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Business Combinations | 12 Months Ended
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Dec. 31, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Business Combinations | Business Combinations Acquisition of Nissens Automotive On November 1, 2024, we acquired all the issued and outstanding shares of European automotive aftermarket parts supplier, AX V Nissens III ApS (now known as SMP Nissens III ApS) and its direct and indirect subsidiaries (“Nissens Automotive”) for €366.8 million (approximately $397.1 million), the purchase price consideration, from Nordic private equity firm, Axcel V K/S, and the Nissen family. The acquired Nissens Automotive business was paid for with cash funded by borrowing from our revolving credit facility and term loans, under the 2024 Credit Agreement. The acquisition of Nissens Automotive, a leading European supplier of thermal management and engine efficiency products for the automotive aftermarket, aligns with our strategy to become an aftermarket leader in North America and Europe across our key product categories. Through this acquisition, we will take advantage of collaboration for growth through cross-selling opportunities as well as bi-directional synergies with significant savings potential. The Nissens Automotive operating segment was created in the fourth quarter as a result of the acquisition. As of February 27, 2025, the purchase price allocation is considered preliminary and was based upon a preliminary valuation. The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the valuation of identifiable intangible assets acquired. We determined the fair value of acquired intangible assets using the multi-period excess earnings method and the relief-from-royalty method under the income approach for customer relationships and trade names, respectively. These methods generally forecast expected future net cash flows discretely associated with each of the identified intangible assets and adjust the forecasts to present value by applying a discount rate intended to reflect risk factors associated with the cash flows and the time value of money. In addition to the consideration transferred to complete the transaction, we incurred closing and other acquisition related costs of $8 million recorded as selling, general and administrative costs within the statement of operations during the year ended December 31, 2024. The following table summarizes the allocation of the acquisition purchase consideration to the identifiable assets acquired and liabilities assumed based on their fair values (in thousands):
Total purchase consideration(a) |  | $ | 397,111 |
Cash and cash equivalents | 24,620 |  |
Accounts receivable | 48,460 |  |
Inventories | 88,337 |  |
Unreturned customer inventories | 1,820 |  |
Prepaid expenses and other current assets | 1,033 |  |
Property, plant and equipment | 29,048 |  |
Operating lease right-of-use assets | 8,625 |  |
Customer relationships intangibles(c) | 150,400 |  |
Other intangibles(c) | 78,871 |  |
Other assets | 407 |  |
Total assets acquired | 431,621 |  |
Current portion of term loan and other debt | 1,749 |  |
Accounts payable | 34,568 |  |
Sundry payables and accrued expenses | 19,836 |  |
Accrued customer returns | 3,360 |  |
Accrued rebates | 24,732 |  |
Payroll and commissions | 3,294 |  |
Long-term debt | 14,423 |  |
Noncurrent operating lease liabilities | 5,501 |  |
Other accrued liabilities | 1,371 |  |
Deferred tax liabilities | 37,870 |  |
Total liabilities assumed | 146,704 |  |
Net assets acquired |  | 284,917 |
Goodwill(b) |  | $ | 112,194 |
(a) Total purchase consideration is the cash paid of $397.1 million for the acquisition. (b) Goodwill is deductible for tax purposes (c) Intangible assets comprise of capitalized computer software of $2.2 million and the following preliminary valuation of identifiable intangible assets (in thousands):
| Gross Carrying Amount | Weighted-Average Useful Life (in Years)
Customer relationships | $ | 150,400 |  | 16
Trade names - Nissens & AVA | 75,600 |  | Indefinite
Trade names - Highway | 1,100 |  | 15
Other intangibles | $ | 227,100 |  |
Unaudited Supplemental Pro Forma Financial Information The following unaudited supplemental pro forma information presents the combined results of operations for the years ended December 31, 2024 and 2023, respectively, as if the Nissens Automotive acquisition was completed on January 1, 2023. The pro forma financial information presented below is for illustrative purposes and is not indicative of the operating results that would have been realized if the acquisition had been completed on January 1, 2023, nor is it indicative of future operating results (in thousands):
| Year Ended December 31,
| 2024 | 2023
Net sales | $ | 1,704,858 |  | $ | 1,615,110 |
Net earnings attributable to SMP | 39,907 |  | 18,870 |
The unaudited supplemental pro forma financial information includes adjustments for (i) amortization and depreciation totaling $3.4 million and $4.1 million for the years ended December 31, 2024 and 2023, respectively, that would have been recognized for the acquired intangible assets and the fair value adjustment of property, plant and equipment; (ii) amortization expense for deferred financing costs of $14.5 million and $18.2 million for the years ended December 31, 2024 and 2023, respectively and (iii) the estimated income tax benefit on the unaudited pro forma financial adjustments. The unaudited supplemental pro forma financial information assumes that the following were incurred during the year ended December 31, 2023: (i) $9.4 million for amortization of the inventory fair-value adjustment, (ii) $1.6 million for acquisition related transaction costs, (iii) $1.8 million for employee retention bonus expense and (iv) the related estimated income tax benefits. The pro forma financial information does not reflect any expected revenue or cost synergies. Increase in Equity Investment - Foshan GWO YNG SMP Vehicle Climate Control & Cooling Products Co. Ltd. (2023) In July 2023, we acquired an additional 15% equity interest in our 65% owned joint venture, Foshan GWO YNG SMP Vehicle Climate Control & Cooling Products Co. Ltd. (“Gwo Yng”), for Chinese renminbi ("RMB") 27,378,290 (approximately $4 million), thereby increasing our equity interest in Gwo Yng to 80%. In connection with the transaction, we amended and restated the charter documents of Gwo Yng to remove all minority shareholder substantive participating rights, giving SMP control of Gwo Yng. As a result, as of the closing date of the transaction, Gwo Yng was accounted for as a business combination achieved in stages (“a step acquisition”). Accordingly, commencing on the closing of the transaction, we reported the results of Gwo Yng on a consolidated basis with the minority ownership interest reported as a noncontrolling interest. The following table summarizes the allocation of the total step acquisition purchase consideration to the identifiable assets acquired and liabilities assumed based on their fair values (in thousands):
Total purchase consideration(a) |  |  | $ | 21,725 |
Assets acquired and liabilities assumed: |  |  |
Cash and cash equivalents | $ | 6,779 |  |  |
Receivables | 5,912 |  |  |
Inventories | 5,945 |  |  |
Other current assets | 528 |  |  |
Property, plant and equipment | 2,924 |  |  |
Operating lease right-of-use assets | 4,372 |  |  |
Intangible assets(b) | 532 |  |  |
Goodwill | 2,208 |  |  |
Long term investments and other assets | 7,257 |  |  |
Current liabilities | (6,004) |  |  |
Noncurrent operating lease liabilities | (3,455) |  |  |
Subtotal |  |  | 26,998 |
Fair value of acquired noncontrolling interest |  |  | (5,273) |
Total purchase consideration allocated to net assets acquired |  |  | $ | 21,725 |
(a) Total purchase consideration is the sum of the fair value of the previously held equity investment interest in Gwo Yng of $17.7 million and the cash paid of $4 million for the acquisition of the additional 15% equity ownership interest. (b) Intangible assets consists of customer relationships of $0.4 million that will be amortized on a straight-line basis over the estimated useful life of 10 years and capitalized software of $0.1 million. Goodwill of $2.2 million was allocated to the Temperature Control and Engineered Solutions segments in the amounts of $1.2 million and $1 million, respectively.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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