SMP

Overall Quarterly Performance • Management reported strong Q2 2026 results, with 7% top-line growth adjusted for tariff refund accounting, 8% year-to-date growth, and a record $63.5 million in adjusted EBITDA alongside strong operating cash flow. • A 50/50 joint venture was recently completed with long-time partner Textrol for a sensor manufacturing operation in Thailand, to support the Vehicle Control segment. The investment strengthens in-house manufacturing capacity, improves supply chain control, and adds a low-cost manufacturing base that reduces geographic risk concentrated in China.

Leadership Transition • After over 40 years of service, Jim Burke stepped down from the Chief Operating Officer role; he remains with the company as Executive Advisor and a member of the board of directors. • Sunil Bhandari joined the company as new global Chief Operating Officer, with responsibility for all global operations including manufacturing, distribution, engineering, procurement, and supply chain. Bhandari brings 25 years of global operations leadership experience, most recently from Eaton Corporation, with a track record of driving strong operational execution.

Balance Sheet and Cash Flow Highlights • Year-to-date operating cash flow reached $58.3 million, $64.2 million higher than the same period in 2025, driven by significant inventory reductions and the timing of received tariff refunds. • Capital expenditures totaled $14.9 million H1 2026, lower than 2025, as construction spending for the new distribution center is complete. • The company reduced net debt to $510.2 million as of Q2 2026, down significantly from year-ago levels, with a leverage ratio of 2.5x adjusted EBITDA, on track to hit the target 2.0x leverage by the end of 2026. • The company paid $14.7 million in dividends and repaid $24 million in credit facility debt during H1 2026.

Strategic Progress • Nissin's Automotive continues to exceed expectations as a growth platform for the company, delivering meaningful business diversification while capturing top and bottom-line synergies with the existing core aftermarket business. Two new complementary product categories (ignition coils, AC hoses) were launched in Europe in early 2026, leveraging cross-company supply chain strengths and already showing early momentum. • The company has advanced its diversification strategy across new product categories, geographies, and end markets, building on structural advantages, strong customer relationships, and consistent execution to outperform in the current environment.

• Full year 2026 sales growth guidance is maintained at a low to mid single-digit percentage range, lower than H1 2026 growth due to more difficult year-over-year comparisons in the second half for Engineered Solutions and Temperature Control, the lapping of 2025 tariff pricing changes, and the loss of foreign currency translation tailwinds for the Nissin's segment as the USD/EUR exchange rate stabilizes. • Full year 2026 adjusted EBITDA margin guidance is maintained at 11% to 12%, reflecting margin expansion from sales growth offset by continued margin compression from passing through tariffs at cost and elevated distribution costs while ramping the new Shawnee, Kansas distribution center. • Full year 2026 expected interest expense on outstanding debt is ~$30 million, the effective income tax rate is expected to fall between 27.5% and 28%, and depreciation and amortization is expected to reach $45 to $50 million, driven by a full year of depreciation on the new distribution center investment plus ongoing business investments. • The current guidance excludes the potential impact of ongoing changes to the US tariff regime, unanticipated inflationary pressure from the Middle East conflict, and changes to interest rates affecting the company's customer supply chain financing program.

1. Vehicle Control: Q2 2026 net sales of $198.6 million, down 1.6% year-over-year. The segment's year-to-date sales are up 4.7%, driven by strong first quarter pipeline orders. The revenue decline was almost entirely due to the ongoing secular decline of the wire set product category; core engine management product sales grew in the quarter. Adjusted EBITDA margin was 8.6% in Q2, lower than the prior year, due to elevated distribution costs from ramping the new Shawnee, Kansas warehouse, higher freight expenses, and general SG&A inflation, partially offset by improved gross margin. This segment contributed approximately 37.8% of consolidated Q2 net sales.

2. Temperature Control: Q2 2026 net sales of $152 million, up 15.7% year-over-year (adjusted for tariff refund accounting). The strong growth was driven by a shift of preseason order timing from Q1 to Q2 2026. Year-to-date sales are up nearly 10% from 2025. Adjusted EBITDA margin improved to 18.2% in Q2, driven by higher sales volume that expanded gross margin and improved operating expense leverage. This segment contributed approximately 28.9% of consolidated Q2 net sales.

3. Nissin's Automotive (European Aftermarket): Q2 2026 net sales grew by $4.4 million, an increase of 4.8% year-over-year, with 2.5 percentage points of growth coming from local currency volume and the remainder from favorable currency translation. After a difficult comparison against strong 2025 H1 orders, the segment delivered 2.3% local currency organic sales growth. Adjusted EBITDA margin reached 19% of net sales in Q2, up from the prior year, due to improved gross margin and controlled SG&A, plus stabilization of currency transaction losses that pressured Q1 2026 results. Strong growth was seen in engine efficiency products (turbos, engine management) driven by new shelf space gains, while air conditioning sales were soft due to a late European summer. This segment contributed approximately 10.1% of consolidated Q2 net sales.

4. Engineered Solutions (Non-Aftermarket): Q2 2026 net sales grew 16.8% year-over-year, bringing year-to-date growth to nearly 15% following a 2025 second half rebound. Growth was broad-based across most served markets. Adjusted EBITDA margin was 9.7% in Q2, down from the prior year, as inflationary pressure reduced gross margin, partially offset by operating expense leverage from higher sales. This segment contributed approximately 23.2% of consolidated Q2 net sales.

Consolidated: Q2 2026 adjusted net sales grew 6.7% year-over-year. Adjusted EBITDA hit a record $63.5 million (12.1% margin), $4.4 million higher than 2025 Q2. Non-GAAP diluted EPS rose 8.6% to $1.40.

• Uncertainty remains around the potential impact of the ongoing Middle East conflict on input costs and global supply chain disruption, even though management noted the company has a history of navigating supply chain challenges and maintains a robust, resilient manufacturing and supply chain footprint. • The wire set product category in the Vehicle Control segment is in a multi-year secular decline, pressuring segment sales as customers adjust their long-term stocking positions. • The Temperature Control and Nissin's Automotive air conditioning categories are exposed to seasonal weather volatility: unseasonably cool weather in early Q2 2026 reduced point-of-sale demand in both regions, and stronger year-ago comparisons for Q3 2026 will pressure near-term growth for Temperature Control. • Sales growth for the Engineered Solutions segment is expected to slow in the second half of 2026 as the segment faces more challenging year-over-year comparisons from the 2025 second half market rebound. • Ongoing changes to the US tariff regime create uncertainty for future cost and pricing levels, and any future changes to interest rates could impact the company's customer supply chain financing program.

Q: With the IEPA tariff refunds completed and replacement Section 301 tariffs in place, what is the net change to the company's overall tariff exposure, and will the company share refund proceeds with customers? / A: The elimination of IEPA tariffs and replacement with new tariffs resulted in only a very small net reduction in the company's total tariff exposure. The company's long-standing policy is to pass all tariff changes through to customers dollar-for-dollar, with a 90 to 120 day timing offset. The company expects to share the received IEPA refunds with customers, consistent with the original pass-through of these costs, though specific customer arrangements are not being disclosed publicly. (319 characters)

Q: After the unseasonably cool weather in early Q2 that softened point-of-sale (POS) demand for temperature control products, have you seen a POS rebound in the six weeks since the end of the quarter, amid the record heat across much of the US? / A: POS demand was indeed soft across May and early June due to unseasonably cool and wet weather, despite strong wholesale pre-season orders from customers that drove Q2 sales growth. While management notes it is still too early to predict full season results and the summer selling season has grown longer in recent years, the company has seen a clear rebound in POS demand as record heat has spread across most of the US. (347 characters)

Q: Vehicle control segment customer POS was noted as positive in the quarter; what is the magnitude and mix of that POS growth between units and pricing? / A: POS for vehicle control remained positive in the quarter, with a modest slowdown from prior periods that still delivered low single-digit year-over-year growth. Most of that POS growth came from pricing, but unit demand also remained strong. (187 characters)

Q: What new product categories has the company launched in Europe to leverage synergies with Nissin's Automotive, and how is the rollout progressing? / A: The company launched two new complementary categories in early 2026: vehicle control ignition coils, which leverage existing local manufacturing capacity in Poland for a localized European go-to-market strategy that is already gaining traction, and AC system hoses, which leverage the company's existing supply chain to fill a gap in Nissin's product portfolio. Both categories are in the early ramp phase, and the partnership has also already helped Nissin's expand its product presence in the North American market, with additional synergies being explored for Standard Motor's legacy business. (401 characters)