Good morning. Our next presenting company is Standard Motor Products, trades on the New York Stock Exchange under the ticker SMP. As the name suggests, they are a manufacturer and distributor of auto parts. The company had some good results here in the past couple of weeks. They'll be certainly here to speak on that. Starting off will be Tony Cristello, Vice President of Investor Relations and Corporate Development. With him is Nathan Iles, the company's CFO. Tony? Good morning and thanks, everyone, for taking time to listen to our presentation. Forward-looking statements. I'm not going to read through them all, but just making sure that everyone gets to see this page or our corporate counsel will be upset. Standard Motor Products, over a hundred-year-old company, focusing in the aftermarket space. Been around since 1919. $1.5 billion company in revenue. We really operate in three different segments: the North American aftermarket, which is comprised of our Vehicle Control side—we'll talk a little bit about that—and our Temperature Control side; our European aftermarket, which we've recently made an acquisition this past November, really expanded that and broke that segment out; and then a smaller piece, about 17% of our business, which is non-aftermarket called Engineered Solutions. That really focuses on just really small, niche, customized product that mimics and matches what we sell in the aftermarket, but it's not to aftermarket customers. It's to commercial ag, heavy-duty equipment, and some light vehicle. If you think about our business and the thesis and how we operate, the aftermarket, for those of you that don't know, is really, really steady business, right? It's driven by the number of cars on the road. It's driven by the average age of the vehicles on the road, and those trends right now are very, very favorable when you think about the average age of a vehicle, 12, 13 years old. One of the things about our business that we really think is beneficial to us as well is we don't sell much into what's considered the do-it-yourself side of the business, right? It's not very discretionary. Much of what we sell is break-fail and you got to fix it. Your car doesn't work unless you don't. Anytime you get the check engine light on, it's probably a part that we will sell on a replacement side. Most of what we sell the product into is the traditional retail channel, and we sell into the WDS, who then sell to your professional installer, your garage. The average age of the vehicles that we service is anywhere from six to 12 years, depending on the product type. We're not on an OE type warranty replacement, but it's usually the second or third owner of the vehicle that's using that. It's typically going to be an installer that's putting that part on because of the complexity of it. When you think about our business model, you know, we just made that acquisition in this past November, closed on Nissens. We'll talk a little bit about that, but it gives us a really good diversification outside of our traditional North American aftermarket. The European aftermarket, very similar dynamics, very similar size. The one difference is it's not as developed from the standpoint of you don't have O'Reilly's of the world or AutoZone's of the world or Advance's of the world or GP. You know, you got more of a traditional aftermarket over there that's not driven by some of the dynamics that are over here. It's growing, it's catching up, low single-digit, historical growth over there as well. Very steady marketplace, very comparable to what we see over here. The engineered solutions side of our business, again, another way that we diversified our business from the standpoint of looking outside of the traditional aftermarket, what are some ways we could grow and be able to expand, expand from geography, expand from customer base. It's really unique. We're not trying to provide, you know, hundreds of thousands of part runs. These are small, niche, five, ten thousand type customers that look for specialized solutions to some of their products. The last piece is because of the stability in the industry in which we operate, we've had pretty consistent financial performance. Cash flow has been pretty good. Capital allocation really includes the dividend that we pay on a regular basis, as well as return to shareholders. We just did the largest acquisition in the company's history with Nissens this past year, and we're looking to continue to deliver. When you think about the expansion of the aftermarket and Nissens recently, it was a, you know, company moving opportunity, right? It allowed us to get into Europe, a new geography. In Europe, on its standalone, you think Europe, but it's lots of different countries, right? In order to go into that marketplace and take advantage of it, it's really difficult to go one country at a time. This acquisition provided us with an opportunity to sort of have critical mass all at once. The business is continuing to grow at a faster pace than what we see here, simply because they're continuing to take market share. They operate with branded product in terms of the Nissens brand. They continue to do very good at growing and introducing new products. We'll talk a little bit about sort of what their business model is. You think about the pro forma business, and here you see it added about $277 million on a pro forma basis last year. Really happy with that piece of the business, and we look forward to a lot of the growth opportunity it provides us. Why did we grow into Europe? When you think about it, Standard Motor Products is the leading supplier for Vehicle Control and Temperature Control in the U.S. Nissens Automotive is the leading supplier for Temperature Control products, thermal management products in Europe, and they have a small piece of what we do on the Vehicle Control side over there as well. This is an opportunity to go to market, allow us to be a full-line supplier, and allow them to take advantage of what we can bring to the table, as well as some of the cross-selling opportunities and some of the opportunities to expand. It gave us a new customer base, gave us new geography. The other thing is when we look at the opportunities between buying power, freight savings, some of those things, we talked about $8 million - $12 million of cost synergies that we'll get in the first 24 months. We think that's going to be a really good opportunity. What we haven't categorized is any of the growth synergies. It takes a while to get those up and going. As we talked about, our Vehicle Control side is a very small piece of their business in Europe, but now we have a footprint and a platform that provides some opportunities there, as well as they're a small piece of business in the U.S. We think we can help them as they grow some of their business here in the U.S. and aftermarket. When you think about our footprint, one of the things that does set us apart as well from some of our competitors, much of what we manufacture is in the U.S., in North America, in Canada, and so we're not heavily reliant on products coming out of Asia. We do have a footprint there. If you think about our North America sales in the context of tariffs, over half are from North America. About 25% is out of China, and the rest is the rest of the world coming out of Europe. One of the things that we think that this positions us better is we have more tariff avoidance from the standpoint of the compliance, USMCA compliance. A lot of competition out there is, you know, much higher percentages coming out of China. We think we're positioned well coming out of that, from a tariff scenario. When you think about the markets that we participate in, again, the North America aftermarket, that's about two-thirds of our revenue from 2024. The Nissens Automotive piece was about 16% of the business from 2024 on a pro forma basis. Engineered Solutions is about 17% of the business. We think there's growth opportunities across all of those segments. We think that when we look at the opportunities, the North American aftermarket, very steady, very solid growth over the long term. The European aftermarket, again, new market for us with Nissens Automotive. We think that that's going to present a very good opportunity here in the future, in the coming years. The Engineered Solutions piece, you know, new customers, different type of customer base, provides us with a little bit of diversification from our core businesses. All right, good morning. I'm going to take us through some of the segments in a little bit deeper dive, and then finish up with some of the financial metrics and maybe touch on Q2 and first half of the year, just with some comments and open it up for Q&A. First, North American aftermarket, Tony covered a little bit of this. Diving in a little bit deeper, it contains our Vehicle Control and Temperature Control segments. We have about 80,000 SKUs across these two segments. What we're doing here is going to our customers full line, all makes, all models. If you think about a coil on plug, a sensor, actuator, whatever the part is, we have the offering in our catalog for every car on the road. It's really important for our customers to be able to have access to those parts. The aftermarket is all really about forward deployment of inventory to be able to fix cars when they come into the bay, to have the parts available. That's what we're offering to the customers. We wrap services around it, so category management services, helping customers figure out which parts on which shelves and which zip codes. We provide a lot of training to technicians to create brand awareness and sort of some stickiness to our brand. We train about 60,000 technicians every year. There are a lot of marketing services as well, just making sure that folks know where they can find our parts and how to get them. Think about key market drivers. Again, Tony touched on a little bit of it, but the market tends to grow very nice and slowly. You get low single-digit growth every year. That's really because you have this car park that's very large and stable, 296 million cars. You get some that move out of that car park, some that move in each year, and you get that low single-digit growth. The other nice tailwind that we have is the average age of a car continues to get older, so about 12.3 years old now. When I started in the industry 10 years ago, that number was under 10 years. You get this really nice slow progression. As cars get older, they need more repair work. Bottom left of the page just gives a little bit of history on sales. You can see in the pie chart Vehicle Control, about two-thirds of this, North American aftermarket Temperature Control, one-third. While sales can be a little bit lumpy in any given year, there are some weather patterns in the Temperature Control segment. Customers can change their ordering patterns over time, but you do get this very nice long-term steady low single-digit growth that I mentioned. From 2021 - 2024, growing from just over $1 billion to now $1.14 billion in 2024. Customer examples are on the right. I would just say, again, as Tony Cristello pointed out, we have some very large stable customers in this market. They've been great partners, symbiotic relationships, and we continue to grow together over time. European aftermarket. Start with the top right because there's a lot of similar dynamics. The car park is actually very similar in size, 280 million cars, and the average age of the car is just about the same, just over 12 years. That really creates the dynamic that allows for that same slow, low single-digit growth. The thing that's different about Nissens Automotive is that they've actually been able to take share and do better than that low single-digit growth over the last probably 10 years or so. It's largely because if you look on that top left-hand side, the Nissens Automotive brand is very well known. They've been able to put new products in that box, wrap the name around it, and see very good market growth and market penetration wherever they enter with new products. That's really taken them up from a market growth of low single digits to something that's more mid to high single digits. I think year to date, they're roughly 8% growth year over year, and that's really what they were from 2023 to 2024 as well. They do have a couple other brands that help them compete. AVA is the second line, not private label, but is a nice second line name for them. The Highway brand lets them take some of their products into the commercial segment, just like we do with Engineered Solutions on a global basis. Sales split for Nissens Automotive there in the pie chart: engine efficiency, cooling, and air conditioning. Very nice mix. This is really what made the acquisition interesting for us, direct overlap with our products in North America. Air conditioning fits right in with Temperature Control. Engine efficiency, while a different name, is really largely Vehicle Control products. Those two things together will provide for a nice revenue synergy opportunity as we look at combining product catalogs. Finally, just to touch on customers, you can see some of the names here. LKQ, many of you might know. I would just point out the Alliance Automotive Group is actually under the Genuine Parts umbrella now that has the NAPA brand in North America. Intercar is a very large customer in Poland. There is no single customer here that's greater than 15% of sales. It is really, besides geographic diversification, nice diversification from a customer perspective as well. Last, let me touch on Engineered Solutions before going into financial highlights. This is really all about taking the products that we were selling into the aftermarket for a hundred years and finding a different outlet for those products. There are bullet points top left, but it's easier to look at the pie chart there. On the bottom left, there is a very nice mix between commercial vehicle, construction, agriculture, light vehicle, and all other, all other being marine, lawn and garden hydraulics, that sort of thing. The thing to point out as far as those markets go, we tend not to over-index the light vehicle. Most folks know that tends to be a tough market. We kind of sell what makes sense for us to sell there. We are able to win business with other customers in those other spaces that have longer contracts, some better pricing dynamics, better margin dynamics. Revenue in the segment has grown from $237 million - $285 million. Some of that is due to acquisitions that we made in the 2021 time period. We were seeing growth here of around 5% before we got into a little bit of a down cycle. The nice thing here is that because this is a growth area for us, a place where we can win and get on new platforms, while many of these end markets have experienced a bit of a down cycle in the last 18 months or longer, our sales stayed flat in 2024. We've had a little bit of softness in the first half, but not as much as you see in other markets. Very consistent and steady business for us. All right, just in terms of a financial overview and to give you an idea of where we stand now on the top line, maybe in a little bit longer term look at sales. North American aftermarket on the left-hand side in the dark blue has grown from under $1 billion in 2020 to now well over $1.1 billion. Again, some of that long-term low single-digit growth you see coming through. Engineered Solutions in the gray box continues to grow nicely as we have built out that segment. Nissens Automotive is coming in, in the European aftermarket bucket, in 2024, closing 2024, full-year sales in 2025. You can see what this did for us from a diversification perspective in geography. We have 71% now in the U.S. That number was much bigger in the past. Just under 20% now in Europe, and then about 11% in the rest of the world. From a free cash flow, CapEx, net debt perspective, on the left-hand side, you can see our free cash flow. It's a little bit lumpy, probably like many companies were in the supply chain, I guess call it crisis, back in 2022-2023. We actually used a lot of cash in 2022 to make sure we had enough inventory on our shelves to satisfy our customers. We recouped all of that investment in 2023 and continued to have good, strong free cash flow. 2024 was a little bit less than run rate because we have invested in a new distribution center in Shawnee, Kansas. The distribution center formally opened in June, and we're building it out now, shipping more and more product out of it each day. There has been about a $25 - $30 million investment there that you can see falls on the CapEx side right in the middle of the page. As we normalize CapEx, we'll get back into a kind of $30 to $35 million range going forward. Finally, net debt, you can see that we've maintained a low leverage profile over time. We always said we'd lever up to do a great acquisition, and that's what we did in 2024. We ended 2024 at 3.7 times levered. That's a little bit of a misnomer because that only included two months of EBITDA for Nissens Automotive. That number on a pro forma basis was much lower, and we actually came out of the second quarter now at 3.2 times, and headed to likely under three by the end of 2025. Capital allocation priorities, just to run through these so folks know where we stand. We're always looking at CapEx investments. We'll continue to do those. We have a dividend program that we've run for many years, and make small increases to each year with board approval. Right now we're kind of in a debt paydown mode, just as we look to unlever, coming out of the Nissens Automotive acquisition. That said, we're always kind of keeping abreast of M&A opportunities. You never know what's going to come up. There's certainly very small investments we could make to add on a product line here or there, just to make sure we're staying aware of what's out there. We have done a fair amount of share repurchases in the past, but we kind of put that on pause as we look at paying down our debt in the near term. These are kind of the core pillars of capital allocation. Finally, just to wrap it up by coming back to what Tony showed, like leading, global automotive aftermarket parts company, stable markets now with a little bit of a growth flavor to it with the Nissens Automotive acquisition in Europe, and demonstrated consistent financial performance. We've had a great couple of years, had a great first half of this year, seeing all of our segments grow. I think we're up, just a little flavor on the first half. Sales were up just a little bit under 26%. A lot of that is obviously Nissens Automotive, but the legacy business grew at just under 5% for the first half of the year. Vehicle Control, Temperature Control, doing very nicely. We've turned in really record earnings both on the back of the acquisition and improvements in North America. With that, I'll stop. I know I have a little bit of time for Q&A and happy to take questions if there are any. Yeah. Who is the seller of the European business? It was a private equity firm, named Axcel, in Denmark. Yeah. Were they kind of like for sellers? No, the Nissens family started the Nissens Automotive business about 100 years ago. In 2018, they sold 75% of it to Axcel as kind of a first step out, and they retained 25%. Axcel held it for the normal holding period and then sold 100% of it to us last year. Yeah. Because historically, buying some of these businesses a year over the last few years from almost those former sellers who sold the ones out of the year has been great for us. Yeah, no. I think, you know, as we looked at it, multiples were more attractive, even though it wasn't maybe a for sale. You know, debt's a little bit cheaper in Europe as well. It lines up pretty well for us. All right, guys, an easy crowd today. I'll keep going. Okay. In like three - five years, you think, obviously you took on some debt to buy this thing in Europe. Where do you see yourself in five years? Are you going to pay that down or? Yeah, we're going to pay it. The target we came out with when we closed was to get under two times by the end of 2026. I think we're well on our way there. You saw on the other page, we kind of lived in the, call it zero to one and a half times for a lot of years. I think we'll get under two, very comfortable there. If there's another opportunity that we can lever up and take advantage of, we'll certainly do that. I think from a just natural growth perspective, we'll be a couple billion dollars, $2 billion in sales in a couple of years, just organically, with continued profit improvements. I think we've got a good road ahead. All right. All right. right. Okay. Thank you all for your time. Thanks, everyone. All right.