false12-312021FY0000093389P33Y6MP6M1P1YP1Y2017 2018 2019 20202015 2016 2017 2018 2019 20202017 2018 2019 20202016 2017 2018 2019 20202017 2018 2019 20202017 2018 2019 20202016 2017 2018 2019 20202023-12-312022-03-312022-06-302030-12-3118500000933892021-01-012021-12-3100000933892021-06-3000000933892022-02-1700000933892019-01-012019-12-3100000933892020-01-012020-12-3100000933892021-12-3100000933892020-12-3100000933892018-12-3100000933892019-12-310000093389us-gaap:TreasuryStockMember2018-12-310000093389us-gaap:RetainedEarningsMember2018-12-310000093389us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310000093389us-gaap:ParentMember2018-12-310000093389us-gaap:NoncontrollingInterestMember2018-12-310000093389us-gaap:CommonStockMember2018-12-310000093389us-gaap:AdditionalPaidInCapitalMember2018-12-310000093389us-gaap:TreasuryStockMember2021-01-012021-12-310000093389us-gaap:RetainedEarningsMember2021-01-012021-12-310000093389us-gaap:CommonStockMember2021-01-012021-12-310000093389us-gaap:ParentMember2021-01-012021-12-310000093389us-gaap:AdditionalPaidInCapitalMember2021-01-012021-12-310000093389us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-12-310000093389us-gaap:NoncontrollingInterestMember2021-01-012021-12-310000093389us-gaap:CommonStockMember2020-01-012020-12-310000093389us-gaap:NoncontrollingInterestMember2019-01-012019-12-310000093389us-gaap:NoncontrollingInterestMember2020-01-012020-12-310000093389us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-12-310000093389us-gaap:ParentMember2020-01-012020-12-310000093389us-gaap:AdditionalPaidInCapitalMember2020-01-012020-12-310000093389us-gaap:ParentMember2019-01-012019-12-310000093389us-gaap:CommonStockMember2019-01-012019-12-310000093389us-gaap:TreasuryStockMember2019-01-012019-12-310000093389us-gaap:RetainedEarningsMember2019-01-012019-12-310000093389us-gaap:TreasuryStockMember2020-01-012020-12-310000093389us-gaap:AdditionalPaidInCapitalMember2019-01-012019-12-310000093389us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-12-310000093389us-gaap:RetainedEarningsMember2020-01-012020-12-310000093389us-gaap:ParentMember2021-12-310000093389us-gaap:CommonStockMember2019-12-310000093389us-gaap:CommonStockMember2021-12-310000093389us-gaap:AdditionalPaidInCapitalMember2020-12-310000093389us-gaap:TreasuryStockMember2019-12-310000093389us-gaap:RetainedEarningsMember2021-12-310000093389us-gaap:NoncontrollingInterestMember2020-12-310000093389us-gaap:NoncontrollingInterestMember2019-12-310000093389us-gaap:CommonStockMember2020-12-310000093389us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310000093389us-gaap:AdditionalPaidInCapitalMember2019-12-310000093389us-gaap:AdditionalPaidInCapitalMember2021-12-310000093389us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000093389us-gaap:RetainedEarningsMember2019-12-310000093389us-gaap:NoncontrollingInterestMember2021-12-310000093389us-gaap:TreasuryStockMember2020-12-310000093389us-gaap:TreasuryStockMember2021-12-310000093389us-gaap:ParentMember2019-12-310000093389us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310000093389us-gaap:RetainedEarningsMember2020-12-310000093389us-gaap:ParentMember2020-12-310000093389smp:ParticulateMatterSensorBusinessOfStoneridgeIncMember2021-01-012021-12-310000093389smp:StabilOperativeGroupGmbHMember2021-01-012021-12-310000093389smp:TrumpetHoldingsIncMember2021-01-012021-12-310000093389srt:MaximumMemberus-gaap:ToolsDiesAndMoldsMember2021-01-012021-12-310000093389srt:MaximumMemberus-gaap:BuildingImprovementsMember2021-01-012021-12-310000093389srt:MaximumMemberus-gaap:BuildingMember2021-01-012021-12-310000093389us-gaap:ToolsDiesAndMoldsMembersrt:MinimumMember2021-01-012021-12-310000093389us-gaap:FurnitureAndFixturesMembersrt:MaximumMember2021-01-012021-12-310000093389srt:MinimumMemberus-gaap:BuildingImprovementsMember2021-01-012021-12-310000093389srt:MinimumMemberus-gaap:FurnitureAndFixturesMember2021-01-012021-12-310000093389us-gaap:BuildingMembersrt:MinimumMember2021-01-012021-12-310000093389us-gaap:MachineryAndEquipmentMembersrt:MaximumMember2021-01-012021-12-310000093389srt:MinimumMemberus-gaap:MachineryAndEquipmentMember2021-01-012021-12-310000093389us-gaap:CustomerConcentrationRiskMember2021-01-012021-12-310000093389smp:StabilOperativeGroupGmbHMember2021-09-300000093389smp:StabilOperativeGroupGmbHMember2021-09-012021-09-300000093389smp:StabilOperativeGroupGmbHMemberus-gaap:CustomerRelationshipsMember2021-01-012021-12-310000093389us-gaap:CorporateJointVentureMembersmp:TrumpetHoldingsIncMember2021-05-310000093389smp:TrumpetHoldingsIncMember2021-05-310000093389smp:TrumpetHoldingsIncMember2021-12-012021-12-310000093389smp:TrumpetHoldingsIncMember2021-05-012021-05-310000093389smp:TrumpetHoldingsIncMemberus-gaap:CustomerRelationshipsMember2021-05-310000093389smp:TrumpetHoldingsIncMemberus-gaap:TradeNamesMember2021-05-310000093389us-gaap:DevelopedTechnologyRightsMembersmp:TrumpetHoldingsIncMember2021-05-310000093389smp:TrumpetHoldingsIncMemberus-gaap:DevelopedTechnologyRightsMember2021-01-012021-12-310000093389smp:TrumpetHoldingsIncMemberus-gaap:CustomerRelationshipsMember2021-01-012021-12-310000093389us-gaap:TradeNamesMembersmp:TrumpetHoldingsIncMember2021-01-012021-12-310000093389smp:ParticulateMatterSensorBusinessOfStoneridgeIncTallinEstoniaMember2021-11-012021-11-300000093389smp:ParticulateMatterSensorBusinessOfStoneridgeIncMember2021-11-012021-11-300000093389smp:ParticulateMatterSensorBusinessOfStoneridgeIncLexingtonOhioMember2021-03-012021-03-310000093389smp:ParticulateMatterSensorBusinessOfStoneridgeIncMember2021-11-300000093389us-gaap:CustomerRelationshipsMembersmp:ParticulateMatterSensorBusinessOfStoneridgeIncMember2021-11-300000093389smp:ParticulateMatterSensorBusinessOfStoneridgeIncMemberus-gaap:CustomerRelationshipsMember2021-01-012021-12-310000093389us-gaap:EmployeeSeveranceMember2019-12-310000093389us-gaap:OtherRestructuringMember2019-12-310000093389us-gaap:OtherRestructuringMember2020-01-012020-12-310000093389us-gaap:EmployeeSeveranceMember2021-01-012021-12-310000093389us-gaap:OtherRestructuringMember2021-01-012021-12-310000093389us-gaap:EmployeeSeveranceMember2020-01-012020-12-310000093389smp:PollakRelocationMember2020-01-012020-12-310000093389smp:PlantRationalizationProgramMember2020-01-012020-12-310000093389smp:PlantRationalizationProgramMember2021-01-012021-12-310000093389smp:SootSensorProductLineRelocationMember2021-01-012021-12-310000093389us-gaap:EmployeeSeveranceMember2020-12-310000093389us-gaap:OtherRestructuringMember2021-12-310000093389smp:PollakRelocationMember2020-12-310000093389us-gaap:OtherRestructuringMember2020-12-310000093389smp:PlantRationalizationProgramMember2021-12-310000093389us-gaap:EmployeeSeveranceMember2021-12-310000093389smp:SootSensorProductLineRelocationMember2021-12-310000093389smp:SootSensorProductLineRelocationMembersrt:MaximumMember2021-01-012021-12-310000093389us-gaap:LandBuildingsAndImprovementsMember2021-12-310000093389us-gaap:MachineryAndEquipmentMember2021-12-310000093389us-gaap:LeaseholdImprovementsMember2021-12-310000093389us-gaap:LeaseholdImprovementsMember2020-12-310000093389us-gaap:MachineryAndEquipmentMember2020-12-310000093389us-gaap:ConstructionInProgressMember2020-12-310000093389us-gaap:ToolsDiesAndMoldsMember2020-12-310000093389us-gaap:LandBuildingsAndImprovementsMember2020-12-310000093389us-gaap:FurnitureAndFixturesMember2020-12-310000093389us-gaap:ConstructionInProgressMember2021-12-310000093389us-gaap:ToolsDiesAndMoldsMember2021-12-310000093389us-gaap:FurnitureAndFixturesMember2021-12-310000093389srt:MaximumMember2021-12-310000093389smp:TemperatureControlMember2019-12-310000093389smp:EngineManagementMember2019-12-310000093389smp:TemperatureControlMembersmp:TrumpetHoldingsIncMember2021-01-012021-12-310000093389smp:EngineManagementMembersmp:StabilOperativeGroupGmbHMember2021-01-012021-12-310000093389smp:TrumpetHoldingsIncMembersmp:EngineManagementMember2021-01-012021-12-310000093389smp:StabilOperativeGroupGmbHMembersmp:TemperatureControlMember2021-01-012021-12-310000093389smp:EngineManagementMember2021-01-012021-12-310000093389smp:EngineManagementMember2020-01-012020-12-310000093389smp:TemperatureControlMember2020-01-012020-12-310000093389smp:TemperatureControlMember2021-01-012021-12-310000093389smp:TemperatureControlMember2021-12-310000093389smp:TemperatureControlMember2020-12-310000093389smp:EngineManagementMember2021-12-310000093389smp:EngineManagementMember2020-12-310000093389smp:SupplyAgreementMember2020-12-310000093389us-gaap:TrademarksMember2021-12-310000093389smp:SupplyAgreementMember2021-12-310000093389us-gaap:NoncompeteAgreementsMember2021-12-310000093389us-gaap:LeaseAgreementsMember2020-12-310000093389smp:PatentsDevelopedTechnologyAndIntellectualPropertyMember2021-12-310000093389us-gaap:CustomerRelationshipsMember2021-12-310000093389us-gaap:LeaseAgreementsMember2021-12-310000093389us-gaap:NoncompeteAgreementsMember2020-12-310000093389us-gaap:CustomerRelationshipsMember2020-12-310000093389smp:PatentsDevelopedTechnologyAndIntellectualPropertyMember2020-12-310000093389us-gaap:TrademarksMember2020-12-310000093389us-gaap:TrademarksMember2020-01-012020-12-310000093389us-gaap:ComputerSoftwareIntangibleAssetMember2021-12-310000093389us-gaap:ComputerSoftwareIntangibleAssetMember2020-12-310000093389srt:MinimumMemberus-gaap:ComputerSoftwareIntangibleAssetMember2021-01-012021-12-310000093389srt:MaximumMemberus-gaap:ComputerSoftwareIntangibleAssetMember2021-01-012021-12-310000093389us-gaap:ComputerSoftwareIntangibleAssetMember2020-01-012020-12-310000093389us-gaap:ComputerSoftwareIntangibleAssetMember2019-01-012019-12-310000093389us-gaap:ComputerSoftwareIntangibleAssetMember2021-01-012021-12-310000093389smp:FoshanGuangdongAutomotiveAirConditioningCoLtdMember2021-12-310000093389smp:OrangeElectronicCoLtdMember2013-01-310000093389smp:FoshanGuangdongAutomotiveAirConditioningCoLtdMember2020-12-310000093389smp:FoshanCheYijiaNewEnergyTechnologyCoLtdMember2019-08-310000093389smp:FoshanCheYijiaNewEnergyTechnologyCoLtdMember2020-12-310000093389smp:FoshanGWOYNGSMPVehicleClimateControlCoolingProductsCoLtdMember2018-03-310000093389smp:FoshanGWOYNGSMPVehicleClimateControlCoolingProductsCoLtdMember2020-12-310000093389smp:OrangeElectronicCoLtdMember2021-12-310000093389smp:OrangeElectronicCoLtdMember2020-12-310000093389smp:FoshanGWOYNGSMPVehicleClimateControlCoolingProductsCoLtdMember2014-04-300000093389smp:FoshanCheYijiaNewEnergyTechnologyCoLtdMember2021-12-310000093389smp:FoshanGuangdongAutomotiveAirConditioningCoLtdMember2017-11-300000093389smp:FoshanGWOYNGSMPVehicleClimateControlCoolingProductsCoLtdMember2021-12-310000093389smp:FoshanCheYijiaNewEnergyTechnologyCoLtdMember2021-01-012021-12-310000093389smp:FoshanGWOYNGSMPVehicleClimateControlCoolingProductsCoLtdMember2021-01-012021-12-310000093389smp:FoshanGuangdongAutomotiveAirConditioningCoLtdMember2021-01-012021-12-310000093389smp:FoshanGWOYNGSMPVehicleClimateControlCoolingProductsCoLtdMember2020-01-012020-12-310000093389smp:OrangeElectronicCoLtdMember2020-01-012020-12-310000093389smp:OrangeElectronicCoLtdMember2021-01-012021-12-310000093389smp:FoshanGuangdongAutomotiveAirConditioningCoLtdMember2020-01-012020-12-310000093389smp:HSBCBankPolskaSAMember2020-12-310000093389smp:HSBCBankPolskaSAMember2021-12-310000093389us-gaap:RevolvingCreditFacilityMembercountry:CAsmp:JPMorganChaseBankCreditFacilityMember2021-12-310000093389smp:JPMorganChaseBankCreditFacilityMemberus-gaap:RevolvingCreditFacilityMember2021-12-310000093389us-gaap:RevolvingCreditFacilityMembersmp:JPMorganChaseBankCreditFacilityMember2021-01-012021-12-310000093389us-gaap:BaseRateMemberus-gaap:RevolvingCreditFacilityMembersrt:MinimumMembersmp:JPMorganChaseBankCreditFacilityMember2021-01-012021-12-310000093389srt:MaximumMembersmp:JPMorganChaseBankCreditFacilityMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMember2021-01-012021-12-310000093389smp:JPMorganChaseBankCreditFacilityMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:LondonInterbankOfferedRateLIBORMembersrt:MaximumMember2021-01-012021-12-310000093389srt:MinimumMembersmp:JPMorganChaseBankCreditFacilityMemberus-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:RevolvingCreditFacilityMember2021-01-012021-12-310000093389us-gaap:RevolvingCreditFacilityMembersmp:JPMorganChaseBankCreditFacilityMembersmp:BorrowingMember2021-12-310000093389us-gaap:RevolvingCreditFacilityMembersmp:JPMorganChaseBankCreditFacilityMemberus-gaap:BaseRateMember2021-12-310000093389smp:JPMorganChaseBankCreditFacilityMemberus-gaap:RevolvingCreditFacilityMember2020-12-310000093389smp:BorrowingMembersmp:JPMorganChaseBankCreditFacilityMemberus-gaap:RevolvingCreditFacilityMember2020-12-310000093389us-gaap:RevolvingCreditFacilityMembersmp:JPMorganChaseBankCreditFacilityMemberus-gaap:BaseRateMember2020-01-012020-12-310000093389us-gaap:BaseRateMemberus-gaap:RevolvingCreditFacilityMembersmp:JPMorganChaseBankCreditFacilityMember2021-01-012021-12-310000093389srt:MinimumMemberus-gaap:RevolvingCreditFacilityMembersmp:StockRepurchaseMember2021-12-310000093389us-gaap:RevolvingCreditFacilityMembersmp:FixedAssetsIncludedInBorrowingBaseMembersrt:MaximumMember2021-12-310000093389us-gaap:RevolvingCreditFacilityMembersmp:FixedAssetsNotIncludedInBorrowingBaseMember2021-12-310000093389us-gaap:RevolvingCreditFacilityMember2021-01-012021-12-310000093389smp:OtherDistributionsMembersrt:MinimumMemberus-gaap:RevolvingCreditFacilityMember2021-12-310000093389smp:StockRepurchaseMemberus-gaap:RevolvingCreditFacilityMember2021-12-310000093389us-gaap:DividendPaidMemberus-gaap:RevolvingCreditFacilityMember2021-12-310000093389smp:HSBCContinentalEuropeMemberus-gaap:SubsequentEventMember2022-02-280000093389smp:HSBCContinentalEuropeMember2021-01-012021-12-310000093389smp:HSBCContinentalEuropeMembersmp:WarsawInterbankOfferedRateMember2021-01-012021-12-310000093389smp:HSBCContinentalEuropeMember2020-12-310000093389smp:HSBCContinentalEuropeMember2021-12-310000093389us-gaap:SeriesAPreferredStockMember2021-12-310000093389us-gaap:PreferredStockMember2021-12-310000093389us-gaap:SeriesAPreferredStockMember2021-01-012021-12-310000093389us-gaap:PreferredStockMember2020-12-310000093389smp:StockRepurchaseProgram2020Member2020-03-310000093389smp:StockRepurchaseProgram2021OctoberMember2021-10-310000093389smp:StockRepurchaseProgram2021FebruaryMember2021-02-280000093389smp:StockRepurchaseProgram2020Member2021-01-012021-12-310000093389us-gaap:SubsequentEventMembersmp:StockRepurchaseProgram2021OctoberMember2022-01-012022-02-170000093389smp:StockRepurchaseProgram2020Member2020-01-012020-12-310000093389smp:StockRepurchaseProgram2021FebruaryMember2021-01-012021-12-310000093389smp:StockRepurchaseProgram2021OctoberMember2021-01-012021-12-310000093389smp:StockRepurchaseProgram2021OctoberMemberus-gaap:SubsequentEventMember2022-02-170000093389smp:StockRepurchaseProgram2021OctoberMember2021-12-310000093389us-gaap:ShareBasedPaymentArrangementNonemployeeMembersmp:TwoThousandAndSixteenOmnibusIncentivePlanMember2021-12-310000093389smp:TwoThousandAndSixteenOmnibusIncentivePlanMemberus-gaap:ShareBasedPaymentArrangementEmployeeMember2021-12-310000093389srt:MinimumMemberus-gaap:RestrictedStockMember2021-01-012021-12-310000093389us-gaap:PerformanceSharesMembersrt:MinimumMember2021-01-012021-12-310000093389us-gaap:RestrictedStockMembersrt:ExecutiveOfficerMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2021-01-012021-12-310000093389srt:ExecutiveOfficerMemberus-gaap:RestrictedStockMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2021-01-012021-12-310000093389us-gaap:ShareBasedCompensationAwardTrancheThreeMemberus-gaap:RestrictedStockMembersrt:ExecutiveOfficerMember2021-01-012021-12-310000093389us-gaap:PerformanceSharesMember2021-01-012021-12-310000093389srt:MinimumMembersmp:ExecutivesAndDirectorsMembersmp:RestrictedAndPerformanceBasedSharesMember2021-01-012021-12-310000093389srt:MaximumMembersmp:ExecutivesAndDirectorsMembersmp:RestrictedAndPerformanceBasedSharesMember2021-01-012021-12-310000093389us-gaap:RestrictedStockMembersrt:ExecutiveOfficerMember2021-01-012021-12-310000093389us-gaap:RestrictedStockMembersrt:DirectorMember2021-01-012021-12-310000093389smp:EmployeesMemberus-gaap:RestrictedStockMember2021-01-012021-12-310000093389smp:TwoThousandAndSixteenOmnibusIncentivePlanMembersmp:RestrictedAndPerformanceBasedSharesMember2021-01-012021-12-310000093389smp:RestrictedAndPerformanceBasedSharesMembersmp:TwoThousandAndSixteenOmnibusIncentivePlanMember2021-12-310000093389smp:RestrictedAndPerformanceBasedSharesMember2021-12-310000093389smp:RestrictedAndPerformanceBasedSharesMember2020-12-310000093389smp:RestrictedAndPerformanceBasedSharesMembersmp:EmployeesMember2021-01-012021-12-310000093389srt:DirectorMembersmp:RestrictedAndPerformanceBasedSharesMember2020-01-012020-12-310000093389smp:EmployeesMembersmp:RestrictedAndPerformanceBasedSharesMember2020-01-012020-12-310000093389srt:DirectorMembersmp:RestrictedAndPerformanceBasedSharesMember2021-01-012021-12-310000093389smp:RestrictedAndPerformanceBasedSharesMember2019-12-310000093389smp:RestrictedAndPerformanceBasedSharesMember2021-01-012021-12-310000093389us-gaap:PerformanceSharesMembersmp:TwoThousandAndSixteenOmnibusIncentivePlanMember2021-01-012021-12-310000093389smp:TwoThousandAndSixteenOmnibusIncentivePlanMemberus-gaap:RestrictedStockMember2021-01-012021-12-310000093389smp:RestrictedAndPerformanceBasedSharesMember2020-01-012020-12-310000093389us-gaap:PerformanceSharesMember2020-01-012020-12-310000093389smp:RestrictedAndPerformanceBasedSharesMember2019-01-012019-12-310000093389smp:EmployeeStockOwnershipPlanAndTrustEsopMember2021-01-012021-12-310000093389smp:EmployeeStockOwnershipPlanAndTrustEsopMember2021-12-310000093389us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember2020-12-310000093389us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember2021-12-310000093389us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember2019-01-012019-12-310000093389us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember2020-01-012020-12-310000093389us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember2021-01-012021-12-310000093389us-gaap:ForeignCountryMember2021-01-012021-12-310000093389us-gaap:ForeignCountryMember2021-12-310000093389us-gaap:StateAndLocalJurisdictionMember2021-01-012021-12-310000093389smp:HungaryTaxAuthorityMember2021-01-012021-12-310000093389us-gaap:StateAdministrationOfTaxationChinaMember2021-01-012021-12-310000093389us-gaap:InlandRevenueHongKongMember2021-01-012021-12-310000093389us-gaap:CanadaRevenueAgencyMember2021-01-012021-12-310000093389us-gaap:MexicanTaxAuthorityMember2021-01-012021-12-310000093389smp:PolandTaxAuthorityMember2021-01-012021-12-310000093389srt:MaximumMemberus-gaap:ForeignCountryMember2021-01-012021-12-310000093389srt:MinimumMemberus-gaap:ForeignCountryMember2021-01-012021-12-310000093389smp:RestrictedAndPerformanceBasedSharesMember2020-01-012020-12-310000093389smp:RestrictedAndPerformanceBasedSharesMember2019-01-012019-12-310000093389smp:RestrictedAndPerformanceBasedSharesMember2021-01-012021-12-310000093389smp:TemperatureControlMemberus-gaap:OperatingSegmentsMember2021-01-012021-12-310000093389us-gaap:IntersegmentEliminationMembersmp:EngineManagementMember2021-01-012021-12-310000093389us-gaap:IntersegmentEliminationMemberus-gaap:CorporateAndOtherMember2019-01-012019-12-310000093389us-gaap:IntersegmentEliminationMembersmp:TemperatureControlMember2019-01-012019-12-310000093389us-gaap:OperatingSegmentsMembersmp:TemperatureControlMember2020-01-012020-12-310000093389smp:EngineManagementMemberus-gaap:OperatingSegmentsMember2019-01-012019-12-310000093389us-gaap:CorporateAndOtherMember2019-01-012019-12-310000093389us-gaap:CorporateAndOtherMemberus-gaap:IntersegmentEliminationMember2021-01-012021-12-310000093389us-gaap:CorporateAndOtherMember2020-01-012020-12-310000093389us-gaap:IntersegmentEliminationMembersmp:TemperatureControlMember2020-01-012020-12-310000093389us-gaap:IntersegmentEliminationMemberus-gaap:CorporateAndOtherMember2020-01-012020-12-310000093389us-gaap:IntersegmentEliminationMembersmp:EngineManagementMember2020-01-012020-12-310000093389smp:TemperatureControlMemberus-gaap:IntersegmentEliminationMember2021-01-012021-12-310000093389us-gaap:IntersegmentEliminationMember2019-01-012019-12-310000093389us-gaap:IntersegmentEliminationMember2020-01-012020-12-310000093389us-gaap:CorporateAndOtherMember2021-01-012021-12-310000093389us-gaap:OperatingSegmentsMembersmp:TemperatureControlMember2019-01-012019-12-310000093389us-gaap:IntersegmentEliminationMember2021-01-012021-12-310000093389smp:EngineManagementMemberus-gaap:OperatingSegmentsMember2020-01-012020-12-310000093389smp:EngineManagementMemberus-gaap:IntersegmentEliminationMember2019-01-012019-12-310000093389smp:EngineManagementMemberus-gaap:OperatingSegmentsMember2021-01-012021-12-310000093389us-gaap:OperatingSegmentsMembersmp:EngineManagementMember2019-12-310000093389us-gaap:OperatingSegmentsMembersmp:TemperatureControlMember2019-12-310000093389us-gaap:OperatingSegmentsMembersmp:EngineManagementMember2021-12-310000093389us-gaap:CorporateAndOtherMember2020-12-310000093389smp:EngineManagementMemberus-gaap:OperatingSegmentsMember2020-12-310000093389smp:TemperatureControlMemberus-gaap:OperatingSegmentsMember2021-12-310000093389us-gaap:CorporateAndOtherMember2021-12-310000093389us-gaap:CorporateAndOtherMember2019-12-310000093389smp:TemperatureControlMemberus-gaap:OperatingSegmentsMember2020-12-310000093389country:US2019-12-310000093389srt:AsiaMember2021-12-310000093389srt:AsiaMember2019-12-310000093389country:MX2021-12-310000093389srt:AsiaMember2020-12-310000093389country:US2021-12-310000093389country:CA2019-12-310000093389srt:EuropeMember2020-12-310000093389country:MX2019-12-310000093389country:CA2021-12-310000093389srt:EuropeMember2019-12-310000093389country:US2020-12-310000093389country:CA2020-12-310000093389srt:EuropeMember2021-12-310000093389country:MX2020-12-310000093389us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembersmp:ThreeLargestIndividualCustomersMember2021-01-012021-12-310000093389us-gaap:SalesRevenueNetMembersmp:AutoZoneIncMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-12-310000093389us-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMembersmp:OReillyAutomotiveIncMember2021-01-012021-12-310000093389smp:NapaAutoPartsMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-12-310000093389smp:OtherForeignMember2019-01-012019-12-310000093389smp:ExportMembersmp:EngineManagementMember2019-01-012019-12-310000093389smp:EngineManagementMembersmp:OtherForeignMember2019-01-012019-12-310000093389smp:OEOESMember2020-01-012020-12-310000093389smp:TemperatureControlMembersrt:AsiaMember2021-01-012021-12-310000093389smp:TemperatureControlMembersmp:OEOESMember2020-01-012020-12-310000093389us-gaap:CorporateAndOtherMembercountry:MX2019-01-012019-12-310000093389srt:EuropeMember2021-01-012021-12-310000093389us-gaap:CorporateAndOtherMembersmp:WireAndCableMember2019-01-012019-12-310000093389smp:OtherClimateControlPartsMemberus-gaap:CorporateAndOtherMember2019-01-012019-12-310000093389smp:TemperatureControlMembersmp:OtherClimateControlPartsMember2021-01-012021-12-310000093389smp:WireAndCableMember2020-01-012020-12-310000093389srt:AsiaMemberus-gaap:CorporateAndOtherMember2021-01-012021-12-310000093389country:CAsmp:EngineManagementMember2021-01-012021-12-310000093389us-gaap:CorporateAndOtherMembersmp:ExportMember2019-01-012019-12-310000093389us-gaap:CorporateAndOtherMembersrt:EuropeMember2021-01-012021-12-310000093389smp:TemperatureControlMembercountry:CA2019-01-012019-12-310000093389smp:TemperatureControlMembersmp:OEOESMember2021-01-012021-12-310000093389srt:AsiaMembersmp:EngineManagementMember2021-01-012021-12-310000093389smp:TemperatureControlMembersmp:OtherForeignMember2019-01-012019-12-310000093389country:CA2021-01-012021-12-310000093389country:CAus-gaap:CorporateAndOtherMember2020-01-012020-12-310000093389country:CAsmp:EngineManagementMember2020-01-012020-12-310000093389smp:EngineManagementMembercountry:US2019-01-012019-12-310000093389country:MXsmp:EngineManagementMember2019-01-012019-12-310000093389smp:TemperatureControlMembercountry:CA2021-01-012021-12-310000093389country:MX2019-01-012019-12-310000093389us-gaap:CorporateAndOtherMembersmp:OEOESMember2020-01-012020-12-310000093389smp:TemperatureControlMembersmp:WireAndCableMember2021-01-012021-12-310000093389smp:OEOESMemberus-gaap:CorporateAndOtherMember2021-01-012021-12-310000093389smp:IgnitionEmissionControlFuelAndSafetyRelatedSystemProductsMemberus-gaap:CorporateAndOtherMember2020-01-012020-12-310000093389country:USsmp:EngineManagementMember2020-01-012020-12-310000093389smp:TemperatureControlMember2019-01-012019-12-310000093389us-gaap:CorporateAndOtherMembercountry:MX2021-01-012021-12-310000093389us-gaap:CorporateAndOtherMembersrt:AsiaMember2019-01-012019-12-310000093389smp:TemperatureControlMembersrt:EuropeMember2021-01-012021-12-310000093389country:MXsmp:TemperatureControlMember2020-01-012020-12-310000093389smp:CompressorsMembersmp:TemperatureControlMember2021-01-012021-12-310000093389country:US2021-01-012021-12-310000093389us-gaap:CorporateAndOtherMembersmp:WireAndCableMember2021-01-012021-12-310000093389smp:OEOESMemberus-gaap:CorporateAndOtherMember2019-01-012019-12-310000093389srt:EuropeMember2019-01-012019-12-310000093389smp:OtherClimateControlPartsMember2020-01-012020-12-310000093389srt:AsiaMember2021-01-012021-12-310000093389us-gaap:CorporateAndOtherMembersmp:AftermarketMember2021-01-012021-12-310000093389smp:AftermarketMember2019-01-012019-12-310000093389smp:EngineManagementMembersmp:WireAndCableMember2021-01-012021-12-310000093389smp:TemperatureControlMembercountry:MX2019-01-012019-12-310000093389smp:IgnitionEmissionControlFuelAndSafetyRelatedSystemProductsMember2020-01-012020-12-310000093389srt:EuropeMember2020-01-012020-12-310000093389smp:OtherForeignMembersmp:EngineManagementMember2021-01-012021-12-310000093389us-gaap:CorporateAndOtherMembercountry:MX2020-01-012020-12-310000093389country:USus-gaap:CorporateAndOtherMember2021-01-012021-12-310000093389smp:AftermarketMembersmp:TemperatureControlMember2020-01-012020-12-310000093389us-gaap:CorporateAndOtherMembersrt:EuropeMember2020-01-012020-12-310000093389srt:AsiaMembersmp:TemperatureControlMember2019-01-012019-12-310000093389smp:WireAndCableMember2019-01-012019-12-310000093389smp:EngineManagementMembersmp:OtherForeignMember2020-01-012020-12-310000093389smp:IgnitionEmissionControlFuelAndSafetyRelatedSystemProductsMembersmp:TemperatureControlMember2019-01-012019-12-310000093389smp:EngineManagementMembersmp:AftermarketMember2019-01-012019-12-310000093389smp:EngineManagementMembersmp:IgnitionEmissionControlFuelAndSafetyRelatedSystemProductsMember2019-01-012019-12-310000093389smp:EngineManagementMembersmp:WireAndCableMember2020-01-012020-12-310000093389smp:IgnitionEmissionControlFuelAndSafetyRelatedSystemProductsMember2019-01-012019-12-310000093389smp:CompressorsMembersmp:EngineManagementMember2020-01-012020-12-310000093389smp:EngineManagementMember2019-01-012019-12-310000093389smp:AftermarketMember2020-01-012020-12-310000093389country:US2019-01-012019-12-310000093389country:CA2020-01-012020-12-310000093389smp:IgnitionEmissionControlFuelAndSafetyRelatedSystemProductsMembersmp:EngineManagementMember2020-01-012020-12-310000093389us-gaap:CorporateAndOtherMembercountry:CA2019-01-012019-12-310000093389us-gaap:CorporateAndOtherMembersmp:ExportMember2021-01-012021-12-310000093389smp:WireAndCableMembersmp:EngineManagementMember2019-01-012019-12-310000093389us-gaap:CorporateAndOtherMembersmp:OtherForeignMember2020-01-012020-12-310000093389smp:CompressorsMembersmp:EngineManagementMember2021-01-012021-12-310000093389smp:OtherClimateControlPartsMember2021-01-012021-12-310000093389us-gaap:CorporateAndOtherMembersmp:AftermarketMember2019-01-012019-12-310000093389smp:ExportMembersmp:TemperatureControlMember2021-01-012021-12-310000093389smp:CompressorsMember2020-01-012020-12-310000093389smp:IgnitionEmissionControlFuelAndSafetyRelatedSystemProductsMembersmp:TemperatureControlMember2021-01-012021-12-310000093389smp:IgnitionEmissionControlFuelAndSafetyRelatedSystemProductsMemberus-gaap:CorporateAndOtherMember2019-01-012019-12-310000093389smp:ExportMember2019-01-012019-12-310000093389srt:EuropeMembersmp:TemperatureControlMember2019-01-012019-12-310000093389smp:AftermarketMembersmp:EngineManagementMember2021-01-012021-12-310000093389smp:OEOESMembersmp:EngineManagementMember2019-01-012019-12-310000093389country:USsmp:TemperatureControlMember2020-01-012020-12-310000093389country:MXsmp:EngineManagementMember2021-01-012021-12-310000093389smp:TemperatureControlMembersmp:ExportMember2019-01-012019-12-310000093389smp:CompressorsMemberus-gaap:CorporateAndOtherMember2020-01-012020-12-310000093389smp:CompressorsMember2019-01-012019-12-310000093389us-gaap:CorporateAndOtherMembercountry:CA2021-01-012021-12-310000093389smp:TemperatureControlMembercountry:US2021-01-012021-12-310000093389smp:OEOESMembersmp:EngineManagementMember2020-01-012020-12-310000093389country:MXsmp:TemperatureControlMember2021-01-012021-12-310000093389smp:AftermarketMembersmp:EngineManagementMember2020-01-012020-12-310000093389smp:ExportMember2020-01-012020-12-310000093389us-gaap:CorporateAndOtherMembersmp:OtherClimateControlPartsMember2020-01-012020-12-310000093389srt:EuropeMembersmp:TemperatureControlMember2020-01-012020-12-310000093389smp:OtherForeignMemberus-gaap:CorporateAndOtherMember2021-01-012021-12-310000093389smp:IgnitionEmissionControlFuelAndSafetyRelatedSystemProductsMembersmp:TemperatureControlMember2020-01-012020-12-310000093389smp:EngineManagementMembercountry:CA2019-01-012019-12-310000093389country:MX2021-01-012021-12-310000093389srt:AsiaMemberus-gaap:CorporateAndOtherMember2020-01-012020-12-310000093389smp:OtherClimateControlPartsMembersmp:EngineManagementMember2020-01-012020-12-310000093389us-gaap:CorporateAndOtherMembersmp:WireAndCableMember2020-01-012020-12-310000093389us-gaap:CorporateAndOtherMembersmp:OtherForeignMember2019-01-012019-12-310000093389us-gaap:CorporateAndOtherMembercountry:US2019-01-012019-12-310000093389smp:OtherClimateControlPartsMembersmp:TemperatureControlMember2020-01-012020-12-310000093389smp:EngineManagementMembersrt:AsiaMember2019-01-012019-12-310000093389country:USus-gaap:CorporateAndOtherMember2020-01-012020-12-310000093389country:MX2020-01-012020-12-310000093389smp:EngineManagementMembersrt:EuropeMember2021-01-012021-12-310000093389us-gaap:CorporateAndOtherMembersmp:ExportMember2020-01-012020-12-310000093389smp:IgnitionEmissionControlFuelAndSafetyRelatedSystemProductsMember2021-01-012021-12-310000093389smp:OtherClimateControlPartsMembersmp:EngineManagementMember2021-01-012021-12-310000093389country:US2020-01-012020-12-310000093389country:CA2019-01-012019-12-310000093389smp:ExportMembersmp:EngineManagementMember2020-01-012020-12-310000093389smp:OEOESMembersmp:EngineManagementMember2021-01-012021-12-310000093389smp:OtherForeignMember2020-01-012020-12-310000093389us-gaap:CorporateAndOtherMembersrt:EuropeMember2019-01-012019-12-310000093389smp:TemperatureControlMembersmp:AftermarketMember2019-01-012019-12-310000093389smp:ExportMembersmp:TemperatureControlMember2020-01-012020-12-310000093389smp:TemperatureControlMembersmp:OtherForeignMember2020-01-012020-12-310000093389smp:CompressorsMember2021-01-012021-12-310000093389smp:OEOESMember2021-01-012021-12-310000093389smp:TemperatureControlMembersmp:WireAndCableMember2019-01-012019-12-310000093389smp:AftermarketMember2021-01-012021-12-310000093389smp:CompressorsMembersmp:TemperatureControlMember2019-01-012019-12-310000093389smp:AftermarketMemberus-gaap:CorporateAndOtherMember2020-01-012020-12-310000093389smp:OtherForeignMembersmp:TemperatureControlMember2021-01-012021-12-310000093389smp:TemperatureControlMembersrt:AsiaMember2020-01-012020-12-310000093389smp:EngineManagementMembersmp:OtherClimateControlPartsMember2019-01-012019-12-310000093389srt:AsiaMember2020-01-012020-12-310000093389smp:ExportMember2021-01-012021-12-310000093389us-gaap:CorporateAndOtherMembersmp:CompressorsMember2019-01-012019-12-310000093389srt:AsiaMembersmp:EngineManagementMember2020-01-012020-12-310000093389smp:EngineManagementMembersmp:CompressorsMember2019-01-012019-12-310000093389smp:OtherForeignMember2021-01-012021-12-310000093389smp:EngineManagementMembersmp:ExportMember2021-01-012021-12-310000093389smp:CompressorsMemberus-gaap:CorporateAndOtherMember2021-01-012021-12-310000093389smp:OEOESMember2019-01-012019-12-310000093389smp:CompressorsMembersmp:TemperatureControlMember2020-01-012020-12-310000093389smp:OtherClimateControlPartsMembersmp:TemperatureControlMember2019-01-012019-12-310000093389smp:TemperatureControlMembercountry:CA2020-01-012020-12-310000093389srt:AsiaMember2019-01-012019-12-310000093389country:USsmp:EngineManagementMember2021-01-012021-12-310000093389srt:EuropeMembersmp:EngineManagementMember2019-01-012019-12-310000093389smp:AftermarketMembersmp:TemperatureControlMember2021-01-012021-12-310000093389smp:OtherClimateControlPartsMember2019-01-012019-12-310000093389country:USsmp:TemperatureControlMember2019-01-012019-12-310000093389smp:OEOESMembersmp:TemperatureControlMember2019-01-012019-12-310000093389smp:EngineManagementMembersrt:EuropeMember2020-01-012020-12-310000093389smp:IgnitionEmissionControlFuelAndSafetyRelatedSystemProductsMemberus-gaap:CorporateAndOtherMember2021-01-012021-12-310000093389country:MXsmp:EngineManagementMember2020-01-012020-12-310000093389smp:IgnitionEmissionControlFuelAndSafetyRelatedSystemProductsMembersmp:EngineManagementMember2021-01-012021-12-310000093389us-gaap:CorporateAndOtherMembersmp:OtherClimateControlPartsMember2021-01-012021-12-310000093389smp:WireAndCableMember2021-01-012021-12-310000093389smp:WireAndCableMembersmp:TemperatureControlMember2020-01-012020-12-310000093389smp:OtherLeasedPropertiesMember2019-01-012019-12-310000093389us-gaap:LandAndBuildingMember2020-01-012020-12-310000093389us-gaap:LandAndBuildingMember2019-01-012019-12-310000093389us-gaap:LandAndBuildingMember2021-01-012021-12-310000093389smp:OtherLeasedPropertiesMember2021-01-012021-12-310000093389smp:OtherLeasedPropertiesMember2020-01-012020-12-310000093389us-gaap:FinancialStandbyLetterOfCreditMember2021-12-310000093389us-gaap:AsbestosIssueMember2021-12-310000093389us-gaap:AsbestosIssueMember2001-09-012020-12-310000093389srt:MaximumMemberus-gaap:SegmentDiscontinuedOperationsMemberus-gaap:AsbestosIssueMember2021-12-310000093389us-gaap:AsbestosIssueMembersrt:MaximumMember2020-08-310000093389us-gaap:AsbestosIssueMemberus-gaap:SegmentDiscontinuedOperationsMembersrt:MinimumMember2021-12-310000093389us-gaap:AsbestosIssueMembersrt:MinimumMember2020-08-310000093389us-gaap:AsbestosIssueMember2020-01-012020-12-310000093389us-gaap:AsbestosIssueMember2020-09-300000093389us-gaap:AsbestosIssueMember2020-09-012020-09-300000093389us-gaap:AsbestosIssueMemberus-gaap:SegmentDiscontinuedOperationsMember2019-01-012019-12-310000093389us-gaap:AsbestosIssueMemberus-gaap:SegmentDiscontinuedOperationsMember2020-01-012020-12-310000093389us-gaap:AsbestosIssueMemberus-gaap:SegmentDiscontinuedOperationsMember2021-01-012021-12-310000093389smp:SECSchedule1209AllowanceForSalesReturnsMember2019-12-310000093389smp:SECSchedule1209ReserveDiscountsMember2018-12-310000093389smp:SECSchedule1209AllowanceForSalesReturnsMember2018-12-310000093389smp:SECSchedule1209ReserveDiscountsMember2020-12-310000093389smp:SECSchedule1209ReserveDiscountsMember2019-12-310000093389smp:SECSchedule1209AllowanceForSalesReturnsMember2020-12-310000093389us-gaap:AllowanceForCreditLossMember2018-12-310000093389us-gaap:AllowanceForCreditLossMember2020-12-310000093389us-gaap:AllowanceForCreditLossMember2019-12-310000093389smp:SECSchedule1209ReserveDiscountsMember2019-01-012019-12-310000093389smp:SECSchedule1209ReserveDiscountsMember2021-01-012021-12-310000093389smp:SECSchedule1209AllowanceForSalesReturnsMember2021-01-012021-12-310000093389smp:SECSchedule1209AllowanceForSalesReturnsMember2020-01-012020-12-310000093389smp:SECSchedule1209AllowanceForSalesReturnsMember2019-01-012019-12-310000093389smp:SECSchedule1209ReserveDiscountsMember2020-01-012020-12-310000093389us-gaap:AllowanceForCreditLossMember2020-01-012020-12-310000093389us-gaap:AllowanceForCreditLossMember2019-01-012019-12-310000093389us-gaap:AllowanceForCreditLossMember2021-01-012021-12-310000093389smp:SECSchedule1209AllowanceForSalesReturnsMember2021-12-310000093389smp:SECSchedule1209ReserveDiscountsMember2021-12-310000093389us-gaap:AllowanceForCreditLossMember2021-12-31iso4217:USDxbrli:sharesiso4217:USDxbrli:sharesxbrli:puresmp:Customeriso4217:EURiso4217:PLNsmp:Votesmp:Typesmp:Employeesmp:Segmentsmp:Officersmp:Claim

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

☑	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2019~~2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the ~~transaction~~transition period from ____ to ____

Commission file number: 001-04743

~~Standard Motor Products, Inc.~~

	Standard Motor Products, Inc.
	(Exact name of registrant as specified in its charter)

STANDARD MOTOR PRODUCTS, INC.

~~INDEX~~

INDEX
PART I.			Page No.

Item 1.	Business	3

Item 1A.	Risk Factors	1216

Item 1B.	Unresolved Staff Comments	2026

Item 2.	Properties	2126

Item 3.	Legal Proceedings	2227

Item 4.	Mine Safety Disclosures	2227

PART II.

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	2227
Item 6.	(Reserved)	29
~~Item 6.~~	~~Selected Financial Data~~	24

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2629

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	4041

Item 8.	Financial Statements and Supplementary Data	4143

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	8892

Item 9A.	Controls and Procedures	8892

Item 9B.	Other Information	8993
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	93

PART III.

Item 10.	Directors, Executive Officers and Corporate Governance	8993

Item 11.	Executive Compensation	8993

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	8993

Item 13.	Certain Relationships and Related Transactions, and Director Independence	8993

Item 14.	Principal ~~Accounting~~Accountant Fees and Services	8993

PART IV.

Item 15.	Exhibits and Financial Statement Schedules	9094

Item 16.	Form 10-K Summary	90
		94
	Signatures	9498

~~Index~~

PART I

In this Annual Report on Form 10-K, “Standard Motor Products,” “we,” “us,” ~~“our”~~“our,” “SMP,” and the “Company” refer to Standard Motor Products, Inc. and its subsidiaries, unless the context requires otherwise. This Report, including the documents incorporated herein by reference, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements in this Report are indicated by words such as “anticipates,” “expects,” “believes,” “intends,” “plans,” “estimates,” “projects,” “strategies” and similar expressions. These statements represent our expectations based on current information and assumptions and are inherently subject to risks and uncertainties. Our actual results could differ materially from those which are anticipated or projected as a result of certain risks and uncertainties, including, but not limited to, changes or loss in business relationships with our major customers and in the timing, size and continuation of our customers’ programs; changes in our supply chain financing arrangements, such as changes in terms, termination of contracts and/or the impact of rising interest rates; the ability of our customers to achieve their projected sales; competitive product and pricing pressures; increases in production or material costs, including procurement costs resulting from higher tariffs, and inflationary cost increases in raw materials, labor and transportation, that cannot be recouped in product pricing; the performance of the aftermarket, ~~heavy duty,~~non-aftermarket, industrial equipment and original equipment markets; changes in the product mix and distribution channel mix; economic and market conditions; successful integration of acquired businesses; our ability to achieve benefits from our cost savings initiatives; product liability and environmental matters (including, without limitation, those related to asbestos-related contingent liabilities and remediation costs at certain properties); the effects of widespread public health crises, including the coronavirus (COVID-19) pandemic; the effects of disruptions in the supply chain caused by the COVID-19 pandemic, Russia’s invasion of the Ukraine and resultant sanctions imposed by the U.S. and other governments; climate-related risks, such as physical risks and transition risks; as well as other risks and uncertainties, such as those described under Risk Factors, Quantitative and Qualitative Disclosures About Market Risk and those detailed herein and from time to time in the filings of the Company with the SEC. Forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. In addition, historical information should not be considered as an indicator of future performance.

ITEM 1.

BUSINESS

Overview

We are a leading ~~independent~~ manufacturer and distributor of premium ~~replacement~~automotive parts ~~for~~used in the ~~engine management~~maintenance, service and ~~temperature control systems~~repair of ~~motor~~ vehicles in the automotive aftermarket ~~industry with~~industry. Through organic growth and several recent acquisitions, described further below, we have strengthened our capabilities as a ~~complementary focus on the heavy duty, industrial equipment~~supplier of custom-engineered products for on-highway (commercial and ~~original equipment markets.~~

~~We are organized into two operating segments. Each segment focuses on providing our customers with full-line coverage of its products,~~light vehicles) and ~~a full suite of complimentary services that are tailored to our customers’ business needs~~off-highway (construction and ~~driving end-user demand for our products.~~agriculture, and all other) applications. We sell our products primarily to automotive aftermarket retailers, ~~program distribution groups,~~ warehouse distributors, original equipment manufacturers and original equipment service part operations in the United States, Canada, Europe, Asia, Mexico and other Latin American countries.

As of December 31, 2022, we managed our business pursuant to two operating segments, each focusing on a specific line of parts. Our ~~Culture~~Engine Management segment generates revenue from the sale of automotive engine parts, including ignition, emission control, fuel, electrical and safety related system products, and wire and cable parts. Our Temperature Control segment generates revenue from the sale of automotive temperature control systems parts, including air conditioning compressors and other climate control parts.

~~Our Company was founded~~Beginning in ~~1919 on~~ the ~~values~~first quarter of ~~ethics, integrity, common decency and respect for others. These values continue to this day and are embodied in~~2023, our Code of Ethics, which has been adopted by the Board of Directors of the Company to serve as a statement of principles to guide our decision-making and reinforce our commitment to these values in all aspects of our business. We believe that our commitment to our Company, our employees and the communities within which we operate has led to high employee satisfaction and low employee turnover, and our commitment to our customers, suppliers and business ~~partners has resulted in high customer satisfaction, as evidenced by the customer awards that we routinely win,~~ will be organized into three operating segments – Engineered Solutions, Vehicle Control and ~~decades-long customer relationships.~~

We also take environmental and social issues seriously. We believe that our commitment to identifying and implementing positive environmental and social related business practices strengthens our Company, improves our relationship with our shareholders and better serves our customers, our communities and the broader environment within which we conduct our business. Temperature Control.

Index

Engineered Solutions is a new operating segment created by carving out all non-aftermarket business from our existing Engine Management and Temperature Control operating segments, which will now solely reflect parts sales to aftermarket channels. This will provide clarity regarding the unique dynamics and margin profiles of the markets served by each segment. Our Engineered Solutions segment will supply custom-engineered solutions to vehicle and equipment manufacturers in non-aftermarket end markets, such as-

Commercial and Light vehicles

Construction

Agriculture

Power Sports

Marine

Hydraulics

Lawn & Garden

The ~~Automotive Aftermarket~~Engineered Solutions segment sells into highly fragmented global end markets and is expected to provide a platform for future growth. Our growth strategy is long-term and we do not expect growth to be linear given the nature of customized engineering and the period of time between the awarding of new business and start of production. Some of our growth drivers in this segment include:

Developing new customer relationships

Cross-selling opportunities with existing customers

Introducing new products to both new and existing customers

Increasing content per unit

Segment offerings include product categories from both of our legacy operating segments, and offer a broad array of conventional and future-oriented technologies, including those that are specific to vehicle electrification as well as those that are powertrain-neutral.

Vehicle Control is the new name for our Engine Management operating segment; it will include our core aftermarket business after the carve out of all non-aftermarket business moved to the new Engineered Solutions operating segment. Within the Vehicle Control segment there will be three new major product groups:

(1)

Ignition, Emissions & Fuel, which will include the traditional internal combustion engine (ICE) dependent categories;

(2)

Wire Sets & Other, which will include spark plug wire sets and other related products, and are product categories we have noted to be in secular decline based upon product life cycle; and

(3)

Electrical & Safety, which will include powertrain neutral vehicle technologies such as electrical switches/relays, safety related products such as anti-lock brake and vehicle speed sensors, tire pressure monitoring, park assist sensors, and advanced driver assistance components.

Our Temperature Control operating segment remains substantially unchanged, as only a small portion of its business will be moved to Engineered Solutions, and this legacy aftermarket business segment is poised to benefit from the broader adoption of more complex AC systems. Those systems will provide passenger comfort regardless of the vehicles powertrain propulsion, and are being developed to cool batteries and other products used on electric vehicles. Segment offerings will continue to provide thermal products in the aftermarket business under two major product groups:

Index

(1)

AC System Components, which includes compressors, connecting lines, heat exchangers, and expansion devices

(2)

Other Thermal Components, which includes parts that provide engine, transmission, electric drive motor, and battery temperature management

This change will better align our operating segments with our strategic focus on diversification, and provide greater transparency into how we are positioned to capture growth opportunities of the future. The change will also better reflect the impact of our recent acquisitions.

The following table summarizes both our reporting structure during 2022 and our planned 2023 reporting structure:

Operating Segments as of 2022		Planned Operating Segments in 2023
Engine Management:		Vehicle Control (Aftermarket):
Ignition, Emissions, Fuel & Safety		Ignition, Emissions & Fuel
Wire and Cable		Wire Sets and Other
		Electrical & Safety

Temperature Control:		Temperature Control (Aftermarket):
Compressors		AC System Components
Other Climate Control Parts		Other Thermal Components

		Engineered Solutions (non-Aftermarket):
		Commercial Vehicle
		Light Vehicle
		Construction & Agriculture
		All Other

Our Business Strategy

The automotive aftermarket is a mature industry ~~is comprised of~~with participants that manufacture, distribute and sell vehicle replacement parts to professional technicians and to individual consumers, who perform “do-it-yourself” repairs on their personal vehicles. While generally a ~~large~~stable industry, the aftermarket tends to be influenced by trends such as the number of diverse manufacturers varying in product specialization and size. In addition to manufacturing, aftermarket companies must allocate resources towards an efficient distribution process in order to maintain the flexibility and responsiveness on which their customers depend. Aftermarket manufacturers must be efficient producers of small lot sizes, and must distribute, with rapid turnaround times, products for nearly all domestic and import vehicles on the road, ~~today.~~the average age of vehicles on the road, and the total number of miles driven per year. Weather extremes like unseasonably hot or cool temperatures in the summer can also have an impact on aftermarket product demand.

~~The automotive aftermarket replacement parts~~Other economic factors such as the level of new vehicle sales and production rates, which more recently have been impacted by global supply chain disruptions, can have a more direct impact on the on-highway and off-highway end markets we supply, such as commercial and light vehicles, construction, agricultural, power sports and others. Typically, these economic factors have a more indirect impact on the aftermarket.

While approximately 80% of our business ~~differs substantially from the OEM parts business. Unlike the OEM parts business that primarily follows trends in new car production,~~is to the automotive aftermarket, ~~replacement parts~~we seek to enhance and diversify our business ~~primarily tends to follow different trends, such as:~~through the following:

Leveraging our manufacturing and distribution capabilities to secure additional business globally

●

~~the number of vehicles on the road;~~

Supporting the service part operations of vehicle and equipment manufacturers with value-added services and product support for the life of the part

●

~~the average age of vehicles on the road; and~~

Developing new product lines that complement our existing product offering and that have the potential for high growth

●

~~the total number of miles driven per year.~~

Expanding our product offering in the medium and heavy duty, commercial vehicle, construction and agricultural equipment, power sports, and other end markets

Executing our acquisition strategy

~~Our Business Strategy~~

Index

In 2021, we completed three acquisitions that expanded our business into specialized non-aftermarket end markets that complement our core aftermarket business. In addition to providing access to product technologies suitable to the aftermarket, and manufacturing and engineering capabilities to support our operating strategy to bring more product manufacturing in-house, these acquisitions provide geographic expansion in Europe and Asia.

~~Our mission~~ With over 100 years in business, we believe that our success is attributable to beour focus on being a key strategic partner to our customers, and in doing so provide:

Professional grade products and solutions within our areas of expertise.

Comprehensive product coverage for all vehicles on the ~~best full-line, full-service supplier~~road through our offering of ~~premium~~professional grade engine management and temperature control ~~products~~.products.

~~The key elements of our strategy are as follows:~~

●

~~Maintain Our Strong Competitive Position in our Engine Management~~Supplier and customer focused initiatives designed to improve order fill rate and ~~Temperature Control Businesses~~. We are a leading independent manufacturer and distributor serving North America and other geographic areas in our core businesses of Engine Management and Temperature Control. We believe that our success is attributable to our emphasis on product quality, the breadth and depth of our product lines for both domestic and import vehicles, and our reputation for outstanding value-added services.

To maintain ~~our strong competitive position, we remain committed to the following:~~high levels of product availability

Expanding our product coverage to include a broader product mix in categories such as

●

~~providing our customers with full-line coverage of high quality engine management and temperature control products, supported by the highest level of value-added services;~~

●

~~continuing to maximize our production, supply chain and distribution efficiencies;~~

●

~~continuing to improve our cost position through increased global sourcing, increased manufacturing at our low-cost plants, and strategic transactions with manufacturers in low-cost regions; and~~

●

~~focusing on our engineering development efforts including a focus on bringing more product manufacturing in-house.~~

●o

~~Provide Superior Value-Added Services~~Electrification, including electric vehicles (EVs) and ~~Product Availability~~. Our goal is to increase sales to existing and new customers by leveraging our skills in rapidly filling orders, maintaining high levels of product availability and offering a product portfolio that provides comprehensive coverage for all vehicle applications. In addition, our marketing support provides insightful customer category management, technical support and award-winning programs, and our technically skilled sales personnel provide our customers with product selection, assortment and application support, and technical training on diagnosing and repairinghybrid electric vehicles ~~equipped with complex systems related to our products.~~(HEVs),

Connectivity and safety related products, such as

➢

anti-lock brake (ABS)

➢

vehicle speed sensors

➢

tire pressure monitoring

➢

park assist sensors

➢

advanced driver assistance components to meet the needs of our customers

In 2022, we introduced approximately 2,400 new products to the aftermarket, of which approximately two-thirds were powertrain neutral. We support our products with superior value-added services provided by our marketing and sales teams that provides our customers with offerings such as data-driven category management, technical support as well as product selection, assortment and application support for all of our products. In addition, we have a team dedicated to providing technical training, in-person and virtually, on diagnosing and repairing vehicles equipped with complex systems.

We are committed to expanding our design, engineering and manufacturing capabilities, and vertically integrating production processes to bring more manufacturing in-house. We engineer, tool and manufacture many of the products we offer for sale and the components used in their assembly. We have found this level of vertical integration, in combination with our manufacturing footprint in low cost regions, provides advantages in terms of the cost, quality and availability of our products.

Examples of vertically integrated processes:
➢ plastic molding operations	➢ automated electronics assembly
➢ stamping and machining operations	➢ design and fabrication of processing and test equipment
➢ wire extrusion	➢ teardown, diagnostics and rebuilding of remanufactured air conditioning compressors, diesel injectors and diesel pumps

We also believe that our technical capabilities have afforded us opportunities to expand our product coverage in our core aftermarket business and in the non-aftermarket end markets we supply for on-highway and off-highway applications, and have better positioned us to satisfy customer demand for both traditional, internal combustion engine (or ICE) applications, and non-ICE (electric or hybrid electric) applications.

Index

●

~~Expand Our Product Lines~~. We intend to increase our sales by continuing to develop internally, or through potential acquisitions, the range of engine management and temperature control products that we offer to our customers. We are committed to investing the resources necessary to maintain and expand our technical capability to manufacture product lines that incorporate the latest technologies, including product lines relating to safety, advanced driver assistance and collision avoidance systems.

●

~~Broaden Our Customer Base~~. Our goal is to increase our customer base by (a) leveraging our manufacturing capabilities to secure additional business globally with original equipment vehicle and equipment manufacturers and their service part operations, as well as our existing customer base of large retailers, program distribution groups, warehouse distributors, other manufacturers and export customers, and (b) supporting the service part operations of vehicle and equipment manufacturers with value-added services and product support for the life of the part.

●

~~Improve Operating Efficiency and Cost Position~~. Our management places significant emphasis on improving our financial performance by achieving operating efficiencies and improving asset utilization, while maintaining product quality and high customer order fill rates.

Our manufacturing footprint is geographically diverse with a greater presence in North America and Europe compared to many of our peers. We ~~intend to continue~~leverage our footprint to improve our ~~operating efficiency and~~ cost position ~~by:~~

●

~~increasing cost-effective vertical integration in key product lines through internal development;~~

●

~~focusing on integrated supply chain management, customer collaboration and vendor managed inventory initiatives;~~

●

~~evaluating additional opportunities to relocate manufacturing to our low-cost plants;~~

●

maintaining and improving our cost effectiveness and competitive responsiveness to better serve our customer base, including sourcing certain materials and products from low cost regions such as those in Asia without compromising product quality;

●

~~enhancing company-wide programs geared toward manufacturing and distribution efficiency; and~~

●

~~focusing on company-wide overhead and operating expense cost reduction programs.~~

●

~~Cash Utilization~~. We intend to apply any excess cash flow from operations and the management of working capital primarily to reduce our outstanding indebtedness, pay dividends to our shareholders, expand our product lines by investing in new tooling and equipment, grow revenues through potential acquisitions, and repurchase shares of our common stock.

by locating labor-intensive processes within our low-cost plants, and by investing in automation and undertaking continuous improvement initiatives in our domestic facilities.

Our Products & Services

The following describes our business more particularly under our existing operating segments as of December 31, 2022 – Engine Management and Temperature Control. Our periodic reports for the first quarter of 2023 and reporting periods thereafter will focus on our new reporting structure and operating segments as of the first quarter of 2023 – Engineered Solutions, Vehicle Control and Temperature Control.

Engine Management Segment

Our Engine Management Segment manufactures and distributes a full line of critical components for most years, makes and models of vehicles on the ~~ignition, electrical, emissions, fuel and safety-related systems of motor vehicles.~~road, including new technologies. Key product categories within our engine management portfolio include: (i) ignition, such as electronic ignition control modules, camshaft and crankshaft position sensors, ignition wires and coils; (ii) electrical, such as switches and relays; (iii) emissions, such as exhaust gas recirculation valves, pressure and temperature sensors and variable valve timing (VVT) components; (iv) fuel, such as mass airflow sensors, fuel pressure sensors, electronic throttle bodies and fuel injectors, including diesel injectors and pumps (new and remanufactured)~~, ignition wires, coils, switches, relays, EGR valves, distributor caps~~; and ~~rotors,~~(v) safety-related systems, such as various sensors primarily measuring temperature, pressure and position in numerous vehicle systems (such as camshaft and crankshaft position, fuel pressure, vehicle speed and mass airflow sensors), electronic throttle bodies, variable valve timing (VVT) components, safety-related components, such asincluding anti-lock brake (ABS) ~~sensors,~~, vehicle speed, tire pressure monitoring (TPMS) ~~sensors~~ and park assist ~~sensors, in addition to many other engine management components.~~sensors.

~~Index~~

We continuously look to expand our product ~~offering to provide our customers with full-line coverage. We~~offering. Recently, we have ~~more recently expanded our offering~~done so by adding late-model coverage for existing product categories, and new product categories in response to new and evolving vehicle technologies, including diesel ~~injectors,~~control modules, pumps and components, turbochargers, evaporation emission control system components, exhaust gas temperature sensors, active grill shutters, battery current sensors, and Advanced Driver Assistance Systems (ADAS) components, including blind spot detection sensors, cruise control distance sensors, lane departure sensor cameras and park assist backup cameras. For example, our offering includes more than seventy product categories for one of the first mass-produced hybrid electric vehicles (HEVs). As more HEVs enter the aftermarket, we intend to expand our product offering to service this important segment.

Ignition, Emission Control, Fuel & Safety Related System Products. Replacement parts for ignition, emission, fuel and safety related systems accounted for ~~approximately $706~~$824.7 million, or ~~62%~~60%, of our consolidated net sales in ~~2019, approximately $648.3~~2022, $786.5 million, or ~~59%~~61%, of our consolidated net sales in ~~2018,~~2021, and ~~approximately $657.3~~$691.7 million, or ~~59%~~61%, of our consolidated net sales in ~~2017.~~

In April 2019, we acquired certain assets and liabilities of the Pollak business of Stoneridge, Inc., a manufacturer and distributer of specialty engine management products including sensors, switches, and connectors for the OE/OES, heavy duty and commercial vehicle markets. The acquisition enhanced our growth opportunities in the OE/OES, heavy duty and commercial vehicle markets and added to our existing expertise in aftermarket distribution, product management and service. For additional information regarding this acquisition and our integration efforts related to the acquisition, refer to the information set forth under the caption “2019 Business Acquisition and Investment” appearing in Note 3, and “Integration Costs” appearing in Note 5 of the Notes to Consolidated Financial Statements in Item 8 of this Report.2020.

~~Wire & Cable Products. Wire~~As the use and ~~cable parts accounted for approximately $143.2 million, or 13%,~~complexity of ~~our consolidated net~~vehicle systems continue to develop and proliferate, we expect to identify and benefit from new sales in 2019, approximately $155.2 million, or 14%, of our consolidated net sales in 2018, and approximately $172.1 million, or 15%, of our consolidated net sales in 2017. These products include ignition (spark plug) wire sets, battery cables, pigtails, sockets and a wide range of electrical wire, terminals, connectors and tools for servicing an automobile’s electrical system.

~~Computer-Controlled Technology~~.opportunities. All new vehicles are ~~factory-equipped~~factory‑equipped with numerous electronic control modules designed to monitor and control the internal combustion process and the emissions, transmission, safety and comfort systems of the vehicle. These control modules monitor inputs from many types of sensors, switches and actuators located throughout the vehicle, and control the systems used to optimize vehicle performance and comfort features. Our sales of sensors, switches, actuators, valves, solenoids and related parts have increased as automobile manufacturers continue to equip their cars with these more complex engine management systems.

Government mandated emissions and fuel economy regulations have been implemented throughout the United States. The Clean Air Act imposes strict emissions control test standards on existing and new vehicles. As many states have implemented required inspection/maintenance tests, the Environmental Protection Agency, through its rulemaking ability, has also encouraged both manufacturers and drivers to reduce vehicle emissions. Automobiles must now comply with emissions standards from the time they were manufactured and, in most states, until the last day they are in use. This law and other government emissions laws and fuel economy regulations have had a positive impact on sales of our ignition, emissions control and fuel delivery parts since vehicles failing these laws may require repairs utilizing parts sold by us.

~~Safety, Driver Assistance and Collision Avoidance Systems~~.An increasing number of new vehicles are factory-equipped with government-mandated safety devices, such as anti-lock braking systems and air bags. As these systems mature, requiring servicing and repair, we anticipate increased sales opportunities for many of our products such as ABS sensors, TPMS sensors and traction control products. Newer automotive systems include Advanced Driver Assistance Systems and Collision Avoidance Systems to alert the driver to potential problems, or to avoid collisions by implementing safeguards. Many of these systems use on-board computers to monitor inputs from sensing devices located throughout the vehicle. ~~As the use~~Our sales of sensors, switches, actuators, valves, solenoids and ~~complexity of these systems~~related parts have increased as automobile manufacturers continue to ~~develop and proliferate, we expect to identify and benefit from new~~equip their cars with these more complex engine management systems.

New sales opportunities ~~within this category.~~have also arisen in the United States as a result of government regulations regarding safety and emissions. Legally, automobiles must now comply with emissions standards from the time they were manufactured and, in most states, until the last day they are in use. Emissions laws and fuel economy regulations have had a positive impact on sales of our ignition, emissions control and fuel delivery parts since vehicles failing these laws may require repairs utilizing parts sold by us. Similarly, as government-mandated safety devices, such as anti-lock braking systems and air bags mature, requiring servicing and repair, we anticipate increased sales opportunities for many of our products such as ABS sensors, TPMS sensors and traction control products.

Index

Wire & Cable Products. Wire and cable parts accounted for $150.6 million, or 11%, of our consolidated net sales in 2022, $151.4 million, or 12%, of our consolidated net sales in 2021, and $144 million, or 13%, of our consolidated net sales in 2020. These products include spark plug wire sets, battery cables, pigtails, sockets and a wide range of electrical wire, terminals, connectors and tools for servicing an automobile’s electrical system.

Temperature Control Segment

Our Temperature Control Segment manufactures and distributes a full line of critical components for the temperature control (air conditioning and heating) systems, engine cooling systems, power window accessories and windshield washer systems of motor vehicles. Key product categories within our temperature control portfolio include: air conditioning compressors (new and remanufactured), air conditioning repair kits, clutch assemblies, blower and radiator fan motors (brushless and brushed), filter dryers, evaporators, accumulators, actuators, hose assemblies, thermal expansion devices, heater valves, heater cores, A/C service tools and chemicals, fan assemblies, fan clutches, oil coolers, window lift motors, window regulators and assemblies, and windshield washer pumps.

We continuously look to improve our cost position through strategic transactions with manufacturers in low cost regions.

In 2014, we formed ~~a joint venture with Gwo Yng Enterprise~~Foshan GWOYNG SMP Vehicle Climate Control & Cooling Products Co., Ltd., a China-based ~~manufacturer of~~joint venture that manufactures light vehicle and heavy duty air conditioning accumulators, filter driers, hose assemblies, and ~~switches; in~~switches.

In 2017, we formed ~~a joint venture with~~ Foshan ~~Guangdong~~FGD SMP Automotive ~~Air Conditioning~~Compressor Co., Ltd., a China-based ~~manufacturer of~~joint venture that manufactures light vehicle and heavy duty belt driven air conditioning ~~compressors for the automotive aftermarket and the Chinese OE market; and in~~compressors.

In 2019, we acquired ~~an approximate 29%~~a minority interest ownership position in ~~Jiangsu~~Foshan Che Yijia New Energy Technology Co., Ltd., a China-based manufacturer of electric air conditioning ~~compressors for electric vehicles.~~ compressors.

We believe ~~that~~ these transactions ~~will~~ enhance our position as a basic low-cost manufacturer and a leading supplier of temperature control ~~parts to the aftermarket, as well as provide us with an~~products and create opportunity for growth in the China OE market. The joint ventures also provide complementary manufacturing capabilities and opportunities for synergy with our other manufacturing facilities, which we believe results in a more reliable supply of products, supporting our customers’ needs for consistent and reliable service levels.

In 2022, we acquired Kade Trading GmbH, a supplier of temperature control products throughout Europe. We believe this acquisition provides synergies to our other recent acquisitions in 2021 into specialized end markets, and an entry point into the European market for our temperature control products with a strong focus on the continuing electrification of thermal systems.

Compressors. Compressors accounted for ~~approximately $160.5~~$222.5 million, or 16%, of our consolidated net sales in 2022, $206.7 million, or 16%, of our consolidated net sales in 2021, and $163.1 million, or 14%, of our consolidated net sales in ~~2019, approximately $148.4 million, or 14%, of our~~2020. Included in consolidated net sales ~~in 2018, and approximately $148.4 million, or 13%,~~for the compressor product line is the revenue generated from the sale of ~~our consolidated net sales in 2017.~~kits.

Other Climate Control Parts. Other climate control parts accounted for ~~approximately $117.9 million, or 10%, of our consolidated net sales in 2019, approximately $130~~$159.8 million, or 12%, of our consolidated net sales in ~~2018, and approximately $130.8~~2022, $141.7 million, or ~~12%~~11%, of our consolidated net sales in ~~2017.~~2021, and $118.9 million, or 11%, of our consolidated net sales in 2020.

~~Financial Information about our Operating Segments~~

For additional information related to our operating segments, and the disaggregation of operating segment net sales by geographic area, major product group and major sales channel, see Note 20 “Industry Segment and Geographic Data” and Note 21 “Net Sales”, respectively, of the Notes to Consolidated Financial Statements in Item 8 of this Report.

Index

Our Brands

We believe that our brands are an important component of our value proposition, and serve to distinguish our premium engine management and temperature control products from those of our competitors. We market and distribute our products under our own brands, such as:

~~Index~~

Engine Management Products


Temperature Control Products

We also distribute our products to customers for resale under private labels and the following co-labels:

Engine

Management

We have also developed our product offering and brand strategies to support our customers’ initiatives to market a tiered product assortment designed to satisfy end-user preferences for quality and value. We believe that this alignment makes us an invaluable business partner to our customers.

Our Customers

We sell our products primarily to:

●•

Automotive aftermarket retailers, such as O’Reilly Automotive, Inc. (“O’Reilly”), ~~Advance Auto Parts, Inc. (operating under the trade names Advance Auto Parts, Autopart International, Carquest and Worldpac) (“Advance”),~~ AutoZone, Inc. (“AutoZone”), and Canadian Tire Corporation, Limited.

●•

Automotive aftermarket distributors, including warehouse distributors and program distribution groups, such as Genuine Parts Co. and National Automotive Parts Association (“NAPA”), Auto Value and All Pro/Bumper to Bumper (Aftermarket Auto Parts Alliance, Inc.), Automotive Distribution Network LLC, The National Pronto Association (“Pronto”), Federated Auto Parts Distributors, Inc. (“Federated”), Pronto and Federated’s affiliate, the Automotive Parts Services Group or The Group, and Icahn Automotive Group LLC (doing business as Pep Boys, Auto Plus, AAMCO and Precision Tune Auto Care).

Index

●•

Original equipment manufacturers and original equipment service part operations, such as General Motors Co., ~~FCA US LLC (formerly known as Chrysler Group LLC),~~ Ford Motor Co., Woodward, Inc., Deere & Company, Caterpillar Inc., Daimler Truck AG, Case/New Holland, Eberspacher, Mobile Climate Control, Volvo/Mack Truck, and ~~Red Dot Corporation.~~Harley.

Our ~~five~~three largest individual customers accounted for approximately ~~69%~~59% of our consolidated net sales in ~~2019,~~2022. During 2022, O’Reilly, AutoZone and ~~approximately 70% of our consolidated net sales in 2018 and 2017. During 2019, O’Reilly, Advance,~~ NAPA ~~and AutoZone~~ accounted for ~~22%~~27%, ~~16%~~17%, ~~15%~~ and ~~11%~~15% of our consolidated net sales, respectively. Net sales from each of these customers were reported in both our Engine Management and Temperature Control Segments.

Competition

~~Index~~

~~Competition~~The automotive aftermarket industry is comprised of a large number of diverse manufacturers varying in product specialization and size. In addition to manufacturing, aftermarket companies must allocate resources towards a dynamic distribution process in order to maintain the flexibility and responsiveness on which their customers depend. Aftermarket manufacturers must be efficient producers of small lot sizes, and must distribute, with rapid turnaround times, products for nearly all domestic and import vehicles on the road today.

We compete primarily on the basis of product quality, product availability, value-added services, product coverage, order ~~turn-around~~turn‑around time, order fill rate, technical support and price. We believe we differentiate ourselves from our competitors primarily through:

a value‑added, knowledgeable sales force;

●

~~a value-added, knowledgeable sales force;~~

continuous product development, engineering & technical advancement;

●

~~extensive product coverage in conjunction with market leading brands;~~

extensive market leading product coverage in conjunction with market leading brands;

●

~~rigorous product qualification standards to ensure that our parts meet or exceed exacting performance specifications;~~

knowledgeable category management, including inventory stocking recommendations for our distributors to get the right parts on the shelf for their marketplace;

●

~~sophisticated parts cataloging systems, including catalogs available online through our website and our mobile application;~~

rigorous product qualification standards to ensure that our parts meet or exceed exacting performance specifications;

●

~~inventory levels and logistical systems sufficient to meet the rapid delivery requirements of customers;~~

sophisticated parts cataloging systems, including catalogs available online through our website and our mobile application;

●

~~breadth of manufacturing capabilities; and~~

inventory levels and responsive logistical systems sufficient to meet the critical delivery requirements of customers;

●

~~award-winning marketing programs, sales support and technical training.~~

breadth of manufacturing capabilities; and

award-winning marketing programs, sales support and technical training.

We offer a variety of strategic customer discounts, allowances and incentives to increase customer purchases of our products. For example, we offer cash discounts for paying invoices in accordance with the specified discounted terms of the invoice. We also offer rebates and discounts to customers as advertising and sales force allowances, and allowances for warranty and overstock returns are also provided. These discounts, allowances and incentives are a common practice throughout the automotive aftermarket industry, and we intend to continue to offer them in response to competitive pressures and to strategically support the growth of all our products.

We are one of the leading independent manufacturers and distributors serving North America and other geographic areas in our core businesses of Engine Management and Temperature Control. In the Engine Management Segment, we compete with: ACDelco, ~~Delphi Technologies PLC,~~Aptiv Plc, Denso Corporation, Continental AG, Hitachi, Ltd., Motorcraft, Robert Bosch GmbH, Visteon Corporation, NGK Spark Plug Co., Ltd., Dorman Products, Inc. and several privately-owned companies primarily importing products from Asia. In the Temperature Control Segment, we compete with: ACDelco, MAHLE GmbH, ~~Behr Hella Service GmbH,~~ Denso Corporation, Motorcraft, Sanden International (U.S.A.), Inc., Continental AG, Dorman Products, Inc., and several privately-owned companies.

~~The automotive aftermarket is~~

Index

Our business operates in highly competitive markets, and we face substantial competition in all markets that we serve. ~~Our success~~In addition, in the marketplace depends on our ability to execute the key elements of our business strategy discussed above. Some of our competitors may have greater financial, marketing and other resources than we do. In addition,aftermarket, we face competition from automobile manufacturers who supply many of the replacement parts sold by us, although these manufacturers generally supply parts only for cars they sell through OE dealerships.

Sales and Distribution

In the traditional aftermarket channel, we sell our products to warehouse distributors and retailers. Our customers buy directly from us and sell directly to jobber stores, professional technicians and to “do-it-yourselfers” who perform automotive repairs on their personal vehicles. In recent years, warehouse distributors have consolidated with other distributors, and an increasing number of distributors own their jobber stores or sell down channel to professional technicians. Retailers are also consolidating with other retailers and have begun to increase their efforts to sell to professional technicians adding additional competition in the “do-it-for-me,” or the professional technician segment of our industry. As automotive parts and systems become more complex, “do-it-yourselfers” are less likely to service their own vehicles and may become more reliant on professional technicians.

In the ~~original equipment and original equipment service channel,~~heavy duty aftermarket, we sell our products to original equipment manufacturers (“OEMs”) for use in the production of vehicles or for distribution within their network to independent dealerships and service dealer technicians. In addition to new car sales, automotive dealerships sell parts and service vehicles. We also sell our products to Tier 1 suppliers of OEMs.

~~Index~~

~~In the heavy duty and industrial markets, we sell our products to warehouse~~recognized distributors ~~and retailers,~~ who buy directly from us and sell directly to fleet operators and repair facilities for use in the repair and maintenance of medium to heavy duty ~~fleet vehicles and owners and operators of heavy duty and industrial equipment.~~vehicles. We also sell our products to the service parts divisions of heavy duty OEMs for ~~use in production and service of medium to~~distribution into the independent heavy duty aftermarket.

In the original equipment market we sell our products to manufacturers of automotive, heavy duty truck, construction, agriculture, alternative energy, lawn/garden and powersports/marine vehicles and equipment, as well as ~~construction, agricultural~~their tier suppliers and ~~specialty vehicles~~system integrators. We also sell and ~~equipment.~~support the service part divisions of each of our customers.

We sell our products primarily in the United States, with additional sales in Canada, Europe, Asia, Mexico and other Latin American countries. Our sales are substantially denominated in U.S. dollars. For information on revenues and long-lived assets by geographic area, see Note 2021 “Industry Segment and Geographic Data” of the Notes to Consolidated Financial Statements in Item 8 of this ~~report.~~Report.

Our sales force is structured to meet the needs of our customers across the distribution channel, allowing us to provide value-added services that we believe are unmatched by our competitors. We also believe that our sales force is the premier direct sales force for our product lines due to our concentration of highly-qualified, well-trained sales personnel. We focus our recruitment efforts on candidates who have technical backgrounds as well as strong sales experience, and we provide our sales personnel extensive instruction and continuing education at our training facility in Irving, Texas, which allows our sales force to stay current on troubleshooting and repair techniques. The continuing education courses along with monthly supplemental web-based training are an integral part of our sales force development strategy.

Our customers have come to depend on our sales personnel as a reliable source for technical information and to assist with sales to their customers (e.g., jobber stores and professional technicians). In this manner, we direct a significant portion of our sales efforts to our customers’ customers to generate demand for our products, and we believe that the structure of our sales force facilitates these efforts by enabling us to implement our sales and marketing programs uniformly throughout the distribution channel. ~~One of the ways~~

Another way we generate ~~this~~ demand for our products is through our training program, which offers training seminars to professional automotive technicians. Our training program is accredited by the National Institute for Automotive Service Excellence (ASE) Training Managers Council. Our seminars are taught by ASE certified instructors in real time either in-person or by webinars online and feature ~~in-person training seminars on~~ more than 30 different ~~topics and~~topics. We also offer on-demand training webinars online on more than 150 different topics. Through our training program, we typically teach approximately 60,000 technicians annually how to diagnose and repair vehicles equipped with complex systems related to our products, and we have approximately 16,000 technicians who are registered to participate in such sessions through our online platform.

We offer a variety of strategic customer discounts, allowances and incentives to increase customer purchases of our products. For example, we offer cash discounts for paying invoices in accordance with the specified discounted terms of the invoice. We also offer rebates and discounts to customers as advertising and sales force allowances, and allowances for warranty and overstock returns are also provided. We believe these discounts, allowances and incentives are a common practice throughout the automotive aftermarket industry, and we intend to continue to offer them in response to competitive pressures and to strategically support the growth of all our products.

Index

Seasonality

Historically, our operating results have fluctuated by quarter, with the greatest sales occurring in the second and third quarters of the year and revenues generally being recognized at the time of shipment. It is in these quarters that demand for our products is typically the highest, specifically in the Temperature Control Segment of our business. In addition to this seasonality, the demand for our ~~temperature control~~Temperature Control products during the second and third quarters of the year may vary significantly with the summer weather and customer ~~inventories. For example, a~~inventories, as evidenced by the strong customer demand in 2022 fueled by the record heat across the country in 2022 and the replenishment of customer inventory levels after very warm summer conditions in 2021. While the COVID-19 pandemic caused large shifts in sales demand between quarters in 2020, our business returned to a more normalized pattern of seasonality and variability in demand of our Temperature Control products in 2022 and 2021. As such, our working capital typically peaks near the end of the second quarter, as ~~we experienced~~the inventory build-up of air conditioning products was converted to sales, and payments on the receivables associated with such sales were yet to be received. During this period, our working capital requirements were funded by borrowing from our revolving credit facility in ~~2018, may increase the demand for~~ our ~~temperature control products, while a mild summer, as we experienced in 2017, may lessen such demand.~~Credit Agreement.

~~Index~~

Working Capital and Inventory Management

Automotive aftermarket companies have been under increasing pressure to provide broad SKU (stock keeping unit) coverage due to parts and brand proliferation. In response to this, we have made, and continue to make, changes toWe seek continuous improvements in our inventory management system, which are designed to reduce inventory ~~requirements.~~requirements and enhance our ability to compete on the basis of product availability, product coverage, order turn‑around time and order fill rate. We have a ~~pack-to-order~~pack‑to‑order distribution system, which permits us to retain slow moving items in a bulk storage state until ana related order ~~for a specific branded part~~ is received. This system reduces the volume of a given part in inventory. We also expanded our inventory management system to improve inventory deployment, enhance our collaboration with customers on forecasts and inventory assortments, and further integrate our supply chain with both toour customers and suppliers.

We face inventory management issues as a result of overstock returns. We 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. In addition, the seasonality of our Temperature Control Segment requires that we increase our inventory during the winter season in preparation of the summer selling ~~season and customers purchasing such inventory have the right to make returns.~~season. We accrue for overstock returns as a percentage of sales after giving consideration to recent returns history.

Our profitability and working capital requirements are seasonal due to our sales mix of ~~temperature control~~Temperature Control products. Our working capital requirements typically peak near the end of the second quarter, as the inventory ~~build-up~~build‑up of air conditioning products is converted to sales and payments on the receivables associated with such sales have yet to be received. These increased working capital requirements are funded by borrowings from our revolving credit ~~facility.~~

~~Production~~facility in our Credit Agreement. In 2022, we strategically increased inventory levels to help offset potential supply chain risks associated with extended lead times and ~~Engineering~~

~~An important component of~~delays transporting our business strategy is to invest the resources necessary to expand our technical capabilities and bring more product manufacturing in-house. We engineer, tool and manufacture many of the products that we offer for sale and the components used in the assembly of those products, and we continue to evaluate opportunities to bring new product categories in-house. For example, we perform our own plastic molding operations, stamping and machining operations, wire extrusion, automated electronics assembly and a wide variety of other processes. In the case of remanufactured components, we conduct our own teardown, diagnostics and rebuilding for air conditioning compressors, diesel injectors, and diesel pumps. We have found this level of vertical integration, in combination with our manufacturing footprint in low cost regions, provides advantages in terms of cost, quality and availability.product.

Suppliers

We source materials through a global network of suppliers to ensure a consistent, high quality and low cost supply of materials and key components for our product lines. As a result of the breadth of our product offering, we are not dependent on any single raw material.

The principal raw materials purchased by us consist of brass, electronic components, fabricated copper (primarily in the form of magnet and insulated cable), steel magnets, laminations, tubes and shafts, stamped steel parts, copper wire, stainless steel coils and rods, aluminum coils, fittings, rods, cast aluminum parts, lead, steel roller bearings, rubber molding compound, ~~thermo-set~~thermo‑set and thermo plastic molding powders, and chemicals. Additionally, we use components and cores (used parts) in our remanufacturing processes for air conditioning compressors, diesel injectors, and diesel ~~pumps, and turbo chargers.~~pumps.

In the case of cores for air conditioning compressors, diesel injectors, and diesel pumps, ~~and turbo chargers,~~ we obtain them either from exchanges with customers who return cores subsequent to purchasing remanufactured parts or through direct purchases from a network of core brokers. In addition, we acquire certain materials by purchasing products that are resold into the market, particularly by OEM sources and other domestic and foreign suppliers.

Index

We believe there is an adequate supply of primary raw materials and cores; however, ~~there can be no assurance over~~disruptions in the ~~long term that the availability of~~global economy have impeded global supply chains, resulting in longer lead times and delays in procuring component parts and raw materials, and ~~components or~~inflationary cost increases in ~~commodity prices will not materially affect~~certain raw materials, labor and transportation. In response to the global supply chain volatility and inflationary cost increases, we have taken, and continue to take, several actions to mitigate the impact by working closely with our suppliers and customers to minimize any potential adverse impacts on our business, including initiating cost savings initiatives and the pass through of higher costs to our customers, which began in the fourth quarter of 2021. We believe that we have also benefited from our geographically diversified manufacturing footprint and our strategy to bring more product manufacturing in-house, especially with respect to product availability and fill rates.

Environmental, Social and Governance (ESG) and Human Capital

We support and seek continuous improvement in the pursuit of environmental, social and corporate governance (ESG) practices that embody our culture and what we believe it means to be a good corporate citizen.

Our Culture

Our Company was founded in 1919 on the values of integrity, common decency and respect for others. These values are embodied in our Code of Ethics, which has been adopted by the Board of Directors of the Company to serve as a statement of principles to guide our decision-making and reinforce our commitment to these values in all aspects of our business. These values also serve as the foundation for our continued focus on many important environmental, social and governance issues, such as environmental stewardship and our efforts to identify and implement practices that reduce our environmental impact while achieving our business goals; our attention to diversity, equity and inclusion, employee development, retention, and health and safety; and our community engagement initiatives, to name a few.

Environmental Stewardship

We have made significant strides with respect to our ESG initiatives, building awareness of the environmental impact of our operations, and challenging ourselves to reduce our impact by reducing our usage of energy and water, reducing our generation of waste, increasing our recycling efforts and reducing our Scope 1 and Scope 2 greenhouse gas emissions (“GHG”).

As a leading manufacturer and distributor of premium parts used in the maintenance, service and repair of vehicles, we are proud of the role our parts play in replacing failed components that are necessary for vehicles to operate safely and efficiently, and in extending the service life of vehicles on the road. We believe our product offering also contributes to a greener car parc through several key product categories that are critical components in automotive systems designed to improve fuel economy and reduce harmful emissions, such as fuel injectors, exhaust gas recirculation valves, sensors and tubes, and evaporative emission control system components. We also bring to market alternative energy products, which utilize cleaner burning fuels or ~~results~~are designed for electric or hybrid electric vehicles.

Our remanufacturing processes divert certain types of ~~operations.~~used automotive products from traditional waste streams and reprocess them for their original purpose. We remanufacture key product categories within our offering, such as air conditioning compressors, diesel injectors and diesel pumps, resulting in the production of premium automotive products within these categories through processes that we believe save energy and reduce waste.

Index

~~Employees~~Human Capital

We believe that our commitment to our employees is critical to our continued success, and has led to high employee satisfaction and low employee turnover. To facilitate talent attraction and retention, we strive to have a diverse, inclusive and safe workplace, with opportunities for our employees to grow and develop in their careers, supported by strong compensation, benefits and health and wellness programs, and by programs that build connections between our employees and their communities. Our employees share our corporate values of integrity, common decency and respect of others, values which have been established since our company was founded.

As of December 31, ~~2019,~~2022, we employed approximately ~~4,200~~4,900 people, with ~~1,800~~2,000 people in the United States and ~~2,400~~2,900 people in Mexico, Canada, Poland, the U.K., Germany, Hungary, China, Hong Kong and Taiwan. Of the ~~4,200~~4,900 people employed, approximately ~~2,200~~2,500 people are production employees. We operate primarily in ~~non-union~~non‑union facilities and have binding labor agreements with employees at other unionized facilities. We have approximately 7675 production employees in Edwardsville, Kansas who are covered by a contract with The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (“UAW”) that expires in August ~~2022.~~2026. We also have approximately ~~1,200~~1,400 employees in Mexico who are covered under union agreements negotiated at various intervals. For clarification, the employee numbers described above exclude the employees of our joint venture operations.

WeAlthough the COVID-19 pandemic has led to some challenges in finding adequate labor, generally we believe that our facilities are in ~~favorable~~ labor markets with ready access to adequate numbers of skilled and unskilled workers, and we believe our relations with our union and ~~non-union~~non‑union employees are good.

Diversity, Equity, Inclusion, and Belonging. We believe that a diverse workforce is critical to our success, and we continue to focus on the hiring, retention and advancement of women and underrepresented populations. Our recent efforts have been focused in three areas: inspiring innovation through an inclusive and diverse culture; expanding our efforts to recruit and hire world-class diverse talent; and identifying strategic partners to accelerate our inclusion and diversity programs. Over the last 5 years, approximately 50+% of our hires and promotions have been women or racially diverse individuals. To further our commitment to diversity, in 2021, we established a Diversity, Equity, Inclusion, and Belonging steering committee to develop key structures within our organization to promote equality, inclusion and awareness among our employees.

Health, Safety and Wellness.The success of our business is fundamentally connected to the well-being of our people. Accordingly, we are committed to the health, safety and wellness of our employees. We provide our employees ~~share~~and their families with access to a variety of innovative, flexible and convenient health and wellness programs, including benefits that provide protection and security so they can have peace of mind concerning events that may require time away from work, or that impact their financial well-being; that support their physical and mental health by providing tools and resources to help them improve or maintain their health status and encourage engagement in healthy behaviors; and that offer choice where possible so they can customize their benefits to meet their needs and the needs of their families.

Compensation and Benefits. We provide competitive compensation and benefits programs that meet the needs of our employees. In addition to wages and salaries, these programs include annual cash bonuses, stock awards, a 401(k) Plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, and employee assistance programs.

Talent Development. We invest significant resources to develop the talent of our high potential employees. We deliver numerous training opportunities, provide rotational assignment opportunities, offer continuous learning and development, and implement methodologies to manage performance, provide feedback and develop talent opportunities for talent.

Index

Our talent development programs are designed to provide employees with the resources they need to help achieve their career goals, build management skills and lead their organizations. We provide a series of employee workshops and mentoring programs that support professional growth and development. Our annual review process encourages manager and employee conversations throughout the year to enhance growth and development.

Social Engagement and Community Service

We believe that building connections between our employees, their families and our communities creates a more meaningful, fulfilling and enjoyable workplace. Through our SMP Cares^® initiative, we sponsor corporate giving and volunteering programs to encourage our employees to connect with our local communities and engage in the local causes that they are passionate about.

Our volunteering efforts include organizing blood drives with the American Red Cross, and fundraising for the March of Dimes, United Way, and many others. In 2022, we collaborated with our employees to donate over $135,000 to local community organizations, schools, shelters, Ukraine, Project Hope, AACF, Habitat for Humanity, Love Independence, local parks, and Toys for Tots. We are a lifetime trustee of the University of the Aftermarket Foundation (“UAF”), and we donate $10,000 annually to fund scholarships to support the next generation of technicians and automotive professionals, which we believe is an important way to sustain and give back to our industry. We are also proud to sponsor annual scholarship contests for future automotive technicians, including our Women in Auto Care scholarship that aims to empower women entering the automotive industry. Since our first scholarship contest in 2015, we have awarded $275,000 in scholarships. We have continued to expand our scholarship program, and in 2022, we awarded four students each with a $5,000 scholarship to Women in AutoCare and to Blue Streak Better Then, Better Now Scholarship. We continue to encourage participation in these initiatives as we believe they are essential in the support of our core values.

Governance

Our commitment to ESG is spearheaded by our Board of Directors. Specifically, our Nominating and Corporate Governance Committee established an ESG steering committee among our executive officers including our Chief Executive Officer & President, Chief Legal Officer & Secretary, Chief Human Resources Officer, and Senior Vice President of North American Operations. This ESG steering committee is tasked with developing specific strategies to ensure that our operations adhere to our corporate governance values and advance our ESG objectives. The multidisciplinary approach of ~~ethics, integrity, common decency~~our steering committee allows it to leverage our expertise in operations, engineering, supply chain, human capital management, finance, legal and ~~respect~~other fields to push our ESG initiatives ahead from all angles.

Continued Commitment

With each year, we intend to further our commitment to ESG initiatives, improving our environmental stewardship, finding ways to give back to our communities, and enhancing the diversity and inclusion of ~~others, values which have been established since~~ our ~~company was founded.~~workforce while offering opportunities for development. Information on our ESG initiatives can be found in our most current sustainability report and on our corporate website at ir.smpcorp.com under “Environmental & Social Responsibility” and at smpcares.smpcorp.com. Information in our sustainability report and on our corporate websites regarding our ESG initiatives are referenced for general information only and are not incorporated by reference in this Report.

Available Information

We are a New York corporation founded in 1919. Our principal executive offices are located at ~~37-18~~37‑18 Northern Boulevard, Long Island City, New York 11101, and our main telephone number at that location is (718) ~~392-0200.~~392‑0200. Our Internet address is www.smpcorp.com. We provide a link to reports that we have filed with the SEC. However, for those persons that make a request in writing or by e-mail (financial@smpcorp.com), we will provide free of charge our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. These reports and other information are also available, free of charge, at ~~www.sec.gov.~~www.sec.gov.

Index

ITEM 1A.

RISK FACTORS

You should carefully consider the risks described below. These risks and uncertainties are not the only ones we face. Additional risks and uncertainties not presently known to us or other factors not perceived by us to present significant risks to our business at this time also may impair our business and results of operations. If any of the stated risks actually occur, they could materially and adversely affect our business, financial condition or operating results.

Risks Related to Our Operations

We depend on a limited number of key customers, and the loss of any such customer, or a significant reduction in purchases by such customer, could have a material adverse effect on our business, financial condition and results of operations.

Our ~~five~~three largest individual customers accounted for approximately ~~69%~~59% of our consolidated net sales in ~~2019,~~2022. During 2022, O’Reilly, AutoZone and ~~approximately 70% of our consolidated net sales in 2018 and 2017. During 2019, O’Reilly, Advance,~~ NAPA ~~and AutoZone~~ accounted for ~~22%~~27%, ~~16%,~~17% and 15% ~~and 11%~~ of our consolidated net sales, respectively. 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.

~~Also, we~~We do not typically enter into long-term agreements with any of our customers. Instead, we enter into a number of purchase order commitments with our customers, based on their current or projected needs. We have in the past, and may in the future, lose customers or lose a particular product line of a customer due to the highly competitive conditions in the automotive aftermarket industry, including pricing pressures, consolidation of customers, customer initiatives to buy direct from foreign suppliers and/or to pursue a private brand strategy, or other business considerations. A decision by any significant customer, whether motivated by competitive conditions, financial difficulties or otherwise, to materially decrease the amount of products purchased from us, to change their manner of doing business with us, or to stop doing business with us, including a decision to source products directly from a low cost region such as Asia, could have a material adverse effect on our business, financial condition and results of operations.

~~Index~~

Because our sales are concentrated, and the market in which we operate is very competitive, we are under ongoing pressure from our customers to offer lower prices, extend payment terms, increase marketing allowances and other terms more favorable to these customers. These customer demands have put continued pressure on our operating margins and profitability, resulted in periodic contract renegotiation to provide more favorable prices and terms to these customers, and significantly increased our working capital needs.

Our industry is highly competitive, and our success depends on our ability to compete with suppliers of automotive ~~aftermarket~~ products, some of which may have substantially greater financial, marketing and other resources than we do.

The automotive ~~aftermarket~~ industry is highly competitive, and our success depends on our ability to compete with domestic and international suppliers of automotive ~~aftermarket~~ products. In the Engine Management Segment, we compete with: ACDelco, ~~Delphi Technologies PLC,~~Aptiv Plc, Denso Corporation, Continental AG, Hitachi, Ltd., Motorcraft, Robert Bosch GmbH, Visteon Corporation, NGK Spark Plug Co., ~~LTD.~~Ltd., Dorman Products, Inc. and several privately-owned companies primarily importing products from Asia. In the Temperature Control Segment, we compete with: ACDelco, MAHLE GmbH, ~~Behr Hella Service GmbH,~~ Denso Corporation, Motorcraft, Sanden International (U.S.A.), Inc., Continental AG, Dorman Products, Inc., and several privately-owned companies. In addition, automobile manufacturers supply many of the replacement parts we sell.

Some of our competitors may have larger customer bases and significantly greater financial, technical and marketing resources than we do. These factors may allow our competitors to:

Index

●

respond more quickly than we can to new or emerging technologies and changes in customer requirements by devoting greater resources than we can to the development, promotion and sale of automotive aftermarket products and services;

engage in more extensive research and development;

●

~~engage in more extensive research and development;~~

sell products at a lower price than we do;

●

~~sell products at a lower price than we do;~~

undertake more extensive marketing campaigns; and

●

~~undertake more extensive marketing campaigns; and~~

make more attractive offers to existing and potential customers and strategic partners.

●

~~make more attractive offers to existing and potential customers and strategic partners.~~

We cannot assure you that our competitors will not develop products or services that are equal or superior to our products or that achieve greater market acceptance than our products or that in the future other companies involved in the automotive ~~aftermarket~~ industry will not expand their operations into product lines produced and sold by us. We also cannot assure you that additional entrants will not enter the automotive ~~aftermarket~~ industry or that companies in the ~~aftermarket~~ industry will not consolidate. Any such competitive pressures could cause us to lose market share or could result in significant price decreases and could have a material adverse effect upon our business, financial condition and results of operations.

There is substantial price competition in our industry, and our success and profitability will depend on our ability to maintain a competitive cost and price structure.

There is substantial price competition in our industry, and our success and profitability will depend on our ability to maintain a competitive cost and price structure. This is the result of a number of industry trends, including the impact of offshore suppliers in the marketplace (particularly in China) which do not have the same infrastructure costs as we do, the consolidated purchasing power of large customers, and actions taken by some of our competitors in an effort to ‘‘win over’’ new business. We have in the past reduced prices to remain competitive and may have to do so again in the future. Price reductions have impacted our sales and profit margins and ~~are expected to~~may do so in the future. Our future profitability will depend in part upon our ability to respond to changes in product and distribution channel mix, to continue to improve our manufacturing efficiencies, to generate cost reductions, including reductions in the cost of components purchased from outside suppliers, ~~and~~ to maintain a cost structure that will enable us to offer competitive ~~prices.~~prices, and to pass through higher distribution, raw materials and labor costs to our customers. Our inability to maintain a competitive cost structure could have a material adverse effect on our business, financial condition and results of operations.

~~Index~~

Our business is seasonal and is subject to substantial quarterly fluctuations, which impact our quarterly performance and working capital requirements.

Historically, our operating results have fluctuated by quarter, with the greatest sales occurring in the second and third quarters of the year and ~~with~~ revenues generally being recognized at the time of shipment. It is in these quarters that demand for our products is typically the highest, specifically in the Temperature Control Segment of our business.

In addition to this seasonality, the demand for our Temperature Control products during the second and third quarters of the year may vary significantly with the summer weather and customer ~~inventories. For example, a~~inventories, as evidenced by the strong customer demand in 2022 fueled by the record heat across the country in 2022 and the replenishment of customer inventory levels after very warm summer ~~as we experienced~~conditions in ~~2018, may increase~~2021. While the COVID-19 pandemic caused large shifts in sales demand ~~for~~between quarters in 2020, our ~~temperature control products, while~~business has returned to a ~~mild summer, as we experienced in 2017, may lessen such demand. As a result~~more normalized pattern of ~~this~~ seasonality and variability in demand of our Temperature Control products in 2022 and 2021. As such, our working capital ~~requirements peak~~typically peaks near the end of the second quarter, as the inventory ~~build-up~~build‑up of air conditioning products iswas converted to sales, and payments on the receivables associated with such sales ~~have~~were yet to be received. During this period, our working capital requirements ~~are typically~~were funded by borrowing from our revolving credit ~~facility.~~facility in our Credit Agreement.

Index

Climate-related physical risks, such as changes to weather patterns and conditions may also impact the pattern of seasonality and variability in demand for our Temperature Control products discussed above, which may impact our quarterly performance and working capital requirements.

We may incur material losses and significant costs as a result of warranty-related returns by our customers in excess of anticipated amounts.

Our products are required to meet rigorous standards imposed by our customers and our industry. 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, failure to meet industry published specifications and/or the result of installation error. In the event that there are material deficiencies or defects in the design and manufacture of our products and/or installation error, the affected products may be subject to warranty returns and/or product recalls. Although we maintain a comprehensive quality control program, we cannot give any assurance that our products will not suffer from defects or other deficiencies or that we will not experience material warranty returns or product recalls in the future.

We accrue for warranty returns as a percentage of sales, after giving consideration to recent historical returns. While we believe that we make reasonable estimates for warranty returns in accordance with our revenue recognition policies, actual returns may differ from our estimates. We have in the past incurred, and may in the future incur, material losses and significant costs as a result of our customers returning products to us for warranty-related issues in excess of anticipated amounts. Deficiencies or defects in our products in the future may result in warranty returns and product recalls in excess of anticipated amounts and may have a material adverse effect on our business, financial condition and results of operations.

Our profitability may be materially adversely affected as a result of overstock ~~inventory-related~~inventory related returns by our customers in excess of anticipated amounts.

We permit overstock returns of inventory that may be either new or non-defective or non-obsolete but that we believe we can re-sell. Customers are generally limited to returning overstocked inventory according to a specified percentage of their annual purchases from us. In addition, a customer’s annual allowance cannot be carried forward to the upcoming year.

We accrue for overstock returns as a percentage of sales, after giving consideration to recent historical returns. While we believe that we make reasonable estimates for overstock returns in accordance with our revenue recognition policies, actual returns may differ from our estimates. To the extent that overstocked returns are materially in excess of our projections, our business, financial condition and results of operations may be materially adversely affected.

~~Index~~

We may be materially adversely affected by asbestos claims arising from products sold by our former brake business, as well as by other product liability claims.

In 1986, we acquired a brake business, which we subsequently sold in March 1998. When we originally acquired this brake business, we assumed future liabilities relating to any alleged exposure to asbestos-containing products manufactured by the seller of the acquired brake business. In accordance with the related purchase agreement, we agreed to assume the liabilities for all new claims filed after September 2001. Our ultimate exposure will depend upon the number of claims filed against us on or after September 2001, and the amounts paid for settlements, awards of asbestos-related damages, and defense of such claims. We do not have insurance coverage for the indemnity and defense costs associated with the claims we face.

At December 31, ~~2019, approximately 1,550~~2022, 1,530 cases were outstanding for which we may be responsible for any related liabilities. Since inception in September 2001 through December 31, ~~2019,~~2022, the amounts paid for settled claims ~~are~~and awards of asbestos-related damages, including interest, were approximately ~~$30.9~~$64.6 million. During 2018, we were a defendant in an asbestos liability case in California, in which we were found liable for $7.6 million in compensatory damages. We are pursuing all rights of appeal of this case. A substantial increase in the number of new claims, or increased settlement payments, or awards of asbestos-related damages, ~~as well as additional findings in the California case,~~ could have a material adverse effect on our business, financial condition and results of operations.

Index

In accordance with our policy to perform an annual actuarial evaluation in the third quarter of each year, ~~and whenever events or changes in circumstances indicate that additional provisions may be necessary,~~ an actuarial study was performed as of August 31, ~~2019.~~2022. Based upon the results of the August 31, ~~2019~~2022 actuarial study, and all other available information to us, we increased our asbestos liability to ~~$52 million,~~ the low end of the range, and recorded an incremental pre-tax provision of ~~$9.7~~$18.5 million in earnings (loss) from discontinued operations in the accompanying statement of operations. The results of the August 31, ~~2019~~2022 study included an estimate of our undiscounted liability for settlement payments and awards of asbestos-related damages, excluding legal costs, ~~and any potential recovery from insurance carriers~~ ranging from ~~$52~~$68.8 million to ~~$90.6~~$111.6 million for the period through ~~2064.~~2065. Future legal costs, which are expensed as incurred and reported in earnings (loss) from discontinued operations in the accompanying statement of operations, are estimated, according to the August 31, 2022 study, to range from ~~$50.6~~$53.2 million to ~~$85.2 million.~~$105.7 million for the period through 2065.

Given the uncertainties associated with projecting asbestos-related matters into the future and other factors outside our control, we cannot give any assurance that significant increases in the number of claims filed against us will not occur, that awards of asbestos-related damages or settlement awards will not exceed the amount we have in reserve, or that additional provisions will not be required. Management will continue to monitor the circumstances surrounding these potential liabilities in determining whether additional reserves and provisions may be necessary. We plan on performing an annual actuarial analysis 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.

In addition to asbestos-related claims, our product sales entail the risk of involvement in other product liability actions. We maintain product liability insurance coverage, but we cannot give any assurance that current or future policy limits will be sufficient to cover all possible liabilities. Further, we can give no assurance that adequate product liability insurance will continue to be available to us in the future or that such insurance may be maintained at a reasonable cost to us. In the event of a successful product liability claim against us, a lack or insufficiency of insurance coverage could have a material adverse effect on our business, financial condition and results of operations.

We may not be able to achieve the benefits that we expect from our cost savings initiatives.

We expect to realize the continued benefit of discretionary cost reduction measures, along with the continued cost savings ~~as a result of various~~anticipated from several ongoing and/or recently completed ~~initiatives, including the closing of our Grapevine, Texas facility; the closing of our recently acquired wire set assembly operation in Nogales, Mexico; the closing of our Orlando, Florida facility;~~restructuring and ~~the moving of production to our domestic and international facilities in Mexico and Poland.~~integration initiatives. Due to factors outside our control, such as the adoption or modification of domestic and foreign laws, regulations or policies, we may not be able to achieve the level of benefits that we expect to realize in these initiatives, or we may not be able to realize these benefits within the time frames we currently expect. Our ability to achieve any anticipated cost savings could be affected by a number of factors such as changes in the amount, timing and character of charges related to such initiatives, or a substantial delay in the completion of such initiatives. Failure to achieve the benefits of our cost saving initiatives could have a material adverse effect on us. Our cost savings is also predicated upon maintaining our sales levels.

~~Index~~

Severe weather, natural disasters and other disruptions could adversely impact our operations at our manufacturing and distribution facilities.

Severe weather conditions and natural disasters, such as hurricanes, ~~floods~~tornados, earthquakes and ~~tornados,~~floods, could damage our properties and effect our operations, particularly our major manufacturing and distribution operations at foreign facilities in Canada, China, Mexico, Poland, Germany and ~~Poland,~~Hungary and at our domestic facilities in Florida, Indiana, Kansas, South Carolina, Texas, Virginia, and ~~Virginia.~~ Wisconsin. Moreover, global climate change may cause these natural disasters to occur more frequently and/or with more intense effects, which could prevent us from, or cause delays in our ability to, manufacture and deliver products to our customers, and/or cause us to incur additional costs.

Index

In addition, our business and operations could be materially adversely affected in the event of other serious disruptions at these facilities due to fire, electrical blackouts, power losses, telecommunications failures, terrorist attack or similar events. Any of these occurrences could impair our ability to adequately manufacture or supply our customers due to all or a significant portion of our equipment or inventory being damaged. WeIf our existing manufacturing or distribution facilities become incapable of producing and supplying products for any reason, we may not be able to ~~effectively shift the manufacture or delivery of products to~~satisfy our ~~customers if one or more of~~customers’ requirements and we may lose revenue and incur significant costs and expenses that may not be recoverable through our ~~manufacturing or distribution facilities are significantly disrupted.~~business interruption insurance.

~~Our operations would be materially and adversely affected if we are unable to purchase~~Disruptions in the supply of raw materials, manufactured components, or equipment ~~from~~could materially and adversely affect our ~~suppliers.~~operations and cause us to incur significant cost increases.

~~Because we purchase~~We source various types of raw materials, finished goods, equipment, and component parts from suppliers as part of a global supply chain, and we may be materially and adversely affected by the failure of those suppliers to perform as expected. ~~This~~Although we have had an adequate supply of purchased supplier raw materials, finished goods, equipment and component parts, disruptions in the global economy have impeded global supply chains, resulting in longer lead times and delays in procuring component parts and raw materials, and inflationary cost increases in certain raw materials, labor and transportation. In response to the global supply chain volatility and inflationary cost increases, we have taken, and continue to take, several actions to mitigate the impact by working closely with our suppliers and customers to minimize any potential adverse impacts on our business, including initiating cost savings initiatives and the pass through of higher costs to our customers, which began in the fourth quarter of 2021. We expect these inflationary trends to continue for some time, and while we believe that we will be able to somewhat offset the impact, there can be no assurances that unforeseen future events in the global supply chain affecting the availability of materials and components, and/or increasing commodity pricing, will not have a material adverse effect on our business, financial condition and results of operations.

Additionally, supplier non-performance may consist of delivery delays or failures caused by production issues or delivery of non-conforming products. Our suppliers’ ability to supply products to us is also subject to a number of risks, including the availability and cost of raw materials, the destruction of their facilities, or work stoppages, cyber attacks on their information technology systems or other limitations on their business operations, which could be caused by any number of factors, such as labor disruptions, financial distress, severe weather conditions and natural disasters, social unrest, economic and political instability, and public health crises, including the occurrence of a contagious disease or illness, such as the ~~novel coronavirus,~~COVID-19 pandemic, war, terrorism or other catastrophic events. In addition, our failure to promptly pay, or order sufficient quantities of inventory from our suppliers may increase the cost of products we purchase or may lead to suppliers refusing to sell products to us at all. Our efforts to protect against and to minimize these risks may not always be effective.

Our operations could be adversely affected by interruptions or breaches in the security of our computer and information technology systems.

We rely on information technology systems throughout our organization to conduct day-to-day business operations, including the management of our supply chain and our purchasing, receiving and distribution functions. We also routinely use our information technology systems to send, receive, store, access and use sensitive data relating to our Company and its employees, customers, suppliers, and business partners, including intellectual property, proprietary business information, and other sensitive materials. Additionally, we rely on our information technology systems to enable many of our employees to work remotely as a result of new policies and practices enacted by us.

Index

Our information technology systems have been subject to cyber threats, including attempts to hack into our network and computer viruses. Such hacking attempts and computer viruses have not significantly impacted or interrupted our business operations. While we implement security measures designed to prevent and mitigate the risk of cyber attacks, our information technology systems, and the systems of our customers, suppliers and business partners, may continue to be vulnerable to computer viruses, attacks by hackers, or unauthorized access caused by employee error or malfeasance. The exploitation of any such vulnerability could unexpectedly compromise our information security, or the security of our customers, suppliers and other business partners. Furthermore, because the techniques used to carry out cyber attacks change frequently and in many instances are not recognized until after they are used against a target, we may be unable to anticipate these changes or implement adequate preventative measures. If our information technology systems, or the systems of our customers, suppliers or business partners, are subject to cyber attacks, such as those involving significant or extensive system interruptions, sabotage, computer viruses or unauthorized access, we could experience disruptions to our business operations and incur substantial remediation costs, which could have a material adverse effect on our business, financial condition or results of operations.

The transition risks associated with global climate change may cause us to incur significant costs.

In addition to the physical risks described above, global climate change has brought about certain risks associated with the anticipated transition to a lower-carbon economy, such as regulatory changes affecting vehicle emissions and fuel efficiency requirements, technological changes in vehicle architectures, changes in consumer demand, carbon taxes, greenhouse gas emissions tracking, and regulation of greenhouse gas emissions from certain sources. Any regulatory changes aimed to reduce or eliminate greenhouse gas emissions may require us to incur increased operating costs, such as to purchase and operate emissions control systems or other such technologies to comply with applicable regulations or reporting requirements. These regulations, as well as shifts in consumer demand due to public awareness and concern of climate change, could affect the timing and scope of their proliferation and may also adversely impact our sales of products designed for the internal combustion engines. As we monitor the rapid developments in this area, we may be required to adjust our business strategy to address the various transition risks posed by climate change.

~~Index~~

MANAGEMENT’S REPORT ON INTERNAL CONTROL

OVER FINANCIAL REPORTING

To the Stockholders of

Standard Motor Products, Inc. and Subsidiaries:

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) of the Exchange Act). Our internal control system was designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Because of these inherent limitations, internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation and presentation, and may not prevent or detect misstatements. 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.

We assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2019.~~2022. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the 2013 Internal Control - Integrated Framework. Based on our assessment using those criteria, we concluded that, as of December 31, ~~2019,~~2022, our internal control over financial reporting is effective.

Our independent registered public accounting firm, KPMG LLP, has audited our consolidated financial statements as of and for the year ended December 31, ~~2019~~2022 and has also audited the effectiveness of our internal control over financial reporting as of December 31, ~~2019.~~2022. KPMG’s report appears on the following pages of this “Item 8. Financial Statements and Supplementary Data.”

Index

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM –

INTERNAL CONTROL OVER FINANCIAL REPORTING

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.’s~~Inc and ~~subsidiaries~~Subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, ~~2019,~~2022, based on criteria established inInternal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway ~~Commission.~~Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2019,~~2022, 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, ~~2019~~2022 and ~~2018,~~2021, 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, ~~2019,~~2022, and the related notes and financial statement Schedule II, Valuation and Qualifying Accounts (collectively, the consolidated financial statements), and our report dated February ~~20, 2020~~22, 2023 expressed an unqualified opinion 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.

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 ~~20, 2020~~22, 2023

Index

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM –

CONSOLIDATED FINANCIAL STATEMENTS

To the Stockholders and Board of Directors

Standard Motor Products, ~~Inc.and~~Inc. and Subsidiaries:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Standard Motor Products, Inc. and ~~subsidiaries~~Subsidiaries (the “Company”) as of December 31, ~~2019~~2022 and ~~2018,~~2021, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the ~~three-year~~three‑year period ended December 31, ~~2019,~~2022, and the related notes and financial statement Schedule II Valuation and Qualifying Accounts~~(collectively,~~ (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, ~~2019~~2022 and ~~2018,~~2021, and the results of its operations and its cash flows for each of the years in the ~~three-year~~three‑year period ended December 31, ~~2019,~~2022, 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, ~~2019,~~2022, 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 ~~20, 2020~~22, 2023 expressed an unqualified 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.

Index

Critical Audit ~~Matters~~Matter

The critical audit ~~matters~~matter communicated below ~~are matters~~is a matter arising from the current period audit of the consolidated financial statements that ~~were~~was communicated or required to be communicated to the audit committee and that: (1) ~~relate~~relates 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 a critical audit ~~matters~~matter 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~~matter below, providing a separate ~~opinions~~opinion on the critical audit ~~matters~~matter or on the accounts or disclosures to which ~~they relate.~~it relates.

~~Assessment of~~ Asbestos ~~Liability~~liability and ~~Litigation~~litigation

As discussed in Notes 1 and 2223 to the consolidated financial statements, the Company is involved in asbestos litigation and has a potential asbestos liability. As of December 31, 2022, the accrued asbestos liability was $68 million. The Company’s asbestos liability represents the low end of the actuarially determined ~~estimate~~range of the undiscounted liability for settlement payments and awards of ~~asbestos-related~~asbestos related damages, excluding legal costs and any potential recovery from insurance carriers. The Company’s asbestos liability includes key assumptions regarding disease distribution, future claim filings, payment rates, settlement values, large claims, and ratios of allocated loss adjustment expense (ALAE) to indemnity.

We identified the assessment of the asbestos liability recorded ~~and related disclosure for these legal proceedings~~ 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 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, large claims, and ratios of allocated loss adjustment exposure (ALAE) to indemnity. 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 included~~matter. We evaluated the ~~following. We~~design and tested the operating effectiveness of certain internal controls ~~over~~related to the ~~Company’s~~ asbestos liability ~~and asbestos litigation process, including~~estimation process. This included controls related to the key assumptions and the ~~underlying~~claims data utilized in the process, and the potential need for an updated actuarial ~~evaluation.~~valuation. We ~~read letters received directly from the Company’s external and internal legal counsel confirming~~evaluated the asbestos related legal cases settled during the year and the number of open cases as of ~~year-end. We involved an actuarial professional with specialized skills~~year-end by reading letters received directly from the Company’s external and ~~knowledge, who:~~

●

~~assessed the actuarial model used by the Company’s asbestos actuary in preparing their annual report which contained an analysis of the Company’s asbestos exposure;~~

●

~~assessed the annual report prepared by the Company’s asbestos actuary for consistency with generally accepted actuarial standards; and~~

●

evaluated the key assumptions and judgments, including consideration of changes of assumptions from those used in the prior year, underlying the actuarial estimates contained within the Company’s asbestos report prepared by the Company’s asbestos actuary.

internal legal counsel. We tested a ~~sample~~selection of claims data used in the actuarial model by comparing the ~~sampled~~selection items to underlying claims documentation. We ~~evaluated the activity of legal claims since the most recent~~involved an actuarial ~~evaluation to determine if an updated actuarial evaluation is necessary. We compared the Company’s related disclosure to the data utilized in the process and the Company’s asbestos report.~~

~~Index~~

~~Initial measurement of the customer relationship intangible assets acquired in the Pollak business combination~~

As discussed in Notes 3 and 9 to the consolidated financial statements, on April 1, 2019, the Company acquired the Pollak business from Stoneridge, Inc. (Pollak) in a business combination. As a result of the transaction, the Company acquired customer relationship intangible assets associated with the generation of future income from Pollak’s existing customers. The acquisition-date fair value for the customer relationship assets was $24.4 million.

We identified the evaluation of the initial measurement of the customer relationship intangible assets acquired in the Pollak transaction as a critical audit matter. There was a high degree of subjectivity in evaluating the multi-period excess earnings method (a form of the income approach) used to calculate the acquisition-date fair value of the customer relationship assets. The multi-period excess earnings method included the following internally-developed assumptions for which there was limited observable market information, and the calculated fair value of such assets was sensitive to possible changes to these assumptions:

●

~~Forecasted revenues attributable to existing customers~~

●

~~Estimated annual attrition~~

●

~~Forecasted earnings before interest, and taxes (EBIT) margins for the acquired business~~

●

~~Discount rates~~

The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the Company’s process to develop the key acquisition-date assumptions. We compared the Company’s year one forecasted revenues attributable to existing customers to the acquired business’s historical information. We evaluated the Company’s forecasted revenues attributable to existing customers and EBIT margins by comparing these forecasted assumptions to historical Company information. In addition, valuation professionalsprofessional with specialized skills and knowledge, who assisted ~~us to:~~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, large claims, and ratios of ALAE to indemnity by comparing them to the Company’s historical experience.

●

~~evaluate the Company’s discount rates by comparing these rates against a discount rate range that was independently developed using publicly available market data for comparable companies,~~

●

~~evaluate the estimated annual attrition rate by comparing the selected attrition rates against the realized range of attrition rates in prior company specific acquisitions, and~~

●

compare the Company’s fair value estimate of the customer relationship assets acquired, using the significant assumptions utilized by the Company and our independently developed discount rate range, to an independent calculation of the multi-period excess earnings model.

/s/ KPMG LLP

We have served as the Company’s auditor since 2010.

New York, New York

February ~~20, 2020~~22, 2023

Index

1. Summary of Significant Accounting Policies

Principles of Consolidation

Standard Motor Products, Inc. and subsidiaries (referred to hereinafter in these notes to the consolidated financial statements as “we,” “us,” ~~“our”~~“our,” “SMP,” or the “Company”) is ~~engaged~~a leading manufacturer and distributor of premium replacement parts utilized in the ~~manufacture~~maintenance, repair and ~~distribution~~service of ~~replacement parts for motor~~ vehicles in the automotive aftermarket industry with a complementary focus on specialized equipments parts for manufacturers across multiple industries around the ~~heavy duty, industrial equipment and original equipment service markets.~~ world.

The consolidated financial statements include our accounts and all domestic and international companies in which we have more than a 50% equity ownership, except in instances where the minority shareholder maintains substantive participating rights, in which case we follow the equity method of accounting. In instances where we have more than a 50% equity ownership and the minority shareholder does not maintain substantive participating rights, our consolidated financial statements include the accounts of the company on a consolidated basis with its net income and equity reported at amounts attributable to both our equity position and that of the noncontrolling interest. Investments in unconsolidated affiliates are accounted for on the equity method, as we do not have a controlling financial interest but have the ability to exercise significant influence. All significant inter-company items have been ~~eliminated.~~eliminated.

Use of Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles werequires 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 ~~relating to~~in the ~~reporting~~preparation of ~~assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities to prepare~~ these consolidated financial statements. We can give no assurances 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 the COVID-19 pandemic, Russia’s invasion of the Ukraine and resultant sanctions imposed by the U.S. and other governments, future increases in interest rates, inflation, macroeconomic uncertainty, and other unforeseen changes in the industry, or business, could materially impact the estimates, and may have a material adverse effect on our business, financial condition and results of operations. Some of the more significant estimates include allowances for ~~doubtful accounts,~~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. We can give no assurances 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 estimate or in the assumptions that we use in calculating the estimate, unforeseen changes in the industry, or business could materially impact the estimate and may have a material adverse effect on our business, financial condition and results of operations.

Reclassification

Certain prior period amounts in the accompanying consolidated financial statements and related notes have been reclassified to conform to the ~~2019~~2022 presentation.

Cash and Cash Equivalents

We consider all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Allowance for ~~Doubtful Accounts~~Expected Credit Losses and Cash Discounts

We do not generally require collateral for our trade accounts receivable. 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, aging analysis, and specific account evaluations. When a receivable balance is known to be uncollectible, it is written off against the allowance for ~~doubtful accounts.~~expected credit losses. In January 2023, one of our customers filed a petition for bankruptcy. In connection with the bankruptcy filing, we evaluated our potential risk and exposure as related to our outstanding accounts receivable balance from the customer as of December 31, 2022, and estimated our anticipated recovery. As a result of our evaluation, we recorded a $7 million pre-tax charge during the year ended December 31, 2022 to reduce our accounts receivable balance to our estimated recovery. We will continue to monitor the circumstances surrounding the bankruptcy in determining whether additional provisions may be necessary. Cash discounts are provided based on an overall average experience rate applied to qualifying accounts receivable balances.

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

Inventories

Inventories are valued at the lower of cost and net realizable value. Cost is determined on the ~~first-in~~ ~~first-out~~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. ~~As such, the~~The historical volatility of such estimates has been minimal. We maintain provisions for inventory reserves of ~~$45.8~~$42.5 million and ~~$44~~$46.2 million as of December 31,~~2019~~ 2022 and 2021, respectively~~2018,~~ ~~respectively.~~.

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 as unreturned customer inventory 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.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Property, Plant and Equipment

Property, plant and equipment are recorded at historical cost and are depreciated using the straight-line method of depreciation over the estimated useful lives as follows:

	Estimated Life
Buildings	25 to 33-1/2years
Building improvements	10 to 25 years
Machinery and equipment	5 to 12 years
Tools, dies and auxiliary equipment	3 to 8 years
Furniture and fixtures	3 to 12 years

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. We assess our property, plant and equipment to be held and used for impairment when indicators are present that the carrying value may not be recoverable.

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~Leases

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~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 secured 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.

Valuation of Long-Lived and Intangible Assets and Goodwill

At acquisition, we estimate and record the fair value of purchased intangible assets, which primarily consist of customer relationships, trademarks and trade names, patents, developed technology and intellectual property, and non-compete agreements. ~~The fair values of these~~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. As related to valuing customer relationships, significant estimates and assumptions used include but are ~~estimated based on our assessment.~~not limited to: (1) forecasted revenues attributable to existing customers; (2) forecasted earnings before interest and taxes (“EBIT”) margins; (3) customer attrition rates; and (4) the discount rate. Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. 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. We believe that the fair value of acquired identifiable net assets, including intangible assets, are based upon reasonable estimates and assumptions.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

We assess the impairment of ~~long-lived~~long‑lived assets, identifiable intangibles assets and goodwill 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 ~~the~~ ~~two-step~~a quantitative impairment test iswould not be required. If we are unable to reach this conclusion, then we would perform ~~the~~ ~~two-step~~a goodwill quantitative impairment test. ~~Initially,~~In performing the quantitative test, the fair value of the reporting unit is compared to its carrying amount. ~~To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit; we are required to perform a~~ ~~second~~ step, as this is an indication that the reporting unit goodwill may be impaired. In this step, we compare the implied fair value of the reporting unit goodwill with the carrying amount of the reporting unit goodwill and recognize aA charge for impairment ~~to the extent the carrying value exceeds the implied fair value. The implied fair value of goodwill~~ is ~~determined~~recognized by allocating the fair value of the reporting unit to all of the assets (recognized and unrecognized) and liabilities of the reporting unit in a manner similar to a purchase price allocation. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill. On January 1,~~2020,~~ ~~we will adopt Accounting Standards Update (“ASU”)~~ ~~2017~~-~~04,Simplifying the Test for Goodwill Impairment~~ ~~(“ASU~~ ~~2017~~-04”). ~~ASU~~ ~~2017~~-04 ~~removes the~~ ~~second~~ ~~step of the impairment test, which requires a hypothetical purchase price allocation to determine the implied fair value of the reporting unit goodwill. Instead, under ASU~~ ~~2017~~-~~04,~~ ~~goodwill impairment is~~ the amount by which athe reporting unit’s carrying ~~value~~amount exceeds its fair value, not to exceed the ~~carrying~~total amount of ~~goodwill. ASU~~ ~~2017~~-04 ~~will be applied prospectively.~~goodwill allocated to the reporting unit.

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

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~~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.

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 remains there until the underlying foreign operation is liquidated or substantially disposed of. Foreign currency transaction gains or losses are recorded in the statement of operations under the caption “other non-operating income (expense), net.”

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Revenue Recognition

We derive our revenue primarily from sales of replacement parts for motor vehicles from both our Engine Management and Temperature Control Segments. 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 providing 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 expected to be returned from the customer and record the estimated return as unreturned customer inventory. The liability is extinguished when a core 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 must be made and used in estimating sales returns and allowances relating to revenue recognized in any accounting period.

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

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 must be made and used 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.

New Customer Acquisition Costs

New customer acquisition costs refer to arrangements pursuant to which we incur change-over costs to induce a new customer to switch from a competitor’s brand. In addition, change-over costs include the costs related to removing the new customer’s inventory and replacing it with our inventory commonly referred to as a ~~stocklift.~~stock lift. New customer acquisition costs are recorded as a reduction to revenue when incurred.

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.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Deferred Financing Costs

Deferred financing costs represent costs incurred in conjunction with our debt financing activities. Deferred financing costs related to our revolving credit facility are capitalized and amortized over the life of the related financing arrangement. If the debt is retired early, the related unamortized deferred financing costs are written off in the period the debt is retired and are recorded in the statement of operations under the caption other non-operating income (expense), net.

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. ~~The valuation allowance is intended to provide for the uncertainty regarding the ultimate utilization of our U.S. foreign tax credit carryovers and foreign net operating loss carryovers.~~ 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 assumptions, we may need to modify the level of valuation allowance which could materially impact our business, financial condition and results of operations.

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

The valuation allowance of $~~0.8~~3.2 million as of December 31,~~2019~~ 2022 is intended to provide for the uncertainty regarding the ultimate realization of our U.S. foreign tax credit carryovers and foreign net operating loss carryovers. Based on these considerations, we believe it is more likely than not that we will realize the benefit of the net deferred tax asset of $~~37.3~~33.7 million as of December 31, 2022~~31,2019,~~, which is net of the remaining valuation allowance.

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. During the years ended December 31,~~2019,2018~~ 2022, 2021 and 2020~~2017,~~, we did not establish a liability for uncertain tax positions.

Environmental Reserves

We are subject to various U.S. Federal and state and local environmental laws and regulations and are involved in certain environmental remediation efforts. We estimate and accrue our liabilities resulting from such matters based upon a variety of factors including the assessments of environmental engineers and consultants who provide estimates of potential liabilities and remediation costs. Such estimates are not discounted to reflect the time value of money due to the uncertainty in estimating the timing of the expenditures, which may extend over several years. Potential recoveries from insurers or other third parties of environmental remediation liabilities are recognized independently from the recorded liability, and any asset related to the recovery will be recognized only when the realization of the claim for recovery is deemed probable.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Asbestos Litigation

In evaluating our potential asbestos-related liability, we ~~use~~have considered various factors including, among other things, an actuarial study ~~that is prepared~~of the asbestos related liabilities performed by ~~a leading~~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 ~~expertise~~experience in assessing asbestos-related ~~liabilities. We evaluate~~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: (1) historical data available from publicly available studies; (2) an analysis of our recent claims history to estimate likely filing rates into the future; (3) an analysis of ~~the range~~our currently pending claims; (4) an analysis of ~~undiscounted liability~~our settlements and awards of asbestos-related damages to ~~determine which amount~~date; and (5) an analysis of closed claims with pay ratios and lag patterns in order to ~~accrue.~~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. ~~Legal~~Future legal costs are expensed as ~~incurred.~~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 futureand 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, which will reported in earnings (loss) from discontinued operations in the accompanying statement of operations. 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.

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash investments, accounts receivable and ~~accounts receivable.~~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.

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. ~~Our~~ 5A significant portion of our net sales are concentrated from our three largest individual ~~customers accounted for approximately~~ ~~69%~~ ~~of our consolidated net sales in~~ ~~2019,~~ ~~and approximately~~ ~~70%~~ ~~of our consolidated net sales in~~ ~~2018~~ ~~and~~ ~~2017.~~ ~~During~~ ~~2019,~~ ~~O’Reilly, Advance, NAPA, and AutoZone accounted for~~ ~~22%~~, ~~16%~~, ~~15%~~ ~~and~~ ~~11%~~ ~~of our consolidated net sales, respectively. Net sales from each of the customers were reported in both our Engine Management and Temperature Control Segments.~~customers. 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 January 2023, one of our customers filed a petition for bankruptcy. In connection with the bankruptcy filing, we evaluated our potential risk and exposure as related to our outstanding accounts receivable balance from the customer as of December 31, 2022, and estimated our anticipated recovery. As a result of our evaluation, we recorded a $7 million pre-tax charge during the year ended December 31, 2022 to reduce our accounts receivable balance to our estimated recovery. The $7 million pre-tax charge is included in selling, general and administrative expenses in our consolidated statement of operations. We will continue to monitor the circumstances surrounding the bankruptcy in determining whether additional provisions may be necessary.

For further information on net sales to our three largest customers and our concentration our customer risk, see Note 21, “Industry Segment and Geographic Data.”

Foreign Cash Balances

Substantially all of the cash and cash equivalents, including foreign cash balances, at December 31,~~2019~~ 2022 and ~~2018~~2021 were uninsured. Foreign cash balances at December 31, 2022 and 2021 were ~~31,2019~~$18.5 million and ~~2018~~ ~~were~~ $~~8.5~~16.6 million ~~and~~ ~~$11.1 million~~, respectively.

Derivative Instruments and Hedging Activities

We occasionally use derivative financial instruments to reduce our market risk for changes in interest rates on our variable rate borrowings. Derivative financial instruments are recorded at fair value in other current and long-term assets, and other current and long-term liabilities in the consolidated balance sheets. For derivative financial instruments that have been formally designated as cash flow interest rate hedges (“interest rate swap agreements”), provided that the hedging instrument is highly effective, the entire change in the fair value of the derivative will be deferred and recorded in accumulated other comprehensive income (“AOCI”) in the consolidated balance sheets. When the underlying hedged transaction is realized (i.e., when the interest payments on the underlying borrowing are recognized in the consolidated statements of operations), the gain/loss included in AOCI is recorded in earnings and reflected on the same line as the gain/loss on the hedged item attributable to the hedged risk (i.e., interest expense). At the inception of each transaction, we formally document the hedge relationship, including the identification of the hedge instrument, the related hedged items, the effectiveness of the hedge, as well as its risk management objectives and strategies.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Recently Issued Accounting Pronouncements

Standards that were adopted

~~Leases~~

~~Effective January~~ 1,~~2019,~~ ~~we adopted ASU~~ ~~2016~~-~~02,Leases,~~ ~~(“ASU~~ ~~2016~~-02”) using the modified retrospective approach. The modified retrospective approach provides a method for recording existing leases at adoption. The most significant impact in adopting the new standard was the recognition of right-of-use (“ROU”) assets and lease liabilities on our consolidated balance sheet for operating leases, while the accounting for finance leases remained substantially unchanged. The adoption of the new standard did not materially impact our consolidated statements of operations or cash flows.

~~In adopting ASU~~ ~~2016~~-~~02,~~ we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward our historical lease identification and lease classifications. In addition, upon adoption, we evaluated all of our leases, and in particular our real estate leases, to determine the appropriate lease term. In evaluating our leases, we determined that the lease term for ~~one~~ ~~of our leases should be lengthened, as we concluded that it is reasonably certain that we will exercise the~~ ~~five-year~~ ~~renewal option in the lease. The lease term for all of our other leases remained unchanged.~~

~~Additionally, we elected to apply the provisions of ASU~~ ~~2018~~-~~11,Targeted Improvements~~, which allows us to initially apply the new lease requirements as of the effective date. Comparative financial information for the prior periods presented were not restated but instead are reported under the accounting standards in effect in those prior periods.

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~Adoption of the new standard resulted in the following changes in our consolidated balance sheet as of January~~ 1,~~2019~~ ~~(in~~ ~~thousands):~~

Balance at
December 31,
2018

Adjustments
Due to
Adoption of
ASU 2016-02

Balance at
January 1,
2019

Balance Sheet
Operating lease right-of-use asset $ — $ 38,580 $ 38,580
Sundry payables and accrued expenses 31,033 7,232 38,265
Noncurrent operating lease liabilities — 31,348 31,348

~~See Note~~ 2 ~~for further information regarding our adoption of ASU~~ ~~2016~~-~~02.~~

~~Standards that are not yet adopted as of December~~ ~~31,2019~~

~~The following table provides a brief description of recently issued accounting pronouncements that have not yet been adopted as of December~~ ~~31,2019,~~ ~~and that could have an impact on our financial statements:~~

Standard	Description	Date of adoption / Effective date	Effects on the financial statements or other significant matters

~~ASU~~ ~~2017~~-~~04,Simplifying the Test for Goodwill Impairment~~	~~This standard is intended to simplify the accounting for goodwill impairment. ASU~~ ~~2017~~-04 ~~removes Step~~ 2 of the test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.	~~January~~ 1,~~2020,~~ ~~with early adoption permitted~~	~~We will adopt the new standard on January~~ 1,~~2020.~~ The new standard will be applied prospectively. We anticipate that the adoption of this standard will not materially impact the amount of goodwill impairment, if any, when performing our annual impairment test.

ASU ~~2016~~2022-~~13,~~06 /ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial ~~Instruments – Credit Losses~~Reporting	~~This standard creates~~These standards are intended to provide optional guidance for a ~~single model~~limited time to ~~measure impairment~~ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial ~~assets, which includes trade accounts receivable. An estimate of~~reporting. The new standards are applicable to contracts that reference LIBOR, or another reference rate, expected ~~credit losses on trade accounts receivable over their contractual life will be required~~ to be ~~recorded at inception, based on historical information, current conditions, and reasonable and supportable forecasts.~~discontinued due to reference rate reform.	~~January~~ 1,ASU 2020-04 effective March 12, 2020 through December 31, 2022, with ~~early adoption permitted~~sunset date extended to December 31, 2024 by ASU 2022–06.	~~We will adopt~~During the year ended December 31, 2022, we entered into a new ~~standard on January~~ 1,~~2020.~~ ~~We anticipate~~credit agreement and new supply chain financing arrangements that no longer used LIBOR as the reference rate. In connection with these new agreements, the adoption of ~~this standard will~~the optional guidance provided in the new standards did not ~~have a material~~materially impact ~~on the manner in which we estimate~~ our ~~allowance for doubtful accounts on trade accounts receivable, or on our~~accounting, consolidated financial ~~statements.~~statements and related disclosures.

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~Standards that are not yet adopted as of December 31, 2022

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~There are no recently issued accounting pronouncements not yet been adopted as of December 31, 2022 that could have a material impact on our financial statements.

~~2. Leases~~

~~Quantitative Lease Disclosures~~

~~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~~ ~~ten years, some of which may include~~ ~~one~~ ~~or more~~ ~~five-year~~ ~~renewal options. We have included the~~ ~~five-year~~ ~~renewal option for~~ ~~one~~ ~~of our leases in our operating lease payments as we concluded that it is reasonably certain that we will exercise the option. 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.~~

~~The following tables provide quantitative disclosures related to our operating leases~~ ~~(in thousands)~~:

Balance Sheet Information
December 31,
2019

Assets
Operating lease right-of-use assets $ 36,020

Liabilities
Sundry payables and accrued expenses $ 8,739
Noncurrent operating lease liabilities 28,376
Total operating lease liabilities $ 37,115

Weighted Average Remaining Lease Term
Operating leases 5.6 Years

Weighted Average Discount Rate
Operating leases 3.7 %

Expense and Cash Flow Information
Year Ended
December 31, 2019

Lease Expense
Operating lease expense (a) $ 8,940

Supplemental Cash Flow Information
Cash Paid for the amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 8,758
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases $ 4,663

~~(a)~~

Excludes expenses of approximately $2.4 million related 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 is not material.

~~Minimum Lease Payments~~

~~At December 31, 2019, we are obligated to make minimum lease payments through 2028, under operating leases, which are as follows (in thousands):~~

2020 $ 8,994
2021 8,245
2022 6,882
2023 5,682
2024 3,881
Thereafter 7,844
Total lease payments $ 41,528
Less: Interest (4,413 )
Present value of lease liabilities $ 37,115

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

3.2. Business Acquisitions and Investments

~~2019 Business Acquisition and~~

2022 Increase in Equity Investment

~~Jiangsu~~Investment in Foshan Che Yijia New Energy Technology Co., Ltd. ~~Equity Investment~~

In August 2019, we acquired an approximate 29% minority interest in ~~Jiangsu~~Foshan Che Yijia New Energy Technology Co., Ltd. (“CYJ”) for approximately $5.1 million. ~~Our~~CYJ is a manufacturer of automotive electric air conditioning compressors and is located in China. We determined, at that time, that due to a lack of a voting majority and other qualitative factors, we do not control the operations of CYJ and accordingly, our investment in CYJ would be accounted for under the equity method of accounting.

In October 2022, we acquired an additional 3.55% equity interest in CYJ for RMB 1.7 million (approximately $242,000), increasing our minority ownership interest in CYJ from an approximate interest of 29% to 33%. The additional acquired ownership interest in CYJ was paid for in cash funded by borrowings under our Credit Agreement with JPMorgan Chase Bank, N.A., as agent. We will continue to account for our minority interest in CYJ using the equity method of accounting.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2022 Business Acquisitions

Acquisition of Capital Stock of Kade Trading GmbH (“Kade”)

In October 2022, we acquired 100% of the capital stock of Kade Trading GmbH (“Kade”) headquartered in Glinde, Germany for Euros 2.7 million (approximately $2.7 million), inclusive of closing balance sheet adjustments, plus a Euros 0.5 million (approximately $0.5 million) earn-out based upon Kade’s performance in 2024 and 2025. Kade is a supplier across Europe of mobile temperature control components to commercial vehicle, passenger car and specialty equipment markets and has been a distributor of CYJ products including electric compressors, hose assemblies and receiver dryers, with annual sales of approximately $6 million. The acquired Kade business, to be reported as part of our Temperature Control segment, was paid for with cash.

The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values (in thousands):

Purchase price				$	3,176
Assets acquired and liabilities assumed:
Receivables	$	790
Inventory		829
Other current assets (1)		1,003
Property, plant and equipment, net		63
Operating lease right-of-use assets		401
Intangible assets		2,395
Goodwill		766
Current liabilities		(1,977	)
Noncurrent operating lease liabilities		(328	)
Deferred income taxes		(766	)
Net assets acquired				$	3,176

(1)

The other current assets balance includes $1 million of cash acquired.

Intangible assets acquired of $2.4 million consist of customer relationships that will be amortized on a straight-line basis over the estimated useful life of 15 years.

Incremental revenues from the acquired Kade business included in our consolidated statement of operations from the acquisition date through December 31, 2022 were $1.3 million.

2021 Business Acquisitions

Acquisition of Capital Stock of Stabil Operative Group GmbH (“Stabil”)

In September 2021, we acquired 100% of the capital stock of Stabil Operative Group GmbH, a German company (“Stabil”), for Euros 13.7 million, or $16.3 million. Stabil is a manufacturer and distributor of a variety of components, including electronic sensors, control units, and clamping devices to the European Original Equipment (“OE”) market, serving both commercial and light vehicle applications. The acquired Stabil business was paid for with cash funded by borrowings under our revolving credit facility with JPMorgan Chase Bank, N.A. ~~CYJ is a manufacturer of air conditioning compressors for electric vehicles~~, as agent, and is ~~located in China. Our minority interest in CYJ is accounted for using~~headquartered on the ~~equity method~~outskirts of ~~accounting.~~

~~Pollak Business of Stoneridge, Inc. Acquisition~~

In April 2019, we acquired certain assets and liabilities of the Pollak business of Stoneridge, Inc. for approximately $40 million, subject to post-closing adjustments. In May 2019, the post-closing adjustments were finalized at $1.6 million, reducing the purchase price to $38.4 million. The acquisition was funded through borrowings under our revolving credit facilityStuttgart, Germany with ~~JPMorgan Chase Bank, N.A. Stoneridge’s Pollak business had manufacturing and distribution~~ facilities in ~~Canton, Massachusetts, El Paso, Texas,~~Germany and ~~Juarez, Mexico, and distributed a range of engine management products including sensors, switches, and connectors.~~Hungary. The acquisition, reported as part of our Engine Management Segment, ~~enhanced~~aligns with our ~~growth opportunities in the OE/OES, heavy duty~~strategy of expansion beyond our core aftermarket business into complementary areas, and gives us exposure to a diversified group of blue chip European commercial and light vehicle markets and added to our existing expertise in aftermarket distribution, product management and service. We have not acquired any of the Pollak facilities or employees, and have relocated all production to our existing facilities. Revenues generated from the acquired business were approximately $45 million for the year ended December 31, 2018.OE customers.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values (in thousands):

Purchase Price			$	38,427
Purchase price								$	16,290
Assets acquired and liabilities assumed:
Receivables					$	2,852
Inventory	$	3,331				5,126
Other current assets (1)						1,628
Property, plant and equipment, net		45				1,810
Operating lease right-of-use assets						4,971
Intangible assets		24,650				5,471
Goodwill		10,401				4,827
Current liabilities						(4,190	)
Noncurrent operating lease liabilities						(4,454	)
Deferred income taxes						(1,751	)
Net assets acquired			$	38,427				$	16,290

(1)

The other current assets balance includes $0.9 million of cash acquired.

Intangible assets acquired of ~~$24.7~~$5.5 million consist of customer relationships ~~related to the acquired OE/OES business of $17.2 million~~ that will be amortized on a straight-line basis over the estimated useful life of 10 years; customer relationships related to the acquired aftermarket business of $7.2 million that will be amortized on a straight-line basis over the estimated useful life of 15 years; a trademark of $0.2 million that will be amortized on a straight-line basis over the estimated useful life of 10 years; and a non-compete agreement of $0.1 million that will be amortized on a straight-line basis over the estimated useful life of 520 years. Goodwill of ~~$10.4~~$4.8 million was allocated to the Engine Management ~~Segment and is deductible for income tax purposes.~~Segment. The goodwill reflects relationships, business specific knowledge and the replacement cost of an assembled workforce associated with personal ~~reputations,~~reputations. The intangible assets and goodwill are not deductible for tax purposes.

Incremental revenues from the acquired Stabil business included in our consolidated statement of operations for the year ended December 31, 2022 were $14.9 million.

Acquisition of Capital Stock of Trumpet Holdings, Inc. (“Trombetta”)

In May 2021, we acquired 100% of the capital stock of Trumpet Holdings, Inc., a Delaware corporation, (more commonly known as “Trombetta”), for $111.7 million. Trombetta is a leading provider of power switching and power management products to Original Equipment (“OE”) customers in various markets. The acquired Trombetta business was paid for in cash funded by borrowings under our revolving credit facility with JPMorgan Chase Bank, N.A., as agent, and has manufacturing facilities in Milwaukee, Wisconsin, Sheboygan Falls, Wisconsin, Tijuana, Mexico, as well as ~~the value~~a 70% ownership in a joint venture in Hong Kong, with operations in Shanghai and Wuxi, China (“Trombetta Asia, Ltd.”). The acquisition, to be reported as part of ~~expected synergies.~~our Engine Management Segment, aligns with our strategy of expansion into non-aftermarket parts.

The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values, (in thousands):

Purchase price				$	111,711
Assets acquired and liabilities assumed:
Receivables	$	9,173
Inventory		12,460
Other current assets (1)		5,193
Property, plant and equipment, net		4,939
Operating lease right-of-use assets		3,847
Intangible assets		54,700
Goodwill		49,250
Current liabilities		(5,072	)
Noncurrent operating lease liabilities		(3,065	)
Deferred income taxes		(8,210	)
Subtotal					123,215
Fair value of acquired noncontrolling interest					(11,504	)
Net assets acquired				$	111,711

(1)

The other current assets balance includes $4.6 million of cash acquired.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Intangible assets acquired of $54.7 million consist of customer relationships of $39.4 million that will be amortized on a straight-line basis over the estimated useful life of 20 years; developed technology of $13.4 million that will be amortized on a straight-line basis over the estimated useful life of 15 years; and a trade name of $1.9 million that will be amortized on a straight-line basis over the estimated useful life of 10 years. Goodwill of $49.3 million was allocated to the Engine Management Segment. The goodwill reflects relationships, business specific knowledge and the replacement cost of an assembled workforce associated with personal reputations. The intangible assets and goodwill are not deductible for tax purposes.

~~Revenues~~

Incremental revenues from the acquired Trombetta business included in our consolidated ~~statements~~statement of operations for the ~~acquisition were $28.2 million from the date of acquisition through~~year ended December 31, ~~2019.~~2022 were $27.4 million.

~~2018 Increase in Equity Investment~~

~~Foshan GWO YNG SMP Vehicle Climate Control & Cooling Products Co. Ltd.~~

~~In April 2014, we formed a 50/50 joint venture with Gwo Yng Enterprise Co., Ltd.~~Acquisition of Particulate Matter Sensor Business of Stoneridge, Inc. (“~~Gwo Yng”~~Soot Sensor”), a China-based manufacturer of air conditioner accumulators, filter driers, hose assemblies and switches for the automotive aftermarket and OEM/OES markets. We acquired our 50% interest in the joint venture for approximately $14 million. We determined, at that time, that due to a lack of a voting majority and other qualitative factors, we do not control the operations of the joint venture and accordingly, our investment in the joint venture was accounted for under the equity method of accounting.

In March 2018, we acquired an additional 15% equity interest in the joint venture for approximately $4.2 million, thereby increasing our equity interest in the joint venture to 65%. The $4.2 million payment for our additional 15% investment was made in cash installments throughout 2018. Although we have increased our equity interest in the joint venture to 65%, the minority shareholder will maintain participating rights that will allow it to participate in certain significant financial and operating decisions that occur in the ordinary course of business. As a result of the existence of these substantive participating rights of the minority shareholder, we will continue to account for our investment in the joint venture under the equity method of accounting.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

~~Activity, by segment, for the year ended December 31, 2019 and 2018 related to our Orlando Plant Rationalization Program consisted of the following (in thousands):~~Integration Costs

Engine
Management

Temperature
Control
Other Total
Exit activity liability at December 31, 2017 $ 986 $ — $ — $ 986
Restructuring and integration costs:
Amounts provided for during 2018 1,479 — — 1,479
Non-cash usage, including asset writedowns (12 ) — — (12 )
Cash payments (2,015 ) — — (2,015 )
Exit activity liability at December 31, 2018 $ 438 $ — $ — $ 438
Restructuring and integration costs:
Amounts provided for during 2019 — — — —
Cash payments (278 ) — — (278 )
Exit activity liability at December 31, 2019 $ 160 $ — $ — $ 160

Particulate Matter Sensor (“Soot Sensor”) Product Line Relocation

~~Integration Costs~~

~~Pollak Relocation~~

In connection with our ~~April 2019 acquisition~~acquisitions in March 2021 and November 2021 of certain ~~assets and liabilities of the Pollak business of~~soot sensor product lines from Stoneridge, Inc., we incurred certain integration expenses in connection with the relocation of certain inventory, machinery, and ~~equipment~~equipment from ~~Pollak’s distribution and manufacturing~~Stoneridge’s facilities in ~~El Paso, Texas, Canton, Massachusetts,~~Lexington, Ohio and ~~Juarez, Mexico,~~Tallinn, Estonia to our existing facilities in ~~Disputanta, Virginia, Reynosa, Mexico~~Independence, Kansas and ~~Independence, Kansas. Total integration~~Bialystok, Poland, respectively. Integration expenses recognized and cash payments made of $144,000 and $392,000, during the years ended December 31, 2022 and 2021, respectively, related to these relocation activities in our Engine Management segment.The soot sensor product line relocation has been substantially completed and there is no remaining aggregate liability related to the soot sensor product line relocation ~~of $2.2~~ ~~million were recognized during the year ended December 31, 2019. The Pollak relocation is substantially completed.~~

~~Activity, by segment, for the year ended December 31, 2019 related to the Pollak relocation consisted of the following (in thousands):~~

Engine
Management

Temperature
Control
Other Total
Exit activity liability at December 31, 2018 $ — $ — $ — $ —
Restructuring and integration costs:
Amounts provided for during 2019 2,199 — — 2,199
Cash payments (1,688 ) — — (1,688 )
Reclassification of inventory reserves (511 ) — — (511 )
Exit activity liability at December 31, 2019 $ — $ — $ — $ —

~~Wire and Cable Relocation~~

In connection with our acquisition of the North American automotive ignition wire business of General Cable Corporation in May 2016, we incurred certain integration expenses, including costs incurred in connection with the consolidation of the General Cable Corporation Altoona, Pennsylvania wire distribution center into our existing wire distribution center in Edwardsville, Kansas and the relocation of certain machinery and equipment. In October 2016, we further announced our plan to relocate all production from the acquired Nogales, Mexico wire set assembly operation to our existing wire assembly facility in Reynosa, Mexico and to close the Nogales, Mexico plant. Asas of December 31, 2018, the wire and cable relocation program has been completed. All of our Nogales, Mexico production activities have been relocated to our Reynosa, Mexico assembly facility and our Nogales, Mexico plant was closed.

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~2022.

~~Activity, by segment, for the year ended December 31, 2018 related to our wire and cable relocation program consisted of the following (in thousands):~~

Engine
Management

Temperature
Control
Other Total
Exit activity liability at December 31, 2017 $ 392 $ — $ — $ 392
Restructuring and integration costs:
Amounts provided for during 2018 1,394 — — 1,394
Non-cash usage, including asset write-downs (169 ) — — (169 )
Cash payments (1,644 ) — — (1,644 )
Foreign currency exchange rate changes 27 — — 27
Exit activity liability at December 31, 2018 $ — $ — $ — $ —

6.4. 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 being accounted for as a sale.

Pursuant to these agreements, we sold ~~$719~~$813.7 million and ~~$720~~$818.8 million of receivables for the years ended December 31, ~~2019~~2022 and ~~2018, respectively, which was~~2021, respectively. Receivables presented at financial institutions and not yet collected as of December 31, 2021 were $1.3 million and remained in our accounts receivable balance as of that date. There were no receivables presented at financial institutions and not yet collected as of December 31, 2022. 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 ~~$22~~$32 million, ~~$24.4~~$11.5 million and ~~$22.6~~$12.2 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, ~~2019, 2018~~2022, 2021 and ~~2017,~~2020, 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 ~~LIBOR rate, as it is a component~~purpose of determining the discount rate applicable to each arrangement. If the ~~LIBOR~~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.

5. Inventories

	December 31, 2022		December 31, 2021
	(In thousands)

Finished goods	$	324,362	$	296,739
Work-in-process		14,099		16,010
Raw materials		190,254		156,006
Subtotal		528,715		468,755
Unreturned customer inventories		19,695		22,268
Total inventories	$	548,410	$	491,023

~~7. Inventories~~

December 31,
2019

December 31,
2018

(In thousands)

Finished goods $ 241,472 $ 226,802
Work-in-process 11,138 10,527
Raw materials 115,611 112,482
Subtotal 368,221 349,811
Unreturned customer inventories 19,722 20,484
Total inventories $ 387,943 $ 370,295

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Property, Plant and Equipment

	December 31,				December 31,
	2019		2018		2022		2021
	(In thousands)				(In thousands)
Land, buildings and improvements	$	38,299	$	40,126	$	42,651	$	40,882
Machinery and equipment		142,531		136,526		166,149		159,967
Tools, dies and auxiliary equipment		54,843		49,365		67,017		63,944
Furniture and fixtures		30,470		29,169		32,084		30,688
Leasehold improvements		11,711		11,386		15,083		14,081
Construction-in-progress		11,271		10,317		23,340		21,012
Total property, plant and equipment		289,125		276,889		346,324		330,574
Less accumulated depreciation		199,476		186,135		239,176		227,788
Total property, plant and equipment, net	$	89,649	$	90,754	$	107,148	$	102,786

Depreciation expense was ~~$17.4~~$19 million in ~~2019, $16.1~~2022, $18.2 million in ~~2018~~2021 and ~~$15.4~~$17.8 million in ~~2017.~~2020.

7. Leases

Quantitative Lease Disclosures

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 eleven 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.

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):

Balance Sheet Information	December 31,
Assets	2022			2021
Operating lease right-of-use assets	$	49,838		$	40,469

Liabilities
Sundry payables and accrued expenses	$	10,763		$	10,544
Noncurrent operating lease liabilities		40,709			31,206
Total operating lease liabilities	$	51,472		$	41,750

Weighted Average Remaining Lease Term
Operating leases	7 Years			5.3 Years

Weighted Average Discount Rate
Operating leases		3.7	%		3	%

	Year Ended, December 31,
Expense and Cash Flow Information	2022		2021
Lease Expense
Operating lease expense (a)	$	11,411	$	10,051
Supplemental Cash Flow Information
Cash Paid for the amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	11,293	$	9,985
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases (b)	$	31,064	$	20,975

(a)

Excludes expenses of approximately $2.7 million and $2 million for the years ended December 31, 2022 and 2021, respectively, related 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 is not material.

(b)

Includes $21.6 million of right-of-use assets related to the lease modification and extension for our executive offices in Long Island City, New York during year ended December 31, 2022, and right-of-use assets obtained in business acquisitions of $0.4 million and $8.8 million during the years ended December 31, 2022 and 2021, respectively.

Minimum Lease Payments

At December 31, 2022, we are obligated to make minimum lease payments through 2033, under operating leases, which are as follows (in thousands):

2023	$	10,956
2024		9,770
2025		7,179
2026		6,268
2027		5,383
Thereafter		20,633
Total lease payments	$	60,189
Less: Interest		(8,717	)
Present value of lease liabilities	$	51,472

8. Goodwill and Other Intangible Assets

Goodwill

We assess the impairment of long‑lived and identifiable intangibles assets and goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. With respect to goodwill, 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 of a reporting unit is below its carrying amount. We completed our annual impairment test of goodwill as of December 31, ~~2019.~~2022.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

In light of the ~~reporting unit;~~negative year-over-year impact on our company’s performance in the year ended December 31, 2022 of inflationary cost increases in raw materials, labor, transportation and freight costs, and the increase in interest rates, and the recent decline in our stock price, we ~~are required~~elected to bypass the qualitative assessment at December 31, 2022 and have decided to perform a ~~second~~ ~~step, as this is an indication that the reporting unit~~quantitative impairment test for goodwill may be impaired. In this step, we compare the implied fair value of the reporting unit goodwill with the carrying amount of the reporting unit goodwill and recognize a charge for impairment to the extent the carrying value exceeds the implied fair value.

~~As of December~~ ~~31,2019,~~ ~~we performed a qualitative assessment of the likelihood of a goodwill impairment for~~at both the Engine Management and Temperature Control reporting units. ~~Based upon our qualitative assessment, we determined that it was not more likely than not that the~~The fair ~~value of the each~~values of the Engine Management and Temperature Control reporting units were ~~less than their respective carrying amounts. As such,~~determined based upon the Income Approach, which estimates the fair value based on future discounted cash flows, and the Market Approach, which estimates the fair value based on market prices of comparable companies. We base our fair value estimates on projected financial information which we ~~concluded that the~~ ~~two-step~~believe to be reasonable. We also considered our total market capitalization as of December 31, 2022. Our December 31, 2022 annual goodwill impairment ~~test would~~analysis did not ~~be required, and that there would be no required goodwill~~result in an impairment charge as it was determined that the fair values of ~~December~~ ~~31,2019~~ ~~at each of the~~our Engine Management and Temperature Control reporting ~~units. We did not have a goodwill impairment charge as~~units were in excess of ~~December~~ ~~31,2019,~~their carrying amounts. While the fair values exceed the carrying amounts at the present time and we do not believe that ~~future~~ impairments are ~~probable.~~probable, we will need to maintain the ongoing performance of the business at current projected levels in future periods to sustain their carrying values.

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

Changes in the carrying values of goodwill by operating segment during the years ended December 31, ~~2019~~2022 and ~~2018~~2021 are as follows (in thousands):

	Engine Management			Temperature Control		Total			Engine Management			Temperature Control		Total
Balance as of December 31, 2017:
Balance as of December 31, 2020:
Goodwill	$	91,631		$	14,270	$	105,901		$	102,055		$	14,270	$	116,325
Accumulated impairment losses		(38,488	)		—		(38,488	)		(38,488	)		—		(38,488	)
	$	53,143		$	14,270	$	67,413		$	63,567		$	14,270	$	77,837
Activity in 2018
Activity in 2021
Acquisition of Trombetta										49,250			—		49,250
Acquisition of Stabil										4,827			—		4,827
Foreign currency exchange rate change		(92	)		—		(92	)		(262	)		—		(262	)
Balance as of December 31, 2018:
Balance as of December 31, 2021:
Goodwill		91,539			14,270		105,809			155,870			14,270		170,140
Accumulated impairment losses		(38,488	)		—		(38,488	)		(38,488	)		—		(38,488	)
	$	53,051		$	14,270	$	67,321		$	117,382		$	14,270	$	131,652
Activity in 2019
Acquisition of Pollak Business of Stoneridge, Inc.		10,401			—		10,401
Activity in 2022
Acquisition of Kade										—			766		766
Foreign currency exchange rate change		80			—		80			(402	)		71		(331	)
Balance as of December 31, 2019:
Balance as of December 31, 2022:
Goodwill		102,020			14,270		116,290			155,468			15,107		170,575
Accumulated impairment losses		(38,488	)		—		(38,488	)		(38,488	)		—		(38,488	)
	$	63,532		$	14,270	$	77,802		$	116,980		$	15,107	$	132,087

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Acquired Intangible Assets

Acquired identifiable intangible assets as of December 31, ~~2019~~2022 and ~~2018~~2021 consist of:

	December 31,						December 31,
	2019			2018			2022			2021
	(In thousands)						(In thousands)
Customer relationships	$	111,692		$	87,195		$	158,717		$	157,020
Patents, developed technology and intellectual property								14,123			14,123
Trademarks and trade names		6,980			6,800			8,880			8,880
Non-compete agreements		3,276			3,193			3,282			3,280
Patents		723			723
Supply agreements		800			800			800			800
Leaseholds		160			160			160			160
Total acquired intangible assets		123,631			98,871			185,962			184,263
Less accumulated amortization (1)		(59,431	)		(51,391	)		(86,945	)		(78,932	)
Net acquired intangible assets	$	64,200		$	47,480		$	99,017		$	105,331

(1)

Applies to all intangible assets, except for a related ~~trademarks and~~ trademark/trade ~~names~~name totaling ~~$5.2~~$2.6 million, which ~~have~~has an indefinite useful ~~lives~~life and, as such, ~~are~~is not being amortized.

~~In April~~ ~~2019,~~ ~~we acquired certain assets and liabilities of the Pollak business of Stoneridge, Inc. Intangible assets acquired of~~ ~~$24.7 million~~ ~~consist of customer relationships related to the acquired OE/OES business of~~ ~~$17.2 million~~ ~~that will be amortized on a straight-line basis over the estimated useful life of~~ 10 ~~years; customer relationships related to the acquired aftermarket business of~~ ~~$7.2 million~~ ~~that will be amortized on a straight-line basis over the estimated useful life of~~ 15 ~~years; a trademark of~~ ~~$0.2 million~~ ~~that will be amortized on a straight-line basis over the estimated useful life of~~ 10 ~~years; and a non-compete agreement of~~ ~~$0.1 million~~ ~~that will be amortized on a straight-line basis over the estimated useful life of~~ 5 ~~years.~~

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

Total amortization expense for acquired intangible assets was $8$8.6 million for the year ended December 31, ~~2019, $7.6~~2022, $8.7 million for the year ended December 31, ~~2018,~~2021, and $8$8.2 million for the year ended December 31, ~~2017.~~2020. Based on the current estimated useful lives assigned to our intangible assets, amortization expense is estimated to be ~~$8.2~~$8.5 million for ~~2020, $6.8~~2023, $8.4 million in ~~2021, $5.2~~2024, $8.4 million in ~~2022, $5~~2025, $8.4 million in ~~2023~~2026 and ~~$33.8~~$62.7 million in the aggregate for the years ~~2024~~2027 through ~~2034.~~2041.

For information related to identified intangible assets acquired in the Stabil, Trombetta, Soot Sensor and Kade acquisitions, see Note 2, “Business Acquisitions and Investments,” of the notes to our consolidated financial statements.

Other Intangible Assets

Other intangible assets include computer software. Computer software as of December 31, ~~2019~~2022 and ~~2018~~2021 totaled ~~$16.9~~$18.7 million and $~~17.2~~17.4 million, respectively. Total accumulated computer software amortization as of December 31, ~~2019~~2022 and ~~2018~~2021 was ~~$16.2~~$17.2 million and ~~$16.3~~$16.5 million, respectively. Computer software is amortized over its estimated useful life of 3 to 10 years. Amortization expense for computer software was ~~$0.4~~$0.7 million, ~~$0.4~~$0.3 million and ~~$0.5~~$0.3 million for the years ended December 31, ~~2019, 2018~~2022, 2021 and ~~2017,~~2020, respectively. ~~Fully amortized computer software, no longer in use, of $0.5~~ ~~million was written-off during the year ended December 31, 2019.~~

~~10.~~

9. Investments in Unconsolidated Affiliates

	December 31,				December 31,
	2019		2018		2022		2021
	(In thousands)				(In thousands)
Foshan GWOYNG SMP Vehicle Climate Control & Cooling Products Co. Ltd.	$	18,099	$	17,764	$	18,410	$	20,692
Foshan FGD SMP Automotive Compressor Co. Ltd		13,633		12,547		16,747		16,676
Jiangsu Che Yijia New Energy Technology Co., Ltd.		4,883		—
Foshan Che Yijia New Energy Technology Co., Ltd.						4,098		3,990
Orange Electronic Co. Ltd		2,243		2,158		2,490		2,729
Total	$	38,858	$	32,469	$	41,745	$	44,087

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Investment in ~~Jiangsu~~Foshan Che Yijia New Energy Technology Co., Ltd.

In August 2019, we acquired an approximate 29% minority interest in ~~Jiangsu~~Foshan Che Yijia New Energy Technology Co., Ltd. (“CYJ”) for approximately $5.1 million. ~~Our investment in CYJ was funded through borrowings under our revolving credit facility with JPMorgan Chase, N.A.~~ CYJ is a manufacturer of automotive electric air conditioning compressors ~~for electric vehicles~~ and is located in China. Our minority interest in CYJ is accounted for using the equity method of accounting.

In December 2021, Standard Motor Products (Hong Kong), Ltd., (“SMP HK”), a subsidiary of Standard Motor Products, Inc., entered into an unsecured loan agreement with CYJ. Under the terms of the loan agreement, CYJ shall have the right to borrow from SMP HK, as lender, up to an aggregate principal amount of $4 million, with interest calculated on the basis of simple interest of five percent (5%) per annum and a maturity date of November 30, 2023, subject to extension by SMP HK at its sole discretion. At December 31, 2022, outstanding borrowings under the loan agreement were $4 million.

In October 2022, we acquired an additional 3.55% equity interest in CYJ for RMB 1.7 million (approximately $242,000), increasing our minority ownership interest in CYJ from an approximate interest of 29% to 33%. We ~~did not make any~~will continue to account for our minority interest in CYJ using the equity method of accounting. During the years ended December 31, 2022 and 2021, purchases we made from CYJ ~~from the date of acquisition through December~~ ~~31,2019.~~were not material.

Investment in Foshan FGD SMP Automotive Compressor Co. Ltd.

In November 2017, we formed Foshan FGD SMP Automotive Compressor Co., Ltd., a 50/50 joint venture with Foshan Guangdong Automotive Air Conditioning Co., Ltd. (“FGD”), a China-based manufacturer of automotive belt driven air conditioning ~~compressors for the automotive aftermarket and the Chinese OE market.~~compressors. We acquired our 50% interest in the joint venture for approximately $12.5 million. ~~Payment for our acquired interest in the joint venture was made in installments with approximately $6.8 million paid in 2017 and the balance of $5.7 million paid in January 2018.~~ We determined that due to a lack of a voting majority, and other qualitative factors, we do not control the operations of the joint venture and accordingly, our investment in the joint venture is accounted for under the equity method of accounting. During the years ended December 31, ~~2019~~2022 and ~~2018,~~2021, we made purchases from ~~FGD~~the joint venture of approximately $~~12.8~~53.3 million and ~~$5.2~~$32.2 million, respectively.

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

Investment in Foshan GWOYNG SMP Vehicle Climate Control & Cooling Products Co. Ltd.

In April 2014, we formed Foshan GWOYNG SMP Vehicle Climate Control & Cooling Products Co. Ltd., a 50/50 joint venture with Gwo Yng Enterprise Co., Ltd. (“Gwo Yng”), a China-based manufacturer of automotive air conditioner accumulators, filter driers, hose assemblies and switches ~~for the automotive aftermarket and OEM/OES markets.~~. We acquired our 50% interest in the joint venture for $14 million. We determined, at that time, that due to a lack of a voting majority and other qualitative factors, we do not control the operations of the joint venture and accordingly, our investment in the joint venture was accounted for under the equity method of accounting.

In March 2018, we acquired an additional 15% equity interest in the joint venture for approximately $4.2 million, thereby increasing our equity interest in the joint venture to 65%. ~~The $4.2 million payment for our additional 15% investment was made in cash installments throughout 2018.~~ Although we ~~have~~ increased our equity interest in the joint venture to 65%, the minority shareholder ~~will maintain~~maintained participating rights that ~~will allow~~allowed it to participate in certain significant financial and operating decisions that occur in the ordinary course of business. As a result of the existence of these substantive participating rights of the minority shareholder, we ~~will continue~~continued to account for our investment in the joint venture under the equity method of accounting. During the years ended December 31, ~~2019~~2022 and ~~2018,~~2021, we made purchases from ~~Gwo Yng~~the joint venture of approximately ~~$12.7~~$16.1 million and ~~$14.9~~$15.9 million, respectively.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Investment in Orange Electronic Co. Ltd.

In January 2013, we acquired ~~an approximate 25%~~a minority interest in Orange Electronic Co., Ltd. (“Orange”) for $6.3 million. Orange is a manufacturer of tire pressure monitoring system sensors and is located in Taiwan. As of December 31, ~~2019,~~2022, our minority interest in Orange of 19.4% is accounted for using the equity method of accounting as we have the ability to exercise significant influence. During each of the fourth quarters of 2018 and 2017, after a review of the recent financial performance and near term prospects for Orange, we determined that the decline in quoted market prices below the carrying amount of our investment in Orange was other than temporary and, as such, recognized a noncash impairment charge of approximately $1.7 million and $1.8 million, respectively, in each quarter. The impairment charge has been reported in our Engine Management Segment and is included in other non-operating income (expense), net in our consolidated statements of operations. Purchases from Orange during the years ended December 31, ~~2019~~2022 and ~~2018 were~~2021, we made purchases from Orange of approximately ~~$3.5~~$4.1 million and ~~$4.9~~$7.8 million, respectively.

~~11.~~

10. Other Assets

	December 31,				December 31,
	2019		2018		2022		2021
	(In thousands)				(In thousands)
Deferred compensation	$	17,519	$	14,020	$	20,190	$	23,623
Noncurrent portion of interest rate swap fair value						3,091		—
Long term receivables						1,944		971
Deferred financing costs, net		656		876		1,603		206
Other		660		723		682		602
Total other assets, net	$	18,835	$	15,619	$	27,510	$	25,402

Deferred compensation consists of assets held in a nonqualified defined contribution pension plan as of December 31, ~~2019~~2022 and ~~2018,~~2021, respectively.

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~12.~~

11. Credit Facilities and Long-Term Debt

Total debt outstanding is summarized as follows:

	December 31,				December 31,
	2019		2018		2022		2021
	(In thousands)				(In thousands)
Revolving credit facilities	$	52,460	$	43,689
Credit facility – term loan due 2027					$	97,500	$	—
Credit facility – revolver due 2027						142,000		—
Senior secured facility – revolver due 2023						—		125,298
Other (1)		4,585		5,530		120		3,138
Total debt	$	57,045	$	49,219	$	239,620	$	128,436

Current maturities of debt	$	56,916	$	49,066	$	55,031	$	128,415
Long-term debt		129		153		184,589		21
Total debt	$	57,045	$	49,219	$	239,620	$	128,436

(1)

Other includes borrowings under our Polish overdraft facility of Zloty ~~16.7~~12.3 million (approximately ~~$4.4 million) and Zloty 19.9 million (approximately $5.3~~$3 million) as of December 31, ~~2019 and 2018, respectively.~~2021. There were no borrowings under the Polish overdraft facility at December 31, 2022.

~~Maturities of long-term debt are not material for the year ended December 31, 2019~~Term Loan and ~~beyond.~~

Revolving Credit ~~Facility~~Facilities

In ~~December 2018, we amended~~March 2022, the Company and its wholly owned subsidiaries, SMP Motor Products Ltd. and Trumpet Holdings, Inc., entered into an amendment to our existing Credit Agreement, dated as of October 28, 2015, as amended (the “2015 Credit Agreement”), with ~~JPMorgan~~JP Morgan Chase Bank, N.A., as agent, and a syndicate of ~~lenders. The amended credit agreement provides~~lenders for aour senior secured revolving credit ~~facility with a line~~facility. The amendment provided for the drawdown of ~~credit of up to $250 million (with~~ an additional $50 million from the agreement’s accordion ~~feature) and extends~~feature to increase the ~~maturity date to~~ ~~December 2023. The~~ line of credit under the ~~amended~~revolving credit ~~agreement also allows~~facility from $250 million to $300 million, and updated the benchmark provisions to replace LIBOR with Term SOFR as the reference rate.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

In June 2022, the Company entered into a new Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of lenders (the “Credit Agreement”). The Credit Agreement provides for a ~~$10~~$500 million ~~line~~credit facility comprised of a $100 million term loan facility (the “term loan”) and a $400 million multi-currency revolving credit facility available in U.S. Dollars, Euros, Sterling, Swiss Francs, Canadian Dollars and other currencies as agreed to ~~Canada as part of~~by the ~~$250 million available for borrowing. Direct~~administrative agent and the lenders (the “revolving facility”). The Credit Agreement replaces and refinances the 2015 Credit Agreement.

Borrowings under the Credit Agreement were used to repay all outstanding borrowings under the ~~amended~~2015 Credit Agreement, and pay certain fees and expenses incurred in connection with the Credit Agreement, with future borrowings used for other general corporate purposes of the Company and its subsidiaries. The term loan amortizes in quarterly installments of 1.25% in each of the first four years, and quarterly installments of 2.5% in the fifth year of the Credit Agreement. The revolving facility has a $25 million sub-limit for the issuance of letters of credit and a $25 million sub-limit for the borrowing of swingline loans. The maturity date is June 1, 2027. The Company may request up to two one-year extensions of the maturity date.

The Company may, upon the agreement of one or more then existing lenders or of additional financial institutions not currently party to the Credit Agreement, increase the revolving facility commitments or obtain incremental term loans by an aggregate amount not to exceed (x) the greater of (i) $168 million or (ii) 100% of consolidated EBITDA (as defined in the Credit Agreement) for the four fiscal quarters ended most recently before such date, plus (y) the amount of any voluntary prepayment of term loans, plus (z) an unlimited amount so long as, immediately after giving effect thereto, the pro forma First Lien Net Leverage Ratio (as defined in the Credit Agreement) does not exceed 2.5 to 1.0.

Term loan and revolver facility borrowings in U.S. Dollars bear interest, at ~~LIBOR~~the Company’s election, at a rate per annum equal to Term SOFR plus a0.10% plus an applicable margin, ~~ranging from 1.25% to 1.75% based on our borrowing availability,~~ or ~~floating at~~an alternate base rate plus an applicable margin, where the alternate base rate is the greater of the prime rate, the federal funds effective rate plus a0.50%, and one-month Term SOFR plus 0.10% plus 1.00%. Term loan borrowings are being made at one-month Term SOFR. The applicable margin ~~ranging~~for the term benchmark borrowings ranges from ~~0.25%~~1.0% to ~~0.75%~~2.0%, and the applicable margin for alternate base rate borrowings ranges from 0% to 1.0%, in each case, based on ~~our borrowing availability,~~the total net leverage ratio of the Company and its restricted subsidiaries. The Company may select interest periods of one, three or six months for Term SOFR borrowings. Interest is payable at ~~our option.~~ the end of the selected interest period, but no less frequently than quarterly.

The ~~amended credit agreement is~~Company’s obligations under the Credit Agreement are guaranteed by ~~certain of our~~its material domestic subsidiaries (each, a “Guarantor”), and secured by ~~certain of our assets.~~

~~Borrowings under the amended credit agreement are secured by~~a first priority perfected security interest in substantially all of ~~our assets, including accounts receivable, inventory~~the existing and future personal property of the Company and each Guarantor, subject to certain ~~fixed assets,~~exceptions. The collateral security described above also secures certain banking services obligations and ~~those~~interest rate swaps and currency or other hedging obligations of ~~certain~~the Company owing to any of ~~our subsidiaries. Availability~~the then existing lenders or any affiliates thereof. Concurrently with the Company’s entry into the Credit Agreement, the Company also entered into a seven year interest rate swap agreement with Wells Fargo Bank, N.A., Co-Syndication Agent and lender under the ~~amended credit agreement is based~~Credit Agreement, on ~~a formula~~$100 million of ~~eligible accounts receivable, eligible drafts presented to the banks under our~~ ~~supply chain financing arrangements, eligible inventory, eligible equipment and eligible fixed assets. After taking into account outstanding~~ borrowings under the ~~amended credit~~Credit Agreement. The interest rate swap agreement ~~there was an additional $194.3 million available for us to borrow pursuant to the formula~~matures in May 2029.

Outstanding borrowings at December 31, ~~2019. Outstanding borrowings~~2022 under the ~~credit agreement, which are classified as~~Credit Agreement were $239.5 million, consisting of current ~~liabilities, were $52.5~~borrowings of $55 million and ~~$43.7 million~~long-term debt of $184.5 million; while outstanding borrowings at December 31, ~~2019 and 2018, respectively; while letters~~2021 under the 2015 Credit Agreement were $125.3 million, consisting of current borrowings. Letters of credit outstanding under the ~~credit agreement~~Credit Agreement were $~~3.1~~$2.4 million at ~~both~~ December 31, ~~2019~~2022, and ~~2018.~~ ~~Borrowings~~$2.6 million under the ~~credit agreement~~2015 Credit Agreement at December 31, 2021. Borrowings at December 31, 2021 under the 2015 Credit Agreement have been classified as current liabilities based upon accounting rules and certain provisions in the agreement.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

At December 31, ~~2019,~~2022, the weighted average interest rate under our Credit Agreement was 5.2%, which consisted of $237 million in borrowings at 5.2% under Term SOFR, adjusted for the impact of the interest rate swap agreement on $100 million of borrowings, and an alternative base rate borrowing of $2.5 million at 8%. At December 31, 2021, the weighted average interest rate on our ~~amended credit agreement~~2015 Credit Agreement was ~~3.5%~~1.4%, which consisted of ~~$40~~$125 million in direct borrowings at ~~2.3%~~1.4% and an alternative base rate loan of ~~$12.5~~$0.3 million at 5%3.5%. AtDuring the year ended December 31, ~~2018, the weighted average interest rate on~~2022, our ~~amended credit agreement was 3.9%, which consisted of $40 million in direct borrowings~~ at ~~3.4%~~ ~~and an alternative base rate loan of~~ ~~$3.7 million~~ at ~~5.8%~~. ~~Our~~ average daily alternative base rate loan balance was ~~$1.7~~$5.6 million, ~~and $1.8~~compared to a balance of $1.1 million ~~during 2019 and 2018, respectively.~~

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~for the year ended December 31, 2021.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

At any time that our borrowing availability is less than the greater of either (a) $25 million, or 10% of the commitments if fixed assets are not included in the borrowing base, or (b) $31.25 million, or 12.5% of the commitments if fixed assets are included in the borrowing base, the terms of the amended credit agreement provide for,The Credit Agreement contains customary covenants limiting, among other ~~provisions, a financial covenant requiring us, on a consolidated basis,~~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 ~~maintain a fixed charge coverage ratio~~customary exceptions, thresholds and baskets. The Credit Agreement also contains customary events of 1:1 at the end of each fiscal quarter (rolling four quarters). As of December 31, 2019, we were not subject to these covenants. The amended credit agreement permits us to pay cash dividends of $20 million and make stock repurchases of $20 million in any fiscal year subject to a minimum availability of $25 million. Provided specific conditions are met, the amended credit agreement also permits acquisitions, permissible debt financing, capital expenditures, and cash dividend payments and stock repurchases of greater than $20 million.default.

Polish Overdraft Facility

~~Our~~In October 2022, our Polish subsidiary, SMP Poland sp. z.o.o., ~~has entered into an~~amended its overdraft facility with HSBC ~~France~~Continental Europe (Spolka Akcyjna) Oddzial w Polsce ~~formerly HSBC Bank Polska S.A.,~~to provide for borrowings under the facility in Euros and U.S. Dollars. Under the amended terms, the overdraft facility provides for borrowings of up to Zloty 30 million (approximately ~~$7.9~~$6.8 million). if borrowings are solely in Zloty, or up to 85% of the Zloty 30 million limit (approximately $5.8 million) if borrowings are in Euros and/or U.S. Dollars. The overdraft facility ~~as amended, expires~~has an initial maturity date in December ~~2020~~.2022, with automatic three-month renewals until June 2027, subject to cancellation by either party, at its sole discretion, at least 30 days prior to the commencement of the three-month renewal period. Borrowings under the amended overdraft facility will bear interest at a rate equal to ~~WIBOR~~(1) the one month Warsaw Interbank Offered Rate (“WIBOR”) + ~~0.75%~~1.5% for borrowings in Polish Zloty, (2) the one month Euro Interbank Offered Rate (“EURIBOR”) + 1.5% for borrowings in Euros, and (3) the Mid-Point of the Fed Target Range + 1.75% for borrowings in U.S Dollars. Borrowings under the overdraft facility are guaranteed by Standard Motor Products, Inc., the ultimate parent company. At December 31, ~~2019 and 2018,~~2021 borrowings under the overdraft facility were Zloty ~~16.7~~12.3 million (approximately ~~$4.4~~$3 million) ~~and Zloty 19.9 million (approximately $5.3 million), respectively.~~. There were no borrowings outstanding under the overdraft facility at December 31, 2022.

Maturities of Debt

As of December 31, 2022, maturities of debt through 2027, assuming no prepayments, are as follows (in thousands):

	Revolving Credit Facility			Term Loan Facility			Polish Overdraft Facility and Other Debt			Total
2023		—			5,000			120			5,120
2024		—			5,000			—			5,000
2025		—			5,000			—			5,000
2026		—			7,500			—			7,500
2027		142,000			75,000			—			217,000
Total	$	142,000		$	97,500		$	120		$	239,620
Less: current maturities		(50,000	)		(5,000	)		(31	)		(55,031	)
Long-term debt	$	92,000		$	92,500		$	89		$	184,589

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Deferred Financing Costs

We have deferred financing costs of approximately ~~$0.9~~$2.1 million and ~~$1.1~~$0.4 million as of December 31, ~~2019~~2022 and ~~2018,~~2021, respectively. Deferred financing costs ~~as of December 31, 2019~~ are related to our term loan and revolving credit ~~facility.~~facilities. In connection with the amendment to ~~our~~the 2015 Credit Agreement entered into in March 2022 and the Credit Agreement entered into in June 2022 with JPMorgan Chase Bank, N.A., as agent, ~~entered into in December 2018,~~ we incurred and capitalized approximately ~~$0.5~~$0.2 million, and $1.9 million, respectively, of deferred financing costs related to bank, legal, and other professional fees which are being amortized, along with ~~the~~certain preexisting deferred financing costs, through ~~2023,~~June 2027, the term of the ~~amended agreement.~~Credit Agreement. In addition, upon entering into the Credit Agreement, we wrote-off $40,000 of unamortized deferred financing costs associated with the 2015 Credit Agreement. Unamortized deferred financing costs written-off in June 2022 were recorded in other non-operating income (expense), net in our consolidated statement of operations.

~~Scheduled amortization for future years,~~Deferred financing costs as of December 31, 2022, assuming no prepayments, ~~of principal is~~are being amortized as follows:

(In thousands)
2020	$	225
2021		225
2022		225
2023		206		491
2024				478
2025				469
2026				464
2027				191
Total amortization	$	881	$	2,093

12. Accumulated Other Comprehensive Income

Changes in Accumulated Other Comprehensive Income by Component (in thousands)

	Foreign Currency Translation			Unrecognized Postretirement Benefit Costs (Credit)			Unrealized derivative gains (losses)			Total
Balance at December 31, 2020 attributable to SMP	$	(5,744	)	$	68		$	—		$	(5,676	)
Other comprehensive income before reclassifications		(2,477	)		—			—			(2,477	)
Amounts reclassified from accumulated other comprehensive income		—			(16	)		—			(16	)
Other comprehensive income, net		(2,477	)		(16	)		—			(2,493	)
Balance at December 31, 2021 attributable to SMP	$	(8,221	)	$	52		$	—		$	(8,169	)
Other comprehensive income before reclassifications		(8,109	)		—			3,797	⁽¹⁾		(4,312	)
Amounts reclassified from accumulated other comprehensive income		—			(15	)		26			11
Other comprehensive income, net		(8,109	)		(15	)		3,823			(4,301	)
Balance at December 31, 2022 attributable to SMP	$	(16,330	)	$	37		$	3,823		$	(12,470	)

(1)

Consists of the unrecognized gain relating to the change in fair value of the cash flow interest rate hedge of $5.2 million ($3.8 million, net of tax), net of cash settlements payments of $42,000 ($31,000, net of tax) in the year ended December 31, 2022.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Reclassifications Out of Accumulated Other Comprehensive Income (in thousands):

	Year Ended December 31,
Details About Accumulated Other Comprehensive Income Components	2022			2021
Derivative cash flow hedge:
Unrecognized gain (loss) (1)	$	35		$	—
Postretirement Benefit Plans:
Unrecognized gain (loss) (2)		(25	)		(27	)
Total before income tax		10			(27	)
Income tax expense (benefit)		(1	)		(11	)
Total reclassifications attributable to SMP	$	11		$	(16	)

(1)

Unrecognized accumulated other comprehensive income (loss) related to the cash flow interest rate hedge is reclassified to earnings and reported as part of interest expense in our consolidated statements of operations when the interest payments on the underlying borrowings are recognized.

(2)

Unrecognized accumulated other comprehensive income (loss) related to our post retirement plans is reclassified to earnings and included in the computation of net periodic postretirement benefit costs, which are included in other non-operating income (expense), net in our consolidated statements of operations (see Note 15, “Employee Benefits,” for additional information).

13. Stockholders’ Equity

We have authority to issue 500,000 shares of preferred stock, $20 par value, and our Board of Directors is vested with the authority to establish and designate any series of preferred, to fix the number of shares therein and the variations in relative rights as between each series. In December 1995, our Board of Directors established a new series of preferred shares designated as Series A Participating Preferred Stock. The number of shares constituting the Series A Preferred Stock is 30,000. The Series A Preferred Stock is designed to participate in dividends, ranks senior to our common stock as to dividends and liquidation rights and has voting rights. Each share of the Series A Preferred Stock shall entitle the holder to one thousand votes on all matters submitted to a vote of the stockholders of the Company. ~~NaN~~No such shares were outstanding at December 31, ~~2019~~2022 and ~~2018.~~

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~2021.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~During~~ ~~2017,~~In March 2020, our Board of Directors authorized the purchase of up to ~~$30~~$20 million of our common stock under a stock repurchase ~~programs. Under these programs,~~program. Stock repurchases under this program, during the years ended December 31,~~2017~~ 2021 and ~~2018,~~ ~~we repurchased~~ ~~539,760~~2020, were 150,273 and ~~112,307~~323,867 shares of our common stock, respectively, ~~in the open market~~ at a total cost of ~~$24.8~~$6.5 million and ~~$5.2~~$13.5 million,, respectively, thereby completing the ~~2017~~2020 Board of ~~Directors’ authorizations.~~

Directors authorization.

In ~~May~~ ~~2018,~~February 2021, our Board of Directors authorized the purchase of up to an additional ~~$20~~$20 million of our common stock under a ~~new~~ stock repurchase program. ~~Under~~Stock repurchases under this program, during the year ended December 31, 2021, were 464,992 shares of our common stock at a total cost of $20 million, thereby completing the February 2021 Board of Directors authorization.

In October 2021, our Board of Directors authorized the purchase of up to an additional $30 million of our common stock under a stock repurchase program. Stock repurchases under this program, during the year ended December 31,~~2018~~ 2021 and ~~2019,~~ ~~we repurchased~~ ~~201,484~~2022 were 7,000 and ~~221,748~~692,067 shares of our common stock, respectively, at a total cost of ~~$9.3~~$0.3 million and ~~$10.7~~$29.7 million,, respectively, thereby completing the ~~2018~~October 2021 Board of Directors authorization.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

In July 2022, our Board of Directors authorized the purchase of up to an additional $30 million of our common stock under a new 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 no repurchases of our common stock under the program.

14. Stock-Based Compensation Plans

Our stock-based compensation program is a broad-based program 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 ~~2016,~~2021, our Board of Directors and Shareholders approved an amendment and restatement to the 2016 Omnibus Incentive ~~Plan. The 2016 Omnibus Incentive~~ Plan supersedes the 2006 Omnibus Incentive Plan, which terminated in May 2016. The 2016 Omnibus Incentive Plan is the only remaining plan available to provide stock-based incentive compensation to our employees, directors and other eligible persons.

(the “Plan”). Under the ~~2016 Omnibus Incentive~~ Plan, which terminates in May 2026, we are authorized to issue, among other things, shares of restricted and performance-based stock to eligible employees and restricted stock to directors of up to ~~1,100,000~~2,050,000 shares; and shares of restricted and performance-based stock to nonemployee directors of up to 350,000 shares. Shares issued under the ~~plan~~Plan that are cancelled, forfeited or expire by their terms are eligible to be granted again under the Plan. The 2016 Omnibus Incentive ~~Plan.~~Plan is the only remaining plan available to provide stock-based incentive compensation to our employees, directors and other eligible persons. Awards previously granted under the 2006 Omnibus Incentive Plan ~~are not affected by the plan’s termination,~~remain outstanding, while shares not yet granted under the plan are not available for future issuance.

We account for our stock-based compensation plans in accordance with the provisions of FASB ASC 718, Stock Compensation, which requires that a company measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The service period is the period of time that the grantee must provide services to us before the stock-based compensation is fully vested. 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. Forfeitures are estimated at the time of grant based on historical trends in order to estimate the amount of share-based awards that will ultimately vest. We monitor actual forfeitures for any subsequent adjustment to forfeiture rates.

~~Stock-based compensation expense under our existing plans was $6.5~~ ~~million ($4.9~~ ~~million, net of tax), $7.4~~ ~~million ($5.5~~ ~~million, net of tax), and $7.1~~ ~~million ($3.2~~ ~~million, net of tax) for the years ended December 31, 2019, 2018 and 2017, respectively.~~

Restricted Stock and Performance Share Grants

We currently grant shares of restricted stock to eligible employees and our independent directors and performance-based stock to eligible employees. ~~Selected~~We grant eligible employees two types of restricted stock (standard restricted shares and long-term retention restricted shares). Standard restricted shares granted to employees become fully vested no earlier than three years after the date of grant. Long-term retention restricted shares granted to selected executives vest at a 25% rate on or within approximately two months of an executive reaching the ages of 60 and ~~other key personnel are~~63, and become fully vested on or within approximately two months of an executive reaching the age of 65. Restricted shares granted ~~performance awards whose vesting is contingent~~to directors become fully vested upon ~~meeting various performance measures with a retention feature.~~ the first anniversary of the date of grant.

Performance-based shares issued to eligible employees are subject to a ~~three year~~three-year measuring period and the achievement of performance targets and, depending upon the achievement of such performance targets, they may become vested ~~on the third anniversary of~~no earlier than three years after the date of grant. Each period we evaluate the probability of achieving the applicable targets, and we adjust our accrual accordingly. Restricted shares ~~granted to employees become fully vested upon the third anniversary of the date of grant; and for selected key executives certain additional~~(other than long-term retention restricted share grants vest 25% upon the attainment of age 60, 25% upon the attainment of age 63 and become fully vested upon the attainment of age 65. Restricted shares granted to directors become fully vested upon the first anniversary of the date of grant. Commencing with the 2015 grants, restrictedshares) and performance shares issued to certain key executives and directors are subject to a one or two year holding period upon the lapse of the vesting period. Forfeitures on stock grants are estimated at 5% for employees and 0% for executives and directors based upon our evaluation of historical and expected future turnover.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Prior to the time 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 during the vesting period). Prior to the time a performance share is issued, the awardees shall have no rights as a stockholder. All shares and rights are subject to forfeiture if certain employment conditions are not met.

Under the amended and restated 2016 Omnibus Incentive Plan, ~~1,100,000~~2,050,000 shares are authorized to be issued. At December 31, ~~2019,~~2022, under the plan, there were an aggregate of (a) ~~778,071~~1,385,337 shares of restricted and performance-based stock grants issued, net of forfeitures, and (b) ~~321,929~~664,663 shares of common stock available for future grants. For the year ended December 31, ~~2019, 204,650~~2022, 246,325 restricted and performance-based shares were granted ~~(148,400~~(179,825 restricted shares and ~~56,250~~66,500 performance-based shares).

In determining the grant date fair value, the stock price on the date of grant, as quoted on the New York Stock Exchange, was reduced by the present value of dividends expected to be paid on the shares issued and outstanding during the requisite service period, discounted at a risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the restriction or vesting period at the grant date. In addition, a further discount for the lack of marketability reduced the fair value of grants issued to certain key executives and directors subject to the one or two year post vesting holding period. Assumptions used in calculating the discount for the lack of marketability include an estimate of stock volatility, risk-free interest rate, and a dividend yield.

The fair value of the shares at the date of grant is amortized to expense ratably over the vesting period. Forfeitures on restricted stock grants are estimated at 5% for employees and 0% for executives and directors, respectively, based on evaluation of historical and expected future turnover.

As related to restricted and performance stock shares, we recorded compensation expense of ~~$6.5~~$7.6 million ($~~4.9~~5.7 million, net of tax), ~~$7.4~~$9.1 million ($~~5.5~~6.9 million, net of tax) and ~~$7.1~~$7.8 million ($~~3.2~~5.8 million, net of tax), for the years ended December 31, ~~2019, 2018~~2022, 2021 and ~~2017,~~2020, respectively. The unamortized compensation expense related to our restricted and performance-based shares was ~~$15.9~~$14.9 million and ~~$15.8~~$16.6 million at December 31, ~~2019~~2022 and ~~2018,~~2021, respectively and is expected to be recognized ~~over a weighted average period of 4.6 years and 0.3 years for employees and directors, respectively, as of December 31, 2019 and~~ over a weighted average period of 4.3 years and 0.3 years for employees and directors, respectively, as of December 31, ~~2018.~~2022 and over a weighted average period of 4.7 years and 0.4 years for employees and directors, respectively, as of December 31, 2021.

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

Our restricted and performance-based share activity was as follows for the years ended December 31, ~~2019~~2022 and ~~2018:~~2021:

Shares
Weighted Average
Grant Date Fair
Value per Share

Balance at December 31, 2017 853,958 $ 33.25
Granted 198,004 39.36
Vested (167,811 ) 39.90
Forfeited (1) (14,110 ) 42.28
Balance at December 31, 2018 870,041 $ 34.59
Granted 204,650 42.05
Vested (188,693 ) 38.08
Forfeited (1) (33,458 ) 43.32
Balance at December 31, 2019 852,540 $ 35.26

~~(1) Due to the lack of achievement of performance targets, performance-based shares forfeited in the years ended December 31, 2019 and 2018 were~~ ~~20,508~~ ~~shares and~~ ~~2,085~~ ~~shares, respectively.~~

	Shares			Weighted Average Grant Date Fair Value per Share
Balance at December 31, 2020		839,686		$	34.77
Granted		211,815			38.51
Vested		(227,682	)		36.10
Forfeited		(16,800	)		39.39
Balance at December 31, 2021		807,019		$	34.92
Granted		246,325			28.44
Vested		(190,082	)		41.71
Performance Shares Target Adjustment		25,317			42.21
Forfeited		(7,750	)		40.73
Balance at December 31, 2022		880,829		$	31.79

The weighted-average grant date fair value of restricted and performance-based shares outstanding as of December 31, ~~2019, 2018~~2022, 2021 and ~~2017~~2020 was ~~$30.1~~$28 million (or ~~$35.26~~$31.79 per share), ~~$30.1~~$28.2 million (or ~~$34.59~~$34.92 per share), and ~~$28.4~~$29.2 million (or ~~$33.25~~$34.77 per share), respectively.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

15. Employee Benefits

Defined Contribution Plans

We maintain various defined contribution plans, which include profit sharing, and provide retirement benefits for substantially all of our employees. Matching obligations, in connection with the plans which are funded in cash and typically contributed to the plans in March of the following year, are as follows (in thousands):

U.S. Defined
Contribution

Year ended December 31,
2019 $ 9,080
2018 8,928
2017 9,153

	U.S. Defined Contribution
Year ended December 31,
2022	$	9,816
2021		9,763
2020		9,457

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 ~~2018,~~2022 and 2021, contributions of ~~$0.6~~$0.8 million and $0.5 million were made related to calendar year ~~2017. In March 2019, contributions~~2021 and 2020, respectively. As of ~~$0.3 million were made related to calendar year 2018. We~~December 31, 2022, we have recorded an obligation of ~~$0.3~~$0.8 million for ~~2019.~~2022.

We also 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 its fiduciary duties. During ~~2019,~~2022, we contributed to the trust an additional ~~49,100~~48,200 shares from our treasury and released ~~49,100~~48,200 shares from the trust leaving 200 shares remaining in the trust as of December 31, ~~2019.~~2022. The provision for expense in connection with the ESOP was approximately $2.3 million in 2022, $2.5 million in ~~2019, $2.6~~2021 and $2.3 million in ~~2018 and $2.2 million in 2017.~~2020.

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

Defined Benefit Pension Plan

We maintain a defined benefit unfunded Supplemental Executive Retirement Plan (“SERP”). The SERP, as amended, is a defined benefit plan pursuant to which we will pay supplemental pension benefits to certain key employees upon the attainment of a contractual participant’s payment date based upon the employees’ years of service and compensation. ~~There~~As there are no current participants in the SERP, there was 0no benefit obligation outstanding related to the ~~SERP~~plan as of December 31, ~~2019~~2022 and ~~2018. We~~2021 and we recorded 0no expense related to the plan during the years ended December 31, ~~2019, 2018~~2022, 2021 and ~~2017.~~2020.

Postretirement Medical Benefits

We ~~provided, and continue to~~ provide certain medical and dental care benefits to ~~eligible retired~~13 former U.S. ~~and Canadian~~union employees. The postretirement medical plans to eligible U.S. employees, other than to former union employees, and eligible Canadian employees terminated on December 31, 2016. As related to the U.S. non-union employees, annually and through the year ended December 31, 2016, a fixed amount was credited into a Health Reimbursement account (“HRA”) to cover both medical and dental costs for all current and future eligible retirees. Balances in the HRA accounts upon termination of the plan at December 31, 2016 remained available for use until December 31, 2018. Any remaining balance at December 31, 2018 was forfeited. Postretirement medical and dental benefits to the remaining eligible 16 former union employees in the U.S. will continue to be provided. The postretirement medical and dental benefit obligation for the former union employees ~~in the U.S.~~ as of December 31, ~~2019,~~2022, and the net periodic benefit cost for our postretirement benefit plans for the years ended December 31, ~~2019, 2018~~2022, 2021 and ~~2017~~2020 were not material.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

16. Other Non-Operating Income (Expense), Net

The components of other non-operating income (expense), net are as follows:

	Year Ended December 31,									Year Ended December 31,
	2019			2018			2017			2022		2021			2020
	(In thousands)									(In thousands)
Interest and dividend income	$	97		$	80		$	91		$	209	$	49		$	109
Equity income (loss) from joint ventures (1)		2,865			(768	)		(602	)
Equity income from joint ventures											3,464		3,295			820
Gain (loss) on foreign exchange		(502	)		(120	)		950			334		(257	)		(350	)
Postretirement plan net periodic benefit credit (cost)		25			262			653
Other non-operating income, net		102			135			158			807		407			233
Total other non-operating income (expense), net	$	2,587		$	(411	)	$	1,250
Total other non-operating income, net										$	4,814	$	3,494		$	812

17. Derivative Financial Instruments

~~(1)~~

Year ended December 31, 2018 and 2017 includes a noncash impairment charge of approximately $1.7 million and $1.8 million, respectively, related to our minority interest investment in Orange Electronic Co., Ltd. (See Note 10, “Investments in Unconsolidated Affiliates” for additional information).

Interest Rate Swap Agreements

We occasionally use derivative financial instruments to reduce our market risk for changes in interest rates on our variable rate borrowings. The principal financial instruments used for cash flow hedging purposes are interest rate swap agreements. The interest rate swaps effectively convert a portion of our variable rate borrowings under our existing facilities to a fixed rate based upon determined notional amount. We do not enter into interest rate swap agreements, or other financial instruments, for trading or speculative purposes.

In June 2022, we entered into a seven year interest rate swap agreement with a notional amount of $100 million that is to mature in May 2029. The interest rate swap agreement has been designated as a cash flow hedge of interest payments on $100 million of borrowings under our Credit Agreement. Under the terms of the swap agreement, we will receive monthly variable interest payments based on one month Term SOFR and will pay interest based upon a fixed rate of 2.683% per annum, adjusted upward for the credit spread adjustment in the Credit Agreement of 0.10% and the loan margin in the Credit Agreement of 1.50% at December 31, 2022.

The fair value of the interest rate swap agreement as of December 31, 2022 was an asset of $5.2 million, which has been deferred and recorded in accumulated other comprehensive income, net of income taxes, in our consolidated balance sheet. When the interest expense on the underlying borrowing is recognized, the deferred gain/loss in accumulated other comprehensive income is recorded in earnings as interest expense in the consolidated statements of operations. We perform quarterly hedge effectiveness assessments and anticipate that the interest rate swap will be highly effective throughout its term.

~~17.~~

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.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following is a summary of the estimated fair values, carrying amounts, and classification under the fair value hierarchy of our financial instruments ~~consisting of cash~~at December 31, 2022 and cash equivalents, deferred compensation, and short term borrowings approximate their fair value. In each instance, fair value is determined after considering Level 1 inputs under the three-level fair value hierarchy. For fair value purposes, theDecember 31, 2021 (in thousands):

		December 31, 2022				December 31, 2021
	Fair Value Hierarchy	Fair Value		Carrying Amount		Fair Value		Carrying Amount

Cash and cash equivalents	LEVEL 1	$	21,150	$	21,150	$	21,755	$	21,755
Deferred compensation	LEVEL 1		20,190		20,190		23,623		23,623
Short term borrowings	LEVEL 1		55,031		55,031		128,415		128,415
Long-term debt	LEVEL 1		184,589		184,589		21		21
Cash flow interest rate swap	LEVEL 2		5,174		5,174		—		—

The carrying value of cash and cash equivalents approximates fair value due to the short maturity of those investments. 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 inby registered investment companies. The carrying value of our ~~revolving~~variable rate short-term borrowings and long-term debt under our credit facilities ~~classified~~approximates fair value as ~~short term borrowings, equals~~the variable interest rates in the facilities reflect current market rates. The fair value of our cash flow interest rate swap agreement obtained from two independent third parties, is based upon market ~~value because~~quotes, and represents the net amount required to terminate the interest rate ~~reflects current~~swap, taking into consideration market ~~rates.~~rates and counterparty credit risk.

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~18.~~

19. Income Taxes

The income tax provision (benefit) consists of the following (in thousands):

Year Ended December 31,
2019 2018 2017
Current:
Domestic $ 14,632 $ 26,821 $ 30,742
Foreign 3,019 3,180 3,139
Total current 17,651 30,001 33,881

Deferred:
Domestic 4,677 (10,132 ) 18,833
Foreign 417 108 98
Total deferred 5,094 (10,024 ) 18,931
Total income tax provision $ 22,745 $ 19,977 $ 52,812

In December 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”), which included a broad range of tax reform affecting businesses, including the reduction of the federal corporate tax rate from 35% to 21%, changes in the deductibility of certain business expenses, and the manner in which international operations are taxed in the U.S. In connection with the enactment of the Act, our income tax provision for the fourth quarter of 2017 included an increase of $17.5 million, reflecting an increase of $16.1 million for the remeasurement of our net deferred tax assets and an increase in tax of $1.4 million due to the deemed repatriation of earnings of our foreign subsidiaries.

As related to the deemed repatriation of earnings of foreign subsidiaries, the Act includes a mandatory one-time tax on accumulated earnings of foreign subsidiaries. As a result, all previously unremitted earnings for which no U.S. deferred tax liability had been accrued are now subject to U.S. tax. In accordance with the guidelines provided in the Act, as of December 31, 2017 we aggregated our estimated foreign earnings and profits, and utilized participating deductions and available foreign tax credits. The gross repatriation tax was $2.3 million, which was offset by $0.9 million of foreign tax credits for a net repatriation tax charge of $1.4 million. During 2018, we refined and updated our calculation of the gross repatriation tax to $2.7 million, which was paid to the U.S. Treasury. The difference in the refined and updated repatriation tax and what was previously recorded in the fourth quarter of 2017 was reflected in the 2018 tax provision. Notwithstanding the U.S. taxation of these amounts, we intend to continue to invest most or all of these earnings indefinitely outside of the U.S., and do not expect to incur any significant additional taxes related to such amounts.

	Year Ended December 31,
	2022			2021			2020
Current:
Domestic	$	16,182		$	26,528		$	30,368
Foreign		8,669			5,851			4,064
Total current		24,851			32,379			34,432

Deferred:
Domestic		1,102			(1,161	)		(7,418	)
Foreign		(747	)		(174	)		(52	)
Total deferred		355			(1,335	)		(7,470	)
Total income tax provision	$	25,206		$	31,044		$	26,962

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,									Year Ended December 31,
	2019			2018			2017			2022			2021			2020

U.S. Federal income tax rate of 21% in 2019 and 2018, and 35% in 2017	$	19,277		$	16,135		$	33,755
U.S. Federal income tax rate of 21%										$	20,650		$	27,398		$	22,550
Increase (decrease) in tax rate resulting from:
State and local income taxes, net of federal income tax benefit		3,328			2,781			3,138			3,118			4,579			3,781
Income tax (tax benefits) attributable to foreign income		191			1,598			(149	)
Income tax (benefit) attributable to foreign income											(53	)		(122	)		330
Other non-deductible items, net		(409	)		(559	)		(1,319	)		423			(1,277	)		(563	)
Impact of Tax Cuts and Jobs Act		—			—			17,515
Change in valuation allowance		358			22			(128	)		1,068			466			864
Provision for income taxes	$	22,745		$	19,977		$	52,812		$	25,206		$	31,044		$	26,962

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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,						December 31,
	2019			2018			2022			2021
Deferred tax assets:
Inventories	$	12,077		$	12,798		$	11,604		$	12,181
Allowance for customer returns		11,969			16,836			14,506			14,185
Postretirement benefits		50			58			25			33
Allowance for doubtful accounts		1,262			1,371
Allowance for expected credit losses								2,965			1,450
Accrued salaries and benefits		9,826			9,147			12,048			15,585
Tax credit carryforwards		609			272
Tax credit and NOL carryforwards								5,103			5,702
Accrued asbestos liabilities		13,132			11,872			17,208			15,463
Other		148			127			190			190
		49,073			52,481			63,649			64,789
Valuation allowance		(757	)		(399	)		(3,155	)		(2,087	)
Total deferred tax assets		48,316			52,082			60,494			62,702
Deferred tax liabilities:
Intangible assets acquired, net of amortization								13,292			13,450
Depreciation		7,706			7,755			8,715			7,589
Interest rate swap agreement								1,299			—
Other		3,338			1,993			3,530			5,537
Total deferred tax liabilities		11,044			9,748			26,836			26,576

Net deferred tax assets	$	37,272		$	42,334		$	33,658		$	36,126

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 ~~$0.8~~$3.2 million as of December 31, ~~2019~~2022 is intended to provide for uncertainty regarding the ultimate realization of our U.S. foreign tax credit carryovers and foreign net operating loss carryovers. 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 ~~$37.3~~$33.7 million as of December 31, ~~2019,~~2022, which is net of the remaining valuation allowance.

At December 31, ~~2019,~~2022, we have foreign tax credit carryforwards of approximately ~~$0.6~~$3 million that will expire in varying amounts by ~~2028~~2031.

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, or all, of these earnings indefinitely outside of the U.S., and do not expect to incur any significant additional taxes related to such amounts.

In accordance with generally accepted accounting practices, 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, ~~2019, 2018~~2022, 2021 and ~~2017,~~2020, we did 0not establish a liability for uncertain tax positions.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

We are subject to taxation in the U.S. and various state, local and foreign jurisdictions. As of December 31, ~~2019,~~2022, the Company is no longer subject to U.S. Federal tax examinations for years before ~~2016.~~2019. We remain subject to examination by state and local tax authorities for tax years ~~2015~~2018 through ~~2018.~~2021. Foreign jurisdictions have statutes of limitations generally ranging from 2 to 6 years. Years still open to examination by foreign tax authorities in major jurisdictions include Canada ~~(2015~~(2018 onward), Hong Kong ~~(2014~~(2017 onward), China (2020 onward), Mexico ~~(2015~~(2018 onward), Poland (2017 onward), Hungary (2016 onward) and ~~Poland (2014~~Germany (2019 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.

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~19.~~

20. Earnings Per Share

We present two calculations of earnings per common share. “Basic” earnings per common share equals net ~~income~~earnings attributable to SMP divided by weighted average common shares outstanding during the period. “Diluted” earnings per common share equals net ~~income~~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 ~~available~~attributable to ~~common stockholders~~SMP and the shares used in calculating basic and dilutive net earnings per common share attributable to SMP (in thousands, except per share data):

	Year Ended December 31,									Year Ended December 31,
	2019			2018			2017			2022			2021			2020
Basic Net Earnings Per Common Share:
Net Earnings Attributable to SMP -
Earnings from continuing operations	$	69,051		$	56,854		$	43,630		$	73,042		$	99,353		$	80,417
Loss from discontinued operations		(11,134	)		(13,851	)		(5,654	)		(17,691	)		(8,467	)		(23,024	)
Net earnings available to common stockholders	$	57,917		$	43,003		$	37,976
Net earnings attributable to SMP										$	55,351		$	90,886		$	57,393

Basic Net Earnings Per Common Share Attributable to SMP -
Earnings from continuing operations per common share										$	3.37		$	4.49		$	3.59
Loss from discontinued operations per common share											(0.82	)		(0.39	)		(1.02	)
Net earnings per common share attributable to SMP										$	2.55		$	4.10		$	2.57

Weighted average common shares outstanding		22,378			22,456			22,726			21,684			22,147			22,374

Diluted Net Earnings Per Common Share Attributable to SMP -
Earnings from continuing operations per common share	$	3.09		$	2.53		$	1.92		$	3.30		$	4.39		$	3.52
Loss from discontinued operations per common share		(0.50	)		(0.62	)		(0.25	)		(0.80	)		(0.37	)		(1.01	)
Basic net earnings per common share	$	2.59		$	1.91		$	1.67

Diluted Net Earnings Per Common Share:
Earnings from continuing operations	$	69,051		$	56,854		$	43,630
Loss from discontinued operations		(11,134	)		(13,851	)		(5,654	)
Net earnings available to common stockholders	$	57,917		$	43,003		$	37,976
Net earnings per common share attributable to SMP										$	2.50		$	4.02		$	2.51

Weighted average common shares outstanding		22,378			22,456			22,726			21,684			22,147			22,374
Plus incremental shares from assumed conversions:
Dilutive effect of restricted stock and performance-based stock		440			476			472			456			469			452
Weighted average common shares outstanding – Diluted		22,818			22,932			23,198			22,140			22,616			22,826

Earnings from continuing operations per common share	$	3.03		$	2.48		$	1.88
Loss from discontinued operations per common share		(0.49	)		(0.60	)		(0.24	)
Diluted net earnings per common share	$	2.54		$	1.88		$	1.64

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):

2019 2018 2017
Restricted and performance shares 255 249 248

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

		2022				2021				2020
Restricted and performance shares			292				269				268

~~20.~~

21. Industry Segment and Geographic Data

We have 2two major reportable operating segments, each of which focuses on a specific line of ~~replacement parts.~~automotive parts in the automotive aftermarket with a complementary focus on the non-aftermarket, industrial equipment and original equipment service markets. Our Engine Management Segment manufactures and remanufactures ignition and emission parts, ignition wires, battery cables, fuel system parts and sensors for vehicle systems. Our Temperature Control Segment manufactures and remanufactures air conditioning compressors, air conditioning and heating parts, engine cooling system parts, power window accessories and windshield washer system parts.

The accounting policies of each segment are the same as those described in the summary of significant accounting policies (see Note 1). The following tables contain financial information for each reportable segment (in thousands):

	Year Ended December 31,									Year Ended December 31,
	2019			2018			2017 (b)			2022			2021			2020
Net sales (a):
Engine Management	$	849,161		$	803,487		$	829,413		$	975,243		$	937,936		$	835,685
Temperature Control		278,355			278,456			279,127			382,285			348,423			281,954
Other		10,397			10,108			7,603			14,287			12,457			10,949
Total net sales	$	1,137,913		$	1,092,051		$	1,116,143		$	1,371,815		$	1,298,816		$	1,128,588

Intersegment sales (a):
Engine Management	$	19,569		$	23,367		$	24,995		$	22,845		$	23,599		$	15,952
Temperature Control		6,545			8,160			7,334			9,728			9,024			6,162
Other		(26,114	)		(31,527	)		(32,329	)		(32,573	)		(32,623	)		(22,114	)
Total intersegment sales	$	—		$	—		$	—		$	—		$	—		$	—

Depreciation and Amortization:
Engine Management	$	19,463		$	17,858		$	17,981		$	23,289		$	21,881		$	20,417
Temperature Control		4,568			4,704			4,373			3,266			3,626			4,035
Other		1,778			1,542			1,562			1,743			1,736			1,871
Total depreciation and amortization	$	25,809		$	24,104		$	23,916		$	28,298		$	27,243		$	26,323

Operating income (loss):
Engine Management	$	103,808		$	84,844		$	97,403		$	91,047		$	117,367		$	111,217
Temperature Control		13,667			14,586			19,609			31,712			36,997			21,296
Other		(22,980	)		(18,162	)		(19,491	)		(18,624	)		(25,365	)		(23,618	)
Total operating income	$	94,495		$	81,268		$	97,521		$	104,135		$	128,999		$	108,895

Investment in unconsolidated affiliates:
Engine Management	$	2,243		$	2,158		$	4,162		$	2,490		$	2,729		$	2,428
Temperature Control		36,615			30,311			27,022			39,255			41,358			38,079
Other		—			—			—			—			—			—
Total investment in unconsolidated affiliates	$	38,858		$	32,469		$	31,184		$	41,745		$	44,087		$	40,507

Capital expenditures:
Engine Management	$	12,593		$	11,435		$	17,750		$	19,306		$	21,922		$	13,496
Temperature Control		2,273			7,245			5,151			4,502			2,586			1,988
Other		1,319			1,461			1,541			2,148			1,367			2,336
Total capital expenditures	$	16,185		$	20,141		$	24,442		$	25,956		$	25,875		$	17,820

Total assets:
Engine Management	$	601,637		$	553,480		$	527,200		$	867,433		$	845,767		$	618,210
Temperature Control		218,783			205,039			177,006			283,086			257,114			230,111
Other		92,310			84,613			83,361			104,410			95,080			108,219
Total assets	$	912,730		$	843,132		$	787,567		$	1,254,929		$	1,197,961		$	956,540

(a)

Segment net sales include intersegment sales in our Engine Management and Temperature Control segments.

~~(b)~~

~~Net sales and intersegment sales for 2017 have not been restated and are reported under accounting standards in effect in the period presented, as we adopted ASU 2014-09,~~ ~~Revenue from Contracts with Customers, on January 1, 2018 using the modified retrospective method.~~

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Other consists of the elimination of intersegment sales from our Engine Management and Temperature Control segments, as well as items pertaining to our Canadian business unit that does not meet the criteria of a reportable operating segment and our corporate headquarters function.

Reconciliation of segment operating income to net earnings:

	Year Ended December 31,									Year Ended December 31,
	2019			2018			2017			2022			2021			2020
	(In thousands)									(In thousands)
Operating income	$	94,495		$	81,268		$	97,521		$	104,135		$	128,999		$	108,895
Other non-operating income (expense), net		2,587			(411	)		1,250
Other non-operating income, net											4,814			3,494			812
Interest expense		5,286			4,026			2,329			10,617			2,028			2,328
Earnings from continuing operations before taxes		91,796			76,831			96,442
Income tax expense		22,745			19,977			52,812
Earnings from continuing operations before income taxes											98,332			130,465			107,379
Provision for income taxes											25,206			31,044			26,962
Earnings from continuing operations		69,051			56,854			43,630			73,126			99,421			80,417
Discontinued operations, net of tax		(11,134	)		(13,851	)		(5,654	)		(17,691	)		(8,467	)		(23,024	)
Net earnings	$	57,917		$	43,003		$	37,976		$	55,435		$	90,954		$	57,393

Year Ended December 31,
2019 2018 2017 (b)
Revenues (a):
(In thousands)
United States $ 1,023,903 $ 976,030 $ 1,001,003
Canada 50,158 57,460 52,005
Mexico 20,035 20,214 24,521
Europe 13,875 13,684 14,088
Other foreign 29,942 24,663 24,526
Total revenues $ 1,137,913 $ 1,092,051 $ 1,116,143

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

	December 31,
	2022		2021		2020
Long-lived assets (a):	(In thousands)
United States	$	326,199	$	315,983	$	241,053
Asia		76,766		80,175		40,621
Europe		38,351		37,892		16,504
Mexico		10,355		12,119		10,586
Canada		7,161		4,461		4,470
Total long-lived assets	$	458,832	$	450,630	$	313,234

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

December 31,
2019 2018 2017
Long-lived assets (c):
(In thousands)
United States $ 253,384 $ 198,494 $ 202,875
Canada 4,659 2,718 2,017
Mexico 12,036 4,012 4,449
Europe 17,004 16,880 18,530
Other foreign 38,942 32,470 31,185
Total long-lived assets $ 326,025 $ 254,574 $ 259,056

~~(a)~~

~~Revenues are attributed to countries based upon the location of the customer.~~

~~(b)~~

~~Revenues for 2017 have not been restated and are reported under accounting standards in effect in the period presented, as we adopted ASU 2014-09,~~ ~~Revenue from Contracts with Customers, on January 1, 2018 using the modified retrospective method.~~

~~(c)~~(a)

Long-lived assets are attributed to countries based upon the location of the assets.

Our 5three largest individual customers accounted for approximately ~~69%~~59% of our consolidated net sales in ~~2019,~~ 2022.~~and approximately~~ ~~70%~~ ~~of our consolidated net sales in 2018 and 2017.~~ During ~~2019,~~2022, O’Reilly, ~~Advance,~~AutoZone and NAPA ~~and AutoZone~~ accounted for ~~22%~~27%, ~~16%,~~17% and 15% ~~and 11%~~ of our consolidated net sales, respectively. Net sales from each of the customers were reported in both our Engine Management and Temperature Control 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 material adverse impact on our business, financial condition and results of operations. In addition, any consolidation among our key customers may further increase our customer concentration risk.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the disaggregation of our net sales from ~~contracts with~~ customers by geographic area, major product group and major sales channels for each of our segments, see Note ~~21,~~22, “Net Sales.”

~~21.~~Beginning in the first quarter of 2023, our business will be organized into three operating segments – Engineered Solutions, Vehicle Control and Temperature Control. This change in operating segments will better align our operating segments with our strategic focus on diversification, and provide greater transparency into how we are positioned to capture growth opportunities of the future. The change will also better reflect the impact of our recent acquisitions.

22. Net Sales

Disaggregation of Net Sales

We disaggregate our net sales from ~~contracts with~~ customers by geographic area, major product group, and major sales channels for 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.

The following tables provide disaggregation of net sales information for the years ended December 31, ~~2019, 2018~~2022, 2021 and ~~2017~~2020 (in thousands):

Year Ended December 31, 2019 (a)	Engine Management		Temperature Control		Other (c)		Total
Year Ended December 31, 2022 (a)									Engine Management		Temperature Control		Other (b)			Total
Geographic Area:
United States	$	760,134	$	263,769	$	—	$	1,023,903	$	849,858	$	359,246	$	—		$	1,209,104
Canada		27,439		12,322		10,397		50,158		32,410		19,894		14,287			66,591
Europe										37,098		1,422		—			38,520
Mexico		19,330		705		—		20,035		30,917		400		—			31,317
Europe		13,341		534		—		13,875
Asia										18,830		356		—			19,186
Other foreign		28,917		1,025		—		29,942		6,130		967		—			7,097
Total	$	849,161	$	278,355	$	10,397	$	1,137,913	$	975,243	$	382,285	$	14,287		$	1,371,815
Major Product Group:
Ignition, emission control, fuel and safety related system products	$	705,994	$	—	$	6,381	$	712,375	$	824,677	$	—	$	10,775		$	835,452
Wire and cable		143,167		—		477		143,644		150,566		—		(223	)		150,343
Compressors		—		160,485		1,338		161,823		—		222,532		1,813			224,345
Other climate control parts		—		117,870		2,201		120,071		—		159,753		1,922			161,675
Total	$	849,161	$	278,355	$	10,397	$	1,137,913	$	975,243	$	382,285	$	14,287		$	1,371,815
Major Sales Channel:
Aftermarket	$	702,872	$	248,420	$	10,397	$	961,689	$	709,128	$	343,702	$	14,287		$	1,067,117
OE/OES		124,665		27,915		—		152,580		234,092		35,915		—			270,007
Export		21,624		2,020		—		23,644		32,023		2,668		—			34,691
Total	$	849,161	$	278,355	$	10,397	$	1,137,913	$	975,243	$	382,285	$	14,287		$	1,371,815

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Year Ended December 31, 2018 (a)	Engine Management		Temperature Control		Other (c)		Total
Year Ended December 31, 2021 (a)									Engine Management		Temperature Control		Other (b)			Total
Geographic Area:
United States	$	714,402	$	261,628	$	—	$	976,030	$	804,398	$	329,980	$	—		$	1,134,378
Canada		33,475		13,877		10,108		57,460		33,590		16,513		12,457			62,560
Europe										27,293		390		—			27,683
Mexico		19,397		817		—		20,214		25,288		358		—			25,646
Europe		13,054		630		—		13,684
Asia										40,668		348		—			41,016
Other foreign		23,159		1,504		—		24,663		6,699		834		—			7,533
Total	$	803,487	$	278,456	$	10,108	$	1,092,051	$	937,936	$	348,423	$	12,457		$	1,298,816
Major Product Group:
Ignition, emission control, fuel and safety related system products	$	648,270	$	—	$	5,829	$	654,099	$	786,514	$	—	$	8,956		$	795,470
Wire and cable		155,217		—		454		155,671		151,422		—		(275	)		151,147
Compressors		—		148,416		1,853		150,269		—		206,697		1,434			208,131
Other climate control parts		—		130,040		1,972		132,012		—		141,726		2,342			144,068
Total	$	803,487	$	278,456	$	10,108	$	1,092,051	$	937,936	$	348,423	$	12,457		$	1,298,816
Major Sales Channel:
Aftermarket	$	684,242	$	246,112	$	10,108	$	940,462	$	702,473	$	317,804	$	12,457		$	1,032,734
OE/OES		97,205		30,275		—		127,480		208,760		28,545		—			237,305
Export		22,040		2,069		—		24,109		26,703		2,074		—			28,777
Total	$	803,487	$	278,456	$	10,108	$	1,092,051	$	937,936	$	348,423	$	12,457		$	1,298,816

Year Ended December 31, 2017 (a)(b)	Engine Management		Temperature Control		Other (c)		Total
Year Ended December 31, 2020 (a)									Engine Management		Temperature Control		Other (b)		Total
Geographic Area:
United States	$	737,108	$	263,895	$	—	$	1,001,003	$	738,521	$	268,680	$	—	$	1,007,201
Canada		32,197		12,205		7,603		52,005		25,842		11,679		10,949		48,470
Europe										12,255		351		—		12,606
Mexico		23,683		838		—		24,521		19,336		271		—		19,607
Europe		13,342		746		—		14,088
Asia										35,079		165		—		35,244
Other foreign		23,083		1,443		—		24,526		4,652		808		—		5,460
Total	$	829,413	$	279,127	$	7,603	$	1,116,143	$	835,685	$	281,954	$	10,949	$	1,128,588
Major Product Group:
Ignition, emission control, fuel and safety related system products	$	657,287	$	—	$	4,403	$	661,690	$	691,722	$	—	$	8,172	$	699,894
Wire and cable		172,126		—		650		172,776		143,963		—		159		144,122
Compressors		—		148,377		1,233		149,610		—		163,071		812		163,883
Other climate control parts		—		130,750		1,317		132,067		—		118,883		1,806		120,689
Total	$	829,413	$	279,127	$	7,603	$	1,116,143	$	835,685	$	281,954	$	10,949	$	1,128,588
Major Sales Channel:
Aftermarket	$	701,308	$	246,097	$	7,603	$	955,008	$	674,744	$	263,690	$	10,949	$	949,383
OE/OES		106,173		30,268		—		136,441		142,072		17,096		—		159,168
Export		21,932		2,762		—		24,694		18,869		1,168		—		20,037
Total	$	829,413	$	279,127	$	7,603	$	1,116,143	$	835,685	$	281,954	$	10,949	$	1,128,588

(a)

Segment net sales include intersegment sales in our Engine Management and Temperature Control segments.

(b)

~~Amounts have not been restated and are reported under accounting standards in effect in the period presented as we adopted ASU 2014-09,~~ ~~Revenue from Contracts with Customers, on January 1, 2018 using the modified retrospective method~~.

~~(c)~~

Other consists of the elimination of intersegment sales from our Engine Management and Temperature Control segments as well as sales from our Canadian business unit that does not meet the criteria of a reportable operating segment. Intersegment wire and cable sales for the years ended December 31, 2022 and 2021 exceeded third party sales from our Canadian business unit.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Geographic Area

We sell our line of products primarily in the United States, with additional sales in Canada, Mexico, Europe, Asia and Latin America. Sales are attributed to countries based upon the location of the customer. Our sales are substantially denominated in U.S. dollars.

Major Product Group

The Engine Management segment of the Company principally generates revenue from the sale of automotive engine ~~replacement~~ parts in the automotive aftermarket including ignition, emission control, fuel and safety related system products, and wire and cable parts. The Temperature Control segment of the Company principally generates revenue from the sale of automotive temperature control systems ~~replacement~~ parts in the automotive aftermarket including air conditioning compressors and other climate control parts.

Major Sales Channel

In the aftermarket channel, we sell our products to warehouse distributors and retailers. Our customers buy directly from us and sell directly to jobber stores, professional technicians and to “do-it-yourselfers” who perform automotive repairs on their personal vehicles. In the Specialized Original Equipment (“OE”) and Original Equipment Service (“OES”) channel, we sell our products to original equipment manufacturers who redistribute our products within their distribution network, independent dealerships and service dealer technicians. Lastly, in the Export channel, our domestic entities sell to customers outside the United States.

~~22.~~

23. Commitments and Contingencies

Total rent expense for the three years ended December 31, ~~2019~~2022 was as follows (in thousands):

Total Real Estate Other
2019 (1) $ 11,382 $ 7,909 $ 3,473
2018 12,605 9,272 3,333
2017 11,954 8,983 2,971

	Total		Real Estate		Other
2022 (1)	$	14,135	$	11,385	$	2,750
2021 (1)		12,065		9,500		2,565
2020		11,669		8,290		3,379

(1)

Includes expenses of approximately ~~$2.4~~$2.7 million and $2 million for the years ended December 31, 2022 and 2021, respectively, related 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 is ~~not~~not material.

For our operating lease minimal rental payments that we are obligated to make, see Note 2,7, “Leases.”

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

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. As of December 31, ~~2019~~2022 and ~~2018,~~2021, we have accrued ~~$22.4~~$19.7 million and ~~$19.6~~$17.5 million, respectively, for estimated product warranty claims included in accrued customer returns. The accrued product warranty costs are based primarily on historical experience of actual warranty claims. Warranty expense for each of the years ~~2019, 2018~~2022, 2021 and ~~2017~~2020 were ~~$99.3~~ $112.5 million, ~~$85.9~~$91.9 million and ~~$94.4~~$87.1 million, respectively.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table provides the changes in our product warranties:

	December 31,						December 31,
	2019			2018			2022			2021
	(In thousands)						(In thousands)
Balance, beginning of period	$	19,636		$	20,929		$	17,463		$	17,663
Liabilities accrued for current year sales		99,304			85,850			112,477			91,908
Settlements of warranty claims		(96,495	)		(87,143	)		(110,273	)		(92,108	)
Balance, end of period	$	22,445		$	19,636		$	19,667		$	17,463

Letters of Credit

At December 31, ~~2019,~~2022, we had outstanding letters of credit with certain vendors aggregating approximately ~~$3.1~~$2.4 million. These letters of credit are being maintained as security for reimbursements to insurance companies and as security to the landlord of our administrative offices in Long Island City, New York. The contract amount of the letters of credit is a reasonable estimate of their value as the value for each is fixed over the life of the commitment.

Change of Control Arrangements

We have a change in control arrangement with 1one 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

InIn 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 statement 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, ~~2019,~~2022, approximately ~~1,550~~1,530 cases were outstanding for which we may be responsible for any related liabilities. Since inception in September 2001 through December 31, ~~2019,~~2022, the amounts paid for settled claims ~~are~~and awards of asbestos-related damages, including interest, were approximately ~~$30.9~~ $64.6 million. We do not have insurance coverage for the indemnity and defense costs associated with the claims we face.

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: (1) historical data available from publicly available studies; (2) an analysis of our recent claims history to estimate likely filing rates into the future; (3) an analysis of our currently pending claims; ~~and~~ (4) an analysis of our settlements and awards of asbestos-related damages to ~~date~~date; and (5) 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.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

~~As related to our potential asbestos-related liability, in~~ ~~2018,~~ ~~we were a defendant in an asbestos liability case in California, in which we were found liable for~~ ~~$7.6 million~~ ~~in compensatory damages. We are pursuing all rights of appeal of this case. During the~~ ~~fourth~~ ~~quarter of~~ ~~2018,~~ ~~our actuarial firm revised the results of its August~~ ~~31,2018~~ ~~study. Based upon the results of the revised actuarial study, in December~~ ~~2018,~~ ~~we increased our asbestos liability to~~ ~~$46.7 million~~ ~~and recorded an incremental pre-tax provision of~~ ~~$10.1 million~~ ~~in earnings (loss) from discontinued operations.~~

In accordance with our policy to perform an annual actuarial evaluation in the third quarter of each year, an ~~updated~~ actuarial study was performed as of August 31, 2022. T~~31,2019.~~ ~~The~~he results of the August 31,~~2019~~ 2022 study included an estimate of our undiscounted liability for settlement payments and awards of asbestos-related damages, excluding legal costs, ~~and any potential recovery from insurance carriers,~~ ranging from $68.8~~$52~~ million to $~~$90.6~~111.6 million for the period through ~~2064.~~2065. The change from the ~~revised~~ prior year study, which was ~~performed in the~~ ~~fourth~~ ~~quarter~~as of ~~2018,~~August 31, 2021, was a ~~$5.3~~$7.9 million increase for the low end of the range and a ~~$6.7~~$11.4 million increase for the high end of the range. The increase in the estimated undiscounted liability from the ~~revised~~ 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,~~2019~~ 2022 actuarial study, in September 2022 we increased our asbestos liability to $~~$52~~68.8 million, the low end of the range, and recorded an incremental pre-tax provision of $~~$9.7~~18.5 million in earnings (loss) from discontinued operations in the accompanying statement of operations. Future legal costs, which are expensed as incurred and reported in earnings (loss) from discontinued operations in the accompanying statement of operations, are estimated, according to the ~~updated~~August 31, 2022 study, to range from $~~$50.6~~53.2 million to $105.7~~$85.2~~ million for the period through ~~2064.~~2065. Total operating cash outflows related to discontinued operations, which include settlements, awards of asbestos-related damages and legal costs, net of taxes, were ~~$8.8~~$12 million ~~$5.7~~, $8.8 million and ~~$5.8~~$16.4 million for the years ended December 31, ~~2019, 2018~~2022, 2021 and ~~2017,~~2020, 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

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 matters. Such revisions of the potential liabilities could have a material adverse effect on our business, financial condition or results of operations.

Index

~~23. Quarterly Financial Data (Unaudited)~~

2019 Quarter Ended
Dec. 31 Sept. 30 June 30 Mar. 31
(In thousands, except per share amounts)
Net sales $ 241,252 $ 307,723 $ 305,172 $ 283,766
Gross profit 72,844 92,088 88,905 77,963
Earnings from continuing operations 12,738 22,654 20,555 13,104
Loss from discontinued operations, net of taxes (1,220 ) (7,903 ) (1,123 ) (888 )
Net earnings $ 11,518 $ 14,751 $ 19,432 $ 12,216
Net earnings from continuing operations per common share:
Basic $ 0.57 $ 1.01 $ 0.92 $ 0.58
Diluted $ 0.56 $ 1.00 $ 0.90 $ 0.57
Net earnings per common share:
Basic $ 0.51 $ 0.66 $ 0.87 $ 0.54
Diluted $ 0.50 $ 0.65 $ 0.85 $ 0.53

2018 Quarter Ended
Dec. 31 Sept. 30 June 30 Mar. 31
(In thousands, except per share amounts)
Net sales $ 246,970 $ 296,619 $ 286,636 $ 261,826
Gross profit 71,603 87,306 81,289 72,589
Earnings from continuing operations 12,157 19,273 16,827 8,597
Loss from discontinued operations, net of taxes (8,837 ) (3,524 ) (882 ) (608 )
Net earnings $ 3,320 $ 15,749 $ 15,945 $ 7,989
Net earnings from continuing operations per common share:
Basic $ 0.54 $ 0.86 $ 0.75 $ 0.38
Diluted $ 0.53 $ 0.84 $ 0.73 $ 0.37
Net earnings per common share:
Basic $ 0.15 $ 0.70 $ 0.71 $ 0.36
Diluted $ 0.14 $ 0.69 $ 0.69 $ 0.35

~~Index~~

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.

CONTROLS AND PROCEDURES

(a)	Evaluation of Disclosure Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Exchange Act, as of the end of the period covered by this Report. This evaluation also included consideration of our internal controls and procedures for the preparation of our financial statements as required under Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Report.

(b)	Management’s Report on Internal Control Over Financial Reporting.

Pursuant to Section 404 of the Sarbanes-Oxley Act, as part of this Report we have furnished a report regarding our internal control over financial reporting as of December 31, ~~2019.~~2022. The report is under the caption “Management’s Report on Internal Control Over Financial Reporting” in “Item 8. Financial Statements and Supplementary Data,” which report isin included herein.

(c)	Attestation Report of Independent Registered Public Accounting Firm.

KPMG LLP, our independent registered public accounting firm, has issued an opinion as to the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2019.~~2022. The opinion is under the caption “Report of Independent Registered Public Accounting Firm−Internal Control Over Financial Reporting” in “Item 8. Financial Statements and Supplementary Data” for this attestation report, which is included herein.

(d)	Changes in Internal Control Over Financial Reporting.

During the quarter ended December 31, ~~2019~~2022 and subsequent to that date, we have not made changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We ~~continue to~~ review, document and test our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in the 2013 Internal Control–Integrated Framework. We may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business. These efforts may lead to various changes in our internal control over financial reporting.

Index

ITEM 9B.

OTHER INFORMATION

None.

ITEM 9C.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not Applicable.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item is incorporated herein by reference to the information in our Definitive Proxy Statement to be filed with the SEC in connection with our ~~2020~~2023 Annual Meeting of Stockholders (the ~~“2020~~“2023 Proxy Statement”) set forth under the captions “Proposal No. 1 - Election of Directors,” “Management Information,” and “Corporate Governance.”

The Board of Directors of the Company has adopted a Code of Ethics that applies to all employees, officers and directors of the Company. The Company’s Code of Ethics is available at ~~www.smpcorp.com~~ir.smpcorp.com under ~~“Investor Relations─Governance~~“Governance Documents.” The Company intends to satisfy any disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of the Company’s Code of Ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, by disclosing such information on the Company’s website, at the address specified above.

ITEM 11.

EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by reference to the information in our ~~2020~~2023 Proxy Statement set forth under captions “Corporate Governance,” “Compensation Discussion & Analysis,” “Executive Compensation and Related Information” and “Report of the Compensation and Management Development Committee.”

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item is incorporated herein by reference to the information in our ~~2020~~2023 Proxy Statement set forth under the captions “Executive Compensation and Related Information” and “Security Ownership of Certain Beneficial Owners and Management.”

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item is incorporated herein by reference to the information in our ~~2020~~2023 Proxy Statement set forth under the captions “Corporate Governance” and “Executive Compensation and Related Information.”

ITEM 14.

PRINCIPAL ~~ACCOUNTING~~ACCOUNTANT FEES AND SERVICES

The Company’s independent registered public accounting firm is KMPG LLP, New York, New York (PCAOB ID 185). All other information required by this Item is incorporated herein by reference to the information in our ~~2020~~2023 Proxy Statement set forth under the captions “Audit and Non-Audit Fees.”

Index

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)	(1)	The Index to Consolidated Financial Statements of the Registrant under Item 8 of this Report is incorporated herein by reference as the list of Financial Statements required as part of this Report.

	(2)
	~~(2)~~	The following financial schedule and related report for the years ~~2019, 2018~~2022, 2021 and ~~2017~~2020 is submitted herewith:

		Schedule II - Valuation and Qualifying Accounts

		All other schedules are omitted because they are not required, not applicable or the information is included in the financial statements or notes thereto.

	(3)	Exhibits.

		The exhibit list in the Exhibit Index is incorporated by reference as the list of exhibits required as part of this Report.

ITEM 16.

FORM 10-K SUMMARY

None.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

EXHIBIT INDEX

Exhibit Number

3.1	Restated By-Laws, dated as of ~~May 23, 1996~~December 15, 2022 (incorporated by reference to the Company's ~~Annual~~Current Report on Form ~~10-K for the year ended~~8-K filed as of December ~~31, 2019)~~21, 2022).

3.2	Restated Certificate of Incorporation, filed as of August 1, 1990 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, ~~2019)~~2017).

3.3	Certificate of Amendment of the Certificate of Incorporation, filed as of February 27, 1996 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, ~~2019)~~2017).

10.1	Amended and Restated Employee Stock Ownership Plan and Trust of Standard Motor Products, Inc., dated as of ~~January 1, 2015~~December 21, 2018 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, ~~2015)~~2021).

10.2	2006 Omnibus Incentive Plan of Standard Motor Products, Inc., as amended (incorporated by reference to the Company’s Registration Statement on Form S-8 (Registration No. 333-174330), filed as of May 19, 2011).

10.3	Supplemental Compensation Plan, effective as of October 1, 2001 (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001).

10.4	Severance Compensation Agreement, dated as of December 12, 2001, between Standard Motor Products, Inc. and James Burke (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001).

10.5	Amendment to the Standard Motor Products, Inc. Supplemental Compensation Plan, effective as of December 1, 2006 (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006).

10.6	Purchase and Sale Agreement, dated as of December 21, 2007, between Standard Motors Products, Inc. and EXII Northern Boulevard Acquisition LLC (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007).

~~10.7~~	Lease Agreement, dated as of March 12, 2008, between Standard Motors Products, Inc. and 37-18 Northern Boulevard LLC (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007).

~~10.8~~	Amendment to Severance Compensation Agreement, dated as of December 15, 2008, between Standard Motor Products, Inc. and James Burke (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009).

~~Index~~

~~STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES~~

~~EXHIBIT INDEX~~

~~Exhibit~~ ~~Number~~

~~10.9~~ 10.7	Amended and Restated Supplemental Executive Retirement Plan, dated as of December 31, 2010 (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010).

~~10.10~~ 10.8	Amendment to Severance Compensation Agreement, dated as of March 8, 2011, between Standard Motor Products, Inc. and James Burke (incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010).

~~10.11~~ 10.9	Credit Agreement, dated as of October 28, 2015, among Standard Motor Products, Inc., as borrower and the other loan parties thereto, and JPMorgan Chase Bank, N.A., as agent and lender, J.P. Morgan Securities LLC, as sole bookrunner and joint lead arranger, Bank of America, N.A. and Wells Fargo Bank, National Association, as co-syndication agents and joint lead arrangers, and the other lenders thereto (incorporated by reference to the Company’s Current Report on Form 8-K filed as of October 30, 2015).

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

EXHIBIT INDEX

Exhibit Number

~~10.12~~ 10.10	Standard Motor Products, Inc. Amended and Restated 2016 Omnibus Incentive Plan and forms of related award agreements (incorporated by reference to the ~~Company��s~~Company’s Registration Statement on Form S-8 (Registration No. ~~333-211461)~~333-256362) filed as of May ~~19, 2016)~~21, 2021).

~~10.13~~ 10.11	First Amendment to Credit Agreement, dated as of December 10, 2018, among Standard Motor Products, Inc. and SMP Motor Products Ltd., as borrowers, JPMorgan Chase Bank, N.A., as agent and lender, and the other lenders thereto (incorporated by reference to the Company’s Current Report on Form 8-K filed as of December 13, 2018).

~~10.14~~ 10.12	~~Consulting~~Second Amendment to Credit Agreement, dated as of ~~April 1, 2018, between~~March 4, 2022, among Standard Motor Products, Inc., SMP Motor Products Ltd. and ~~John P. Gethin~~Trumpet Holdings, Inc., as borrowers, JPMorgan Chase Bank, N.A., as agent and lender, and the other lenders thereto (incorporated by reference to the Company’s ~~Quarterly~~Current Report on Form ~~10-Q~~8-K filed as of ~~May 4, 2018)~~March 10, 2022).

10.13	Credit Agreement, dated as of June 1, 2022, among Standard Motor Products, Inc., as Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A. and Wells Fargo Bank, National Association, as Co-Syndication Agents, J.P. Morgan Securities LLC, as Sustainability Structuring Agent, JPMorgan Chase Bank, N.A., as Sole Bookrunner, JPMorgan Chase Bank, N.A., BofA Securities, Inc. and Wells Fargo Securities, LLC, as Joint Lead Arrangers, and the lenders named therein (incorporated by reference to the Company’s Current Report on Form 8-K filed as of June 2, 2022).

21	List of Subsidiaries of Standard Motor Products, Inc.

23	Consent of KPMG LLP, Independent Registered Public Accounting Firm.

24	Power of Attorney (see signature page to Annual Report on Form 10-K).

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certification of Chief Executive Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Certification of Chief Financial Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

EXHIBIT INDEX

101.INS**	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH**	Inline XBRL Taxonomy Extension Schema Document.
101.CAL**	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB**	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF**	Inline XBRL Taxonomy Extension Definition Linkbase Document.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

**	In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to the Original Filing shall be deemed to be “furnished” and not “filed.”

** In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to the Original Filing shall be deemed to be “furnished” and not “filed.”

Index

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	STANDARD MOTOR PRODUCTS, INC.
	(Registrant)

	~~/s/~~ /s/ Eric P. Sills
	Eric P. Sills
	Chief Executive Officer and President

	~~/s/ James J. Burke~~
	~~James J. Burke~~
	~~Chief Operating Officer~~

	/s/ Nathan R. Iles
	Nathan R. Iles
	Chief Financial Officer

New York, New York

February ~~20, 2020~~22, 2023

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Eric P. Sills ~~James J. Burke~~ and Nathan R. Iles, jointly and severally, as his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

February ~~20, 2020~~22, 2023	/s/ Eric P. Sills
	Eric P. Sills
	Chief Executive Officer and President
	(Principal Executive Officer)

February ~~20, 2020~~	~~/s/ James J. Burke~~
	~~James J. Burke~~
	~~Chief Operating Officer~~

~~February 20, 2020~~22, 2023	/s/ Nathan R. Iles
	Nathan R. Iles
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

~~Index~~


February ~~20, 2020~~22, 2023	/s/ James J. Burke
	James J. Burke
	Chief Operating Officer

February 22, 2023	/s/ Lawrence I. Sills
	Lawrence I. Sills, Director

February ~~20, 2020~~22, 2023	/s/ ~~John P. Gethin~~Alejandro C. Capparelli
	~~John P. Gethin,~~Alejandro C. Capparelli, Director

Index

February ~~20, 2020~~22, 2023	/s/ Pamela Forbes Lieberman
	Pamela Forbes Lieberman, Director

February ~~20, 2020~~22, 2023	/s/ Patrick S. McClymont
	Patrick S. McClymont, Director

February ~~20, 2020~~22, 2023	/s/ Joseph W. McDonnell
	Joseph W. McDonnell, Director

February ~~20, 2020~~22, 2023	/s/ Alisa C. Norris
	Alisa C. Norris, Director

February ~~20, 2020~~22, 2023	/s/ Pamela S. Puryear, Ph.D.
	Pamela S. Puryear, Director

February 22, 2023	/s/ William H. Turner
	William H. Turner, Director

~~February 20, 2020~~	~~/s/ Richard S. Ward~~
	~~Richard S. Ward, Director~~

~~February 20, 2020~~	~~/s/ Roger M. Widmann~~
	~~Roger M. Widmann, Director~~

Index

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES

Schedule II ‑ Valuation and Qualifying Accounts

Years ended December 31, ~~2019, 2018~~2022, 2021 and ~~2017~~2020

			Additions													Additions

Description	Balance at beginning of year		Charged to costs and expenses			Other			Deductions			Balance at end of year		Balance at beginning of year		Charged to costs and expenses			Other		Deductions		Balance at end of year

Year ended December 31, 2019:
Allowance for doubtful accounts	$	4,488,000	$	(295,000	)	$	—		$	(51,000	)	$	4,244,000
Year ended December 31, 2022:
Allowance for expected credit losses														$	4,815,000	$	6,242,000	⁽¹⁾	$	—	$	6,928,000	$	4,129,000
Allowance for discounts		1,199,000		10,660,000			—			10,891,000			968,000		1,355,000		13,456,000			—		13,565,000		1,246,000
	$	5,687,000	$	10,365,000		$	—		$	10,840,000		$	5,212,000	$	6,170,000	$	19,698,000		$	—	$	20,493,000	$	5,375,000

Allowance for sales returns	$	57,433,000	$	136,777,000		$	—		$	150,094,000		$	44,116,000	$	42,412,000	$	152,985,000		$	—	$	158,228,000	$	37,169,000


Year ended December 31, 2018:
Allowance for doubtful accounts	$	3,824,000	$	325,000		$	—		$	(339,000	)	$	4,488,000
Year ended December 31, 2021:
Allowance for expected credit losses														$	4,406,000	$	450,000		$	—	$	41,000	$	4,815,000
Allowance for discounts		1,143,000		10,359,000			—			10,303,000			1,199,000		1,416,000		13,827,000			—		13,888,000		1,355,000
	$	4,967,000	$	10,684,000		$	—		$	9,964,000		$	5,687,000	$	5,822,000	$	14,277,000		$	—	$	13,929,000	$	6,170,000

Allowance for sales returns	$	35,916,000	$	132,390,000		$	6,670,000	(1)	$	117,543,000		$	57,433,000	$	40,982,000	$	129,964,000		$	—	$	128,534,000	$	42,412,000



Year ended December 31, 2017:
Allowance for doubtful accounts	$	3,353,000	$	970,000		$	—		$	499,000		$	3,824,000
Year ended December 31, 2020:
Allowance for expected credit losses														$	4,244,000	$	392,000		$	—	$	230,000	$	4,406,000
Allowance for discounts		1,072,000		10,664,000			—			10,593,000			1,143,000		968,000		11,488,000			—		11,040,000		1,416,000
	$	4,425,000	$	11,634,000		$	—		$	11,092,000		$	4,967,000	$	5,212,000	$	11,880,000		$	—	$	11,270,000	$	5,822,000

Allowance for sales returns	$	40,176,000	$	137,416,000		$	—		$	141,676,000		$	35,916,000	$	35,240,000	$	135,448,000		$	—	$	129,706,000	$	40,982,000

(1)

~~The other addition~~Includes a $7 million charge relating to ~~the allowance~~one of our customers that filed a petition for ~~sales returns represents the cumulative effect of the changes made to our consolidated balance sheet as of~~bankruptcy in January ~~1, 2018 for the adoption of ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~.

2023.

100

New York	11-1362020
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

37-18 Northern Blvd., Long Island City, New York	11101
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:	(718) 392-0200

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $2.00 per share	SMP	New York Stock Exchange LLC

Large Accelerated Filer ☑	Accelerated Filer ☐
Non-Accelerated Filer ☐	Smaller reporting company ☐
Emerging growth company ☐

	Year Ended December 31,
	2019			2018			2017			2016			2015
				(Dollars in thousands)
Statement of Operations Data:
Net sales	$	1,137,913		$	1,092,051		$	1,116,143		$	1,058,482		$	971,975
Gross profit		331,800			312,787			326,656			322,487			280,988
Operating income (1)		94,495			81,268			97,521			98,789			79,764
Earnings from continuing operations (2)		69,051			56,854			43,630			62,412			48,120
Loss from discontinued operations, net of income tax benefit (3)		(11,134	)		(13,851	)		(5,654	)		(1,982	)		(2,102	)
Net earnings (2) (3)		57,917			43,003			37,976			60,430			46,018
Per Share Data:
Earnings from continuing operations (2):
Basic	$	3.09		$	2.53		$	1.92		$	2.75		$	2.11
Diluted		3.03			2.48			1.88			2.70			2.08
Earnings per common share (2) (3):
Basic		2.59			1.91			1.67			2.66			2.02
Diluted		2.54			1.88			1.64			2.62			1.99
Cash dividends per common share		0.92			0.84			0.76			0.68			0.60
Other Data:
Depreciation and amortization	$	25,809		$	24,104		$	23,916		$	20,457		$	17,637
Capital expenditures		16,185			20,141			24,442			20,921			18,047
Dividends		20,593			18,854			17,287			15,447			13,697
Cash Flows Provided By (Used In):
Operating activities	$	76,928		$	70,258		$	64,617		$	97,805		$	65,171
Investing activities		(54,812	)		(29,886	)		(31,228	)		(88,018	)		(18,011	)
Financing activities		(23,378	)		(46,121	)		(35,944	)		(7,756	)		(41,155	)
Balance Sheet Data (at period end):
Cash and cash equivalents	$	10,372		$	11,138		$	17,323		$	19,796		$	18,800
Working capital		239,969			233,638			210,194			190,380			195,198
Total assets (4)		912,730			843,132			787,567			768,697			681,064
Total debt		57,045			49,219			61,778			54,975			47,505
Long-term debt (excluding current portion)		129			153			79			120			62
Stockholders’ equity		504,228			467,201			453,654			441,028			391,979

	Page No.

Management’s Report on Internal Control over Financial Reporting	4244

Report of Independent Registered Public Accounting Firm—Internal Control Over Financial Reporting	4345

Report of Independent Registered Public Accounting Firm—Consolidated Financial Statements	4547

Consolidated Statements of Operations for the years ended December 31, ~~2019, 2018~~2022, 2021 and ~~2017~~2020	4849

Consolidated Statements of Comprehensive Income for the years ended December 31, ~~2019, 2018~~2022, 2021 and ~~2017~~	49

~~Consolidated Balance Sheets as of December 31, 2019 and 2018~~2020	50

Consolidated Balance Sheets as of December 31, 2022 and 2021	51

Consolidated Statements of Cash Flows for the years ended December 31, ~~2019, 2018~~2022, 2021 and ~~2017~~2020	5152

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, ~~2019, 2018~~2022, 2021 and ~~2017~~2020	5253

Notes to Consolidated Financial Statements	5354

	SMP	S&P 500	S&P 1500 Auto Parts & Equipment Index	SMP		S&P 500		S&P 1500 Auto Parts & Equipment Index
2014	100	100	100
2015	101	101	93
2016	144	114	99
2017	124	138	130		100		100		100
2018	136	132	89		110		96		69
2019	152	174	119		123		126		92
2020					94		149		113
2021					125		192		138
2022					85		157		93

	December 31,
(In thousands, except per share data)	2022			2021			2020

Net sales	$	1,371,815		$	1,298,816		$	1,128,588
Gross profit		382,539			376,931			336,655
Gross profit %		27.9	%		29	%		29.8	%
Operating income		104,135			128,999			108,895
Operating income %		7.6	%		9.9	%		9.6	%
Earnings from continuing operations before income taxes		98,332			130,465			107,379
Provision for income taxes		25,206			31,044			26,962
Earnings from continuing operations		73,126			99,421			80,417
Loss from discontinued operations, net of income taxes		(17,691	)		(8,467	)		(23,024	)
Net earnings		55,435			90,954			57,393
Net earnings attributable to noncontrolling interest		84			68			—
Net earnings attributable to SMP		55,351			90,886			57,393
Per share data attributable to SMP – Diluted:
Earnings from continuing operations	$	3.30		$	4.39		$	3.52
Discontinued operations		(0.80	)		(0.37	)		(1.01	)
Net earnings per common share	$	2.50		$	4.02		$	2.51

	Common Stock		Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total SMP			Non- controlling Interest			Total
(In thousands)
BALANCE AT DECEMBER 31, 2019	$	47,872	$	102,742		$	417,437		$	(8,589	)	$	(55,234	)	$	504,228		$	—		$	504,228
Net earnings		—		—			57,393			—			—			57,393			—			57,393
Other comprehensive income, net of tax		—		—			—			2,913			—			2,913			—			2,913
Cash dividends paid ($0.50 per share)		—		—			(11,218	)		—			—			(11,218	)		—			(11,218	)
Purchase of treasury stock		—		—			—			—			(13,482	)		(13,482	)		—			(13,482	)
Stock-based compensation		—		1,712			—			—			6,389			8,101			—			8,101
Employee Stock Ownership Plan		—		630			—			—			1,671			2,301			—			2,301

BALANCE AT DECEMBER 31, 2020		47,872		105,084			463,612			(5,676	)		(60,656	)		550,236			—			550,236
Noncontrolling interest in business acquired		—		—			—			—			—			—			11,504			11,504
Net earnings		—		—			90,886			—			—			90,886			68			90,954
Other comprehensive loss, net of tax		—		—			—			(2,493	)		—			(2,493	)		15			(2,478	)
Cash dividends paid ($1.00 per share)		—		—			(22,179	)		—			—			(22,179	)		—			(22,179	)
Purchase of treasury stock		—		—			—			—			(26,862	)		(26,862	)		—			(26,862	)
Dividends paid to noncontrolling interest		—		—			—			—			—			—			(540	)		(540	)
Stock-based compensation		—		159			—			—			9,320			9,479			—			9,479
Employee Stock Ownership Plan		—		134			—			—			2,379			2,513			—			2,513

BALANCE AT DECEMBER 31, 2021		47,872		105,377			532,319			(8,169	)		(75,819	)		601,580			11,047			612,627
Net earnings		—		—			55,351			—			—			55,351			84			55,435
Other comprehensive loss, net of tax		—		—			—			(4,301	)		—			(4,301	)		(113	)		(4,414	)
Cash dividends paid ($1.08 per share)		—		—			(23,428	)		—			—			(23,428	)		—			(23,428	)
Purchase of treasury stock		—		—			—			—			(29,656	)		(29,656	)		—			(29,656	)
Stock-based compensation		—		(131	)		—			—			8,309			8,178			—			8,178
Employee Stock Ownership Plan		—		369			—			—			1,927			2,296			—			2,296

BALANCE AT DECEMBER 31, 2022	$	47,872	$	105,615		$	564,242		$	(12,470	)	$	(95,239	)	$	610,020		$	11,018		$	621,038

	Common Stock		Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Income			Treasury Stock			Total
(In thousands)
BALANCE AT DECEMBER 31, 2016	$	47,872	$	96,850		$	336,464		$	(11,028	)	$	(29,130	)	$	441,028
Net earnings		—		—			37,976			—			—			37,976
Other comprehensive income, net of tax		—		—			—			6,919			—			6,919
Cash dividends paid ($0.76 per share)		—		—			(17,287	)		—			—			(17,287	)
Purchase of treasury stock		—		—			—			—			(24,779	)		(24,779	)
Stock-based compensation		—		2,193			—			—			5,445			7,638
Employee Stock Ownership Plan		—		1,014			—			—			1,145			2,159

BALANCE AT DECEMBER 31, 2017		47,872		100,057			357,153			(4,109	)		(47,319	)		453,654
Cumulative effect adjustment		—		—			(1,189	)		—			—			(1,189	)
Net earnings		—		—			43,003			—			—			43,003
Other comprehensive loss, net of tax		—		—			—			(5,485	)		—			(5,485	)
Cash dividends paid ($0.84 per share)		—		—			(18,854	)		—			—			(18,854	)
Purchase of treasury stock		—		—			—			—			(14,483	)		(14,483	)
Stock-based compensation		—		1,648			—			—			6,350			7,998
Employee Stock Ownership Plan		—		765			—			—			1,792			2,557

BALANCE AT DECEMBER 31, 2018		47,872		102,470			380,113			(9,594	)		(53,660	)		467,201
Net earnings		—		—			57,917			—			—			57,917
Other comprehensive loss, net of tax		—		—			—			1,005			—			1,005
Cash dividends paid ($0.92 per share)		—		—			(20,593	)		—			—			(20,593	)
Purchase of treasury stock		—		—			—			—			(10,738	)		(10,738	)
Stock-based compensation		—		(473	)		—			—			7,390			6,917
Employee Stock Ownership Plan		—		745			—			—			1,774			2,519

BALANCE AT DECEMBER 31, 2019	$	47,872	$	102,742		$	417,437		$	(8,589	)	$	(55,234	)	$	504,228

	Balance at December 31, 2018		Adjustments Due to Adoption of ASU 2016-02		Balance at January 1, 2019
Balance Sheet
Operating lease right-of-use asset	$	—	$	38,580	$	38,580
Sundry payables and accrued expenses		31,033		7,232		38,265
Noncurrent operating lease liabilities		—		31,348		31,348

Balance Sheet Information	December 31, 2019
Assets
Operating lease right-of-use assets	$	36,020

Liabilities
Sundry payables and accrued expenses	$	8,739
Noncurrent operating lease liabilities		28,376
Total operating lease liabilities	$	37,115

Weighted Average Remaining Lease Term
Operating leases	5.6 Years

Weighted Average Discount Rate
Operating leases		3.7	%

Expense and Cash Flow Information	Year Ended December 31, 2019

Lease Expense
Operating lease expense (a)	$	8,940

Supplemental Cash Flow Information
Cash Paid for the amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	8,758
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	4,663

2020	$	8,994
2021		8,245
2022		6,882
2023		5,682
2024		3,881
Thereafter		7,844
Total lease payments	$	41,528
Less: Interest		(4,413	)
Present value of lease liabilities	$	37,115

Purchase Price			$	2,924
Assets acquired and liabilities assumed:
Inventory	$	1,032
Machinery and equipment, net		1,137
Intangible assets		755
Net assets acquired			$	2,924

	Workforce Reduction			Other Exit Costs			Total
Exit activity liability at December 31, 2017	$	2,854		$	—		$	2,854
Restructuring and integration costs:
Amounts provided for during 2018 (1)		9			4,501			4,510
Non-cash usage, including asset write-downs		—			(181	)		(181	)
Cash payments		(2,148	)		(3,036	)		(5,184	)
Reclassification of environmental liability (1)		—			(1,284	)		(1,284	)
Foreign currency exchange rate changes		27			—			27
Exit activity liability at December 31, 2018	$	742		$	—		$	742
Restructuring and integration costs:
Amounts provided for during 2019 (1)		—			2,585			2,585
Cash payments		(406	)		(1,688	)		(2,094	)
Reclassification of environmental liability (1)		—			(386	)		(386	)
Reclassification of inventory reserves		—			(511	)		(511	)
Exit activity liability at December 31, 2019	$	336		$	—		$	336

	December 31, 2019		December 31, 2018
	(In thousands)

Finished goods	$	241,472	$	226,802
Work-in-process		11,138		10,527
Raw materials		115,611		112,482
Subtotal		368,221		349,811
Unreturned customer inventories		19,722		20,484
Total inventories	$	387,943	$	370,295

	2019 Quarter Ended
	Dec. 31			Sept. 30			June 30			Mar. 31
	(In thousands, except per share amounts)
Net sales	$	241,252		$	307,723		$	305,172		$	283,766
Gross profit		72,844			92,088			88,905			77,963
Earnings from continuing operations		12,738			22,654			20,555			13,104
Loss from discontinued operations, net of taxes		(1,220	)		(7,903	)		(1,123	)		(888	)
Net earnings	$	11,518		$	14,751		$	19,432		$	12,216
Net earnings from continuing operations per common share:
Basic	$	0.57		$	1.01		$	0.92		$	0.58
Diluted	$	0.56		$	1.00		$	0.90		$	0.57
Net earnings per common share:
Basic	$	0.51		$	0.66		$	0.87		$	0.54
Diluted	$	0.50		$	0.65		$	0.85		$	0.53

	2018 Quarter Ended
	Dec. 31			Sept. 30			June 30			Mar. 31
	(In thousands, except per share amounts)
Net sales	$	246,970		$	296,619		$	286,636		$	261,826
Gross profit		71,603			87,306			81,289			72,589
Earnings from continuing operations		12,157			19,273			16,827			8,597
Loss from discontinued operations, net of taxes		(8,837	)		(3,524	)		(882	)		(608	)
Net earnings	$	3,320		$	15,749		$	15,945		$	7,989
Net earnings from continuing operations per common share:
Basic	$	0.54		$	0.86		$	0.75		$	0.38
Diluted	$	0.53		$	0.84		$	0.73		$	0.37
Net earnings per common share:
Basic	$	0.15		$	0.70		$	0.71		$	0.36
Diluted	$	0.14		$	0.69		$	0.69		$	0.35