronic throttle bodies, diesel exhaust emissions control, gasoline direct injection, active grill shutters; electrification, such as battery cooling fans, drive battery charging cables and adapters, and electric coolant pumps; and safety related categories, such as anti-lock brake, vehicle speed sensors, tire pressure monitoring, park assist sensors and advanced driver assistance components, including blind spot detection sensors, cruise control distance sensors, lane departure sensor cameras and park assist backup cameras. 7 Index Supply Chain Excellence .
Within our Vehicle Control Segment, we focus on expanding our product coverage in advanced powertrain technologies, including start and stop technology, cylinder deactivation, variable valve timing, turbochargers, electronic throttle bodies, diesel exhaust emissions control, gasoline direct injection, active grill shutters; electrification, such as battery cooling fans, drive battery charging cables and adapters, and electric coolant pumps; and safety related categories, such as anti-lock brake, vehicle speed sensors, tire pressure monitoring, park assist sensors and advanced driver assistance components, 6 Index including blind spot detection sensors, cruise control distance sensors, lane departure sensor cameras and park assist backup cameras.
Our product offering is a reflection of the vehicles in operation, the adoption rates of new vehicle technologies by original equipment manufacturers, the number of miles driven, and the failure rates of parts in service.
Our product offering is a reflection of the vehicles in operation, the adoption rates of new vehicle technologies by original equipment manufacturers, product lifecycle and our product category strategy, the number of miles driven, and the failure rates of parts in service.
These reports and other information are also available, free of charge, at www.sec.gov . 13 Index
These reports and other information are also available, free of charge, at www.sec.gov . 12 Index
Examples of vertically integrated processes: ➢ plastic molding operations ➢ automated electronics assembly ➢ stamping and machining operations ➢ design and fabrication of automated processing and test equipment ➢ wire extrusion ➢ teardown, diagnostics and rebuilding of remanufactured air conditioning compressors, diesel injectors and diesel pumps As of December 31, 2024, seventeen of our principal manufacturing facilities maintained quality management systems that were ISO 9001 and/or TS 16949 certified, and thirteen of our principal manufacturing and distribution facilities maintained environmental management systems that were ISO 14001 certified.
Examples of vertically integrated processes: ➢ plastic molding operations ➢ automated electronics assembly ➢ stamping and machining operations ➢ design and fabrication of automated processing and test equipment ➢ wire extrusion ➢ teardown, diagnostics and rebuilding of remanufactured air conditioning compressors, diesel injectors and diesel pumps As of December 31, 2025, twenty-four of our principal facilities maintained quality management systems that were ISO 9001 and/or TS 16949 certified, and fifteen of our principal facilities maintained environmental management systems that were ISO 14001 certified.
Human Capital As of December 31, 2024, we employed approximately 5,600 people, with 2,000 people in the United States and 3,600 people in Mexico, Canada, Denmark, France, Germany, Hungary, Italy, Netherlands, Poland, Slovakia, Spain, the United Kingdom, China and Hong Kong. Of the 5,600 people employed, approximately 2,800 people are production employees.
Human Capital As of December 31, 2025, we employed approximately 5,700 people, with 1,900 people in the United States and 3,800 people in Mexico, Canada, Denmark, France, Germany, Hungary, Italy, Netherlands, Poland, Slovakia, Spain, the United Kingdom, China and Hong Kong. Of the 5,700 people employed, approximately 2,900 people are production employees.
Information on our sustainability initiatives can be found in our most current sustainability report and on our corporate website at ir.smpcorp.com under “Environmental & Social Responsibility” and at smpcares.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.
Information on our sustainability initiatives can be found in our most current sustainability report and on our corporate website at smpcorp.com under “Our Company – SMP Sustainability” and at smpcares.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.
For example, we manage forecasting responsibilities for our major retail customers, and provide twelve month projections to our suppliers to assist in their raw material and capacity planning to ensure continuity of supply. In 2023, we announced plans to open a new distribution center in Shawnee, Kansas.
For example, we manage forecasting responsibilities for our major retail customers, and provide twelve month projections to our suppliers to assist in their raw material and capacity planning to ensure continuity of supply. In the second quarter of 2025, we opened a new distribution center in Shawnee, Kansas.
Nissens Automotive is a new operating segment created in the fourth quarter of 2024 following the completion of our previously-disclosed acquisition of AX V Nissens III ApS (now known as SMP Nissens III ApS) and its direct and indirect subsidiaries (“Nissens Automotive”) in November 2024.
Nissens Automotive was created in the fourth quarter of 2024 following the completion of our acquisition of AX V Nissens III ApS (now known as SMP Nissens III ApS) and its direct and indirect subsidiaries (“Nissens Automotive”) in November 2024.
We continuously look to expand our coverage through the addition of late-model applications in existing product categories as well as new product categories in response to evolving vehicle technologies, or that otherwise complement our existing offering and have potential for high growth.
We continuously look to expand our coverage through the execution of our product category strategy, which may include the addition of applications in existing product categories as well as new product categories in response to evolving vehicle technologies, or that otherwise complement our existing offering and have potential for sales growth.
We believe we differentiate ourselves from our competition through the execution of our value proposition, discussed further above. In addition, in the automotive aftermarket, we offer a variety of strategic customer discounts, allowances and incentives to increase the sale of our products.
Our primary competitors are global and regional tier suppliers of original equipment manufacturers. We believe we differentiate ourselves from our competition through the execution of our value proposition, discussed further above. In addition, in the automotive aftermarket, we offer a variety of strategic customer discounts, allowances and incentives to increase the sale of our products.
Specifically, our Nominating and Corporate Governance Committee established a sustainability steering committee among our executive officers including our Chief Executive Officer & President, Chief Legal Officer & Secretary, Chief Human Resources Officer, and Senior Vice President of North American Operations.
Specifically, our Nominating and Corporate Governance Committee established a sustainability steering committee among our executive officers including our Chief Executive Officer & President, Chief Legal Officer & Secretary, Chief Human Resources Officer, and Chief Accounting Officer.
For example, we believe emissions laws and fuel economy regulations have had a positive impact on sales of our ignition, emissions control and fuel delivery parts since vehicles not meeting emissions inspection standards may require repairs utilizing parts sold by us.
While vehicle emissions and fuel economy standards are presently under review under the current Administration, we believe emissions laws and fuel economy regulations generally have had a positive impact on sales of our ignition, emissions control and fuel delivery parts since vehicles not meeting emissions inspection standards may require repairs utilizing parts sold by us.
(8) Clamping Devices , covering commercial and light vehicle automotive applications, and industrial applications. 5 Index Our Business Strategy Our Corporate Mission is to be a leading global supplier of parts and services to diverse end markets for the vehicles of yesterday, today and tomorrow, while leveraging our heritage of integrity and respect for all of our stakeholders.
Our Business Strategy Our Corporate Mission is to be a leading global supplier of parts and services to diverse end markets for the vehicles of yesterday, today and tomorrow, while leveraging our heritage of integrity and respect for all of our stakeholders.
From time to time, we conduct employee engagement surveys to identify areas where we can enhance our talent retention strategy and employee satisfaction, including fostering a sense of belonging throughout our organization.
We conduct a comprehensive global employee engagement survey bi-annually to gather employee feedback and identify areas where we can enhance our talent retention strategy and employee satisfaction, including fostering a sense of belonging throughout our organization.
The new facility, which began a phased opening in 2024 and is expected to be fully operational in 2025, will expand our total distribution network square footage to meet our growing demands in the automotive aftermarket, and integrate new distribution technologies including a mechanized material handling system designed to deliver improved logistics capabilities, operational efficiencies, as well as enhanced employee, customer and supplier experiences.
This facility increased our total distribution network square footage to meet our growing demands in the automotive aftermarket, and integrates new distribution technologies including a mechanized material handling system designed to deliver improved logistics capabilities, operational efficiencies, as well as enhanced employee, customer and supplier experiences.
Our seminars cover approximately 150 different topics, offered in both English and Spanish.
Our seminars cover more than 200 different topics, offered in both English and Spanish.
It is in these quarters that demand for our products is typically the highest, specifically in the Temperature Control Segment of our business. The demand for our Temperature Control products during the second and third quarters of the year may vary significantly with the summer weather and customer inventories.
The demand for our Temperature Control products during the second and third quarters of the year may vary significantly with the summer weather and customer inventories.
(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. 4 Index Our Engineered Solutions Segment services our vehicle and equipment manufacturing customers across diverse global end markets, including commercial and light vehicles, construction, agriculture, power sports, marine, hydraulics and lawn and garden, through an offering of custom-engineered solutions within the following product categories: (1) Thermal Management Products , which are designed to control the operating temperature of HVAC, battery and heat exchange systems, such as electrical compressors, fans, motors and pumps.
Our Engineered Solutions Segment services our vehicle and equipment manufacturing customers across diverse global end markets, including commercial and light vehicles, construction, agriculture, power sports, marine, hydraulics and lawn and garden, through an offering of custom-engineered solutions within the following product categories: (1) Thermal Management Products , which are designed to control the operating temperature of HVAC, battery and heat exchange systems, such as hose assemblies, accumulators, driers, compressors, heat exchangers and motors.
We expect to have an adequate supply of primary raw materials and cores necessary to meet our needs; however, there are always risks and uncertainties with respect to the supply of raw materials and components that could impact their availability in sufficient quantities and at cost effective prices to meet our needs. 11 Index Sustainability We support and seek continuous improvement in the pursuit of environmental, social and corporate governance practices that embody our culture and what we believe it means to be a good corporate citizen.
We expect to have an adequate supply of primary raw materials and cores necessary to meet our needs; however, there are always risks and uncertainties with respect to the supply of raw materials and components that could impact their availability in sufficient quantities and at cost effective prices to meet our needs.
Our operating segment structure provides clarity to the unique dynamics and margin profiles of the markets we serve, and it is designed to align our operations with our strategic focus on diversifying our business and capturing opportunities for future growth. 3 Index Our Vehicle Control Segment services our core automotive aftermarket customers through its offering of premium replacement parts within the following major product groups.
Our operating segment structure provides clarity to the unique dynamics and margin profiles of the markets we serve, and it is designed to align our operations with our strategic focus on diversifying our business and capturing opportunities for future growth.
We believe our automotive aftermarket business benefits from our Engineered Solutions business through accelerated future product development; systems, processes and quality enhancements; the technical insights of its original equipment customers; its global footprint; and synergistic mergers and acquisitions.
We believe our automotive aftermarket business benefits from our Engineered Solutions business through accelerated future product development; systems, processes and quality enhancements; the technical insights of its original equipment customers; its global footprint; and synergistic mergers and acquisitions. 8 Index We distribute our Engineered Solutions products under the following trade names: Engineered Solutions Strategic Acquisitions We selectively pursue strategic acquisitions that strengthen our position in the markets we supply or that diversify our business in target markets or geographies.
(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.
(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. (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.
In addition, we acquire certain materials by purchasing products that are resold into the market, particularly by OEM sources and other domestic and foreign suppliers.
In addition, we acquire certain materials by purchasing products that are resold into the market, particularly by OEM sources and other domestic and foreign suppliers. In 2025, we experienced continued stabilization in our global supply chains, including fewer disruptions and delays affecting our ocean freight shipments.
We operate primarily in non‑union facilities and have binding labor agreements with employees at other unionized facilities. We have approximately 94 production employees in Edwardsville, Kansas, who will eventually migrate to our new Shawnee, KS facility, who are covered by a contract with The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America that expires in August 2026.
We operate primarily in non‑union facilities and have binding labor agreements with employees at other unionized facilities. We have approximately 94 production employees in Edwardsville, Kansas and Shawnee, Kansas facilities. Eventually, these employees will all migrate to our new Shawnee, Kansas facility.
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.
For example, in addition to cabin comfort, powertrains such as electric vehicles will require cooling systems for the batteries, electronics, motors and other applications. 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.
Our Engineered Solutions operating segment offers a broad array of conventional and future-oriented technologies in markets for commercial and light vehicles, construction, agriculture, power sports, marine, hydraulics and lawn and garden.
Our Engineered Solutions operating segment offers a broad array of conventional and future-oriented technologies in markets for commercial and light vehicles, construction, agriculture, power sports, marine, hydraulics and lawn and garden. 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.
These discounts, allowances and incentives are a common practice in the automotive aftermarket, and we intend to continue offering them in response to competitive pressures and to strategically support growth in sales of our products. 10 Index Seasonality Historically, our operating results have fluctuated by quarter, with the greatest sales occurring in the second and third quarters of the year and revenues generally being recognized at the time of shipment.
These discounts, allowances and incentives are a common practice in the automotive aftermarket, and we intend to continue offering them in response to competitive pressures and to strategically support growth in sales of our products.
(7) Ignition & Emissions , which includes wire, ignition coils and positive crankcase ventilation valves.
(7) Ignition & Emissions , which includes wire, ignition coils and positive crankcase ventilation valves. (8) Clamping Devices , covering commercial and light vehicle automotive applications, and industrial applications.
We believe our facilities are in labor markets with ready access to adequate numbers of skilled and unskilled workers, and our relations with our union and non‑union employees are good. Talent Acquisition and Retention. We strive to hire, retain and advance a workforce whose diverse experiences and backgrounds enhance our collaborative and inclusive environment.
F or clarification, the employee numbers described above exclude the employees of our joint venture operations. We believe our facilities are in labor markets with ready access to adequate numbers of skilled and unskilled workers, and our relations with our union and non‑union employees are good. Talent Acquisition and Retention.
(1) Engine Management , which includes components for the ignition, emissions and fuel delivery systems of vehicles utilizing an internal combustion engine.
Our Vehicle Control Segment services our core automotive aftermarket customers through its offering of premium replacement parts within the following major product groups. (1) Engine Management , which includes components for the ignition, emissions and fuel delivery systems of vehicles utilizing an internal combustion engine.
Our Culture Our Company was founded in 1919 on the values of integrity, common decency and respect for others.
Sustainability We support and seek continuous improvement in the pursuit of environmental, social and corporate governance practices that embody our culture and ideals of being a good corporate citizen. Our Culture Our Company was founded in 1919 on the values of integrity, common decency and respect for others.
We also have approximately 1,200 employees in Mexico who are represented by works council, trade unions or other employee representative bodies under agreements negotiated at various intervals. For clarification, the employee numbers described above exclude the employees of our joint venture operations.
These employees are covered by a contract with The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America that expires in August 2026. We also have approximately 1,300 employees in Mexico who are represented by works council, trade unions or other employee representative bodies under agreements negotiated at various intervals.
Our three largest individual customers accounted for approximately 60.7% of our consolidated net sales in 2024 . During 2024 , O’Reilly Auto Parts, AutoZone and NAPA accounted for 28.4% , 18.8% and 13.5% of our consolidated net sales, respectively. Competition Our business operates in highly competitive markets, and we face substantial competition in all of the markets that we supply.
In 2025, t hree customers each accounted for more than 10% of our consolidated net sales at 25.2% , 18.6% and 10.5%, respectively. Competition Our business operates in highly competitive markets, and we face substantial competition in all of the markets that we supply.
In our Engineered Solutions segment, we compete on the basis of product quality, price and availability (including order turn-around time and fill rate), technical expertise (including product design, development and innovation), and lean process improvements. Our primary competitors are global and regional tier suppliers of original equipment manufacturers.
In the automotive aftermarket, we compete primarily on the basis of product quality, availability (including order turn-around time and fill rate), coverage and price, and value-added services.
Removed
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, Asia and other foreign countries.
Added
We also believe our diverse global footprint provides a competitive advantage and resiliency within our supply chain that helps to mitigate the impact of tariffs on imports to the United States. Our significant manufacturing operations in North America produce products that are currently mostly exempt from tariffs under the United States-Mexico-Canada Agreement.
Removed
For example, in addition to cabin comfort, powertrains such as electric vehicles will require cooling systems for the batteries, electronics, motors and other applications.
Added
Seasonality Historically, our operating results have fluctuated by quarter, with the greatest sales occurring in the second and third quarters of the year and revenues generally being recognized at the time of shipment. It is in these quarters that demand for our products is typically the highest, specifically in the Temperature Control Segment of our business.
Removed
We distribute our Engineered Solutions products under the following trade names: Engineered Solutions 9 Index Strategic Acquisitions We selectively pursue strategic acquisitions that strengthen our position in the markets we supply or that diversify our business in target markets or geographies.
Added
In response to increases in our procurement costs resulting from higher tariffs, our procurement teams focused on shifting supply sources to countries with lower tariff rates.
Removed
In 2024, we experienced a gradual improvement in our global supply chains, with fewer delays in procuring component parts and raw materials, and moderation in the volatility of input costs generally following a period of significant volatility.
Added
We strive to hire, retain and advance a workforce whose diverse experiences and backgrounds enhance our collaborative and inclusive environment.
Removed
However, we were adversely impacted by regional events, such as the Suez Canal and Panama Canal disruptions, and the lingering effects of inflationary cost increases.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

45 edited+19 added−7 removed100 unchanged
Biggest changeThe foregoing matters could also cause significant damage to our business reputation, affect our relationships with our business partners, lead to claims against us, and/or subject us to fines or other penalties assessed by governmental authorities. Additionally, we may be required to incur substantial costs to remediate the damage caused by these disruptions or protect us against future cybersecurity incidents.
Biggest changeSuch incidents could also result in the theft of our intellectual property and proprietary business information, unauthorized access to personnel information, damage to our business reputation and our relationships with our business partners, and lead to claims against us and fines or other penalties assessed by governmental authorities.
Many of our products carry a warranty ranging from a 90-day limited warranty to a limited lifetime warranty, which generally cover defects in materials or workmanship, and conformance to agreed upon specifications. If our products fail to conform to these warranties, the affected products may be subject to warranty returns and/or product recalls.
Many of our products carry a warranty ranging from a 90-day limited warranty to a limited lifetime warranty, which generally cover defects in materials and workmanship, and conformance to agreed upon specifications. If our products fail to conform to these warranties, the affected products may be subject to warranty returns and/or product recalls.
Moreover, the technologies and techniques used to carry out cyber-attacks are continuously evolving, making it difficult to detect these changes or implement adequate measures in time to prevent or mitigate the impact of an attack.
Moreover, the technologies and techniques used to carry out cyber-attacks are continuously evolving, making it difficult to detect these changes or implement adequate measures in time to prevent, detect or mitigate the impact of an attack.
Our global operations subject us to a variety of political, economic and regulatory risks that are associated with doing business internationally, including: (a) changes in economic conditions in the countries in which we operate; (b) political uncertainty, instability, civil unrest and the risks of terrorism or other hostilities; (c) currency exchange rate fluctuations and currency controls; (d) changes in U.S. trade policy and international trade agreements, resulting in political tension and trade disputes between the U.S. and foreign governments, and new or higher tariffs or changes to customs requirements or procedures; and (e) the potential for shortages of trained labor.
Our global operations subject us to a variety of political, economic and regulatory risks that are associated with doing business internationally, including: (a) changes in economic conditions in the countries in which we operate; (b) political uncertainty, instability, civil unrest and the risks of terrorism or other hostilities; (c) foreign currency exchange rate fluctuations and currency controls; (d) changes in U.S. trade policy and international trade agreements, resulting in political tension and trade disputes between the U.S. and foreign governments, and new or higher tariffs or changes to customs requirements or procedures; and (e) the potential for shortages of trained labor.
Due to factors outside our control, such as changes in U.S. trade policy resulting in new or higher tariffs, the adoption or modification of domestic and foreign laws, regulations or policies and other factors such as changes in our sales levels or the amount, timing and character of charges related to such initiatives, or a substantial delay in the completion of such initiatives , we may not be able to achieve the level of benefits that we expect to realize in these initiatives, or we may not be able to realize these benefits within the time frames we currently expect .
Due to factors outside our control, such as changes in U.S. trade policy resulting in new or higher tariffs, the adoption or modification of domestic and foreign laws, regulations or policies and other factors such as changes in our sales levels or the amount, timing and 15 Index character of charges related to such initiatives, or a substantial delay in the completion of such initiatives , we may not be able to achieve the level of benefits that we expect to realize in these initiatives, or we may not be able to realize these benefits within the time frames we currently expect .
In addition, future events, such as new information, changes in existing environmental laws or their interpretation, and more vigorous enforcement policies of federal, state or local regulatory agencies, may have a material adverse effect on our business, financial condition and results of operations. 22 Index Our future performance may be materially adversely affected by changes in technologies and improvements in the quality of new vehicle parts .
In addition, future events, such as new information, changes in existing environmental laws or their interpretation, and more vigorous enforcement policies of federal, state or local regulatory agencies, may have a material adverse effect on our business, financial condition and results of operations. 21 Index Our future performance may be materially adversely affected by changes in technologies and improvements in the quality of new vehicle parts .
In the event that we determine that our goodwill or other intangible assets are impaired, we may be required to record a significant charge to earnings that could adversely affect our financial condition and results of operations. 21 Index Risks Related to Other External Factors We conduct our manufacturing and distribution operations on a worldwide basis and are subject to risks associated with doing business outside the United States.
In the event that we determine that our goodwill or other intangible assets are impaired, we may be required to record a significant charge to earnings that could adversely affect our financial condition and results of operations. 20 Index Risks Related to Other External Factors We conduct our manufacturing and distribution operations on a worldwide basis and are subject to risks associated with doing business outside the United States.
We cannot assure you that our competitors will not develop products or services that are equal or superior to our products or that achieve greater market acceptance than our products or that in the future other companies involved in the 14 Index automotive industry will not expand their operations into product lines produced and sold by us.
We cannot assure you that our competitors will not develop products or services that are equal or superior to our products or that achieve greater market acceptance than our products or that in the future other companies involved in the 13 Index automotive industry will not expand their operations into product lines produced and sold by us.
Our 20 Index access to funding sources in amounts adequate to finance our activities on terms that are beneficial to us could be impaired by factors that affect us specifically or the economy generally. During periods of disruptions in the credit and capital markets, potential sources of external financing could be reduced, and borrowing costs could increase.
Our access to funding sources in amounts adequate to finance our activities on terms that are beneficial to us could be impaired by factors that affect us specifically or the economy generally. During periods of disruptions in the credit and capital markets, potential sources of external financing could be reduced, and borrowing costs could increase.
The loss of one or more of these customers or, a significant reduction in purchases of our products from any one of them could have a material adverse impact on our business, financial condition and results of operations. In addition, any consolidation among our key customers may further increase our customer concentration risk.
The loss of one or more of these customers or, a significant reduction in purchases of our products from any one of them, could have a materially adverse impact on our business, financial condition and results of operations. In addition, any consolidation among our key customers may further increase our customer concentration risk.
If the benchmark reference rate increases significantly, we may be negatively impacted as we may not be able to pass these added costs on to our customers, which could have a material and adverse effect upon our financial condition, results of operations and cash flows.
If the benchmark reference rate increases significantly, we may be negatively impacted as we may not be able to pass these added costs on to our 18 Index customers, which could have a material and adverse effect upon our financial condition, results of operations and cash flows.
Our ability to generate cash is in part subject to: • general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control; • the ability of our customers to pay timely the amounts we have billed; and • our ability to sell receivables under supply chain financing arrangements.
Our ability to generate cash is in part subject to: 19 Index • general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control; • the ability of our customers to pay timely the amounts we have billed; and • our ability to sell receivables under supply chain financing arrangements.
Failure to achieve the benefits of our cost saving initiatives could have a material adverse effect on us. 16 Index Severe weather, natural disasters and other disruptions could adversely impact our operations at our manufacturing and distribution facilities.
Failure to achieve the benefits of our cost saving initiatives could have a material adverse effect on us. Severe weather, natural disasters and other disruptions could adversely impact our operations at our manufacturing and distribution facilities.
The bankruptcy, insolvency or other credit failure of any customer that has a substantial amount owed to us could have a material adverse effect on our operating revenue and results of operations.
The bankruptcy, insolvency or other credit 17 Index failure of any customer that has a substantial amount owed to us could have a material adverse effect on our operating revenue and results of operations.
In accordance with our policy to perform an annual actuarial evaluation in the third quarter of each year, an actuarial study was performed as of August 31, 2024.
In accordance with our policy to perform an annual actuarial evaluation in the third quarter of each year, an actuarial study was performed as of August 31, 2025.
We may incur material losses and significant costs as a result of warranty-related returns by our customers in excess of anticipated amounts . Our products are required to meet rigorous standards imposed by our customers and our industry.
We may incur material losses and significant costs as a result of warranty-related returns by our customers in excess of anticipated amounts or product recalls . Our products are required to meet rigorous standards imposed by our customers and our industry.
Our success is dependent upon our ability to attract, retain and motivate certain key employees, including our management and our skilled workforce of engineers, technically-trained salesforce employees and other qualified personnel.
Our success is dependent upon our ability to attract, retain and motivate certain key employees, including our management and our skilled workforce of engineers, technically-trained sales force employees and other qualified personnel.
Our operations and properties are subject to a wide variety of increasingly complex and stringent federal, state, local and international laws and regulations, including those governing the use, storage, handling, generation, treatment, emission, release, discharge and disposal of materials, substances and wastes, the remediation of contaminated soil and groundwater and the health and safety of employees.
Our operations and properties are subject to federal, state, local and international laws and regulations, including those governing the use, storage, handling, generation, treatment, emission, release, discharge and disposal of materials, substances and wastes, the remediation of contaminated soil and groundwater and the health and safety of employees.
These factors may allow our competitors to: • respond more quickly than we can to new or emerging technologies and changes in customer requirements by devoting greater resources than we can to the development, promotion and sale of automotive products and services; • engage in more extensive research and development; • sell products at a lower price than us; • undertake more extensive marketing campaigns; and • make more attractive offers to existing and potential customers and strategic partners.
These factors may allow our competitors to: • respond more quickly than we can to new or emerging technologies, such as the identification of potential uses and successful adoption of artificial intelligence ("AI") technologies, and changes in customer requirements by devoting greater resources than we can to the development, promotion and sale of automotive products and services; • engage in more extensive research and development; • sell products at a lower price than us; • undertake more extensive marketing campaigns; and • make more attractive offers to existing and potential customers and strategic partners.
A decline in the reputation of our brands as a result of events, such as deficiencies or defects in the design or manufacture of our products, or from legal proceedings, product recalls or warranty claims resulting from such deficiencies or defects, may harm our reputation as a manufacturer and distributor of premium automotive parts, reduce demand for our products and adversely affect our business.
A decline in the reputation of our brands as a result of events, such as the proliferation of private labels by certain retail customers, deficiencies or defects in the design or manufacture of our products, or from legal proceedings, product recalls or warranty claims resulting from such deficiencies or defects, may harm our reputation as a manufacturer and distributor of premium automotive parts, reduce demand for our products and adversely affect our business.
In 2022 and 2024, we entered into interest rate swap agreements with a notional amounts of $100 million and $103.9 million or €100 million that mature in May 2029 and March 2030, respectively. The interest rate swap agreements are designated as a cash flow hedges of interest payments on borrowings in U.S. dollars and euros under our 2024 Credit Agreement.
In 2022 and 2024, we entered into interest rate swap agreements with a total notional amount of $213.0 million that mature in May 2029 and March 2030, respectively. The interest rate swap agreements are designated as a cash flow hedges of interest payments on borrowings in U.S. dollars and euros under our 2024 Credit Agreement.
Higher interest rates, inflationary cost increases in raw materials, labor and transportation and a general worsening of economic conditions have put financial pressure on many of our customers and may threaten certain customers’ ability to maintain liquidity sufficient to repay their obligations to us as they become due.
Higher interest rates, inflationary cost increases in raw materials, labor and transportation, the availability of supplier finance programs to purchase goods and services and the terms of such programs, and a general worsening of economic conditions have put financial pressure on many of our customers and may threaten certain customers’ ability to maintain liquidity sufficient to repay their obligations to us as they become due.
Despite security measures designed to prevent and mitigate the risk of cybersecurity incidents, our information systems, and the systems of our customers, suppliers and business partners, may be vulnerable to such incidents, including interruptions, outages, data breaches, phishing attacks, ransomware attacks, unauthorized access, attempts to hack into our network, and computer viruses.
Despite security measures designed to prevent, detect and mitigate the risk of cybersecurity incidents, our information systems, and the systems of our customers, suppliers and business partners, have been subject to and remain vulnerable to 16 Index harm from such incidents, including interruptions, outages, data breaches, phishing attacks, ransomware attacks, unauthorized access, attempts to hack into our network, and computer viruses.
The results of the August 31, 2024 study included an estimate of our undiscounted liability for settlement payments and awards of asbestos-related damages, excluding legal costs, ranging from $99.6 million to $210.8 million for the period through 2065.
The results of the August 31, 2025 study included an estimate of our undiscounted liability for settlement payments and awards of asbestos-related damages, excluding legal costs, ranging from $127.5 million to $275.9 million for the period through 2065.
Future legal costs, which are expensed as incurred and reported in loss from discontinued operations in the accompanying statement of operations, are estimated, according to the August 31, 2024 study, to range from $49.8 million to $115.9 million for the period through 2065.
Future legal costs, which are expensed as incurred and reported in loss from discontinued operations in the accompanying consolidated statements of operations, are estimated, according to the August 31, 2025 study, to range from $48.5 million to $115.3 million for the period through 2065.
Deficiencies or defects in our products in the future may result in warranty returns and product recalls in excess of anticipated amounts and may have a material adverse effect on our business, financial condition and results of operations.
Deficiencies or defects in our products in the future may result in warranty returns and product recalls in excess of anticipated amounts and may have a material adverse effect on our business, financial condition and results of operations. 14 Index Our profitability may be materially adversely affected as a result of overstock inventory related returns by our customers in excess of anticipated amounts .
As of December 31, 2024 , our total outstanding indebtedness was $562.3 million , including outstanding borrowings under the 2024 Credit Agreement of $545.4 million , net of deferred financing costs, consisting of current borrowings of $25.2 million and long-term debt of $520.1 million .
As of December 31, 2025 , our total outstanding indebtedness was $618.7 million , including outstanding borrowings under the 2024 Credit Agreement of $598.1 million, net of deferred financing costs, consisting of current borrowings of $45.3 million and long-term debt of $552.8 million .
Depending upon the level of sales of receivables pursuant these agreements, a hypothetical, instantaneous and unfavorable change of 100 basis points in the reference rate may have an approximate $8.8 million negative impact on our earnings or cash flows. 19 Index A significant increase in our indebtedness, or in interest rates, could negatively affect our financial condition, results of operations and cash flows.
Depending upon the level of sales of receivables pursuant these agreements, the effect of a hypothetical, instantaneous and unfavorable change of 100 basis points in the margin rate may have an approximate $9.8 million negative impact on our earnings or cash flows.
Based upon the results of the August 31, 2024 actuarial study, and all other available information to us, we increased our asbestos liability to $99.6 million, the low end of the range, and recorded an incremental pre-tax provision of $29.3 million in loss from discontinued operations in the accompanying statement of operations.
Based upon the results of the August 31, 2025 actuarial study, in September 2025 we increased our asbestos liability to $127.5 million , the low end of the range, and recorded an incremental pre-tax provision of $44.4 million in loss from discontinued operations in the accompanying consolidated statement of operations.
We also cannot assure you that additional entrants will not enter the automotive industry or that companies in the industry will not consolidate. Any such competitive pressures could cause us to lose market share or could result in significant price decreases and could have a material adverse effect upon our business, financial condition and results of operations.
Any such competitive pressures could cause us to lose market share or could result in significant price decreases and could have a material adverse effect upon our business, financial condition and results of operations.
In the event that our information systems, or the systems of our customers, suppliers or business partners, are subject to such incidents, we could experience errors, interruptions, delays, and/or the cessation of services in key portions of our information systems.
In the event that our information systems, or the systems of our customers, suppliers or business partners, are subject to such incidents, we could experience errors, interruptions, delays, and/or the cessation of services in key portions of our information systems, adversely affecting our ability to process orders, maintain proper inventory levels, collect accounts receivable, disburse funds and perform key business operations.
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”).
A significant increase in our indebtedness, or in interest rates, could negatively affect our financial condition, results of operations and cash flows. 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”).
Our ultimate exposure will depend upon the number of claims filed against us on or after September 2001, and the amounts paid for settlements, awards of asbestos-related damages, and defense of such claims. We do not have insurance coverage for the indemnity and defense costs associated with the claims we face.
In accordance with the related purchase agreement, we agreed to assume the liabilities for all new claims filed after September 2001. Our ultimate exposure will depend upon the number of claims filed against us on or after September 2001, and the amounts paid for settlements, awards of asbestos-related damages, and defense of such claims.
A substantial increase in the number of new claims, or increased settlement payments, or awards of asbestos-related damages, could have a material adverse effect on our business, financial condition and results of operations.
Since inception in September 2001 through December 31, 2025, the amounts paid for settled claims and awards of asbestos-related damages, including interest, were approximately $105.2 million. A substantial increase in the number of new claims, or increased settlement payments, or awards of asbestos-related damages, could have a material adverse effect on our business, financial condition and results of operations.
In our Engineered Solutions business, our supply agreements with our customers are generally requirements contracts, and a decline in the production requirements of any of our significant customers could adversely impact our revenues and profitability. 18 Index In our Engineered Solutions business, our customers generally agree to purchase their requirements for specific products, and we receive volume forecasts of their requirements, but not long-term firm volume commitments.
In our Engineered Solutions business, our supply agreements with our customers are generally requirements contracts, and a decline in the production requirements of any of our significant customers could adversely impact our revenues and profitability.
Furthermore, our customers typically reserve the right to change, delay or cancel their orders for products, and we have limited recourse in such events.
In our Engineered Solutions business, our customers generally agree to purchase their requirements for specific products, and we receive volume forecasts of their requirements, but not long-term firm volume commitments. Furthermore, our customers typically reserve the right to change, delay or cancel their orders for products, and we have limited recourse in such events.
We believe that new or higher tariffs on imports to the United States from countries in which we source raw materials, component parts and finished goods, such as the tariffs on imports from Mexico, Canada and China announced on February 1, 2025, should they be implemented and sustained for an extended period of time, could have a substantial adverse effect on the automotive industry and our business .
We believe that new or higher tariffs on imports to the United States from countries in which we source raw materials, component parts and finished goods could have a substantial adverse effect on the automotive industry and our business . Further, any retaliatory tariffs imposed by foreign governments would exacerbate the impact.
Customers are generally limited to returning overstocked inventory according to a specified percentage of their annual purchases from us. In addition, a customer’s annual allowance cannot be carried forward to the upcoming year. 15 Index We accrue for overstock returns as a percentage of sales, after giving consideration to recent historical returns.
In our automotive aftermarket business, we permit overstock returns of inventory that may be either new or non-defective or non-obsolete but that we believe we can re-sell. Customers are generally limited to returning overstocked inventory according to a specified percentage of their annual purchases from us. In addition, a customer’s annual allowance cannot be carried forward to the upcoming year.
When we originally acquired this brake business, we assumed future liabilities relating to any alleged exposure to asbestos-containing products manufactured by the seller of the acquired brake business. In accordance with the related purchase agreement, we agreed to assume the liabilities for all new claims filed after September 2001.
In 1986, we acquired a brake business, which we subsequently sold in March 1998. When we originally acquired this brake business, we assumed future liabilities relating to any alleged exposure to asbestos-containing products manufactured by the seller of the acquired brake business.
We may be materially adversely affected by asbestos claims arising from products sold by our former brake business, as well as by other product liability claims . In 1986, we acquired a brake business, which we subsequently sold in March 1998.
To the extent that overstocked returns are materially in excess of our projections, our business, financial condition and results of operations may be materially adversely affected. We may be materially adversely affected by asbestos claims arising from products sold by our former brake business, as well as by other product liability claims .
If we do not respond appropriately to changes in automotive technologies, such as the adoption of new technologies and systems to make traditional, internal-combustion-engine vehicles more efficient, or the adoption of electric or hybrid electric vehicle architectures, we could experience less demand for our products thereby causing a decline in our results of operations or deterioration in our business and financial condition, and we may have a material adverse effect on our long-term performance.
These factors could result in less demand for our products thereby causing a decline in our results of operations or deterioration in our business and financial condition, and we may have a material adverse effect on our long-term performance.
The 2024 Credit Agreement provides for senior secured borrowings of up to approximately $750 million, consisting of a $430 million multi-currency revolving credit facility (global tranche), a $10 million multi-currency revolving credit facility (Danish tranche), a $200 million delayed draw term loan facility, and a 100 million euros delayed draw term loan facility.
The 2024 Credit Agreement matures on September 16, 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.
While we believe that we make reasonable estimates for overstock returns in accordance with our revenue recognition policies, actual returns may differ from our estimates. To the extent that overstocked returns are materially in excess of our projections, our business, financial condition and results of operations may be materially adversely affected.
We accrue for overstock returns as a percentage of sales, after giving consideration to recent historical returns. While we believe that we make reasonable estimates for overstock returns in accordance with our revenue recognition policies, actual returns may differ from our estimates.
Our three largest individual customers accounted for approximately 60.7% of our consolidated net sales in 2024 . During 2024 , O’Reilly Auto Parts, AutoZone and NAPA accounted for 28.4% , 18.8% and 13.5% of our consolidated net sales, respectively. Net sales from each of the customers were reported in our Vehicle Control and Temperature Control operating segments.
In 2025, t hree customers each accounted for more than 10% of our consolidated net sales at 25.2% , 18.6% and 10.5%, respectively. Net sales from each of the customers were reported in our Vehicle Control and Temperature Control operating segments.
At December 31, 2024, 1,287 cases were outstanding for which we may be responsible for any related liabilities. Since inception in September 2001 through December 31, 2024, the amounts paid for settled claims and awards of asbestos-related damages, including interest, were approximately $91.4 million .
We do not have insurance coverage for the indemnity and defense costs associated with the claims we face. At December 31, 2025, approximately 945 cases were outstanding for which we may be responsible for any related liabilities.
Removed
Our profitability may be materially adversely affected as a result of overstock inventory related returns by our customers in excess of anticipated amounts . In our automotive aftermarket business, we permit overstock returns of inventory that may be either new or non-defective or non-obsolete but that we believe we can re-sell.
Added
We also cannot assure you that additional entrants will not enter the automotive industry or that companies in the industry will not consolidate. Furthermore, if we do not invest in or effectively use AI capabilities, or if competitors leverage these technologies more successfully, our competitive position could suffer.
Removed
We have not experienced a material cybersecurity incident in 2024, but we cannot guarantee that there 17 Index will be no future cybersecurity incident that causes a material adverse effect on our information systems, or that of our customers, suppliers and other business partners.
Added
Furthermore, non-conformities that affect motor vehicle safety or compliance with applicable motor vehicle safety standards or guidelines, or non-conformities in products sold to original equipment manufacturers or their tier suppliers or system integrators could result in significant costs and lost sales, investigations and/or enforcement actions by state and federal governments, as well as negative publicity and damage to our reputation that could reduce future demand for our products.
Removed
If critical information systems fail or otherwise become unavailable, our ability to process orders, maintain proper inventory levels, collect accounts receivable and disburse funds could be adversely affected.
Added
Additionally, we may be required to incur substantial costs to remediate the damage caused by these disruptions or to protect us against future cybersecurity incidents. Furthermore, artificial intelligence ("AI") technologies are increasingly being used in our industry.
Removed
We recorded a $7 million pre-tax charge in 2022 to reduce our outstanding accounts receivable balance from a customer that filed for bankruptcy in the first quarter of 2023 to our estimated recovery amount.
Added
The use of AI-based solutions by our business partners could lead to the public disclosure of confidential and proprietary business information (including personal data) in contravention of our policies, contractual requirements and applicable data protection laws. The use of AI tools by our customers, suppliers and business partners may also increase our vulnerability to cybersecurity incidents.
Removed
Further, any retaliatory tariffs imposed by foreign governments would exacerbate the impact.
Added
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.
Removed
We are currently monitoring our environmental remediation efforts at one of our facilities and our reserve balance related to the environmental clean-up at this facility is $1.7 million at December 31, 2024.
Added
In addition, we have foreign currency exchange rate exposure, primarily, with respect to the Canadian dollar, the euro, the British pound, the Polish zloty, the Hungarian forint, the Mexican peso, the Danish kroner, the Taiwan dollar, the Chinese yuan renminbi and the Hong Kong dollar.
Removed
The environmental testing and any remediation costs at such facility may be covered by several insurance policies, although we can give no assurance that our insurance will cover any environmental remediation claims.
Added
Our exposure to exchange rate risk is due to certain costs, revenues and borrowings being denominated in currencies other than one of our subsidiary’s functional currency and net investments in our foreign subsidiaries.
Added
While we actively monitor our exposure, and use derivative instruments to manage exchange rate risk, exchange rates may be volatile and could adversely impact our financial results and the comparability of results from period to period.
Added
Changes in automotive technologies can impact our business, such as the adoption of new technologies and systems to make traditional, internal-combustion-engine vehicles more efficient, the adoption of electric or hybrid electric vehicle architectures, or changes in access to vehicle-generated data needed to service and repair vehicles.
Added
As vehicles have become more complex and reliant on software, electronics and telematics systems, access to vehicle-generated data has become increasingly important to diagnose, service and repair vehicles.
Added
If access to this vehicle-generated data is limited to the service part operations of original equipment manufacturers, our aftermarket customers, including professional technicians and individual consumers performing “do-it-yourself” repairs on their personal vehicles, may be prevented from servicing and repairing vehicles.
Added
These limitations could also adversely effect our ability to design, develop, manufacture and sell our aftermarket products, which could have a material adverse effect on our business, financial condition and results of operations.
Added
If we fail to maintain an effective system of internal controls or identify a material weakness or significant deficiency in our internal control over financial reporting, our ability to report our financial condition and results of operations in a timely and accurate manner could be adversely affected, investor confidence in our company could diminish, and the value of our securities may decline.
Added
As a public company, we are required to comply with Section 404 of the Sarbanes Oxley Act of 2002 (“SOX”), which requires, among other things, that companies maintain disclosure controls and procedures to ensure timely disclosure of material information, and that management reviews the effectiveness of those controls on a quarterly basis.
Added
During fiscal year 2025, we identified a material weakness in our internal control over financial reporting related to information technology general controls at our Nissens Automotive operating segment, which we acquired in November 2024. Specifically, the material weakness related to its information technology general controls over certain IT systems that support financial transactions and reporting.
Added
As a result of this material weakness, we have commenced remedial action; however, such actions are ongoing and we cannot guarantee that they will be sufficient to remediate the material weakness or that we will not have a material weakness in the future.
Added
Furthermore, we cannot be certain that we will be able to maintain adequate controls over our financial processes and reporting in the future or that we will be able to comply with our obligations under Section 404 of SOX.
Added
If we fail to maintain the adequacy of our internal controls, we cannot assure our stockholders that we will be able to conclude in the future that we have effective internal control over financial reporting, and/or we may encounter difficulties in implementing or improving our internal controls, which could harm our operating results or cause us to fail to meet our reporting obligations.
Added
If we fail to maintain effective internal controls, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our securities may be negatively affected, and we could be subject to sanctions or investigation by regulatory authorities, such as the SEC or NYSE.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+1 added−1 removed11 unchanged
Biggest changeCybersecurity Governance The Audit Committee of our Board of Directors oversees the adequacy and effectiveness of our internal controls, policies and procedures regarding cybersecurity, information security and data protection, and compliance with applicable laws and 23 Index regulations concerning privacy.
Biggest changeCybersecurity Governance The Audit Committee of our Board of Directors oversees the adequacy and effectiveness of our internal controls, policies and procedures regarding cybersecurity, information security and data protection, and compliance with applicable laws and regulations concerning privacy. Our Chief Information Officer (“CIO”), in turn, is responsible for managing the Company’s cybersecurity risk management program and incident response procedures.
Depending upon the results of the assessment, including the nature and magnitude of the event, our incident response procedures provide for oversight and management of an incident by the IRT, under the direction of the CIO, or, in the event of escalation, under the direction of the executive officers of the Company, with reporting to and oversight by the Audit Committee.
Depending upon the results of the assessment, including the nature and magnitude of the event, our incident response procedures provide for oversight and management of an incident by the IRT, under the direction of the CIO, or, in the event of escalation, under the direction of the executive officers of the Company, with reporting to and oversight by the Audit Committee. 23 Index
On a quarterly basis, and more frequently as circumstances warrant, our CIO briefs the Audit Committee on our cybersecurity risks, our strategies for preventing, detecting, responding to and mitigating such risks, including the effectiveness of our incident response procedures, and our information security controls.
On a quarterly basis, and more frequently as circumstances warrant, our CIO briefs the Audit Committee on our cybersecurity risks, our strategies for preventing, detecting, responding to and mitigating such risks, including the results of our SOC 2 audits, the effectiveness of our incident response procedures, and our information security controls.
Removed
Our Chief Information Officer (“CIO”), in turn, is responsible for managing the Company’s cybersecurity risk management program and incident response procedures.
Added
For example, in October 2025, we engaged an external auditor to perform a System and Organization Controls 2 (SOC 2) examination of the design of our security controls.

Item 2. Properties

Properties — owned and leased real estate

3 edited+1 added−1 removed0 unchanged
Biggest changeThomas Canada Manufacturing 42,500 Owned 24 Index Engineered Solutions Kirchheim-Teck Germany Distribution 27,500 2031 Pécel Hungary Manufacturing 33,500 Owned Milwaukee WI Manufacturing 84,000 2028 Sheboygan Falls WI Manufacturing 22,500 2025 Tijuana Mexico Distribution 13,800 2026 Tijuana Mexico Manufacturing 30,400 2026 Wuxi China Manufacturing 27,600 2029 Nissens Automotive Cachtice Slovakia Manufacturing 143,900 2031 Horsens Denmark Administration and Manufacturing 91,100 Owned Horsens Denmark Manufacturing 19,600 Owned Horsens Denmark Distribution 211,500 Owned Horsens Denmark Distribution 54,300 2028 Niepolomice Poland Administration and Distribution 70,300 2025 Tilburg Netherlands Administration and Distribution 30,800 2027 Other Mississauga Canada Administration and Distribution 82,400 2028 Irving TX Training Center 13,400 2027 1 It is our intention to extend the lease in Reynosa, Mexico that is set to expire in 2025, and relocate operations from Niepolomice, Poland to a new location in Skawina, Poland upon expiration of the lease in 2025. 2 These facilities are also utilized by the Engineered Solutions operating segment. 3 This facility began a phased opening in 2024 and is expected to be fully operational in 2025.
Biggest changeThomas 1 Canada Manufacturing 42,500 Owned Engineered Solutions Kirchheim-Teck Germany Distribution 27,500 2031 Pécel Hungary Manufacturing 33,500 Owned Pécel Hungary Manufacturing 40,300 Owned Milwaukee WI Manufacturing 84,000 2028 Sheboygan Falls WI Manufacturing 22,500 2026 Tijuana Mexico Distribution 13,800 2026 Tijuana Mexico Manufacturing 30,400 2026 Wuxi China Manufacturing 27,600 2029 Nissens Automotive Cachtice Slovakia Manufacturing 143,900 2031 Horsens Denmark Administration and Manufacturing 91,100 Owned Horsens Denmark Manufacturing 19,600 Owned 24 Index Horsens Denmark Distribution 211,500 Owned Horsens Denmark Distribution 54,300 2028 Zakrzów Poland Administration and Distribution 86,000 2030 Tilburg Netherlands Administration and Distribution 30,800 2027 Other Mississauga Canada Administration and Distribution 82,400 2028 Irving TX Training Center 13,400 2027 1 These facilities are also utilized by the Engineered Solutions operating segment. 2 This facility is also utilized by the Temperature Control operating segment.
Lauderdale FL Distribution 30,000 Owned Greenville 2 SC Manufacturing 184,500 Owned Independence 2 KS Manufacturing 337,400 Owned Long Island City NY Administration 75,800 2033 McAllen TX Distribution 120,300 2027 Mishawaka 2 IN Manufacturing 153,100 Owned Reynosa 2 Mexico Manufacturing 175,000 2025 Reynosa 2 Mexico Manufacturing 153,000 2031 Shawnee 3 KS Distribution 574,700 2033 Temperature Control Foshan City China Manufacturing 361,500 2028 Lewisville TX Administration and Distribution 415,000 2034 Reynosa 2 Mexico Manufacturing 82,000 2026 Reynosa 2 Mexico Manufacturing 117,500 2026 Reynosa Mexico Manufacturing 274,000 2034 St.
Lauderdale FL Distribution 30,000 Owned Greenville 1 SC Manufacturing 184,500 Owned Independence 1 KS Manufacturing 337,400 Owned Long Island City NY Administration 75,800 2033 McAllen TX Distribution 120,300 2027 Mishawaka 1 IN Manufacturing 153,100 Owned Reynosa 1 Mexico Manufacturing 175,000 2032 Reynosa 1 Mexico Manufacturing 153,000 2031 Shawnee 2 KS Distribution 574,700 2033 Temperature Control Foshan City China Manufacturing 361,500 2028 Lewisville 1 TX Administration and Distribution 415,000 2034 Reynosa 1 Mexico Manufacturing 82,000 2026 Reynosa 1 Mexico Manufacturing 117,500 2026 Reynosa Mexico Manufacturing 274,000 2034 St.
ITEM 2. PROPERTIES We maintain our executive offices in Long Island City, New York. The table below describes our principal facilities as of December 31, 2024. Location State or Country Principal Business Activity Approx. Square Feet Owned or Expiration Date of Lease¹ Vehicle Control Bialystok Poland Manufacturing 155,000 2032 Disputanta VA Distribution 411,000 Owned Edwardsville KS Distribution 363,500 Owned Ft.
ITEM 2. PROPERTIES We maintain our executive offices in Long Island City, New York. The table below describes our principal facilities as of December 31, 2025 . Location State or Country Principal Business Activity Approx.
Removed
This facility is also utilized by the Temperature Control operating segment.
Added
Square Feet Owned or Expiration Date of Lease Vehicle Control Bialystok 1 Poland Manufacturing 158,700 2032 Disputanta VA Distribution 411,000 Owned Edwardsville KS Distribution 363,500 Owned Ft. Lauderdale FL Distribution 23,300 Owned Ft.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+1 added−1 removed1 unchanged
Biggest changeFor information related to our 2024 Credit Agreement, see Note 11, “Credit Facilities and Long-Term Debt,” of the Notes to Consolidated Financial Statements in Item 8 of this Report. 25 Index There have been no unregistered offerings of our common stock during the fourth quarter of 2024 .
Biggest changeOur 2024 Credit Agreement permits dividends and distributions by us provided specific conditions are met. For information related to our 2024 Credit Agreement, see Note 11, “Credit Facilities and Long-Term Debt,” of the Notes to Consolidated Financial Statements in Item 8 of this Report.
The comparisons in this table are required by the Securities and Exchange Commission and are not intended to forecast or be indicative of possible future performance of the Company’s Common Stock or the referenced indices. Standard Motor Products, Inc.
The comparisons in this table are required by the Securities and Exchange 25 Index Commission and are not intended to forecast or be indicative of possible future performance of the Company’s Common Stock or the referenced indices. Standard Motor Products, Inc.
The graph shows the change in value of a $100 investment in the Company’s Common Stock and each of the above indices on December 31, 2019 and the reinvestment of all dividends.
The graph shows the change in value of a $100 investment in the Company’s Common Stock and each of the above indices on December 31, 2020 and the reinvestment of all dividends.
As of February 25, 2025, there were 492 holders of record of our common stock. Dividends are declared and paid on the common stock at the discretion of our Board of Directors (the “Board”) and depend on our profitability, financial condition, capital needs, future prospects, and other factors deemed relevant by our Board.
As of February 24, 2026, there were 484 holders of record of our common stock. Dividends are declared and paid on the common stock at the discretion of our Board of Directors (the “Board”) and depend on our profitability, financial condition, capital needs, future prospects, and other factors deemed relevant by our Board.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades publicly on the New York Stock Exchange (“NYSE”) under the trading symbol “SMP.” The last reported sale price of our common stock on the NYSE on February 25, 2025 was $30.93 per share.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades publicly on the New York Stock Exchange (“NYSE”) under the trading symbol “SMP.” The last reported sale price of our common stock on the NYSE on February 24, 2026 was $44.19 per share.
S&P 500 Index S&P Composite 1500 Auto Parts & Equipment Index 2019 100.00 100.00 100.00 2020 76.80 118.40 123.10 2021 101.61 152.39 150.65 2022 69.31 124.79 101.83 2023 81.80 157.59 108.43 2024 65.89 197.02 86.10 * Source: S&P Capital IQ ITEM 6. (RESERVED) 26 Index
S&P 500 Index S&P Composite 1500 Auto Parts & Equipment Index 2020 100.00 100.00 100.00 2021 132.31 128.71 122.38 2022 90.24 105.40 82.72 2023 106.51 133.10 88.08 2024 85.80 166.40 69.94 2025 105.86 196.16 84.60 * Source: S&P Capital IQ ITEM 6. (RESERVED)
Removed
Our 2024 Credit Agreement permits dividends and distributions by us provided specific conditions are met.
Added
There have been no unregistered offerings of our common stock during the fourth quarter of 2025 .

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

65 edited+26 added−29 removed48 unchanged
Biggest changeExcluding the $14.3 million impact of including Nissens Automotive into our financial statements for the two months from the acquisition date, the increase in selling, general and administrative expenses is principally due to the impact of (i) $10.5 million higher distribution and freight expenses in our legacy business primarily due to higher sales, (ii) $10.3 million of costs associated with our acquisition of Nissens Automotive, including $2.3 million of derivative losses on 30 Index forward foreign exchange contract used to economically hedge the purchase price, and (iii) $4.6 million of increased rent and incremental expenses as we transition away from our Edwardsville, Kansas distribution center to our new distribution facility in Shawnee, Kansas. 31 Index Restructuring and Integration Expenses.
Biggest changeThe $85.6 million increase i n selling, general and administrative expenses in 2025 is principally due to ( i) $79.3 million in selling, general and administrative expenses for Nissens Automotive as the results reflect a full year of activity compared to two months from the close of the acquisition in 2024, (ii) higher distribution and freight expenses in our legacy business primarily due to higher sales and costs associated with the transition away from our Edwardsville, Kansas distribution center to our new distribution facility in Shawnee, Kansas, and (iii) increased general and administrative costs related to company-wide strategic initiatives, offset by (iv) lower costs associated with our acquisition of Nissens Automotive. 30 Index Restructuring Expenses.
Borrowings under the 2024 Credit Agreement were used to repay all outstanding borrowings under the 2022 Credit Agreement and to finance the Company's acquisition of Nissens Automotive and related transaction costs, and will be used for general corporate purposes of the Company and its subsidiaries.
Borrowings under the 2024 Credit Agreement were used to repay all outstanding borrowings under the 2022 Credit Agreement and to finance the Company's acquisition of Nissens Automotive and related transaction costs, and will be used for general corporate purposes of the Company and its subsidiaries.
The 2024 Credit Agreement matures on September 16, 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 2024 Credit Agreement matures on September 16, 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.
Restructuring and Integration Programs For a detailed discussion on the restructuring and integration costs, see Note 3, “Restructuring and Integration Expenses,” of the Notes to Consolidated Financial Statements in Item 8 of this Report. 32 Index Liquidity and Capital Resources Our primary cash requirements include working capital, capital expenditures, quarterly dividends, stock repurchases, principal and interest payments on indebtedness and acquisitions.
Restructuring Programs For a detailed discussion on the restructuring and integration costs, see Note 3, “Restructuring Expenses,” of the Notes to Consolidated Financial Statements in Item 8 of this Report. 31 Index Liquidity and Capital Resources Our primary cash requirements include working capital, capital expenditures, quarterly dividends, stock repurchases, principal and interest payments on indebtedness and acquisitions.
Factors we consider important, which could trigger an impairment review, include the following: (a) significant underperformance relative to expected historical or projected future operating results; (b) significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and (c) significant negative industry or economic trends.
Factors we consider important, which could trigger an impairment review, include the following: (a) significant underperformance relative to expected historical or projected future operating results; (b) significant changes in the manner of our use of the acquired assets or the strategy 35 Index for our overall business; and (c) significant negative industry or economic trends.
Loss from discontinued operations, net of income tax, reflects information contained in the actuarial studies performed as of August 31, 2024 and 2023 , as well as other available information, and legal expenses and other costs associated with our asbestos-related liability.
Loss from discontinued operations, net of income tax, reflects information contained in the actuarial studies performed as of August 31, 2025 and 2024 , as well as other available information, and legal expenses and other costs associated with our asbestos-related liability.
Recently Issued Accounting Pronouncements For a detailed discussion on recently issued accounting pronouncements and their impact on our consolidated financial statements, see Note 1, “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements in Item 8 of this Report.
Recently Issued Accounting Pronouncements For a detailed discussion on recently issued accounting pronouncements and their impact on our consolidated financial statements, see Note 1, “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements in Item 8 of this Report. 36 Index
This discussion summarizes the significant factors affecting our results of operations and the financial condition of our business during each of the fiscal years in the two-year period ended December 31, 2024 .
This discussion summarizes the significant factors affecting our results of operations and the financial condition of our business during each of the fiscal years in the two-year period ended December 31, 2025 .
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 under the program from time to time, in the open market or through private 35 Index transactions, as market conditions warrant.
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 under the program from time to time, in the open market or through private transactions, as market conditions warrant.
Borrowings under the amended overdraft facility will bear interest at a rate equal to (i) the one month Warsaw Interbank Offered Rate (“WIBOR”) + 1.0% for borrowings in Polish zloty, (ii) the one month Euro Interbank Offered Rate (“EURIBOR”) + 1.0% for borrowings in Euros, and (iii) the Mid-Point of the Fed Target Range + 1.25% for borrowings in U.S dollars.
Borrowings under the amended overdraft facility bear interest at a rate equal to (i) the one month Warsaw Interbank Offered Rate (“WIBOR”) + 1.0% for borrowings in Polish zloty, (ii) the one month EURIBOR + 1.0% for borrowings in Euros, and (iii) the Mid-Point of the Fed Target Range + 1.25% for borrowings in U.S dollars.
The year-over-year increase in interest expense reflects the impact of higher average outstanding balances due to borrowings under our 2024 Credit Agreement to fund our acquisition of Nissens Automotive, partly offset by slightly lower year-over-year average interest rates on our credit facilities, including the impact of our interest swap agreements.
The year-over-year increase in interest expense reflects the impact of higher average outstanding balances due to borrowings under our 2024 Credit Agreement to fund our acquisition of Nissens Automotive in 2024, partly offset by slightly lower year-over-year average interest rates on our credit facilities, including the impact of our interest rate swap agreements. Income Tax Provision .
Discussion and analysis of our financial condition and results of operations for fiscal year 2023 , and comparisons of fiscal years 2023 and 2022 can be found in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Discussion and analysis of our financial condition and results of operations for fiscal year 2024 , and comparisons of fiscal years 2024 and 2023 can be 26 Index found in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Cash provided by our operating activities was used to reduce our borrowings under our 2022 Credit Agreement, fund our investing activities and pay dividend s. 33 Index Quarterly dividends were paid at a rate of $0.29 in 2024 and 2023 .
Cash provided by our operating activities in 2024 was used to reduce our borrowings under our 2022 Credit Agreement, fund our investing activities and pay dividend s. Quarterly dividends were paid at a rate of $0.31 in 2025 and $0.29 in 2024 .
A charge in the amount of $48.5 million , $46 million and $32 million related to the sale of receivables is included in selling, general and administrative expenses in our consolidated statements of operations for the years ended December 31, 2024, 2023 and 2022, respectively.
A charge in the amount of $45.3 million , $48.5 million and $46 million related to the sale of receivables is included in selling, general and administrative expenses in our consolidated statements of operations for the years ended December 31, 2025, 2024 and 2023, respectively.
Material Cash Commitments Material cash commitments as of December 31, 2024 consist of required cash payments to service our outstanding borrowings of $545.4 million under our 2024 Credit Agreement with JPMorgan Chase Bank, N.A., as agent and the future minimum cash requirements of $144.8 million through 2034 under operating leases.
Material Cash Commitments Material cash commitments as of December 31, 2025 consist of required cash payments to service our outstanding borrowings of $598.1 million under our 2024 Credit Agreement with JPMorgan Chase Bank, N.A., as agent and the future minimum cash requirements of $138.4 million through 2034 under operating leases.
Pursuant to these agreements, we sold $884.7 million and $830.8 million of receivables for the years ended December 31, 2024 and 2023, respectively. Receivables presented at financial institutions and not yet collected as of December 31, 2024 and December 31, 2023 were approximately $5.8 million and $4.5 million, respectively, and remained in our accounts receivable balance for those periods.
Pursuant to these agreements, we sold $978.6 million and $884.7 million of receivables for the years ended December 31, 2025 and 2024, respectively. Receivables presented at financial institutions and not yet collected as of December 31, 2025 and December 31, 2024 were approximately $1.3 million and $5.8 million, respectively, and remained in our accounts receivable balance for those periods.
While we anticipate continued margin pressure resulting from inflationary headwinds and a competitive market environment, we believe that our cost savings and product rationalization initiatives should mitigate much of this impact to our gross margins as well as, cost synergies related to our acquisition of Nissens Automotive.
While we anticipate continued margin pressure resulting from a competitive market environment, we believe that our cost savings and product rationalization initiatives should mitigate much of this impact to our gross margins as well as, revenue and cost synergies related to the continued integration of our new segment, Nissens Automotive.
During the years ended December 31, 2024 and 2023 , we recorded a net loss of $26.1 million and $29 million from discontinued operations, respectively.
During the years ended December 31, 2025 and 2024 , we recorded a net loss of $37.7 million and $26.1 million from discontinued operations, respectively.
The gross margin percentage increase in our Temperature Control operating segment reflected higher sales volume, some increased pricing, improved operating performance from cost savings initiatives, and favorable fixed cost absorption due to higher production levels than those achieved in 2023.
The gross margin percentage increase in our Temperature Control operating segment reflected higher sales volume, higher customer pricing, improved operating performance from cost savings initiatives, lower seasonal returns and favorable fixed cost absorption due to higher production levels than those achieved in 2024.
Interest expense increased to $13.5 million in 2024 , compared to $13.3 million in 2023 .
Interest expense increased to $31.3 million in 2025 , compared to $13.5 million in 2024 .
Gross margins, as a percentage of consolidated net sales, increased to 28.9% f or 2024 , compared to 28.6% for 2023 .
Gross margins, as a percentage of consolidated net sales, increased to 31.2% f or 2025 , compared to 28.9% for 2024 .
Operating Income. Operating income was $80.6 million , or 5.5% , of consolidated net sales in 2024 , compared to $92.7 million , or 6.8% , of consolidated net sales in 2023 .
Operating Income. Operating income was $136.5 million, or 7.6% , of consolidated net sales in 2025 , compared to $80.6 million , or 5.5% , of consolidated net sales in 2024 .
In May 2024 and July 2024, the Company amended it's then-existing Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of lenders ("2022 Credit Agreement"), to transition from the Canadian Dollar Offered Rate (“CDOR”) to the Canadian Overnight Repo Rate Average (“CORRA”) for benchmark borrowings denominated in Canadian dollars and to provide for a new $125 million term loan and the use of funds available under the revolving credit facility to finance the acquisition of Nissens Automotive and related transaction costs.
Liquidity Our primary sources of funds are ongoing net cash flows from operating activities and availability under our 2024 Credit Agreement (as detailed below). 32 Index In May 2024 and July 2024, the Company amended it's then-existing Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of lenders ("2022 Credit Agreement"), to transition from the Canadian Dollar Offered Rate to the Canadian Overnight Repo Rate Average for benchmark borrowings denominated in Canadian dollars and to provide for a new $125 million term loan and the use of funds available under the revolving credit facility to finance the acquisition of Nissens Automotive and related transaction costs.
Gross margin as a percentage of net sales in 2024 was 28.9% a s compared to 28.6% in 2023 .
Gross margin as a percentage of net sales in 2025 was 31.2% a s compared to 28.9% in 2024 .
Borrowings under the overdraft facility are guaranteed by Standard Motor Products, Inc., the ultimate parent company. There were no borrowings outstanding under the overdraft facility at both December 31, 2024 and December 31, 2023.
Borrowings under the overdraft facility are guaranteed by Standard Motor Products, Inc., the ultimate parent company. There were $3.6 million borrowings outstanding under the overdraft facility at December 31, 2025 and none at December 31, 2024.
Included in our operating margin were selling, general and administrative expenses of $335.1 million , o r 22.9% of net sales in 2024 compared to $293.6 million , or 21.6% of net sales in 2023 .
Included in our operating margin were selling, general and administrative expenses of $420.7 million , o r 23.5% of net sales in 2025 compared to $335.1 million , or 22.9% of net sales in 2024 .
During 2024, cash provided by operating activities was $76.7 million as compared to cash provided by operating activities of $144.3 million in 2023. Net earnings during 2024 were $28.5 million compared to $34.4 million in 2023.
During 2025, cash provided by operating activities was $57.4 million as compared to cash provided by operating activities of $76.7 million in 2024. Net earnings during 2025 were $42.2 million compared to $28.5 million in 2024.
Cash used in investing activities was $418.7 million in 2024 as compared to $25.7 million in 2023. Investing activities during 2024 primarily consisted of (i) $372.5 million of cash paid for the acquisition of 100% of the shares of Nissens Automotive, net of cash acquired of $24.6 million, and (ii) capital expenditures of $44 million.
Investing activities during 2025 primarily consisted of capital expenditures of $38.7 million as compared to 2024 which primarily consisted of $372.5 million of cash paid for the acquisition of 100% of the shares of Nissens Automotive, net of cash acquired of $24.6 million, and capital expenditures of $44.0 million.
Selling, general and administrative expenses increased $41.5 million to $335.1 million , or 22.9% of consolidated net sales in 2024 , as compared to $293.6 million , or 21.6% of consolidated net sales in 2023 .
Selling, general and administrative expenses increased $85.6 million to $420.7 million, or 23.5% of consolidated net sales in 2025 , as compared to $335.1 million , or 22.9% of consolidated net sales in 2024 .
The loss from discontinued operations for the year ended December 31, 2024 and 2023 includes (i) a $29.3 million and $23.8 million pre-tax provision, respectively, to increase our indemnity liability in line with the 2024 and 2023 actuarial studies; (ii) legal and other miscellaneous expenses, before taxes, of $4.8 million and $4.9 million for 2024 and 2023 , respectively, and (iii) a $10.5 million pre-tax provision in 2023 related to a breach of contract legal proceeding.
The loss from discontinued operations for the years ended December 31, 2025 and 2024 includes a $44.4 million and $29.3 million pre-tax provision, respectively, to increase our indemnity liability in line with the 2025 and 2024 actuarial studies, and legal and other miscellaneous expenses, before taxes, of $5.2 million and $4.8 million for 2025 and 2024 , respectively.
Other non-operating income, net was $6.9 million in 2024 , compared to $2.3 million in 2023 . The year-over-year increase in other non-operating income, net results from the increase in year-over-year equity income from our joint ventures, and the favorable impact of changes in foreign currency exchange rates.
Other non-operating income, net was $5.4 million in 2025, compared to $6.9 million in 2024. The year-over-year decrease in other non-operating income, net primarily results from less favorable impact of changes in foreign currency exchange rates and a decrease in year-over-year equity income from our joint ventures. Interest Expense.
The income tax provision for 2024 was $19.4 million at an effective tax rate of 26.2% , compared to $18.4 million at an effective tax rate of 22.5% in 2023 .
The income tax provision for 2025 was $30.6 million at an effective tax rate of 27.7%, compared to $19.4 million at an effective tax rate of 26.2% in 2024.
We assess long‑lived assets, identifiable intangible assets and goodwill for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
We believe that the fair value of acquired identifiable net assets, including intangible assets, are based upon reasonable estimates and assumptions. We assess long‑lived assets, identifiable intangible assets and goodwill for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
Although we do not believe that there is a reasonable likelihood that there will be a material change in the future estimates, or in the assumptions that we use in calculating the estimates, the uncertain future effects, if any, of the disruptions in the supply chain caused by geo-political risks, future increases in interest rates, inflation, macroeconomic uncertainty, and other unforeseen changes in the industry, or business, could materially impact the estimates, and may have a material adverse effect on our business, financial condition and results of operations. 36 Index Valuation of Long‑Lived and Intangible Assets and Goodwill The company accounts for business combinations using the acquisition method and accordingly, the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree are generally recorded at their acquisition date fair values.
Although we do not believe that there is a reasonable likelihood that there will be a material change in the future estimates, or in the assumptions that we use in calculating the estimates, the uncertain future effects, if any, of the disruptions in the supply chain caused by geo-political risks, future increases in interest rates, inflation, macroeconomic uncertainty, and other unforeseen changes in the industry, or business, could materially impact the estimates, and may have a material adverse effect on our business, financial condition and results of operations.
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”).
Cash used in financing activities was $0.3 million in 2025 as compared to cash provided by financing activities of $349.5 million in 2024 . 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”).
Consolidated net sales for 2024 were $1,463.8 million , an increase o f $105.6 million, or 7.8%, c ompared to $1,358.3 million in 2023 , with the majority of our net sales to customers located in the United States. Consolidated net sales increased in all our operating segments when compared to the prior fiscal year.
Consolidated net sales for 2025 were $1,791.2 million, an increase of $327.3 million, or 22.4%, compared to $1,463.8 million i n 2024 , with the majority of our net sales to customers located in the United States. Consolidated net sales increased in all of our automotive aftermarket operating segments when compared to the prior fiscal year.
The following table summarizes consolidated net sales by segment and by major product group within each segment for the years ended December 31, 2024 and 2023 (in thousands): Year Ended December 31, 2024 2023 Vehicle Control Engine Management (Ignition, Emissions and Fuel Delivery) $ 467,460 $ 450,180 Electrical and Safety 229,361 221,782 Wire Sets and Other 65,739 65,970 Total Vehicle Control 762,560 737,932 Temperature Control AC System Components 274,926 237,756 Other Thermal Components 105,162 99,998 Total Temperature Control 380,088 337,754 Engineered Solutions Commercial Vehicle 89,171 79,376 Construction/Agriculture 35,832 41,665 Light Vehicle 91,548 92,701 All Other 68,905 68,844 Total Engineered Solutions 285,456 282,586 Nissens Automotive Engine Cooling 19,287 — Air Conditioning 9,214 — Engine Efficiency 7,244 — Total Nissens Automotive 35,745 35,745 — Other — — Total $ 1,463,849 $ 1,358,272 Vehicle Control’s net sales for 2024 increased $24.6 million , or 3.3% , to $762.6 million compared to $737.9 million in 2023 .
The following table summarizes consolidated net sales by segment and by major product group within each segment (in thousands): Year Ended December 31, 2025 2024 Vehicle Control Engine Management (Ignition, Emissions and Fuel Delivery) $ 486,203 $ 467,460 Electrical and Safety 241,938 229,361 Wire Sets and Other 57,251 65,739 Total Vehicle Control 785,392 762,560 Temperature Control AC System Components 316,781 274,926 Other Thermal Components 109,586 105,162 Total Temperature Control 426,367 380,088 Nissens Automotive Air Conditioning 126,727 9,214 Engine Cooling 126,389 19,287 Engine Efficiency 52,261 7,244 Total Nissens Automotive 305,377 35,745 Engineered Solutions Light Vehicle 84,887 91,548 Commercial Vehicle 81,239 89,171 Construction/Agriculture 35,618 35,832 All Other 72,740 68,905 Total Engineered Solutions 274,484 285,456 Intersegment sales (462) — Total $ 1,791,158 $ 1,463,849 Vehicle Control’s net sales for 2025 increased $22.8 million, or 3%, to $785.4 million compared to $762.6 million in 2024 .
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 December 2024 to a March 2025 maturity date.
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.
The $41.5 million increase in selling, general and administrative expenses in 2024 is principally due to (i) $14.3 million of selling, general and administrative expenses for Nissens Automotive as the results of our new operating segment are consolidated into our financial statements for the two months from the close of the acquisition, (ii) higher distribution and freight expenses in our legacy business primarily due to higher sales, (iii) costs associated with our acquisition of Nissens Automotive, and (iv) increased rent and incremental expenses as we transition away from our Edwardsville, Kansas distribution center to our new distribution facility in Shawnee, Kansas.
The $85.6 million increase i n selling, general and administrative expenses in 2025 is principally due to ( i) $79.3 million in selling, general and administrative expenses for Nissens Automotive as the results reflect a full year of activity compared to two months from the close of the acquisition in 2024, (ii) higher distribution and freight expenses in our legacy business primarily due to higher sales and costs associated with the transition away from our Edwardsville, Kansas distribution center to our new 27 Index distribution facility in Shawnee, Kansas, and (iii) increased general and administrative costs related to company-wide strategic initiatives, offset by (iv) lower costs associated with our acquisition of Nissens Automotive.
To date, there have been 321,229 shares repurchased for a total cost of $10.4 million, all of which occurred during the first half of 2024. As of December 2023 there had been no repurchases of our common stock under the program.
To date, there have been 321,229 shares purchased for a total cost of $10.4 million, all of which occurred in 2024. There were no purchases of our common stock in 2025 .
Asbestos Litigation In evaluating our potential asbestos-related liability, we have considered various factors including, among other things, an actuarial study of the asbestos related liabilities performed by an independent actuarial firm, our settlement amounts and whether there are any co-defendants, the jurisdiction in which lawsuits are filed, and the status and results of such claims. 37 Index As is our accounting policy, we consider the advice of actuarial consultants with experience in assessing asbestos-related liabilities to estimate our potential claim liability; and perform an actuarial evaluation in the third quarter of each year and whenever events or changes in circumstances indicate that additional provisions may be necessary.
Asbestos Litigation In evaluating our potential asbestos-related liability, we have considered various factors including, among other things, an actuarial study of the asbestos related liabilities performed by an independent actuarial firm, our settlement amounts and whether there are any co-defendants, the jurisdiction in which lawsuits are filed, and the status and results of such claims.
December 31, (In thousands, except per share data) 2024 2023 Net sales $ 1,463,849 $ 1,358,272 Gross profit 423,321 388,826 Gross profit % 28.9 % 28.6 % Operating income 80,624 92,677 Operating income % 5.5 % 6.8 % Earnings from continuing operations before income taxes 73,989 81,716 Provision for income taxes 19,385 18,368 Earnings from continuing operations 54,604 63,348 Loss from discontinued operations, net of income taxes (26,128) (28,996) Net earnings 28,476 34,352 Net earnings attributable to noncontrolling interest 976 204 Net earnings attributable to SMP 27,500 34,148 Per share data attributable to SMP – Diluted: Continuing operations $ 2.41 $ 2.85 Discontinued operations (1.17) (1.31) Net earnings per common share $ 1.24 $ 1.54 Consolidated net sales for 2024 were $1,463.8 million , a increase of $105.6 million, or 7.8% c ompared to net sales of $1,358.3 million in 2023.
Year Ended December 31, (In thousands, except per share data) 2025 2024 Net sales $ 1,791,158 $ 1,463,849 Gross profit 559,408 423,321 Gross profit % 31.2 % 28.9 % Operating income 136,507 80,624 Operating income % 7.6 % 5.5 % Earnings from continuing operations before income taxes 110,523 73,989 Provision for income taxes 30,617 19,385 Earnings from continuing operations 79,906 54,604 Loss from discontinued operations, net of income taxes (37,698) (26,128) Net earnings 42,208 28,476 Net earnings attributable to noncontrolling interest 873 976 Net earnings attributable to SMP 41,335 27,500 Net earnings per share data attributable to SMP – Diluted: Continuing operations $ 3.52 $ 2.41 Discontinued operations (1.68) (1.17) Net earnings per common share $ 1.84 $ 1.24 Consolidated net sales for 2025 were $1,791.2 million, an increase of $327.3 million, or 22.4% compared to net sales of $1,463.8 million in 2024.
The following table summarizes gross margins by segment for the years ended December 31, 2024 and 2023 , respectively (in thousands): Year Ended December 31, Vehicle Control Temperature Control Engineered Solutions Nissens Automotive Other Total 2024 Net sales $ 762,560 $ 380,088 $ 285,456 $ 35,745 $ — $ 1,463,849 Gross margins 244,085 117,792 49,919 11,525 — 423,321 Gross margin percentage 32.0 % 31.0 % 17.5 % 32.2 % — 28.9 % 2023 Net sales $ 737,932 $ 337,754 $ 282,586 $ — $ — $ 1,358,272 Gross margins 238,215 95,827 54,784 — — 388,826 Gross margin percentage 32.3 % 28.4 % 19.4 % — — 28.6 % Compared to 2023 , gross margin percentage decreased from 32.3% to 32.0% at Vehicle Control , increased from 28.4% to 31.0% at Temperature Control, and decreased from 19.4% to 17.5% at Engineered Solutions.
The following table summarizes gross margins by segment (in thousands): Year Ended December 31, Vehicle Control Temperature Control Nissens Automotive Engineered Solutions Other Total 2025 Net sales $ 785,392 $ 426,367 $ 305,377 $ 274,484 $ (462) $ 1,791,158 Gross margins 247,105 144,821 120,430 47,052 — 559,408 Gross margin percentage 31.5 % 34.0 % 39.4 % 17.1 % — 31.2 % 2024 Net sales $ 762,560 $ 380,088 $ 35,745 $ 285,456 $ — $ 1,463,849 Gross margins 244,085 117,792 11,525 49,919 — 423,321 Gross margin percentage 32.0 % 31.0 % 32.2 % 17.5 % — 28.9 % Compared to 2024, gross margin percentage at our Temperature Control and Nissens Automotive operating segments increased by 3.0 percentage points from 31.0% to 34.0%, and 7.2% percentage points from 32.2% to 39.4%, respectively.
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 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.
The higher effective tax rate in 2024 compared to 2023 reflects the impact of non-deductible transaction costs associated with our acquisition of Nissens Automotive, an increase in earnings from international as compared to U.S. operations, and the effective tax rate impact of lower year-over-year pre-tax income. Loss From Discontinued Operations.
The higher effective tax rate in 2025 compared to 2024 reflects an increase in earnings from international as compared to U.S. operations, and an increase in future tax liabilities associated with unrepatriated earnings from international operations. Loss From Discontinued Operations.
Overall, the gross margin increase as a percentage of sales in 2024 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, and increased pricing, which more than offset lingering inflationary increases in certain materials and labor costs .
In addition, we experienced the positive impact of higher sales volumes in our legacy segments lead to higher fixed manufacturing cost absorption, improved operating performance including the impact of cost control measures, and increased pricing primarily to incorporate higher tariffs on imports into the United States, which more than offset increases in certain materials and labor costs and a lag in the timing of updating pricing for the impact of higher tariffs.
Letters of credit outstanding under the Credit Agreement were $2.5 million and $2.3 million at December 31, 2024 and 2023, respectively. 34 Index To manage the interest rate risk on the 2024 Credit Agreement, the Company has entered into interest rate swap agreements designated as cash flow hedges of a portion of the borrowings under the 2024 Credit Agreement to swap floating rate interest to a fixed rate.
Outstanding borrowings, net of unamortized deferred financing costs, and letters of credit under the 2024 Credit Agreement consist of the following (in millions): December 31, 2025 December 31, 2024 Current maturities of debt $ 45.3 $ 25.2 Long-term debt 552.8 520.1 Total outstanding borrowings $ 598.1 $ 545.4 Letters of credit $ 4.6 $ 2.5 To manage the interest rate risk on the 2024 Credit Agreement, the Company has entered into interest rate swap agreements designated as cash flow hedges of a portion of the borrowings under the 2024 Credit Agreement to swap floating rate interest to a fixed rate.
December 31, 2024 2023 Operating cash flows $ 76,693 $ 144,260 Total debt $ 562,314 $ 156,211 Cash and cash equivalents 44,426 32,526 Net debt $ 517,888 $ 123,685 Remaining borrowing capacity 193,379 334,180 Total liquidity $ 237,805 $ 366,706 Operating Activities.
December 31, 2025 2024 Operating cash flows $ 57,440 $ 76,693 Total debt $ 618,715 $ 562,314 Cash and cash equivalents 72,031 44,426 Net debt $ 546,684 $ 517,888 Remaining borrowing capacity 137,004 193,379 Total liquidity $ 209,035 $ 237,805 Operating Activities.
Under the amended terms, the overdraft facility provides for borrowings of up to Polish zloty 30 million (approximately $7.3 million) if borrowings are solely in Polish zloty, or up to 85% of the Polish zloty 30 million limit (approximately $6.2 million) if borrowings are in euros and/or U.S. dollars.
In 2023, our Polish subsidiary, SMP Poland sp. z.o.o., amended its overdraft facility with HSBC Continental Europe (Spolka Akcyjna) Oddzial w Polsce to provide 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.
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.
For additional information related to our material cash commitments, see Note 7, “Leases,” and Note 11, “Credit Facilities and Long-Term Debt,” of the Notes to Consolidated Financial Statements in Item 8 of this Report. 34 Index 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.
These activities were funded with cash provided by our operating activities, in addition to borrowings under our 2024 Credit Agreement. During 2023, we (i) reduced our borrowings under our 2022 Credit Agreement by $83.5 million; and (ii) paid dividends of $25.2 million and $0.7 million to SMP shareholders and shareholders of our noncontrolling interests, respectively.
During 2025, we paid dividends to SMP shareholders of $27.3 million funded with net borrowings under our 2024 Credit Agreement and cash provided by our operating activities.
The primary drivers that generate goodwill are the value of synergies between the acquired entities and the company and the acquired assembled workforce, neither of which qualifies as a separately identifiable intangible asset. Goodwill and certain other intangible assets having indefinite lives are not amortized to earnings, but instead are subject to periodic testing for impairment.
Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. The primary drivers that generate goodwill are the value of synergies between the acquired entities and the company and the acquired assembled workforce, neither of which qualifies as a separately identifiable intangible asset.
The decrease in cash provided by operating activities resulted primarily from an increase in inventories of $36.9 million compared to a decrease of $29.5 million in the prior year, as well as increases in other working capital accounts primarily due to higher net sales and preparation for pre-season orders in our Temperature Control segment, and lower net earnings.
The decrease in cash provided by operating activities resulted primarily from an increase in inventories of $81.6 million compared to a increase of $36.9 million in the prior year, primarily due to higher net sales, additional tariff costs capitalized into inventory, preparation for and delivery timing of expected orders in early 2026.
While our business in U.S. markets could be impacted by additional tariffs, we expect to mitigate the impact with a combination of price increases and cost reduction efforts. 27 Index Operating margin as a percentage of net sales in 2024 wa s 5.5% as compared to 6.8% in 2023 .
We anticipate that the ongoing benefits from our cost-savings initiatives and synergies with our newly acquired operating segment, Nissens Automotive, will mitigate continued pressure on margins. While our business in U.S. markets could be impacted by additional tariffs, we expect to mitigate the impact with a combination of price increases and cost reduction efforts.
During 2024, we (i) increased our borrowings under our 2024 Credit Agreement by $392 million, (ii) paid dividends to SMP shareholders of $25.3 million, and (iii) made cash payments for the repurchase of shares of our common stock of $10.4 million.
During 2024 , we increase d our borrowings by $392.0 million under our 2024 Credit Agreement; and paid dividends of $25.3 million and $2.3 million to SMP shareholders and shareholders of our noncontrolling interests, respectively.
The higher year-over-year Temperature Control net sales reflects higher customer demand due to the impact of warmer seasonal weather conditions in the U.S. compared to 2023. Demand for our Temperature Control products may vary significantly with summer weather conditions and customer inventory levels.
The higher year-over-year Temperature Control net sales reflects continued very strong customer demand compared to the same period in 2024 benefiting from a longer peak season, growth in certain product categories and gains in market share as our existing customers continued to grow. Demand for our Temperature Control products may vary significantly with summer weather conditions and customer inventory levels.
The year-over-year decrease in operating income of $12.1 million is primarily the result of higher selling, general and administrative expenses, including costs associated with the acquisition of Nissens Automotive, and higher restructuring and integration expenses, partially offset, by the impact of higher net sales and improved gross margin percentage. Other Non-Operating Income, Net.
The year-over-year increase in operating income of $55.9 million primarily reflects the inclusion of Nissens Automotive segment results for a full year, as compared to two months in 2024, which resulted in improved gross margin, as well as lower acquisition related costs and restructuring expenses, offset by higher selling, general and administrative expenses. Other Non-Operating Income, Net.
The increase in net sales in 2024 reflects the impact of multiple factors including: • strong demand in our Temperature Control operating segment primarily reflecting the impact of warmer year-over-year seasonal weather conditions, • net sales of $35.7 million for the period from acquisition to December 31, 2024 in our new segment, Nissens Automotive, created with the acquisition of Nissens Automotive, a leading European supplier of thermal management and engine efficiency products for the automotive aftermarket, on November 1, 2024, • stable demand in our Vehicle Control aftermarket segment across our major product groups, and • a slight increase in net sales in our Engineered Solutions operating segment with growth from business wins and successful cross-selling efforts offset by slowing customer production in the fourth quarter.
The increase in net sales in 2025 refl ects the impact of multiple factors including: • $269.6 million higher net sales in 2025 due to the inclusion of a full year performance of our new segment, Nissens Automotive which was acquired on November 1, 2024, as compared to two months in 2024, • strong demand in our Temperature Control operating segment primarily reflecting the impact of growth in certain product categories and gains in market share, • stable demand in our Vehicle Control aftermarket segment, offset by • lower net sales in our Engineered Solutions operating segment as growth from business wins and successful cross-selling efforts offset lower demand due to cyclical softness across global end markets.
Gross margin percentage for the Nissens Automotive segment was 32.2% for the two months from the closing date of the acquisition . The gross margin percentage in our Vehicle Control operating segment remained relatively flat reflecting higher sales volume and higher fixed cost absorption due to higher production levels than those achieved in 2023, partially offset by inflationary cost increases.
The gross margin percentage in our Vehicle Control operating segment decreased slightly as higher sales volume and higher fixed cost absorption due to higher production levels than those achieved in 2024, was more than offset by the impact of passing higher tariffs on imports into the United States through to customers at cost.
For additional information see Note 17, "Derivative Financial Instruments" of the Notes to Consolidated Financial Statements in Item 8 of this Report.
For additional information see Note 17, "Derivative Financial Instruments" of the Notes to Consolidated Financial Statements in Item 8 of this Report. 33 Index The weighted average interest rate on borrowings under the 2024 Credit Agreement, adjusted for the impact of interest rate swap agreements, was 4.8% and 5.6% at December 31, 2025 and 2024 , respectively.
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. Gross Margins.
Demand for Nissens Automotive products follow a similar annual seasonal pattern as the Temperature Control segment, as demand for many products generally increases with warmer weather.
At December 31, 2024, the weighted average interest rate on borrowings under the 2024 Credit Agreement was 5.6% , primarily consisting of Term SOFR for borrowings in U.S. dollars and EURIBOR for borrowings in euros, adjusted for the impact of the interest rate swap agreement on $100 million of the U.S. dollar borrowings.
Interest rates primarily consist of Term SOFR for borrowings in U.S. dollars and the Euro Interbank Offered Rate ("EURIBOR") for borrowings in euros. The average daily alternative base rate swingline loan balance was $1.5 million and $0.7 million during the years ended December 31, 2025 and 2024 , respectively.
Net earnings attributable to the noncontrolling interest were $1.0 million and $0.2 million during the years ended December 31, 2024 and 2023 , respectively. For additional information on the Gwo Yng step acquisition, see Note 2, “Business Combinations,” in the Notes to Consolidated Financial Statements in Item 8 of this Report.
Net earnings attributable to the noncontrolling interest were $0.9 million and $1.0 million during the years ended December 31, 2025 and 2024 , 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.
The year-over-year decrease in capital expenditures primarily relates to lower spending as our new distribution facility in Shawnee, Kansas reaches completion. We regularly review our plans for capital investment and believe we have sufficient liquidity to meet our needs. Financing Activities .
Restructuring and integration expenses in 2024 consist of $7.3 million of costs related to workforce reductions and severance costs, and $0.4 million for the relocation of machinery and equipment ; while 2023 expenses primarily related to the Cost Reduction Initiative consist of $2 million of costs related to workforce reductions and severance costs, and $0.7 million for the relocation of machinery and equipment.
Restructuring expenses of $2.6 million in 2025, primarily consisted of costs to relocate machinery and equipment within the Cost Reduction Initiative initiated in 2022, as compared to $7.7 million in 2024 which primarily consisted of severance and other benefit enhancements within the Separation Program initiated in 2024 . Additional restructuring expenses related to these programs are expected to be immaterial.
Removed
We anticipate that the ongoing benefits from our cost-savings initiatives and strong gross margins in our newly acquired operating segment, Nissens Automotive, will mitigate continued pressure on margins resulting from inflationary headwinds.
Added
Overall, the increase in gross margin as a percentage of sales in 2025 primarily reflects the inclusion of Nissens Automotive segment results for a full year, as compared to two months in 2024, which included more profitable periods within the seasonal calendar.
Removed
The new larger distribution center will integrate new distribution technologies including a mechanized material handling system designed to deliver improved logistics capabilities, operational efficiencies, as well as enhanced employee, customer and supplier experiences and is expect to be fully operational later in 2025. We will incur additional costs in 2025 during the phase-in period while we operate the two facilities.
Added
Operating margin as a percentage of net sales in 2025 wa s 7.6% as compared to 5.5% in 2024 .
Removed
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.
Added
Overall the increase in operating margin as a percentage of sales primarily reflects the inclusion of Nissens Automotive segment results for a full year, as compared to two months in 2024, which resulted in improved gross margin, as well as lower acquisition related costs and restructuring expenses.
Removed
Separation Program During the second quarter of 2024 we offered a voluntary retirement incentive package of severance and other benefit enhancements to eligible employees in the United States and Canada as part of our commitment to optimizing our cost structure and providing professional development opportunities to our employees. The offer period ended on June 14, 2024.
Added
The global automotive aftermarket industry continues to be resilient with a growing number of older vehicles on the road. Our global automotive aftermarket business remains strong with demand for our products driven by the quality, brand recognition and high levels of customer service that we provide.
Removed
During the third quarter of 2024, we expanded the program to include involuntary separations. We recorded expenses of $7.1 million in 2024 , with additional expenses to be recorded of approximately $0.6 million in 2025, and $0.1 million in 2026 for an aggregate cost of approximately $7.7 million.
Added
We are optimistic about our business and are well positioned to capitalize on these favorable trends and the long-term growth potential in the coming years.
Removed
It is anticipated that the overall separation program will reduce operating expenses in 2025. Expenses incurred pursuant to the program are recorded in restructuring and integration expenses in our statement of operations. 28 Index Results of Operations Sales .
Added
United States Trade Policy 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.
Removed
Demand in the Vehicle Control segment remained relatively stable across our major product groups. Temperature Control’s net sales for 2024 increased $42.3 million , or 12.5% , to $380.1 million compared to $337.8 million in 2023.
Added
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.
Removed
Engineered Solutions’ net sales for 2024 increased $2.9 million , or 1% , to $285.5 million compared to $282.6 million in 2023 . Overall, net sales in our Engineered Solutions operating segment showed year-over-year improvement driven by new 29 Index business wins as well as successful cross-selling efforts, partly offset by slowing customer production schedules in the fourth quarter.

… 40 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+0 added−3 removed7 unchanged
Biggest changeTo reduce our market risk for changes in interest rates on our variable rate borrowings, and to manage a portion of our exposure to changes in interest rates, we occasionally enter into interest rate swap agreements. In 2022, we entered into an interest rate swap agreement with a notional amount of $100 million that matures in May 2029.
Biggest changeTo reduce our market risk for changes in interest rates on our variable rate borrowings, and to manage a portion of our exposure to changes in interest rates, we occasionally enter into interest rate swap agreements. Interest rate swap agreements designated as cash flow hedges of interest payments mature in May 2029 and March 2030.
Additionally, we invest our excess cash in highly liquid short-term investments. Based upon our current level of borrowings under our 2024 Credit Agreement and our excess cash, the effect of a hypothetical, instantaneous and unfavorable change of 100 basis points in the interest rate may have an approximate $5 million annualized negative impact on our earnings or cash flows.
Additionally, we invest our excess cash in highly liquid short-term investments. Based upon our current level of borrowings under our 2024 Credit Agreement and our excess cash, the effect of a hypothetical, instantaneous and unfavorable change of 100 basis points in the interest rate may have an approximate $5.3 million annualized negative impact on our earnings or cash flows.
Depending upon the level of sales of receivables pursuant these agreements, the effect of a hypothetical, instantaneous and unfavorable change of 100 basis points in the margin rate may have an approximate $8.8 million negative impact on our earnings or cash flows.
Depending upon the level of sales of receivables pursuant these agreements, the effect of a hypothetical, instantaneous and unfavorable change of 100 basis points in the margin rate may have an approximate $9.8 million negative impact on our earnings or cash flows.
As of December 31, 2024 and December 31, 2023 , our monetary assets and liabilities which are subject to this exposure are immaterial, therefore, the potential immediate loss to us that would result from a hypothetical 10% change in foreign currency exchange rates would not be expected to have a material impact on our earnings or cash flows.
As of December 31, 2025 and December 31, 2024 , our monetary assets and liabilities which are subject to this exposure are immaterial, therefore, the potential immediate loss to us that would result from a hypothetical 10% change in foreign currency exchange rates would not be expected to have a material impact on our earnings or cash flows.
The charge related to the sale of receivables is included in selling, general and administrative expenses in our consolidated statements of operations. 39 Index
The charge related to the sale of receivables is included in selling, general and administrative expenses in our consolidated statements of operations. 37 Index
We sell our undivided interests in certain of these receivables at our discretion when we determine that the cost of these arrangements is less than the cost of servicing our receivables with existing debt. During the year ended December 31, 2024 , we sold $884.7 million of receivables.
We sell our undivided interests in certain of these receivables at our discretion when we determine that the cost of these arrangements is less than the cost of servicing our receivables with existing debt. During the year ended December 31, 2025 , we sold $978.6 million of receivables.
As of December 31, 2024 , we had approximately $545.4 million of outstanding borrowings under our 2024 Credit Agreement, net of deferred financing costs, of which approximately $445.4 million bears interest at variable rates of interest and $100 million bears interest at fixed rates, after consideration of the interest rate swap agreements entered into in June 2022 and October 2024.
As of December 31, 2025 , we had approximately $598.1 million of outstanding borrowings under our 2024 Credit Agreement, net of deferred financing costs, of which approximately $386.4 million bears interest at variable rates of interest and $211.7 million bears interest at fixed rates, after consideration of the interest rate swap agreements entered into in June 2022 and October 2024.
Under the terms of the swap agreement, we will receive monthly variable interest payments based on one month EURIBOR and will pay interest based on a fixed rate of 2.11% per annum.
Under the terms of the interest rate swap agreements, we will receive monthly variable interest payments based on one month Term SOFR and one month EURIBOR, respectively, and will pay interest based on a fixed rate of 2.683% per annum and 2.11% per annum, respectively.
Removed
The interest rate swap agreement is designated as a cash flow hedge of interest payments on $100 million of borrowings 38 Index under our 2024 Credit Agreement. Under the terms of the swap agreement, we will receive monthly variable interest payments based on one month Term SOFR and will pay interest based on a fixed rate of 2.683% per annum.
Removed
In October 2024, we entered into an interest rate swap agreement with an initial notional amount of €100 million that matures in March 2030. At December 31, 2024, the notional amount was $103.9 million or €100 million.
Removed
The interest rate swap agreement is designated as a cash flow hedge of interest payments on euro denominated borrowings under our 2024 Credit Agreement equal to the notional amount of the interest rate swap agreement. The notional amount of the interest rate swap will decrease quarterly starting from June 2025.

Other SMP 10-K year-over-year comparisons