Standard Motor Products (NYSE:SMP) outlined its growth strategy, European expansion and capital-allocation priorities during the Midwest IDEAS Conference, highlighting its recently acquired Nissens business and the resilience of the automotive replacement-parts market.
Tony Cristello, the company’s vice president of investor relations and corporate development, said Standard Motor Products is a 107-year-old company with nearly $2 billion in revenue, approximately $200 million in adjusted EBITDA and a global workforce of 6,000 employees. Its operations consist of North American aftermarket, European aftermarket and Engineered Solutions segments.
Nissens acquisition expands European aftermarket reach
Standard Motor Products acquired Nissens, a European aftermarket company with more than $300 million in revenue, at the end of November 2024. Cristello described the transaction as transformational, saying it provided the company with 17 locations across Europe and expanded its ability to grow through cross-selling and new-product introductions.
Nissens has historically been more concentrated in temperature-control products, while Standard Motor Products’ North American aftermarket business is more heavily weighted toward vehicle-control parts. The company sees an opportunity to fill gaps in Nissens’ catalog with Standard Motor Products’ existing offerings.
According to Cristello, Standard Motor Products was able to introduce more than 800 types of parts into Nissens’ catalog after the acquisition. It has also introduced coils and air-conditioning hoses as new categories for Nissens. The company’s coil manufacturing facility in Poland provides an advantage in supplying products to the European business, he said.
The company expects between $8 million and $12 million in cost synergies from the Nissens acquisition, while Cristello said gross synergies could become significant over time. He also noted that Standard Motor Products manufactures roughly 60% to 65% of the products it sells, compared with approximately 20% to 25% for Nissens, creating potential opportunities to apply Nissens’ sourcing and distribution capabilities across both operations.
Aftermarket demand supported by aging, more complex vehicles
Cristello said the North American aftermarket is generally a low-single-digit growth market, supported by nearly 300 million vehicles on the road, an average vehicle age of almost 13 years and increasingly complex vehicle systems. Many of the company’s vehicle-control products—including fuel-injection components, ignition coils, sensors and wires—are used in non-discretionary “break-fix” repairs, he said.
Temperature-control products, meanwhile, are expected to grow at a mid-single-digit rate, which Cristello characterized as roughly 4% to 6% over time. Overall, the company expects its North American aftermarket operations to grow at a low- to mid-single-digit pace.
European aftermarket operations are growing faster than the North American business, according to Cristello, reflecting Nissens’ market-share gains, product introductions and opportunities to add customers. The European market is also more fragmented, with no Nissens customer representing more than 15% of sales and the top six customers accounting for less than 30% of sales.
Cristello said Europe’s greater adoption of electric vehicles may also give the company earlier visibility into evolving vehicle technologies. While EVs represent only about 2% to 3% of vehicles currently on the road, he said the company sees potential in thermal-management applications because EV batteries require cooling.
Manufacturing footprint and Engineered Solutions outlook
Addressing tariffs, Cristello said between 55% and 60% of North American sales are manufactured in Mexico. Because the company substantially transforms sourced components in Mexico, much of the product it sells back into the U.S. qualifies under the U.S.-Mexico-Canada Agreement, reducing tariff exposure. He said the company still has some tariff exposure but believes its manufacturing footprint limits the impact.
The company also operates a coil facility in Poland, has facilities in Slovakia through Nissens and maintains joint ventures in China and Thailand. The Thailand joint venture is expected to manufacture sensors for the Vehicle Control business.
Engineered Solutions, which accounted for about 15% of 2025 revenue, supplies specialized components for light vehicles as well as equipment and vehicle categories including tractors, trucks, construction equipment and ATVs. Cristello described the segment as more cyclical and volatile than the aftermarket operations.
The segment posted double-digit growth through the first half of the year, helped by comparisons with a weaker prior period, but Cristello said growth could moderate to a flatter level in the second half before the cycle improves. He characterized longer-term Engineered Solutions growth as mid-single-digit.
Debt reduction remains capital-allocation priority
Standard Motor Products said the Nissens acquisition was approximately a $400 million transaction on a pro forma basis, valued at 7.5 times. Leverage stood at 3.7 times when the deal closed and had declined to 2.5 times in the company’s most recent quarter.
Cristello said the company expects to reach leverage of 2 times or less by the end of the year, ahead of its earlier target of reaching that level by the end of 2026. Reducing debt is currently the company’s first capital-allocation priority, followed by capital expenditures and its dividend, which Cristello said has a yield of about 3.5%.
The company expects capital expenditures of $35 million to $40 million and said recent spending has included a new distribution center in Shawnee, Kansas. Standard Motor Products may also pursue acquisitions that add adjacent categories or strategic expansion opportunities, while share repurchases could again become a focus after debt is reduced, Cristello said.
About Standard Motor Products (NYSE:SMP)
Standard Motor Products, Inc, headquartered in Long Island City, New York, is a leading manufacturer and distributor of aftermarket and original equipment automotive parts. Since its founding in 1919, the company has focused on engineering, testing, and supplying ignition and temperature management products for passenger cars and light trucks. Its product lineup includes ignition coils, spark plug wires, sensors, switches, heating and air conditioning controls, and related electronic components.
The company operates through two primary segments: Engine Management and Temperature Control.
