STANDARD MOTOR PRODUCTS, INC. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page No. Reports of Independent Registered Public Accounting Firm 39 Consolidated Statements of Operations for the years ended December 31, 202 5 , 202 4 and 202 3 43 Consolidated Statements of Comprehensive Income for the years ended December 31, 202 5 , 202 4 and 202 3 44 Consolidated Balance Sheets as of December 31, 202 5 and 202 4 45 Consolidated Statements of Cash Flows for the years ended December 31, 202 5 , 202 4 and 202 3 46 Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 202 5 , 202 4 and 202 3 47 Notes to Consolidated Financial Statements 48 38 Index REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors Standard Motor Products, Inc. and Subsidiaries: Opinion on Internal Control Over Financial Reporting We have audited Standard Motor Products, Inc. and Subsidiaries (the Company) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, because of the effect of the material weakness, described below, on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statement of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes and financial statement Schedule II, Valuation and Qualifying Accounts (collectively, the consolidated financial statements), and our report dated February 26, 2026 expressed an unqualified opinion on those consolidated financial statements. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. A material weakness related to ineffective IT general controls, arising from the unavailability of information to track and monitor administrative user activity has been identified and included in management’s assessment. The material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2025 consolidated financial statements, and this report does not affect our report on those consolidated financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 39 Index Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP New York, New York February 26, 2026 40 Index REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors Standard Motor Products, Inc. and Subsidiaries: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Standard Motor Products, Inc. and Subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes and financial statement Schedule II Valuation and Qualifying Accounts (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 26, 2026 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Asbestos liability and litigation As discussed in Notes 1 and 23 to the consolidated financial statements, the Company is involved in asbestos litigation and has a potential asbestos liability. As of December 31, 2025, the accrued asbestos liability was $125.1 million. The Company’s asbestos liability represents the low end of the actuarially determined range of the undiscounted liability for settlement payments and awards of asbestos-related damages, excluding legal costs and any potential recovery from insurance carriers. We identified the assessment of the asbestos liability recorded as a critical audit matter. This required subjective auditor judgment, due to the nature of the estimate and assumptions, including the applicability of those assumptions to the current 41 Index facts and circumstances, as well as judgments about future events and uncertainties. Specialized skills were needed to evaluate the Company’s key assumptions. The key assumptions included future claim filings, closed with pay ratios, closed with pay lag patterns, settlement values, and large claims. Minor changes to these key assumptions could have had a significant effect on the Company’s assessment of the accrual for the asbestos liability. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the asbestos liability estimation process. This included controls related to the key assumptions and the claims data utilized in the process, and the potential need for an updated actuarial valuation. We evaluated the asbestos related legal cases settled during the year and the number of open cases as of year-end by reading letters received directly from the Company’s external and internal legal counsel. We tested a selection of claims data used in the actuarial model by comparing the selection items to underlying claims documentation. We involved an actuarial professional with specialized skills and knowledge, who assisted in evaluating (1) the future claim filings assumption by developing an independent expectation and comparing it against the Company’s future claim filing assumption, and (2) the closed with pay ratios, closed with pay lag patterns, settlement values, and large claims by comparing them to the Company’s historical experience. /s/ KPMG LLP We have served as the Company’s auditor since 2010. New York, New York February 26, 2026 42 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, (In thousands, except share and per share data) 2025 2024 2023 Net sales $ 1,791,158 $ 1,463,849 $ 1,358,272 Cost of sales 1,231,750 1,040,528 969,446 Gross profit 559,408 423,321 388,826 Selling, general and administrative expenses 420,659 335,104 293,583 Restructuring expenses 2,580 7,668 2,642 Other income, net 338 75 76 Operating income 136,507 80,624 92,677 Other non-operating income, net 5,355 6,877 2,326 Interest expense 31,339 13,512 13,287 Earnings from continuing operations before income taxes 110,523 73,989 81,716 Provision for income taxes 30,617 19,385 18,368 Earnings from continuing operations 79,906 54,604 63,348 Loss from discontinued operations, net of income tax benefit of $ 13,245 , $ 9,180 and $ 10,188 ( 37,698 ) ( 26,128 ) ( 28,996 ) Net earnings 42,208 28,476 34,352 Net earnings attributable to noncontrolling interest 873 976 204 Net earnings attributable to SMP (a) $ 41,335 $ 27,500 $ 34,148 Net earnings (loss) attributable to SMP Continuing operations 79,033 53,628 63,144 Discontinued operations ( 37,698 ) ( 26,128 ) ( 28,996 ) Net earnings attributable to SMP $ 41,335 $ 27,500 $ 34,148 Per common share data Basic: Continuing operations $ 3.59 $ 2.46 $ 2.91 Discontinued operations ( 1.71 ) ( 1.20 ) ( 1.34 ) Net earnings attributable to SMP per common share $ 1.88 $ 1.26 $ 1.57 Diluted: Continuing operations $ 3.52 $ 2.41 $ 2.85 Discontinued operations ( 1.68 ) ( 1.17 ) ( 1.31 ) Net earnings attributable to SMP per common share $ 1.84 $ 1.24 $ 1.54 Dividends declared per common share $ 1.24 $ 1.16 $ 1.16 Weighted average number of common shares, basic 21,986,301 21,801,141 21,716,177 Weighted average number of common shares, diluted 22,483,591 22,237,060 22,161,341 (a) Throughout this Form 10-K, “SMP” refers to Standard Motor Products, Inc. and subsidiaries. See accompanying notes to consolidated financial statements. 43 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year Ended December 31, (In thousands) 2025 2024 2023 Net earnings $ 42,208 $ 28,476 $ 34,352 Other comprehensive income (loss), net of tax: Foreign currency translation 45,838 ( 20,973 ) 7,447 Cash flow hedges ( 2,001 ) 1,025 ( 924 ) Postretirement benefit plans ( 10 ) ( 11 ) ( 13 ) Total other comprehensive income (loss), net of tax 43,827 ( 19,959 ) 6,510 Total comprehensive income 86,035 8,517 40,862 Comprehensive income (loss) attributable to noncontrolling interest, net of tax: Net earnings 873 976 204 Foreign currency translation 138 ( 101 ) 14 Comprehensive income (loss) attributable to noncontrolling interest, net of tax 1,011 875 218 Comprehensive income attributable to SMP $ 85,024 $ 7,642 $ 40,644 See accompanying notes to consolidated financial statements. 44 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, (In thousands, except share and per share data) 2025 2024 ASSETS CURRENT ASSETS: Cash $ 72,031 $ 44,426 Accounts receivable, less allowances for discounts and expected credit losses of $ 10,043 and $ 5,472 in 2025 and 2024, respectively 232,020 210,719 Inventories 712,151 624,913 Unreturned customer inventories 15,771 16,163 Prepaid expenses and other current assets 18,477 25,703 Total current assets 1,050,450 921,924 Property, plant and equipment, net 188,562 168,735 Operating lease right-of-use assets 105,178 109,899 Goodwill 256,159 241,418 Customer relationships intangibles, net 212,056 210,430 Other intangibles, net 99,102 90,540 Deferred income taxes 25,384 13,199 Investments in unconsolidated affiliates 26,310 24,842 Other assets 32,040 33,139 Total assets $ 1,995,241 $ 1,814,126 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Current portion of revolving credit facility $ 30,000 $ 10,800 Current portion of term loan and other debt 21,988 16,317 Accounts payable 169,089 148,009 Sundry payables and accrued expenses 79,526 84,936 Accrued customer returns 49,554 46,471 Accrued core liability 12,528 12,807 Accrued rebates 84,494 76,168 Payroll and commissions 46,135 40,964 Total current liabilities 493,314 436,472 Long-term debt 566,727 535,197 Noncurrent operating lease liabilities 93,381 98,214 Accrued asbestos liabilities 112,625 84,568 Other accrued liabilities 30,932 29,593 Total liabilities 1,296,979 1,184,044 Commitments and contingencies Stockholders’ equity: Common Stock - par value $ 2.00 per share (Authorized 30,000,000 shares; issued 23,936,036 shares) 47,872 47,872 Capital in excess of par value 99,005 100,135 Retained earnings 589,448 575,385 Accumulated other comprehensive income 17,857 ( 25,832 ) Treasury stock - at cost ( 1,790,097 shares and 2,077,877 shares in 2025 and 2024, respectively) ( 70,483 ) ( 81,815 ) Total SMP stockholders’ equity 683,699 615,745 Noncontrolling interest 14,563 14,337 Total stockholders’ equity 698,262 630,082 Total liabilities and stockholders’ equity $ 1,995,241 $ 1,814,126 See accompanying notes to consolidated financial statements. 45 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, (In thousands) 2025 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 42,208 $ 28,476 $ 34,352 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 43,848 31,413 29,022 Amortization of deferred financing cost 1,216 1,911 491 Increase to allowance for expected credit losses 4,642 732 2,943 Increase to inventory reserves 9,850 4,155 3,068 Equity income from joint ventures ( 3,556 ) ( 4,274 ) ( 2,070 ) Employee stock ownership plan allocation 2,700 2,787 2,966 Stock-based compensation 7,502 6,127 6,598 Increase in deferred income taxes ( 11,843 ) ( 9,996 ) ( 6,952 ) Increase in tax valuation allowance 2,420 770 674 Other non-cash items 1,987 — — Loss on discontinued operations, net of tax 37,698 26,128 28,996 Change in assets and liabilities: (Increase) decrease in accounts receivable ( 16,767 ) ( 8,753 ) 7,965 (Increase) decrease in inventories ( 81,629 ) ( 36,883 ) 29,494 (Increase) decrease in prepaid expenses and other current assets 6,655 856 ( 70 ) Increase in accounts payable 14,601 8,166 19,645 Increase (decrease) in sundry payables and accrued expenses ( 6,110 ) 24,170 ( 4,284 ) Net changes in other assets and liabilities 2,018 908 ( 8,578 ) Net cash provided by operating activities 57,440 76,693 144,260 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions of businesses, net of cash acquired — ( 372,491 ) — Step acquisition of affiliate — — ( 3,954 ) Cash acquired in step acquisition — — 6,779 Capital expenditures ( 38,724 ) ( 44,018 ) ( 28,633 ) Other investing activities 3,060 ( 2,174 ) 108 Net cash used in investing activities ( 35,664 ) ( 418,683 ) ( 25,700 ) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under term loans — 211,457 — Repayments of term loans ( 15,755 ) ( 93 ) ( 5,000 ) Net borrowings (repayments) under revolving credit facilities 41,910 180,671 ( 78,500 ) Net borrowings (repayments) of other debt and lease obligations 1,570 595 ( 58 ) Purchase of treasury stock — ( 10,428 ) — Payments of debt issuance costs — ( 5,133 ) — Increase (decrease) in overdraft balances 63 166 ( 189 ) Dividends paid ( 27,272 ) ( 25,341 ) ( 25,164 ) Dividends paid to noncontrolling interest ( 785 ) ( 2,347 ) ( 700 ) Net cash provided by (used in) financing activities ( 269 ) 349,547 ( 109,611 ) Effect of exchange rate changes on cash 6,098 4,343 2,427 Net increase in cash and cash equivalents 27,605 11,900 11,376 CASH AND CASH EQUIVALENTS at beginning of year 44,426 32,526 21,150 CASH AND CASH EQUIVALENTS at end of year $ 72,031 $ 44,426 $ 32,526 Supplemental disclosure of cash flow information: Cash paid during the year for interest $ 32,728 $ 14,044 $ 14,597 See accompanying notes to consolidated financial statements. 46 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY Years Ended December 31, 2025, 2024 and 2023 (In thousands) Common Stock Capital in Excess of Par Value Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total SMP Non- controlling Interest Total Balance at December 31, 2022 $ 47,872 $ 105,615 $ 564,242 $ ( 12,470 ) $ ( 95,239 ) $ 610,020 $ 11,018 $ 621,038 Noncontrolling interest in step acquisition — — — — — — 5,273 5,273 Net earnings — — 34,148 — — 34,148 204 34,352 Other comprehensive income, net of tax — — — 6,496 — 6,496 14 6,510 Cash dividends paid — — ( 25,164 ) — — ( 25,164 ) — ( 25,164 ) Dividends paid to noncontrolling interest — — — — — — ( 700 ) ( 700 ) Stock-based compensation — ( 3,880 ) — — 10,478 6,598 — 6,598 Employee Stock Ownership Plan — 16 — — 2,950 2,966 — 2,966 Balance at December 31, 2023 47,872 101,751 573,226 ( 5,974 ) ( 81,811 ) 635,064 15,809 650,873 Net earnings — — 27,500 — — 27,500 976 28,476 Other comprehensive loss, net of tax — — — ( 19,858 ) — ( 19,858 ) ( 101 ) ( 19,959 ) Cash dividends paid — — ( 25,341 ) — — ( 25,341 ) — ( 25,341 ) Purchase of treasury stock — — — — ( 10,428 ) ( 10,428 ) — ( 10,428 ) Dividends paid to noncontrolling interest — — — — — — ( 2,347 ) ( 2,347 ) Stock-based compensation — ( 1,619 ) — — 7,640 6,021 — 6,021 Employee Stock Ownership Plan — 3 — — 2,784 2,787 — 2,787 Balance at December 31, 2024 47,872 100,135 575,385 ( 25,832 ) ( 81,815 ) 615,745 14,337 630,082 Net earnings — — 41,335 — — 41,335 873 42,208 Other comprehensive income, net of tax — — — 43,689 — 43,689 138 43,827 Cash dividends paid — — ( 27,272 ) — — ( 27,272 ) — ( 27,272 ) Dividends paid to noncontrolling interest — — — — — — ( 785 ) ( 785 ) Stock-based compensation — ( 393 ) — — 7,895 7,502 — 7,502 Employee Stock Ownership Plan — ( 737 ) — — 3,437 2,700 — 2,700 Balance at December 31, 2025 $ 47,872 $ 99,005 $ 589,448 $ 17,857 $ ( 70,483 ) $ 683,699 $ 14,563 $ 698,262 See accompanying notes to consolidated financial statements. 47 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies Principles of Consolidation & Basis of Presentation Stan dard Motor Products, Inc. and its subsidiaries (referred to hereinafter in these notes to the consolidated financial statements as “we,” “us,” “our,” “SMP,” or the “Company”) is a leading manufacturer and distributor of premium replacement parts in the automotive aftermarket, and a custom-engineered solutions provider to vehicle and equipment manufacturers in diverse non-aftermarket end markets. Our business is organized in four reportable segments (also referred to as operating segments), comprising of three reportable segments, Vehicle Control, Temperature Control and Nissens Automotive, that sell products in the automotive aftermarket, while our fourth reportable segment, Engineered Solutions 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, Canada, Europe, Asia, Mexico and other Latin American countries. These consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") an d include our accounts and all domestic and international companies that we control. In addition, we use the equity method, to include our share of the results of certain affiliates based on our economic interest, our ability to exercise significant influence over the operating or financial decisions of these affiliates or our ability to direct their economic resources. We do not control these affiliates, as our ownership in these other affiliates is generally 50% or less. All significant inter-company items have been eliminated. Reclassification Certain prior period amounts in the accompanying consolidated financial statements and related notes have been reclassified to conform to the 2025 presentation. Use of Estimates The preparation of consolidated annual and quarterly financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities at the date of our consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. We have made a number of estimates and assumptions in the preparation of these consolidated financial statements. We can give no assurance that actual results will not differ from those estimates. 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 disruptions in the supply chain caused by geo-political risks, future increases in interest rates, tariffs, 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. Some of the more significant estimates include allowances for expected credit losses, cash discounts, valuation of inventory, valuation of long-lived assets, goodwill and other intangible assets, depreciation and amortization of long-lived assets, product liability exposures, asbestos, environmental and litigation matters, valuation of deferred tax assets, share based compensation and sales returns and other allowances. Cash and Cash Equivalents We consider all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Substantially all of the cash and cash equivalents, including foreign cash balances, at December 31, 2025 and 2024 were uninsured. Foreign cash balances at December 31, 2025 and 2024 were $ 70.1 million and $ 42.5 million , respectively. Allowance for Expected Credit Losses and Cash Discounts Accounts receivable have been reduced by an allowance for amounts that may become uncollectible in the future. These allowances are established based on a combination of write-off history, supportable forecasts of future economic conditions, aging analysis, and specific account evaluations. When a receivable balance is known to be uncollectible, it is 48 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) written off against the allowance for expected credit losses. Cash discounts are provided based on an overall average experience rate applied to qualifying accounts receivable balances. Inventories Inventories are valued at the lower of cost and net realizable value. Cost is determined on the first-in first-out basis. Where appropriate, standard cost systems are utilized for purposes of determining cost; the standards are adjusted as necessary to ensure they approximate actual costs. Estimates of lower of cost and net realizable value of inventory are determined by comparing the actual cost of the product to the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation of the inventory. We also evaluate inventories on a regular basis to identify inventory on hand that may be obsolete or in excess of current and future projected market demand. For inventory deemed to be obsolete, we provide a reserve on the full value of the inventory. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates our estimate of future demand. Future projected demand requires management judgment and is based upon (a) our review of historical trends and (b) our estimate of projected customer specific buying patterns and trends in the industry and markets in which we do business. Using rolling twelve month historical information, we estimate future demand on a continuous basis. The historical volatility of such estimates has been minimal. We utilize cores (used parts) in our remanufacturing processes for air conditioning compressors, diesel injectors, and diesel pumps. The production of air conditioning compressors, diesel injectors, and diesel pumps involves the rebuilding of used cores, which we acquire either in outright purchases from used parts brokers, or from returns pursuant to an exchange program with customers. Under such exchange programs, at the time of sale of air conditioning compressors, diesel injectors, and diesel pumps, we estimate the core expected to be returned from the customer and record the estimated return as unreturned customer inventory. In addition, many of our customers can return inventory to us based upon customer warranty and overstock arrangements within customer specific limits. At the time products are sold, we accrue a liability for product warranties and overstock returns and record an asset for unreturned customer inventory based on our estimate of anticipated customer returns. Estimates are based upon historical information on the nature, frequency and probability of the customer return. Unreturned core, warranty and overstock customer inventory is recorded at standard cost. Revision to these estimates is made when necessary, based upon changes in these factors. We regularly study trends of such claims. Leases We determine if an arrangement is a lease at inception. For operating leases, we include and report operating lease right-of-use (“ROU”) assets, sundry payables and accrued expenses, and noncurrent operating lease liabilities on our consolidated balance sheet for leases with a term longer than twelve months. Finance leases are reported on our consolidated balance sheets in property, plant and equipment, current portion of other debt, and long-term debt. Operating lease ROU assets and operating lease liabilities are recognized at the lease commencement date based on the present value of the total lease payments over the lease term. Our ROU assets represent the right to use an underlying leased asset over the existing lease term, and the corresponding lease liabilities represent our obligation to make lease payments arising from the lease agreement. As most of our leases do not provide for an implicit rate, we use our incremental borrowing rate based on the information available when determining the present value of our lease payments. Our lease terms may include options to terminate, or extend, our lease when it is reasonably certain that we will execute the option. Lease agreements may contain lease and non-lease components, which are generally accounted for separately. Operating lease expense is recognized on a straight-line basis over the lease term. Business Combinations and Intangible Assets Including 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. At acquisition, we estimate and record the fair value of purchased intangible assets, which primarily consist of customer relationships, trademarks and trade names, and patents, developed technology and intellectual property. 49 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Intangible assets acquired through business combinations are subject to potential adjustments within the measurement period, which is up to one year from the acquisition date. Valuing intangible assets requires the use of significant estimates and assumptions. Significant estimates and assumptions used in valuing customer relationships include but are not limited to: (i) forecasted revenues attributable to existing customers; (ii) forecasted margins; (iii) customer attrition rates; and (iv) the discount rate. 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. Goodwill and certain other intangible assets having indefinite lives are not amortized to earnings, but instead are subject to periodic testing for impairment. Intangible assets determined to have definite lives are amortized over their remaining useful lives generally on a straight-line basis. We believe that the fair value of acquired identifiable net assets, including intangible assets, are based upon reasonable estimates and assumptions. Acquisition related costs, including advisory, legal, accounting, valuation and pre-close and other costs, are typically expensed in the periods in which the costs are incurred and are recorded in selling, general and administrative expenses within the statement of operations. The results of operations of acquired businesses are included in the Consolidated Financial Statements from the acquisition date. Impairment 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. With respect to goodwill and identifiable intangible assets having indefinite lives, we test for impairment on an annual basis or in interim periods if an event occurs or circumstances change that may indicate the fair value is below its carrying amount. 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. We review the fair values using the discounted cash flows method and market multiples. When performing our evaluation of goodwill for impairment, if we conclude qualitatively that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then a quantitative impairment test would not be required. If we are unable to reach this conclusion, then we would perform a quantitative impairment test. In performing the quantitative impairment test, the fair value of the reporting unit is compared to its carrying amount. A charge for impairment is recognized by the amount by which the reporting unit’s carrying amount exceeds its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. Identifiable intangible assets having indefinite lives are reviewed for impairment on an annual basis using a methodology similar with that used to evaluate goodwill. Intangible assets having definite lives and other long-lived assets are reviewed for impairment whenever events such as product discontinuance, plant closures, product dispositions or other changes in circumstances indicate that the carrying amount may not be recoverable. In reviewing intangible assets having definite lives and other long-lived assets for impairment, we compare the carrying value of such assets to the estimated undiscounted future cash flows expected from the use of the assets and their eventual disposition. When the estimated undiscounted future cash flows are less than their carrying amount, an impairment loss is recognized equal to the difference between the assets fair value and their carrying value. There are inherent assumptions and estimates used in developing future cash flows requiring our judgment in applying these assumptions and estimates to the analysis of identifiable intangibles and long‑lived asset impairment including projecting revenues, interest rates, tax rates and the cost of capital. Many of the factors used in assessing fair value are outside our control and it is reasonably likely that assumptions and estimates will change in future periods. These changes can result in future impairments. In the event our planning assumptions were modified resulting in impairment to our assets, we would be required to include an expense in our statement of operations, which could materially impact our business, financial condition and results of operations. 50 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Foreign Currency Translation Assets and liabilities of our foreign operations are translated into U.S. dollars at year-end exchange rates. Income statement accounts are translated using the average exchange rates prevailing during the year. The resulting translation adjustments are recorded as a separate component of accumulated other comprehensive income (loss) and remain there until the underlying foreign operation is liquidated or substantially disposed of. Foreign currency transaction gains or losses are recorded in other non-operating income (expense), net in our statement of operations. Revenue Recognition We derive our revenue primarily from automotive aftermarket sales in our Vehicle Control, Temperature Control and Nissens Automotive segments, and non-aftermarket sales in our Engineered Solutions Segment. We recognize revenues when our performance obligation has been satisfied and the control of products has been transferred to a customer which typically occurs upon shipment. Revenue is measured as the amount of consideration we expect to receive in exchange for the transfer of goods or provision of services. The amount of consideration we receive and revenue we recognize depends on the marketing incentives, product warranty and overstock returns we offer to our customers. For certain of our sales of remanufactured products, we also charge our customers a deposit for the return of a used core component which we can use in our future remanufacturing activities. Such deposit is not recognized as revenue at the time of the sale but rather carried as a core liability. At the same time, we estimate the core components expected to be returned from the customer and record the estimated return as unreturned customer inventory. The liability is extinguished when a core component is actually returned to us, or at period end when we estimate and recognize revenue for the core deposits not expected to be returned. We estimate and record provisions for cash discounts, quantity rebates, sales returns and warranties in the period the sale is recorded, based upon our prior experience and current trends. Significant management judgments and estimates are made in estimating sales returns and allowances relating to revenue recognized in any accounting period. Product Warranty and Overstock Returns Many of our products carry a warranty ranging from a 90-day limited warranty to a lifetime limited warranty, which generally covers defects in materials or workmanship and failure to meet industry published specifications and/or the result of installation error. In addition to warranty returns, we also permit our customers to return new, undamaged products to us within customer-specific limits (which are generally limited to a specified percentage of their annual purchases from us) in the event that they have overstocked their inventories. At the time products are sold, we accrue a liability for product warranties and overstock returns as a percentage of sales based upon estimates established using historical information on the nature, frequency and average cost of the claim and the probability of the customer return. At the same time, we record an estimate of anticipated customer returns as unreturned customer inventory. Significant judgments and estimates are made in connection with establishing the sales returns and other allowances in any accounting period. Revision to these estimates is made when necessary, based upon changes in these factors. We regularly study trends of such claims. Selling, General and Administration Expenses Selling, general and administration expenses include shipping costs and advertising, which are expensed as incurred. Shipping and handling charges, as well as freight to customers, are included in distribution expenses as part of selling, general and administration expenses. Accounting for Income Taxes Income taxes are calculated using the asset and liability method. Deferred tax assets and liabilities are determined based on the estimated future tax effects of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities, as measured by the current enacted tax rates. We maintain valuation allowances when it is more likely than not that all or a portion of a deferred asset will not be realized. In determining whether a valuation allowance is warranted, we consider all positive and negative evidence and all sources of taxable income such as prior earnings history, expected future earnings, carryback and carryforward periods and tax strategies to estimate if sufficient future taxable income will be generated to realize the deferred tax asset. The assessment of the adequacy of our valuation allowance is based on our estimates of taxable income by jurisdiction in which we operate and the period over which our deferred tax assets will be recoverable. In the event that actual results differ from these estimates, or we adjust these estimates in future periods for current trends or expected changes in our estimating 51 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) assumptions, we may need to modify the level of valuation allowance which could materially impact our business, financial condition and results of operations. Tax benefits are recognized for an uncertain tax position when, in management’s judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition threshold, the tax benefit is measured as the largest amount that is judged to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. The liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances and when new information becomes available. Such adjustments are recognized entirely in the period in which they are identified. 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. 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. The methodology used to project asbestos-related liabilities and costs in our actuarial study considered: (i) historical data available from publicly available studies; (ii) an analysis of our recent claims history to estimate likely filing rates into the future; (iii) an analysis of our currently pending claims; (iv) an analysis of our settlements and awards of asbestos-related damages to date; and (v) an analysis of closed claims with pay ratios and lag patterns in order to develop average future settlement values. Based on the information contained in the actuarial study and all other available information considered by us, we have concluded that no amount within the range of settlement payments and awards of asbestos-related damages was more likely than any other and, therefore, in assessing our asbestos liability we compare the low end of the range to our recorded liability to determine if an adjustment is required. Future legal costs are expensed as incurred and reported in earnings (loss) from discontinued operations in the accompanying statement of operations. We plan to perform an annual actuarial evaluation during the third quarter of each year for the foreseeable future and whenever events or changes in circumstances indicate that additional provisions may be necessary. Given the uncertainties associated with projecting such matters into the future and other factors outside our control, we can give no assurance that additional provisions will not be required. We will continue to monitor events and changes in circumstances surrounding these potential liabilities in determining whether to perform additional actuarial evaluations and whether additional provisions may be necessary. At the present time, however, we do not believe that any additional provisions would be reasonably likely to have a material adverse effect on our liquidity or consolidated financial position. Loss Contingencies We have loss contingencies, for such matters as legal claims and legal proceedings. Establishing loss reserves for these matters requires estimates, judgment of risk exposure and ultimate liability. We record provisions when the liability is considered probable and reasonably estimable. Significant judgment is required for both the determination of probability and the determination as to whether an exposure can be reasonably estimated. We maintain an ongoing monitoring and identification process to assess how the activities are progressing against the accrued estimated costs. As additional information becomes available, we reassess our potential liability related to these matters. Adjustments to the liabilities are recorded in the statement of operations in the period when additional information becomes available. Such revisions of the potential liabilities could have a material adverse effect on our business, financial condition or results of operations. Concentrations of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash investments, accounts receivable and derivative financial instruments used to reduce our market risk for changes in interest rates on our variable rate borrowings. We place our cash investments with high quality financial institutions and limit the amount of credit exposure to any one institution. Derivative financial instruments used to reduce our market risk for changes in interest rates on our variable rate borrowings are entered into with high quality financial institutions, with their credit worthiness reviewed on a quarterly basis. Although we are directly affected by developments in the vehicle parts industry, management does not believe significant credit risk exists. 52 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) With respect to accounts receivable, such receivables are primarily from warehouse distributors and major retailers in the automotive aftermarket industry located in the U.S. We perform ongoing credit evaluations of our customers’ financial conditions and we obtain credit insurance on accounts receivable from certain customers primarily based in Europe. 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. 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. Recently Adopted Accounting Pronouncements Improvements to Income Tax Disclosures In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 270): Improvements to Income Tax Disclosures. This accounting standards update improves transparency and decision making usefulness of income tax disclosures primarily with the expansion of the: a. annual income effective tax rate reconciliation to include disclosure of (i) eight specific categories of rate reconciling items; (ii) additional information for reconciling items that meet or exceed a quantitative threshold; and (iii) expand the required disclosures to include reconciling percentages as well as reported amounts; and b. annual disclosures of income taxes paid to include the disaggregation by federal, state and foreign jurisdictions. The ASU is effective for annual reporting periods beginning after December 15, 2024, and as such we have expanded our disclosures in Note 19, "Income Taxes" of the notes to our consolidated financial statements with full retrospective application to all prior periods presented. Segment Reporting In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This accounting standards update improves segment disclosure requirements, primarily through expanding the disclosures to include significant segment expenses incurred by the business. To achieve these disclosures the following items are required by ASU 2023-07: (i) significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss; (ii) the amount and description of the composition of other segment items to reconcile to segment profit and loss; and (iii) the CODM’s title and position and how the CODM uses the reported segment measures to allocate resources. Additionally, ASU 2023-07 requires interim disclosures of all reportable segment profit or loss and assets previously required annually by Topic 280. This ASU is effective for fiscal years beginning after December 15, 2023 and as such we have expanded our disclosures in Note 21, "Industry Segment and Geographic Data ," of the notes to our consolidated financial statements and recast comparative periods . Standards that are not yet adopted as of December 31, 2025 Disaggregation of Income Statement Expenses In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). This accounting standards update seeks to provide investors and users of the financial statements with clearer information regarding companies' cost structures by disaggregating expense line items in the income statement. ASU 2024-03 requires tabular disclosure in the notes to the financial statements, at each interim and annual reporting period, of certain types of expenses (including purchases of inventory, employee compensation, depreciation and intangible asset amortization) that are already included in commonly presented expense captions on the income statement within continuing operations, and qualitative description of remaining amounts not separately disaggregated quantitatively. Furthermore, the guidance requires disclosure of the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. The ASU is effective for annual reporting periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, which for us is January 1, 2027 and January 1, 2028, respectively. The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted. 53 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) This new standard, once adopted, will require us to disclose expenses in a more detailed and granular way than we do in these consolidated financial statements. We are currently evaluating the full impact of adopting ASU 2024-03 on our consolidated financial statements, disclosures, processes and controls. We will adopt the guidance when it becomes effective. Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity In May 2025, the FASB issued ASU 2025-03, Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity (subtopic 805-10-55). This accounting standards update seeks to improve the requirements for identifying the accounting acquirer in transactions effected primarily by exchanging equity interests in which the legal acquiree is a variable interest entity (“VIE”), enhance the comparability of financial statements and result in more closely aligned accounting outcomes as economically similar transactions in which the legal acquiree is a voting interest entity. Under the current guidance, if the legal acquiree is a VIE, the primary beneficiary of the VIE is always the accounting acquirer. The revised guidance requires an entity to assess the factors in Topic 805, Business Combinations, to determine the accounting acquirer in an acquisition transaction primarily effected by exchanging equity interests when the legal acquiree is a VIE that meets the definition of a business. The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods and applies prospectively to any acquisition transaction that occurs after the initial application date. The ASU is not expected to have a material impact on the Company’s consolidated financial statements. Targeted Improvements to the Accounting for Internal-Use Software In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This accounting standards update removes references to software development project stages and clarifies that an entity is required to start capitalizing software costs when both of the following occur: (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. The update provides the following two factors to consider in determining if the second criterion has been met: • The software being developed has technological innovations or novel, unique, or unproven functions or features, and the uncertainty related to those technological innovations, functions, or features, has not been resolved through coding and testing. • The significant performance requirements (for example, functions or features) have not been identified or continue to be substantially revised. The update specifies that the disclosures in Subtopic 360-10, Property, Plant, and Equipment—Overall , are required for all capitalized internal-use software costs, regardless of how those costs are presented in the financial statements. Additionally, the amendments clarify that the intangible asset disclosures in paragraphs 350-30-50-1 through 50-3 are not required for capitalized internal-use software costs. The amendments in this update are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods and can be applied prospectively, retrospectively or using a modified transition approach. Early adoption is permitted as of the beginning of an annual reporting period. We will adopt the guidance when it becomes effective. We are currently evaluating the effects of adopting this standard and do not anticipate the impact to be material. Hedge Accounting Improvements In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements , which introduces five targeted improvements to better align hedge accounting with the economics of entities’ risk management activities. The update will be effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods. Early adoption is permitted. We do not expect this update to have a material effect on our consolidated financial statements and related disclosures. We have reviewed all other recently issued accounting pronouncements and concluded they were either not applicable or not expected to have a material impact on the Company’s consolidated financial statements. 54 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) United States Tax Law In July 2025, the President signed into law budget reconciliation bill H.R.1, commonly referred to as the One Big Beautiful Bill Act (“OBBBA”) introducing tax reform measures that included changes to tax deductions for businesses, international tax rules, and foreign tax credit limitations that become effective in 2025 and 2026. As of enactment, these changes did not materially affect our deferred tax assets and liabilities or related valuation allowances. The impact on our income tax expense, effective income tax rate and cash tax payments for the year ended December 31, 2025 was not material. We will continue to evaluate the full impact of the legislation as additional guidance becomes available. 2. Business Combinations Acquisition of Nissens Automotive On November 1, 2024, we acquired all the issued and outstanding shares of European automotive aftermarket parts supplier, AX V Nissens III ApS (now known as SMP Nissens III ApS) and its direct and indirect subsidiaries (“Nissens Automotive”) for € 366.8 million (approximately $ 397.1 million), the purchase price consideration, from Nordic private equity firm, Axcel V K/S, and the Nissen family. The acquired Nissens Automotive business was paid for with cash funded by borrowing from our revolving credit facility and term loans, under the 2024 Credit Agreement. The acquisition of Nissens Automotive, a leading European supplier of thermal management and engine efficiency products for the automotive aftermarket, aligns with our strategy to become an aftermarket leader in North America and Europe across our key product categories. Through this acquisition, we will take advantage of collaboration for growth through cross-selling opportunities as well as bi-directional synergies with significant savings potential. The acquired Nissens Automotive business is a reportable operating segment. We determined the fair value of acquired intangible assets using the multi-period excess earnings method and the relief-from-royalty method under the income approach for customer relationships and trade names, respectively. These methods generally forecast expected future net cash flows discretely associated with each of the identified intangible assets and adjust the forecasts to present value by applying a discount rate intended to reflect risk factors associated with the cash flows and the time value of money. In addition to the consideration transferred to complete the transaction, we incurred closing and other acquisition related costs of $ 0.5 million and $ 8 million recorded as selling, general and administrative costs within the statement of operations during the years ended December 31, 2025 and 2024, respectively. 55 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table summarizes the allocation of the acquisition purchase consideration to the identifiable assets acquired and liabilities assumed based on their fair values (in thousands): Total purchase consideration ⁽ᵃ⁾ $ 397,111 Cash and cash equivalents 24,620 Accounts receivable 48,460 Inventories 88,337 Unreturned customer inventories 1,820 Prepaid expenses and other current assets 1,033 Property, plant and equipment 29,048 Operating lease right-of-use assets 8,625 Customer relationships intangibles ⁽ᶜ⁾ 150,400 Other intangibles ⁽ᶜ⁾ 78,871 Other assets 407 Total assets acquired 431,621 Current portion of term loan and other debt 1,749 Accounts payable 34,568 Sundry payables and accrued expenses 19,836 Accrued customer returns 3,360 Accrued rebates 24,732 Payroll and commissions 3,294 Long-term debt 14,423 Noncurrent operating lease liabilities 5,501 Other accrued liabilities 1,371 Deferred tax liabilities 37,870 Total liabilities assumed 146,704 Net assets acquired 284,917 Goodwill ⁽ᵇ⁾ $ 112,194 (a) Total purchase consideration consists of cash only. (b) Goodwill is deductible for tax purposes (c) Intangible assets comprise of capitalized computer software of $ 2.2 million and the following (in thousands): Gross Carrying Amount Weighted-Average Useful Life (in Years) Customer relationships $ 150,400 16 Trade names - Nissens and AVA 75,600 Indefinite Trade names - Highway 1,100 15 $ 227,100 Unaudited Supplemental Pro Forma Financial Information The following unaudited supplemental pro forma information presents the combined results of operations for the years ended December 31, 2024 and 2023, respectively, as if the Nissens Automotive acquisition was completed on January 1, 2023. The pro forma financial information presented below is for illustrative purposes and is not indicative of the operating results that would have been realized if the acquisition had been completed on January 1, 2023, nor is it indicative of future operating results (in thousands): 56 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Year Ended December 31, 2024 2023 Net sales $ 1,704,858 $ 1,615,110 Net earnings attributable to SMP 39,907 18,870 The unaudited supplemental pro forma financial information includes adjustments for (i) amortization and depreciation totaling $ 3.4 million and $ 4.1 million for the years ended December 31, 2024 and 2023, respectively, that would have been recognized for the acquired intangible assets and the fair value adjustment of property, plant and equipment; (ii) amortization expense for deferred financing costs of $ 14.5 million and $ 18.2 million for the years ended December 31, 2024 and 2023, respectively and (iii) the estimated income tax benefit on the unaudited pro forma financial adjustments. The unaudited supplemental pro forma financial information assumes that the following were incurred during the year ended December 31, 2023: (i) $ 9.4 million for amortization of the inventory fair-value adjustment, (ii) $ 1.6 million for acquisition related transaction costs, (iii) $ 1.8 million for employee retention bonus expense and (iv) the related estimated income tax benefits. The pro forma financial information does not reflect any expected revenue or cost synergies. 3. Restructuring Expenses Separation Program In 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. Later in 2024 we expanded the program to include involuntary separations. The voluntary offer period ended on June 14, 2024. Costs primarily comprise of compensation expense and enhanced medical benefits, and are charged to restructuring and integration expenses in our statement of operations as a one-time termination benefit. Voluntary retirement incentive costs were recognized when the employee accepted the offer or are being recognized over their remaining period of service based on the agreed retirement date. Involuntary separation costs were recognized when the respective criteria were met and expenses were recorded either during the third quarter of 2024 or over the remaining service period for the affected employees. We anticipate that the program will be substantially complete by the end of 2027. Additional restructuring costs related to the initiative are expected to be immaterial. The total restructuring expenses recorded to date are $ 7.7 million . Activity related to the separation program workforce reduction consists of the following (in thousands): Exit activity liability at December 31, 2023 $ — Restructuring expenses: Amounts provided for during 2024 ⁽ᵃ⁾ 7,116 Cash payments ( 2,485 ) Stock-based compensation 150 Foreign currency translation ( 5 ) Exit activity liability at December 31, 2024 $ 4,776 Restructuring expenses: Amounts provided for during 2025 ⁽ᵇ⁾ 586 Cash payments ( 4,796 ) Foreign currency translation 7 Exit activity liability at December 31, 2025 $ 573 (a) Consists of $ 3.8 million in our Vehicle Control segment, $ 0.8 million in our Temperature Control segment, $ 0.8 million in our Engineered Solutions segment, and $ 1.7 million of unallocated corporate expenses. (b) Consists of $ 0.4 million in our Vehicle Control segment and $ 0.2 million in our Temperature Control segment. 57 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Cost Reduction Initiative In 2022, to further our ongoing efforts to improve operating efficiencies and reduce costs, we announced plans for a reduction in our sales force, and initiated plans to relocate certain product lines from our Independence, Kansas manufacturing facility and from our St. Thomas, Canada manufacturing facility to our manufacturing facilities in Reynosa, Mexico. In 2025, we extended the program for plans to relocate additional product lines from certain plants in the United States and Canada to our existing manufacturing facilities in Mexico. We anticipate that the initiative will be substantially completed by the end of 2026. Additional restructuring costs related to the initiative are expected to be immaterial. The total restructuring expenses recorded to date are $ 6.6 million . Activity related to the cost reduction initiative consists of the following (in thousands): Workforce Reduction Other Exit Costs Total Exit activity liability at December 31, 2023 $ 1,729 $ — $ 1,729 Restructuring expenses: Amounts provided for during 2024 (a) 163 389 552 Cash payments ( 1,632 ) ( 389 ) ( 2,021 ) Foreign currency translation ( 28 ) — ( 28 ) Exit activity liability at December 31, 2024 $ 232 $ — $ 232 Restructuring expenses: Amounts provided for during 2025 (b) 396 1,598 1,994 Cash payments ( 422 ) ( 1,598 ) ( 2,020 ) Exit activity liability at December 31, 2025 $ 206 $ — $ 206 (a) Consists of $ 0.4 million in our Vehicle Control segment, $ 0.1 million in our Temperature Control segment and an immaterial amount in our Engineered Solutions segment (b) Consists of $ 1.9 million in our Vehicle Control segment and $ 0.1 million in our Engineered Solutions segment. Restructuring and integration activities are included within "sundry payables and accrued expenses" and "other current liabilities" in the consolidated balance sheet. 4. Sale of Receivables We are party to several supply chain financing arrangements, in which we may sell certain of our customers’ trade accounts receivable to such customers’ financial institutions. 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. Under the terms of the agreements, we retain no rights or interest, have no obligations with respect to the sold receivables, and do not service the receivables after the sale. As such, these transactions are accounted for as a sale. 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. All receivables sold were reflected as a reduction of accounts receivable in the consolidated balance sheet at the time of sale. A charge in the amount of $ 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. To the extent that these arrangements are terminated, our financial condition, results of operations, cash flows and liquidity could be adversely affected by extended payment terms, delays or failures in collecting trade accounts receivables. The utility of the supply chain financing arrangements also depends upon a benchmark reference rate for the purpose of determining the discount rate applicable to each arrangement. 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. 58 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 5. Inventories December 31, (in thousands) 2025 2024 Finished goods $ 458,420 $ 394,852 Work-in-process 23,190 22,053 Raw materials 230,541 208,008 Subtotal 712,151 624,913 Unreturned customer inventories 15,771 16,163 Total inventories $ 727,922 $ 641,076 6. Property, Plant and Equipment December 31, (In thousands) Estimated Useful Life (in years) 2025 2024 Land $ 8,433 $ 7,724 Buildings and improvements 10 to 33.5 67,702 60,632 Machinery and equipment 5 to 12 216,375 186,902 Tools, dies and auxiliary equipment 3 to 8 88,018 78,934 Furniture and fixtures 3 to 12 39,449 37,400 Leasehold improvements (a) 24,485 18,991 Construction-in-progress 44,383 51,416 Total property, plant and equipment 488,845 441,999 Less accumulated depreciation 300,283 273,264 Total property, plant and equipment, net $ 188,562 $ 168,735 (a) Leasehold improvements are depreciated over the shorter of the estimated useful life or the term of the lease. Costs related to maintenance and repairs which do not prolong the assets useful lives are expensed as incurred. Property, plant and equipment are recorded at historical cost and are depreciated using the straight-line method of depreciation over the estimated useful lives. Depreciation expense was $ 24.3 million in 2025 , $ 20.6 million in 2024 and $ 19.7 million in 2023. 7. Leases We have operating and finance leases for our manufacturing facilities, warehouses, office space, automobiles, and certain equipment. Our leases have remaining lease terms of up to nine years , some of which may include one or more five-year renewal options. We have not included any of the renewal options in our operating lease payments, as we concluded that it is not reasonably certain that we will exercise any of these renewal options. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Operating lease expense is recognized on a straight-line basis over the lease term. Finance leases are not material. 59 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following tables provide quantitative disclosures related to our operating leases and includes all operating leases acquired from the date of the acquisition (in thousands, except where otherwise indicated): Year Ended December 31, Balance Sheet Information 2025 2024 Assets Operating lease right-of-use assets $ 105,178 $ 109,899 Liabilities Sundry payables and accrued expenses $ 21,990 $ 19,992 Noncurrent operating lease liabilities 93,381 98,214 Total operating lease liabilities $ 115,371 $ 118,206 Weighted Average Remaining Lease Term 6.9 years 7.7 years Weighted Average Discount Rate 5.1 % 5.0 % Year Ended December 31, 2025 2024 Lease Expense Operating lease expense $ 24,701 $ 19,993 Variable and other lease expense (a) 7,240 3,907 Total lease costs $ 31,941 $ 23,900 (a) Relates to non-lease components such as maintenance, property taxes, etc., and operating lease expense for leases with an initial term of 12 months or less which are not material. Year Ended December 31, 2025 2024 Supplemental Cash Flow Information Cash paid for the amounts included in the measurement of lease liabilities $ 22,719 $ 18,365 Right-of-use assets obtained in exchange for new lease obligations (a) $ 11,141 $ 17,873 (a) The year ended December 31, 2025 primarily includes $ 5.7 million of right-of-use assets related to the lease modification and extension for our manufacturing facility in Reynosa, Mexico and $ 2.8 million of right-of-use assets related to our new warehouse in Niopolomice, Poland. The year ended December 31, 2024 primarily includes $ 4.7 million of right-of-use assets related to the lease modification and extension for our manufacturing facility in Bialystok, Poland and $ 10.8 million of right-of-use assets related to the new lease agreement for our manufacturing facility in Reynosa, Mexico. Minimum Lease Payments At December 31, 2025, we are obligated to make the following minimum operating lease payments through 2034 (in thousands): 2026 $ 22,830 2027 20,316 2028 16,937 2029 15,887 2030 16,539 Thereafter 45,885 Total lease payments 138,394 Less: Interest ( 23,023 ) Present value of lease liabilities $ 115,371 60 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 8. Goodwill and Other Intangible Assets We completed our annual impairment test of goodwill and indefinite-lived intangible assets as of December 31, 2025. As allowed under the guidance, we elected to perform quantitative impairment tests of goodwill related to our Nissens Automotive and Engineered Solutions operating segments and our Nissens tradename of December 31, 2025. We performed qualitative impairment assessments for goodwill related to all our other operating segments and other intangible assets and concluded that it was not more likely than not that the fair value of any of our reporting units was less than carrying value, therefore no quantitative impairment tests were required. Based on the results of the tests, there was no goodwill impairment as of December 31, 2025. While we concluded that we did not have a goodwill impairment charge as of December 31, 2025, and we do not believe that future impairments are probable, we will need to maintain the current ongoing performance levels at each of our reporting units in future periods to sustain their goodwill and indefinite-lived intangible assets carrying values. Goodwill Changes in the carrying values of goodwill by reporting unit during the years ended December 31, 2025 and 2024 are as follows (in thousands): Vehicle Control ⁽ᵃ⁾ Temperature Control Engineered Solutions Nissens Automotive Total Goodwill as of December 31, 2023 $ 90,806 $ 12,730 $ 31,193 $ — $ 134,729 Acquisition of Nissens Automotive — — — 112,194 112,194 Foreign currency translation ( 384 ) ( 62 ) ( 144 ) ( 4,915 ) ( 5,505 ) Goodwill as of December 31, 2024 90,422 12,668 31,049 107,279 241,418 Foreign currency translation 630 109 234 13,768 14,741 Goodwill as of December 31, 2025 $ 91,052 $ 12,777 $ 31,283 $ 121,047 $ 256,159 (a) Goodwill balance is net of accumulated impairment losses of $ 38.5 million for December 31, 2025, 2024 and 2023. Acquired Intangible Assets Acquired identifiable intangible assets consist of (in thousands): December 31, 2025 2024 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Customer relationships $ 323,312 $ ( 111,256 ) $ 212,056 $ 303,547 $ ( 93,117 ) $ 210,430 Trademarks and trade names⁽ᵃ⁾ 91,666 ( 5,284 ) 86,382 82,220 ( 4,995 ) 77,225 Patents and developed technology 14,123 ( 4,816 ) 9,307 14,123 ( 3,924 ) 10,199 Other 4,280 ( 4,280 ) — 4,268 ( 4,268 ) — Total $ 433,381 $ ( 125,636 ) $ 307,745 $ 404,158 $ ( 106,304 ) $ 297,854 (a) Trademarks and trade names include $ 84.2 million of indefinite lived intangible assets which are not amortized. Total amortization expense for acquired intangible assets was $ 18.4 million, $ 10.0 million and $ 8.5 million for the years ended December 31, 2025, 2024 and 2023, respectively. Based on the current estimated useful lives assigned to our intangible assets, amortization expense is estimated to be $ 18.8 million in 2026, $ 18.8 million in 2027, $ 18.8 million in 2028, $ 17.5 million in 2029 and $ 149.7 million million in the aggregate for the years 2030 through 2041. For information related to identified intangible assets acquired in the Nissens acquisition, see Note 2, “Business Acquisitions and Investments,” of the notes to our consolidated financial statements. 61 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Other Intangible Assets Other intangible assets include computer software of $ 23.2 million and $ 21.4 million, at December 31, 2025 and 2024, respectively, less accumulated amortization of $ 19.8 million and $ 18.3 million as of December 31, 2025 and 2024, respectively. Computer software is amortized over its estimated useful life of 3 to 10 years. Amortization expense for computer software was $ 1.2 million, $ 0.8 million and $ 0.8 million for the years ended December 31, 2025, 2024 and 2023, respectively. 9. Investments in Unconsolidated Affiliates Investments in unconsolidated affiliates accounted for under the equ ity method were $ 26.3 million and $ 24.8 million at December 31, 2025 and 2024, respectively which includes $ 22.3 million and $ 20.0 million at December 31, 2025 and 2024, respectively, related to our 50 % owned joint venture interest in Foshan FGD SMP Automotive Compressor Co. Ltd. with our joint venture partner Foshan Guangdong Automotive Air Conditioning Co. Ltd.. During the years ended December 31, 2025 and 2024, we made purchases from the joint venture of approximately $ 89.2 million a nd $ 60.0 million, respectively. 10. Other Assets December 31, (in thousands) 2025 2024 Deferred compensation $ 27,511 $ 26,333 Noncurrent portion of interest rate swap 2,086 3,991 Deferred financing costs, net 1,233 1,702 Other 1,210 1,113 Total other assets, net $ 32,040 $ 33,139 Deferred compensation consists of assets used to manage market risk arising from our nonqualified defined contribution plan liability. 11. Credit Facilities and Long-Term Debt Total debt outstanding is summarized as follows (in thousands): December 31, 2025 2024 2024 Credit Agreement⁽ᵃ⁾ Multi-currency revolver $ 298,426 244,171 U.S. dollar term loan⁽ᵇ⁾ 188,771 198,287 Euro term loan⁽ᵇ⁾ 110,855 102,908 Other 20,663 16,948 Total debt $ 618,715 $ 562,314 Current maturities of debt 51,988 $ 27,117 Long-term debt 566,727 535,197 Total debt $ 618,715 $ 562,314 (a) Weighted average interest rate, adjusted for the impact of interest rate swap agreements, was 4.8 % and 5.6 % at December 31, 2025 and 2024 , respectively. 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. (b) Amounts are shown net of unamortized deferred financing costs of $ 1.9 million and $ 2.7 million at December 31, 2025 and 2024, respectively . 62 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Term Loans and Revolving Credit Facilities 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. For additional information on our agreement to acquire Nissens Automotive see Note 2, “Business Combinations.” In September 2024, the Company refinanced its existing 2022 Credit Agreement with a new five -year Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of lenders (“2024 Credit Agreement”). The 2024 Credit Agreement matures on September 16, 2029 and provides for an approximately $ 750 million credit facility, comprised of (i) a $ 430 million multi-currency revolving credit facility ("global tranche"); (ii) a $ 10 million multi-currency revolving credit facility, available to one or more wholly-owned Danish subsidiaries of the Company ("Danish tranche"); (iii) a $ 200 million term loan facility in U.S. dollars; and (iv) a 100 million euros term loan facility. The revolving credit facility has a $ 25 million sublimit for the issuance of letters of credit, and a $ 30 million sublimit for the borrowing of swingline loans. 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 term loans amortize in quarterly installments of 1.25 % in each of the first two years following the funding, 1.875 % for the next year, and 2.50 % in each quarter thereafter. The Company may request up to two one-year extensions of the maturity date. The Company may, subject to customary conditions, increase the global tranche or obtain incremental term loans in an aggregate amount not to exceed (x) the greater of (i) $ 168 million and (ii) 100 % of consolidated EBITDA for the four fiscal quarters ended most recently before such date, plus (y) any voluntary prepayment of term loans, plus (z) any amount that, after giving effect to the increase, the pro forma First Lien Net Leverage Ratio (as defined in the 2024 Credit Agreement) does not exceed 2.75 to 1.00. The Company may also, subject to customary conditions, request to increase the Danish tranche by up to $ 5 million. Borrowings bear interest at the applicable interest rate index selected by the Company based on the particular currency borrowed plus a credit spread adjustment depending on the index, and a margin ranging from 1.25 % to 2.25 % per annum based on the total net leverage ratio of the Company and its restricted subsidiaries. The Company may select interest periods of one, three or six months depending on the index. Interest is payable at the end of the selected interest period, but no less frequently than quarterly. The Company may prepay the borrowings, in whole or in part, at any time without premium or penalty, subject to certain conditions. The Company’s obligations under the 2024 Credit Agreement are guaranteed by its material domestic subsidiaries (each, a “Guarantor”), and secured by a first priority perfected security interest in substantially all of the existing and future personal property of the Company and each Guarantor, subject to certain exceptions. The collateral security described above also secures certain banking services obligations and interest rate swaps and currency or other hedging obligations of the Company owing to any of the then existing lenders or any affiliates thereof. 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 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 63 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The 2024 Credit Agreement contains customary covenants limiting, among other things, the incurrence of additional indebtedness, the creation of liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other payments in respect of equity interests, acquisitions, investments, loans and guarantees, subject, in each case, to customary exceptions, thresholds and baskets. The 2024 Credit Agreement also contains customary events of default. Polish Overdraft Facility 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. 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. 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. 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. Maturities of Debt As of December 31, 2025, maturities of debt through 2037 , assuming no prepayments, are as follows (in thousands): Multi-Currency Revolver U.S. Dollar Term Loan Euro Term Loan Other Debt Total 2026 — 9,606 5,651 6,731 21,988 2027 — 14,655 8,614 1,279 24,548 2028 — 19,703 11,576 1,207 32,486 2029 298,426 144,807 85,014 1,242 529,489 2030 — — — 1,279 1,279 Thereafter — — — 8,925 8,925 Total 298,426 188,771 110,855 20,663 618,715 Less: current maturities ( 30,000 ) ( 9,606 ) ( 5,651 ) ( 6,731 ) ( 51,988 ) Long-term debt 268,426 179,165 105,204 13,932 566,727 Deferred Financing Costs Deferred financing costs related to our term loan and revolving credit facilities were $ 3.6 million and $ 4.8 million as of December 31, 2025 and 2024, respectively. In connection with the July 2024 amendment to our 2022 Credit Agreement and the 2024 Credit Agreement, we deferred financing costs of $ 5.1 million that will be amortized over the term of the borrowings, and expensed $ 1.4 million of pre-existing unamortized financing costs to interest expense in our consolidated statement of operations. Deferred financing costs as of December 31, 2025, assuming no prepayments, are being amortized in the amo unts of $ 1.1 million in 2026, $ 1.0 million in 2027, $ 0.9 million in 2028, and $ 0.6 million in 2029. Letters of Credit As of December 31, 2025 and 2024, we had outstanding letters of credit aggregating approximately $ 4.6 million and $ 2.5 million, respectively. These letters of credit are primarily provided as security for reimbursements to insurance companies and for import bonds placed with U.S. Customs. 64 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 12. Accumulated Other Comprehensive Income Attributable to SMP Accumulated other comprehensive income attributable to SMP consists of the following (in thousands): Foreign Currency Translation Cash Flow Hedges ⁽ᵃ⁾ Postretirement Benefit Plans Total Balance at December 31, 2023 $ ( 8,897 ) $ 2,899 $ 24 $ ( 5,974 ) Other comprehensive income before reclassifications ( 23,385 ) ⁽ᵇ⁾ 2,893 — ( 20,492 ) Amounts reclassified from accumulated other comprehensive income — ( 2,524 ) ( 18 ) ( 2,542 ) Net other comprehensive income (loss) ( 23,385 ) 369 ( 18 ) ( 23,034 ) Tax amounts 2,513 656 7 3,176 Balance at December 31, 2024 $ ( 29,769 ) $ 3,924 $ 13 $ ( 25,832 ) Other comprehensive income before reclassifications 38,997 ⁽ᶜ⁾ ( 4,210 ) — 34,787 Amounts reclassified from accumulated other comprehensive income — 1,506 ( 16 ) 1,490 Net other comprehensive income (loss) 38,997 ( 2,704 ) ( 16 ) 36,277 Tax amounts 6,703 703 6 7,412 Balance at December 31, 2025 $ 15,931 $ 1,923 $ 3 $ 17,857 (a) Includes u nrecognized losses relating to the change in fair value of cash flow interest rate hedges of $ 2.7 million and $ 1.4 million and cash settlement receipts of $ 1.5 million ($ 1.1 million net of tax) and $ 2.5 million ($ 1.9 million, net of tax) in the years ended December 31, 2025 and 2024, respectively. (b) Primarily reflects the depreciation of the Danish kroner and Mexican peso. (c) Primarily reflects the appreciation of the Danish kroner. 13. Stockholders’ Equity 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. 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 . 14. Stock-Based Compensation Plans Our stock-based compensation program is designed to attract and retain employees while also aligning employees’ interests with the interests of our shareholders. In addition, members of our Board of Directors participate in our stock-based compensation program in connection with their service on our board. In May 2025 our Shareholders approved the Standard Motor Products, Inc. 2025 Omnibus Incentive Plan (the “Plan”) which supersedes the 2016 Omnibus Incentive Plan, as amended (the “2016 Plan”). The Plan will terminate in May 2035, unless terminated sooner as provided for within the Plan. The Plan permits the grant of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards, and other stock-based awards. The maximum number of shares that may be issued under the Plan is 1,050,000 , subject to adjustment as provided under the Plan. At December 31, 2025, there were 773,511 shares of common stock available for future grants. Awards previously granted under the 2006 and 2016 Omnibus Incentive Plans remain outstanding, while shares not yet granted under these plans are not available for future issuance. 65 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) We account for our stock-based compensation plans using grant-date fair value, net of estimated forfeitures, to measure the cost of employee services received in exchange for an award of equity instruments. The grant-date fair value of the award is recognized as an expense on a straight-line basis over the requisite service periods in our consolidated statements of operations. The service period is the period of time that the grantee must provide services before the award vests. The service period is generally three years for standard restricted shares and performance-based restricted shares. Standard restricted shares granted in 2025 generally vest in equal amounts annually over three years . Standard restricted shares granted prior to 2025 and performance-based restricted shares generally cliff vest after three years . The service period for long-term retention restricted shares varies based on the age of the executive as the awards vest ratably at 25 % when an executive reaches the ages of 60 and 63, with the remainder vesting when an executive reaches the age of 65. Awards to employees eligible for retirement prior to the award becoming fully vested are amortized to expense over the period up to the date the employee becomes eligible to retire and is no longer required to provide service to earn the award. Restricted shares granted to directors cliff vest after one year . The number of performance-based shares issued to eligible employees upon vesting at the end of a three -year measuring period is based upon the achievement of performance targets. Each period we evaluate the probability of achieving the applicable targets, and adjust our expense accordingly. Before a restricted share becomes fully vested or a performance share is issued, the awardees cannot transfer, pledge, hypothecate or encumber such shares. Prior to the time a restricted share is fully vested, the awardees have all other rights of a stockholder, including the right to vote, but do not receive dividends. Prior to the time a performance share is issued, the awardees have no rights as a stockholder. All shares and rights are subject to forfeiture if certain employment conditions are not met. The fair value of awards is measured at the stock market price on the date of grant, reduced by the present value of dividends expected to be paid on the shares during the requisite service period discounted at a risk-free interest rate based on U.S. Treasury rates. A further discount for the lack of marketability reduces the fair value of grants issued to certain key executives and directors subject to a one or two year post vesting holding period. The following table shows stock-based compensation expense, which is primarily recorded in selling, general and administrative expenses in the consolidated statements of operations (in millions) : Year Ended December 31, 2025 2024 2023 Stock-based compensation expense $ 7.5 $ 5.8 $ 6.2 Income tax benefits related to stock-based compensation 2.1 1.5 1.4 Stock-based compensation expense, net of tax $ 5.4 $ 4.3 $ 4.8 As of December 31, 2025, there was $ 16.1 million of unrecognized stock-based compensation expense, net of estimated forfeitures that is expected to be recognized over a weighted-average period of 3.4 years for employees and 0.3 years for directors. Our restricted and performance-based share activity was as follows for the years ended December 31, 2025 and 2024: Shares Weighted Average Grant Date Fair Value per Share Aggregate Intrinsic Value (in thousands) Balance at December 31, 2024 929,024 $ 26.82 Granted 277,018 32.44 Vested ( 200,480 ) 27.75 Performance Shares Target Adjustment ( 27,087 ) 28.19 Forfeited ( 13,303 ) 26.90 Balance at December 31, 2025 965,172 $ 28.28 $ 35,567 66 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The weighted-average grant date fair value of restricted shares granted during the years ended December 31, 2025, 2024 and 2023 was $ 9.0 million , $ 6.7 million , and $ 6.2 million , respectively. The fair value of shares vested during the years ended December 31, 2025, 2024 and 2023 was $ 7.3 million, $ 6.1 million and $ 8.9 million, respectively. 15. Employee Benefits We maintain various defined contribution plans, which include profit sharing, and provide retirement benefits for substantially all of our employees. Contributions to the plans, which are typically paid in cash to the plans in March of the following year, are as follows (in thousands): Year ended December 31, U.S. Defined Contribution 2025 $ 7,338 2024 10,314 2023 10,510 We maintain a defined contribution Supplemental Executive Retirement Plan for key employees. Under the plan, these employees may elect to defer a portion of their compensation and, in addition, we may at our discretion make contributions to the plan on behalf of the employees. In March 2025 and 2024 , contributions of $ 0.3 million and $ 0.6 million were made related to calendar years 2024 and 2023 , respectively. As of December 31, 2025, we have recorded an obligation of $ 0.5 million for 2025. We have an Employee Stock Ownership Plan and Trust (“ESOP”) for employees who are not covered by a collective bargaining agreement. In connection therewith, we maintain an employee benefits trust to which we contribute shares of treasury stock. We are authorized to instruct the trustees to distribute such shares toward the satisfaction of our future obligations under the plan. The shares held in trust are not considered outstanding for purposes of calculating earnings per share until they are committed to be released. The trustees will vote the shares in accordance with their fiduciary duties. During 2025, we contributed 87,300 shares to the trust from our treasury and released 87,300 shares from the trust leaving 200 shares remaining in the trust as of December 31, 2025. The provision for expense in connection with the ESOP was approximately $ 2.7 million in 2025, $ 2.8 million in 2024 and $ 3.0 million in 2023. 16. Other Non-Operating Income, Net The components of other non-operating income, net are as follows (in thousands): Year Ended December 31, 2025 2024 2023 Interest and dividend income $ 1,310 $ 871 $ 517 Equity income from joint ventures 3,556 4,274 2,070 Gain (loss) on foreign exchange 362 1,228 ( 776 ) Other non-operating income, net 127 504 515 Total other non-operating income, net $ 5,355 $ 6,877 $ 2,326 17. Derivative Instruments As part of our risk management strategy, we occasionally use derivative instruments, including interest rate swaps, forward foreign exchange contracts and non-derivative instruments such as foreign currency denominated debt, to reduce our market risk for changes in interest rates and to manage foreign exchange rate risk. The objective is to offset gains and losses resulting from these exposures with losses and gains on the derivative contracts and non-derivative instruments used to hedge them, thereby reducing volatility of earnings or protecting the fair value of assets and liabilities. Derivative instruments may be designated as fair value hedges, cash flow hedges or hedges of the foreign currency exposure of a net investment in a foreign operation (“net investment hedges”) or they may not be designated as hedging instruments. Derivative instruments are recognized at fair value on a gross basis in other current and long-term assets, and other current and long-term liabilities in the consolidated balance sheets. The change in fair value of the derivative instruments is recognized in the consolidated statements of operations or consolidated statements of comprehensive income 67 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) depending upon the type of hedge as further discussed below. Cash flows from derivative instruments are classified with the activities that correspond to the underlying hedged items in the consolidated statements of cash flows. Due to the use of derivative instruments, we are exposed to the risk that our counterparties will fail to meet their contractual obligations. To mitigate counterparty credit risk, we have a policy of only entering into derivative contracts with carefully selected major financial institutions based on their credit ratings and other factors, and periodically reassess their creditworthiness. We do not offset d erivative assets against liabilities in master netting agreements and there were no receivables or payables recognized on receipt or payment of cash collateral at December 31, 2025 and 2024 . The interest rate swa ps effectively convert a portion of our variable rate borrowings under our existing facilities to a fixed rate based upon a determined notional amount. The forward foreign exchange contracts fix expected future cash flows in U.S. dollar terms on certain transactions and foreign currency denominated debt is used to partially offset the effects of changes in foreign currency exchange rates on our investments in certain foreign subsidiaries. We do not enter into derivative instruments for trading or speculative purposes. The notional amounts of financial instruments used to hedge the above risks are as follows (in millions): December 31, 2025 2024 Interest rate swaps $ 213 $ 204 Non-derivative debt instruments $ 192 $ 203 Cash Flow Hedges Interest rate swap agreements designated as cash flow hedges of interest payments mature in May 2029 and March 2030. 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. The fair value of interest rate swap agreements designated as cash flow hedges of interest rate risk are as follows (in thousands): December 31, 2025 2024 Derivative assets $ 2,587 $ 5,409 Derivative liabilities $ — $ 101 Gains/losses are deferred and recorded in accumulated other comprehensive income, net of income taxes, in the consolidated balance sheets and reclassified to interest expense in the consolidated statements of operations when the hedged interest payments on the underlying borrowing are recognized in interest expense. We expect to reclassify a net gain of $ 0.5 million from accumulated other comprehensive income in the next twelve months . We perform quarterly hedge effectiveness assessments and anticipate that the interest rate swaps will be highly effective. If it becomes probable that the hedged interest payment(s) will not occur, we immediately recognize the related deferred hedging gains/losses in earnings. There were no such reclassifications during the year ended December 31, 2025. Net Investment Hedge Euro-denominated debt is designated as a hedge of our net investment in Nissens Automotive's foreign operations whose functional currency is Danish kroner. Provided the net investment hedge is highly effective, gains/losses are recorded as a currency translation adjustment in accumulated other comprehensive income in the consolidated balance sheet. The gains/losses will s ubsequently be reclassified into earnings when the hedged net investment is either sold or substantially liquidated. We recognized a loss of $ 25.8 million and a gain of $ 9.7 million as a currency translation adjustment in other comprehensive income in the years ended December 31, 2025 and 2024 respectively . No gains or losses related to the net investment hedge were recognized in earnings in 2025 . 68 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Non-Designated Derivatives In 2024, we realized losses of $ 2.5 million related to forward foreign exchange contracts that were used to economically hedge forecasted foreign currency transactions primarily related to our acquisition of Nissens Automotive. The losses were recorded in selling, general and administrative expenses in the consolidated statement of operations. There are no forward foreign exchange contracts outstanding at December 31, 2025 and 2024, respectively. 18. Fair Value Measurements We follow a three-level fair value hierarchy that prioritizes the inputs to measure fair value. This hierarchy requires entities to maximize the use of “observable inputs” and minimize the use of “unobservable inputs.” The three levels of inputs used to measure fair value are as follows: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect assumptions that market participants would use in pricing an asset or liability. The following is a summary of the estimated fair values, carrying amounts, and classification under the fair value hierarchy of our financial instruments recorded at fair value (in thousands): Fair Value December 31, 2025 December 31, 2024 Hierarchy Level Fair Value Carrying Amount Fair Value Carrying Amount Deferred compensation 1 27,511 27,511 26,333 26,333 Short-term investments 2 — — 6,956 6,956 Cash flow hedge interest rate swaps 2 2,587 2,587 5,409 5,409 The fair value of the underlying assets held by the deferred compensation plan are based on the quoted market prices of the underlying funds which are held by registered investment companies. The fair value of our cash flow interest rate swap agreements are obtained from independent third parties, are based upon market quotes, and represents the net amount required to terminate the interest rate swap, taking into consideration market rates and counterparty credit risk. The carrying value of our short-term borrowings and long-term debt under our credit facilities of $ 618.7 million and $ 562.3 million at December 31, 2025 and 2024, respectively, approximates fair value as the variable interest rates in the facilities reflect current market rates, which are considered level 2 inputs. 19. Income Taxes Earnings from continuing operations before income taxes consists of the following (in thousands): Year Ended December 31, 2025 2024 2023 Domestic $ 105,356 $ 71,742 $ 60,780 Foreign 5,167 2,247 20,936 Total $ 110,523 $ 73,989 $ 81,716 69 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The provision (benefit) for income taxes attributable to continuing operations consists of the following (in thousands): Year Ended December 31, 2025 2024 2023 Current tax expense (benefit) Domestic federal $ 15,650 $ 17,426 $ 13,832 Domestic state and local 1,951 2,335 1,590 Foreign 22,439 11,254 9,224 Total current tax expense 40,040 31,015 24,646 Deferred tax expense (benefit) Domestic federal ( 3,919 ) ( 7,848 ) ( 4,926 ) Domestic state and local ( 1,031 ) ( 1,688 ) ( 843 ) Foreign ( 4,473 ) ( 2,094 ) ( 509 ) Total deferred tax expense ( 9,423 ) ( 11,630 ) ( 6,278 ) Total income tax expense (benefit) Domestic federal 11,731 9,578 8,906 Domestic state and local 920 647 747 Foreign 17,966 9,160 8,715 Total income tax expense $ 30,617 $ 19,385 $ 18,368 Reconciliations between taxes at the U.S. federal income tax rate and taxes at our effective income tax rate on earnings from continuing operations before income taxes are as follows (in thousands): Year Ended December 31, 2025 2024 2023 Amount Rate Amount Rate Amount Rate U.S. federal statutory tax $ 23,210 21.0 % $ 15,538 21.0 % $ 17,160 21.0 % Effect of cross-border tax laws Global intangible low taxed income (GILTI) ⁽ᵃ⁾ — — 2,986 4.0 3,070 3.7 U.S. taxation of Mexican disregarded entities 1,972 1.8 1,871 2.5 1,881 2.3 Other ( 50 ) — ( 326 ) ( 0.4 ) ( 743 ) ( 0.9 ) Tax credits Foreign tax credits ( 3,452 ) ( 3.1 ) ( 5,297 ) ( 7.1 ) ( 5,356 ) ( 6.6 ) Changes in valuation allowances 2,360 2.1 770 1.0 865 1.1 Nontaxable or nondeductible items Nondeductible acquisition costs — — 795 1.1 — — Permanent difference true-up ( 256 ) ( 0.2 ) ( 395 ) ( 0.5 ) ( 1,330 ) ( 1.6 ) Other 193 0.2 ( 118 ) ( 0.2 ) 29 — Other adjustments 14 — ( 122 ) ( 0.2 ) ( 131 ) ( 0.2 ) Domestic state and local income taxes, net of federal income tax effect ⁽ᵇ⁾ 3,057 2.8 1,922 2.6 2,086 2.6 Foreign tax effects Canada Provincial 1,794 1.6 1,305 1.8 1,028 1.3 Other ( 442 ) ( 0.4 ) ( 710 ) ( 1.0 ) ( 607 ) ( 0.7 ) Mexico 1,173 1.0 1,465 2.0 1,097 1.3 Other foreign jurisdictions 1,045 0.9 ( 299 ) ( 0.4 ) ( 681 ) ( 0.8 ) Effective tax rate $ 30,617 27.7 % $ 19,385 26.2 % $ 18,368 22.5 % (a) We intend to elect the GILTI high tax exception when we file our income tax return for the year ended December 31, 2025. This election excludes from GILTI the income of a controlled foreign corporation that incurs a foreign tax at a rate greater than 90% of the U.S. corporate rate. Accordingly, the amount of global intangible low taxed income reflected above is zero . 70 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (b) The states that comprise more than 50% of the tax effect in this category for 2025 include Texas, Tennessee, California, and Illinois. Texas, Tennessee, Kansas, New York, Illinois, and California for 2024, and Texas, California, Kansas, New York, and Illinois for 2023. The following is a summary of the components of the net deferred tax assets and liabilities recognized in the accompanying consolidated balance sheets (in thousands): December 31, 2025 2024 Deferred tax assets: Inventories $ 12,624 $ 9,087 Allowance for customer returns 16,298 17,854 Accrued asbestos liabilities 31,579 24,032 Accrued salaries and benefits 13,861 13,564 Tax credit and net operating loss carryforwards 7,689 5,690 Allowance for expected credit losses 4,631 3,586 Other 4,351 10 91,033 73,823 Valuation allowance ( 7,270 ) ( 4,849 ) Total deferred tax assets 83,763 68,974 Deferred tax liabilities: Intangible assets acquired, net of amortization 44,319 43,755 Depreciation 7,486 6,669 Other 6,574 5,351 Total deferred tax liabilities 58,379 55,775 Net deferred tax assets $ 25,384 $ 13,199 In assessing the realizability of the deferred tax assets, we consider whether it is more likely than not that some portion or the entire deferred tax asset will be realized. Ultimately, the realization of the deferred tax asset is dependent upon the generation of sufficient taxable income in those periods in which temporary differences become deductible and/or net operating loss carryforwards can be utilized. We consider the level of historical taxable income, scheduled reversal of temporary differences, carryback and carryforward periods, tax planning strategies and projected future taxable income in determining whether a valuation allowance is warranted. We also consider cumulative losses in recent years as well as the impact of one-time events in assessing our pre-tax earnings. Assumptions regarding future taxable income require significant judgment. Our assumptions are consistent with estimates and plans used to manage our business. The valuation allowance of $ 7.3 million as of December 31, 2025 is intended to provide for uncertainty regarding the ultimate realization of our U.S. foreign tax credit carryovers of $ 7.0 million that will expire in varying amounts by 2035 , and foreign net operating losses subject to valuation allowance of $ 0.3 million . Based on these considerations, we believe it is more likely than not that we would realize the benefit of the net deferred tax asset of $ 25.4 million as of December 31, 2025, which is net of the remaining valuation allowance. As related to the taxation of our foreign subsidiaries, we aggregate our foreign earnings and profits, and utilize allowable deductions and available foreign tax credits in computing our U.S. tax. Notwithstanding the U.S. taxation of these amounts, we intend to continue to invest most of these earnings indefinitely outside of the U.S., and do not expect to incur any significant additional taxes related to such amounts. We recognize in our financial statements only those tax positions that meet the more-likely-than-not recognition threshold. We establish tax reserves for uncertain tax positions that do not meet this threshold. During the years ended December 31, 2025, 2024 and 2023, we did not establish a liability for uncertain tax positions. We are subject to taxation in the U.S. and various state, local and foreign jurisdictions. As of December 31, 2025, the Company is no longer subject to U.S. Federal tax examinations for years before 2022 . We remain subject to examination by state and local tax authorities for tax years 2021 through 2024. Foreign jurisdictions have statutes of limitations g enerally ranging from 2 to 6 years. Years still open to examination by foreign tax authorities in major jurisdictions include 71 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Canada (2021 onward), Poland (2020 onward) and Denmark (2020 onward). We do not presently anticipate that our unrecognized tax benefits will significantly increase or decrease over the next 12 months; however, actual developments in this area could differ from those currently expected. The following is a summary of our cash taxes paid (in thousands): Year Ended December 31, 2025 2024 2023 Domestic federal $ 2,185 $ 2,008 $ 4,978 Domestic state and local 1,834 681 1,068 Foreign Canada - federal 2,586 1,918 1,675 Canada - provincial 1,834 1,335 1,135 China 2,126 1,427 862 Denmark 6,665 3,859 — Mexico 4,761 5,507 4,198 Poland 879 1,559 1,104 Other 1,963 1,547 999 Total $ 24,833 $ 19,841 $ 16,019 20. Earnings Per Share We present two calculations of earnings per common share. “Basic” earnings per common share equals net earnings attributable to SMP divided by weighted average common shares outstanding during the period. “Diluted” earnings per common share equals net earnings attributable to SMP divided by the sum of weighted average common shares outstanding during the period plus potentially dilutive common shares. Potentially dilutive common shares that are anti-dilutive are excluded from net earnings per common share. The following are reconciliations of the net earnings attributable to SMP and the shares used in calculating basic and dilutive net earnings per common share attributable to SMP (in thousands, except share and per share data): Year Ended December 31, 2025 2024 2023 Net earnings (loss) attributable to SMP Continuing operations 79,033 53,628 63,144 Discontinued operations ( 37,698 ) ( 26,128 ) ( 28,996 ) Net earnings attributable to SMP $ 41,335 $ 27,500 $ 34,148 Basic net earnings (loss) per common share attributable to SMP Continuing operations $ 3.59 $ 2.46 $ 2.91 Discontinued operations $ ( 1.71 ) $ ( 1.20 ) $ ( 1.34 ) Diluted net earnings (loss) per common share attributable to SMP Continuing operations $ 3.52 $ 2.41 $ 2.85 Discontinued operations $ ( 1.68 ) $ ( 1.17 ) $ ( 1.31 ) Weighted average number of common shares, basic 21,986,301 21,801,141 21,716,177 Dilutive effect of restricted stock and performance-based stock 497,290 435,919 445,164 Weighted average number of common shares, diluted 22,483,591 22,237,060 22,161,341 72 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The shares listed below were not included in the computation of diluted net earnings per common share attributable to SMP because to do so would have been anti-dilutive for the periods presented or because they were excluded under the treasury method (in thousands): 2025 2024 2023 Restricted and performance shares 293 285 280 21. Industry Segment and Geographic Data Our business is organized into four operating segments, Vehicle Control, Temperature Control, Engineered Solutions and Nissens Automotive, each of which focuses on a specific line of business. Our automotive aftermarket business is comprised of three operating segments, Vehicle Control, Temperature Control and Nissens Automotive, while our Engineered Solutions operating segment offers a broad array of conventional and future-oriented technologies. The Vehicle Control operating segment includes sales from ignition emissions and fuel delivery, electrical and safety, and wire sets and other product categories to automotive aftermarket customers. The Temperature Control operating segment includes sales from air conditioning system components and other thermal product categories to automotive aftermarket customers primarily in the United States, and is poised to benefit from the broader adoption of more complex air conditioning systems that will provide passenger comfort regardless of the vehicle's powertrain. The Nissens Automotive operating segment includes sales of engine cooling, air conditioning system components and engine efficiency products to automotive aftermarket customers primarily in Europe. The Engineered Solutions operating segment includes sales of custom-engineered solutions to vehicle and equipment manufacturers in highly diversified global end-markets such as commercial and light vehicles, construction, agriculture, power sports and marine. We identify our operating segments based on how our chief operating decision maker ("CODM"), our President and Chief Executive Officer, allocates resources, assesses performance and makes decisions. The CODM uses operating income (loss) to allocate resources (including employees, property, and financial or capital resources) for each segment during the annual budget and forecasting process. The CODM considers budget-to-actual and year-over-year variances on a monthly basis for the significant measure when making decisions about allocating capital and personnel to the segments. The CODM also uses segment gross profit for evaluating product pricing and operating income (loss) to assess the performance for each segment by comparing the results with one another. In addition to these measures, the CODM tracks expenses at a disaggregated level to understand the drivers of total operating expenses. These include selling, general and administrative expenses, distribution expenses, supply chain financing expenses, restructuring and integration expenses, and any other special expense items. In tracking these expenses separately, the CODM is able to identify opportunities for adjusting how the business uses funds to achieve greater profitability. The accounting policies of each segment are the same as those described in Note 1, "Summary of Significant Accounting Policies". The following tables contain financial information for each reportable operating segment (in thousands): 73 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Year Ended December 31, 2025 Vehicle Control Temperature Control Nissens Automotive Engineered Solutions Intersegment sales Total Net sales $ 785,392 $ 426,367 $ 305,377 $ 274,484 $ ( 462 ) $ 1,791,158 Cost of sales 538,287 281,546 184,947 227,432 ( 462 ) 1,231,750 Gross profit 247,105 144,821 120,430 47,052 — 559,408 Selling and marketing expenses 43,715 14,657 19,603 8,277 — 86,252 Distribution expenses 66,661 33,843 35,751 5,217 — 141,472 General and administration expenses 40,728 17,905 35,803 20,855 — 115,291 Supply chain financing expenses 27,934 16,741 577 — — 45,252 Restructuring expenses 2,271 190 — 118 — 2,579 Other expenses — — 1,796 1,987 — 3,783 Total segment operating expenses 181,309 83,336 93,530 36,454 — 394,629 Segment operating income (loss) $ 65,796 $ 61,485 $ 26,900 $ 10,598 $ — $ 164,779 Unallocated corporate expenses and other 28,272 Other non-operating income, net 5,355 Interest expense 31,339 Earnings from continuing operations before income taxes $ 110,523 Year Ended December 31, 2024 Vehicle Control Temperature Control Nissens Automotive Engineered Solutions Intersegment sales Total Net sales $ 762,560 $ 380,088 $ 35,745 $ 285,456 $ — $ 1,463,849 Cost of sales 518,475 262,296 24,220 235,537 — 1,040,528 Gross profit 244,085 117,792 11,525 49,919 — 423,321 Selling and marketing expenses 45,878 15,938 1,536 8,060 — 71,412 Distribution expenses 57,627 32,858 7,097 5,290 — 102,872 General and administration expenses 36,935 16,763 5,560 20,906 — 80,164 Supply chain financing expenses 32,090 16,449 — — — 48,539 Restructuring expenses 4,249 847 — 843 — 5,939 Other expenses — — 100 — — 100 Total segment operating expenses 176,779 82,855 14,293 35,099 — 309,026 Segment operating income (loss) $ 67,306 $ 34,937 $ ( 2,768 ) $ 14,820 $ — $ 114,295 Unallocated corporate expenses and other 33,671 Other non-operating income, net 6,877 Interest expense 13,512 Earnings from continuing operations before income taxes $ 73,989 74 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Year Ended December 31, 2023 Vehicle Control Temperature Control Nissens Automotive Engineered Solutions Intersegment sales Total Net sales $ 737,932 $ 337,754 $ — $ 282,586 $ — $ 1,358,272 Cost of sales 499,717 241,927 — 227,802 — 969,446 Gross profit 238,215 95,827 — 54,784 — 388,826 Selling and marketing expenses 46,223 16,772 — 8,407 — 71,402 Distribution expenses 54,401 30,467 — 4,989 — 89,857 General and administration expenses 34,430 14,664 — 21,186 — 70,280 Supply chain financing expenses 30,558 15,473 — — — 46,031 Restructuring expenses 1,276 1,108 — 258 — 2,642 Total segment operating expenses 166,888 78,484 — 34,840 — 280,212 Segment operating income (loss) $ 71,327 $ 17,343 $ — $ 19,944 $ — $ 108,614 Unallocated corporate expenses and other 15,937 Other non-operating income, net 2,326 Interest expense 13,287 Earnings from continuing operations before income taxes $ 81,716 Year Ended December 31, (in thousands) 2025 2024 2023 Depreciation and amortization Vehicle Control $ 16,178 $ 14,841 $ 13,877 Temperature Control 3,285 3,307 3,424 Nissens Automotive 12,935 1,943 — Engineered Solutions 10,088 9,608 9,966 Total operating segment depreciation and amortization 42,486 29,699 27,267 Corporate 1,362 1,714 1,755 Total depreciation and amortization $ 43,848 $ 31,413 $ 29,022 Capital expenditures Vehicle Control $ 22,571 $ 29,603 $ 13,955 Temperature Control 4,076 2,621 1,899 Nissens Automotive 946 213 — Engineered Solutions 9,553 9,721 12,095 Total operating segment capital expenditures 37,146 42,158 27,949 Corporate 1,578 1,860 684 Total capital expenditures $ 38,724 $ 44,018 $ 28,633 75 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, (in thousands) 2025 2024 Investment in unconsolidated affiliates Vehicle Control $ 2,883 $ 2,447 Temperature Control 20,402 20,396 Nissens Automotive — — Engineered Solutions 3,025 1,999 Total operating segment investment in unconsolidated affiliates 26,310 24,842 Corporate — — Total investment in unconsolidated affiliates $ 26,310 $ 24,842 Total assets Vehicle Control $ 741,732 $ 659,607 Temperature Control 312,884 276,216 Nissens Automotive 531,606 482,773 Engineered Solutions 289,776 285,866 Total operating segment assets 1,875,998 1,704,462 Corporate 119,243 109,664 Total assets $ 1,995,241 $ 1,814,126 December 31, (in thousands) 2025 2024 Long-lived assets ⁽ᵃ⁾ Denmark $ 383,393 $ 347,629 United States 372,187 378,557 Asia 67,410 67,406 Europe, excluding Denmark 65,239 59,909 Mexico 27,098 21,173 Canada 4,080 4,329 Total long-lived assets $ 919,407 $ 879,003 (a) Long-lived assets are attributed to countries based upon the location of the assets. 22. Net Sales We disaggregate our net sales from contracts with customers by major product group and geographic area within each of our segments, as we believe it best depicts how the nature, amount, timing and uncertainty of our net sales are affected by economic factors. Major Product Group The Vehicle Control operating segment generates its revenues from core aftermarket sales of ignition, emissions, and fuel delivery, electrical and safety, and wire sets and other product categories primarily in the United States. The Temperature Control operating segment generates its revenue from aftermarket sales of air conditioning system components and other thermal products. The Nissens Automotive operating segment generates its revenues from aftermarket sales of engine cooling, air conditioning system components and engine efficiency products primarily in Europe. The Engineered Solutions operating segment generates revenues from custom-engineered products to vehicle and equipment manufacturers in highly diversified global end-markets such as commercial and light vehicles, construction, agriculture, power sports and marine. 76 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table summarizes consolidated net sales by major product group within each operating segment (in thousands): Year Ended December 31, 2025 2024 2023 Vehicle Control Engine Management (Ignition, Emissions and Fuel Delivery) $ 486,203 $ 467,460 $ 450,180 Electrical and Safety 241,938 229,361 221,782 Wire Sets and Other 57,251 65,739 65,970 Total Vehicle Control 785,392 762,560 737,932 Temperature Control AC System Components 316,781 274,926 237,756 Other Thermal Components 109,586 105,162 99,998 Total Temperature Control 426,367 380,088 337,754 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 92,701 Commercial Vehicle 81,239 89,171 79,376 Construction/Agriculture 35,618 35,832 41,665 All Other 72,740 68,905 68,844 Total Engineered Solutions 274,484 285,456 282,586 Intersegment sales ( 462 ) — — Total $ 1,791,158 $ 1,463,849 $ 1,358,272 Geographic Area We sell our line of products primarily in the United States, with additional sales in Europe, Canada, Mexico, and other foreign countries. Sales are attributed to countries based upon the location of the customer. Our sales are substantially denominated in U.S. dollars. The following tables provide disaggregation of net sales information by geographic area within each operating segment (in thousands): Year Ended December 31, 2025 Vehicle Control Temperature Control Nissens Automotive Engineered Solutions Intersegment sales Total United States $ 700,098 $ 407,745 $ 16,210 $ 149,110 $ ( 462 ) $ 1,272,701 Europe, excluding Poland 877 102 207,030 48,841 — 256,850 Canada 38,113 16,831 364 33,320 — 88,628 Poland 35 — 70,366 6,578 — 76,979 Mexico 41,248 61 77 10,854 — 52,240 Other foreign 5,021 1,628 11,330 25,781 — 43,760 Total $ 785,392 $ 426,367 $ 305,377 $ 274,484 $ ( 462 ) $ 1,791,158 77 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Year Ended December 31, 2024 Vehicle Control Temperature Control Nissens Automotive Engineered Solutions Intersegment sales Total United States $ 677,779 $ 360,858 $ 2,213 $ 154,960 $ — $ 1,195,810 Europe, excluding Poland 1,091 176 31,748 49,605 — 82,620 Canada 37,683 16,707 82 31,027 — 85,499 Poland 27 — 9 4,077 — 4,113 Mexico 40,555 171 14 9,138 — 49,878 Other foreign 5,425 2,176 1,679 36,649 — 45,929 Total $ 762,560 $ 380,088 $ 35,745 $ 285,456 $ — $ 1,463,849 Year Ended December 31, 2023 Vehicle Control Temperature Control Nissens Automotive Engineered Solutions Intersegment sales Total United States $ 659,570 $ 319,904 $ — $ 168,878 $ — $ 1,148,352 Europe, excluding Poland 878 8 — 56,647 — 57,533 Canada 36,088 17,081 — 25,689 — 78,858 Poland 38 — — 2,619 — 2,657 Mexico 36,350 49 — 6,658 — 43,057 Other foreign 5,008 712 — 22,095 — 27,815 Total $ 737,932 $ 337,754 $ — $ 282,586 $ — $ 1,358,272 23. Commitments and Contingencies Warranties We generally warrant our products against certain manufacturing and other defects. These product warranties are provided for specific periods of time depending on the nature of the product. Accruals for estimated product warranty claims are included in accrued customer returns on the consolidated balance sheet. The following table provides the changes in our product warranties (in thousands): December 31, 2025 2024 Balance, beginning of period $ 24,715 $ 21,134 Liabilities accrued for current year sales 127,055 134,831 Settlements of warranty claims ( 124,209 ) ( 131,249 ) Balance, end of period $ 27,561 $ 24,715 Change of Control Arrangements We have a change in control arrangement with one key officer. In the event of a change of control (as defined in the agreement), the executive will receive severance payments and certain other benefits as provided in his agreement. Asbestos In 1986, we acquired a brake business, which we subsequently sold in March 1998 and which is accounted for as a discontinued operation in the accompanying consolidated statements of operations. 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 on or 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. At December 31, 2025, approximately 945 cases were outstanding for which we may be responsible for any related liabilities. 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 . We do not have insurance coverage for the indemnity and defense costs associated with the claims we face. 78 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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. 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. The methodology used to project asbestos-related liabilities and costs in our actuarial study considered: (i) historical data available from publicly available studies; (ii) an analysis of our recent claims history to estimate likely filing rates into the future; (iii) an analysis of our currently pending claims; (iv) an analysis of our settlements and awards of asbestos-related damages to date; and (v) an analysis of closed claims with pay ratios and lag patterns in order to develop average future settlement values. Based on the information contained in the actuarial study and all other available information considered by us, we have concluded that no amount within the range of settlement payments and awards of asbestos-related damages was more likely than any other and, therefore, in assessing our asbestos liability we compare the low end of the range to our recorded liability to determine if an adjustment is required. 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. 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. The change from the prior year study, which was as of August 31, 2024, was a $ 27.9 million increase for the low end of the range and a $ 65.1 million increase for the high end of the range. The increase in the estimated undiscounted liability from the prior year study at both the low end and high end of the range reflects our actual experience, our historical data and certain assumptions with respect to events that may occur in the future. 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. 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. Total operating cash outflows related to discontinued operations, which include settlements, awards of asbestos-related damages and legal costs, net of taxes, were $ 14.0 million , $ 15.3 million and $ 11.0 million for the years ended December 31, 2025, 2024 and 2023, respectively. We plan to perform an annual actuarial evaluation during the third quarter of each year for the foreseeable future and whenever events or changes in circumstances indicate that additional provisions may be necessary. Given the uncertainties associated with projecting such matters into the future and other factors outside our control, we can give no assurance that additional provisions will not be required. We will continue to monitor events and changes in circumstances surrounding these potential liabilities in determining whether to perform additional actuarial evaluations and whether additional provisions may be necessary. At the present time, however, we do not believe that any additional provisions would be reasonably likely to have a material adverse effect on our liquidity or consolidated financial position. Other Litigation In connection with the aforementioned former brake business, we were subject to a legal proceeding alleging a breach of contract claim of the related purchase agreement. In August 2023, we reached a final settlement in the amount of $ 10.5 million which was paid in October 2023 and the settlement was fully recorded in loss from discontinued operations in the accompanying consolidated statement of operations in 2023. We are currently involved in various other legal claims and legal proceedings (some of which may involve substantial amounts), including claims related to commercial disputes, product liability, employment, and environmental. Although these legal claims and legal proceedings are subject to inherent uncertainties, based on our understanding and evaluation of the relevant facts and circumstances, we believe that the ultimate outcome of these matters will not, either individually or in the aggregate, have a material adverse effect on our business, financial condition or results of operations. We may at any time determine that settling any of these matters is in our best interests, which settlement may include substantial payments. Although we cannot currently predict the specific amount of any liability that may ultimately arise with respect to any of these matters, we will record provisions when the liability is considered probable and reasonably estimable. Significant judgment is required in both the determination of probability and the determination as to whether an exposure can be reasonably estimated. As additional information becomes available, we reassess our potential liability related to these 79 Index STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) matters. Such revisions of the potential liabilities could have a material adverse effect on our business, financial condition or results of operations. 24. Subsequent Event In 2025 we were subject to tariffs on certain imports into the United States under the International Emergency Economic Powers Act (“IEEPA”). On February 20, 2026, the United States Supreme Court rendered a decision invalidating tariffs imposed under IEEPA. In response to the Supreme Court’s decision, the current Administration announced its intention to impose new tariffs under different statutory authority. We are currently evaluating the impact of these actions on our business and will continue to monitor developments as they occur. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.