This Report 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 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, that cannot be
recouped in product pricing; the performance of the aftermarket, heavy duty,
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 novel coronavirus (COVID-19)
pandemic; 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.  The following discussion should be read in conjunction with
the unaudited consolidated financial statements, including the notes thereto,
included elsewhere in this Report.

Overview



We are a leading independent manufacturer and distributor of premium replacement
parts for the engine management and temperature control systems of motor
vehicles in the automotive aftermarket industry with a complementary focus on
the heavy duty, industrial equipment 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, and a full suite of
complementary services that are tailored to our customers' business needs and
driving end-user demand for our products.  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.

Our Culture

Our Company was founded in 1919 on the values of ethics, integrity, common
decency and respect for others.  These values continue to this day and 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.  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, 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.

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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 products during the second
and third quarters of the year may vary significantly with the summer weather
and customer inventories.  For example, a warm summer, as we experienced in
2018, may increase the demand for our temperature control products, while a mild
summer, as we experienced in 2017, may lessen such demand.  As a result of this
seasonality and variability in demand of our Temperature Control products, our
working capital requirements typically peak near the end of the second quarter,
as the inventory build­up of air conditioning products is converted to sales and
payments on the receivables associated with such sales have yet to be received.
During this period, our working capital requirements are typically funded by
borrowing from our revolving credit facility.

Inventory Management



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.  We accrue for overstock returns as a percentage of sales after giving
consideration to recent returns history.

Discounts, Allowances, and Incentives



We offer a variety of usual customer discounts, allowances and incentives.
First, we offer cash discounts for paying invoices in accordance with the
specified discount terms of the invoice.  Second, we offer pricing discounts
based on volume purchased from us and participation in our cost reduction
initiatives.  These discounts are principally in the form of "off-invoice"
discounts and are immediately deducted from sales at the time of sale. For those
customers that choose to receive a payment on a quarterly basis instead of
"off-invoice," we accrue for such payments as the related sales are made and
reduce sales accordingly.  Finally, rebates and discounts are provided to
customers as advertising and sales force allowances, and allowances for warranty
and overstock returns are also provided.  Management analyzes historical
returns, current economic trends, and changes in customer demand when evaluating
the adequacy of the sales returns and other allowances. Significant management
judgments and estimates must be made and used in connection with establishing
the sales returns and other allowances in any accounting period.  We account for
these discounts and allowances as a reduction to revenues, and record them when
sales are recorded.

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Impact of the Novel Coronavirus ("COVID-19")



In March 2020, the World Health Organization declared the outbreak of the novel
coronavirus (COVID-19) a pandemic, which has spread globally and created
significant volatility, uncertainty and economic disruption in many countries in
which we operate, including the United States, Mexico, Canada, Poland, and
China.  In certain countries in which we operate, national, state and local
governments implemented a variety of measures in response to the COVID-19
pandemic that had the effect of restricting or limiting, among other activities,
the operations of certain businesses.  While many of these measures have been
eased, allowing for increased economic activity during the second quarter of
2020, there can be no assurances that restrictive measures will not be
implemented again if the outbreak were to increase.

As we were declared an essential business under national and regional shelter-in
place orders, our business operations have continued throughout the first six
months of 2020.  During the three months ended March 31, 2020, our overall
business remained relatively stable, with the effects of the COVID-19 pandemic
weakening our sales in the second half of March 2020, as customer POS sales
began to soften.  In April 2020, we experienced a significant reduction in
customer demand for our products.  As many of the national and regional
shelter-in-place orders were eased, our business began to rebound in May 2020.
The trend continued into June 2020 as we continued to experience an increase in
incoming orders and increased demand for our products.  As we begin our third
quarter of 2020, our business is improving to pre-COVID-19 levels with our
customers' POS sales exceeding their comparable figures for 2019. Overall, our
net sales for the three and six months ended June 30, 2020 have declined $57.2
million, or 18.8%, and $86.7 million, or 14.7%, respectively, compared to the
three and six months ended June 30, 2019.  Our gross margins decreased to 26% in
the second quarter of 2020, compared to 29.1% in the second quarter of 2019, and
decreased to 26.8% in the first six months of 2020, compared to 28.3% in the
first six months of 2019.

In response to the COVID-19 pandemic, we have established a committee, comprised
of our executive officers, to oversee the Company's risk identification,
management and mitigation strategies regarding the impact of the pandemic on our
business and operations.  Among the issues that are actively being managed by
the committee are those relating to the duration, severity and scope of the
pandemic, the impact of governmental measures in response to the pandemic,
potentially declining customer demand for our products, the deterioration of
general economic conditions, potential disruptions in our supply chain, the
management of inventories and production volumes, cost reduction and cash
preservation initiatives, and the enactment of policies and practices to ensure
the health and safety of our employees, contractors and customers. The committee
continues to meet on a regular basis, closely monitoring events related to the
pandemic and any appropriate actions that may be taken.

During the second quarter of 2020, we implemented many cost reduction measures
in response to the impact of the COVID-19 pandemic on our business, including
the reduction of discretionary spending and the temporary reduction of
production levels in several of our facilities in line with the lower customer
demand levels, including the temporary closures of our facilities in Mexico and
Canada. These facilities have since been reopened, and the production levels at
all facilities have been adjusted to meet the increase in customer demand after
considering current inventory levels and the stability of our supply chain.

We

continue to closely monitor customer demand and inventory levels as we manage the production levels at all of our facilities.



Additionally, as part of the cost reduction measures implemented by us in
response to the impact of the COVID-19 pandemic on our business, in April 2020,
our Board of Directors approved to temporarily (a) reduce base salaries of our
Office of Chief Executive (i.e., the Executive Chairman, Chief Executive
Officer, Chief Operating Officer, Chief Financial Officer, and Chief Commercial
Officer) by 25%, (b) reduce the base salaries of our other executives by 10%,
(c) reduce non-employee directors' annual cash and equity retainers by 25%, and
(d) suspend our quarterly cash dividend payments and stock repurchases until
further notice. We continue to analyze our cost structure in response to the
challenges arising from the COVID-19 pandemic, and we may implement additional
cost reduction measures, or modify or terminate any prior cost reduction
measures taken as general business conditions warrant.

Regarding the health and welfare of our employees, contractors and customers, we
have implemented a number of policies and practices at all of our facilities.
We have provided personal protection equipment, including face masks and gloves,
to all our employees and require their usage while at work, have installed
plexiglas partitions where appropriate, and require temperature checks for all
employees and visitors upon entering our facilities.  We have established
protocols for individuals who have tested positive, and for employees who have
symptoms or have been exposed to the virus.  All of our facilities are
thoroughly cleaned and sanitized daily, and all state mandated protocols are
followed as employees return to work after the lifting of shelter-in-place
orders. The health and safety of our employees, vendors and visitors has always
been and will continue to be our first priority.

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Finally, in April 2020, we borrowed $75 million under our amended credit
agreement.  The borrowing was made as a precautionary measure to increase our
cash position and preserve financial flexibility in light of the uncertainty in
the global markets resulting from the COVID-19 pandemic.  In June 2020, we
repaid the additional $75 million of borrowed funds.

The effects of the COVID-19 pandemic on our business, financial condition and
results of operations in the third quarter of 2020 and future periods may
continue to be significant based upon the significant volatility, uncertainty
and potential economic disruption caused by the pandemic.

See "Interim Results of Operations" and Item 1A "Risk Factors" of this Report
for a further discussion of the impact of the COVID-19 pandemic on our business,
results of operations and financial condition.

Impact of CARES Act



In March 2020, the U.S. enacted the Coronavirus Aid, Relief, and Economic
Security Act (the "CARES Act").  The CARES Act was passed to protect Americans
from the public health and economic impacts of COVID-19.  The CARES Act provides
for fast and direct assistance for American workers, families and small
businesses, and preserves jobs for American industries. As related to the
preservation of jobs for American industries, the CARES Act includes the
enactment of an employee retention feature, a payroll tax deferral opportunity
and, in certain instances, payroll support and business loans.

The payroll tax deferral opportunity in the CARES Act enables businesses to
enhance their cash flow by permitting the cash deferral of the payment of the
employer's share of the Social Security tax they otherwise would be responsible
for paying to the federal government with respect to their employees.  The
amount of the cash deferral will be paid over the next two years, with 50% of
the amount to be paid by December 31, 2021 and the remaining 50% by December 31,
2022.  In April 2020, we elected to defer our share of the employers' Social
Security tax relating to wages paid to our employees.  The total cash deferral
as of June 30, 2020 is $1.7 million, which we plan to pay equally by December
31, 2021 and 2022.

The employee retention feature of the CARES Act enables employers to obtain a
tax credit for wages paid to employees unable to provide services to the company
as a result of COVID-19.  The tax credit is limited to 50% of up to $10,000 of
wages per employee paid, or incurred, from March 13, 2020 through December 31,
2020.  Although our manufacturing facilities were deemed to be an essential
business and continued to operate, our headquarters in Long Island City, New
York were forced to close under the New York State shelter-in-place mandate by
the governor.  We are currently reviewing the employee retention feature of the
CARES Act to determine our eligibility for the 50% tax credit throughout the
company.  Additionally, we are in the process of investigating eligibility for
wage subsidies in Canada and Poland under local law.

Impact of Changes in U.S. Trade Policy



Changes in U.S. trade policy, particularly as it relates to China, as with much
of our industry, have resulted in the assessment of increased tariffs on goods
that we import into the United States.  Although our operating results for the
first six months of 2020 have been slightly impacted by the timing of Chinese
sourced products, we have taken, and continue to take, several actions to
mitigate the impact of the increased tariffs, including but not limited to,
price increases to our customers.  We do not anticipate that the increased
tariffs will have a significant impact on our future operating results.
Although we are confident that we will be able to pass along the impact of the
increased tariffs to our customers, there can be no assurances that we will be
able to pass on the entire increased costs imposed by the tariffs.

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Interim Results of Operations:

Comparison of the Three Months Ended June 30, 2020 to the Three Months Ended June 30, 2019



Sales.  Consolidated net sales for the three months ended June 30, 2020 were
$247.9 million, a decrease of $57.2 million, or 18.8%, compared to $305.2
million in the same period of 2019, with the majority of our net sales to
customers located in the United States.  Consolidated net sales decreased in
both our Engine Management and Temperature Control Segments.

The following table summarizes consolidated net sales by segment and by major
product group within each segment for the three months ended June 30, 2020 and
2019 (in thousands):

                                                                   Three Months Ended June 30,
                                                                    2020                 2019

Engine Management: Ignition, Emission Control, Fuel and Safety Related System Products

$      142,787       $      181,831
Wire and Cable.                                                        30,366               36,211
Total Engine Management                                               173,153              218,042

Temperature Control:
Compressors                                                            44,878               52,493
Other Climate Control Parts                                            27,514               31,913
Total Temperature Control                                              72,392               84,406

All Other                                                               2,394                2,724

Total                                                          $      247,939       $      305,172



Engine Management's net sales decreased $44.9 million, or 20.6%, to $173.2
million for the three months ended June 30, 2020.  Net sales in ignition,
emission control, fuel and safety related system products for the three months
ended June 30, 2020 were $142.8 million, a decrease of $39 million, or 21.5%,
compared to $181.8 million in the same period of 2019.  Net sales in the wire
and cable product group for the three months ended June 30, 2020 were $30.4
million, a decrease of $5.8 million, or 16.1%, compared to $36.2 million in the
three months ended June 30, 2019.  Engine Management's decrease in net sales for
the second quarter of 2020 compared to the same period in 2019 results primarily
from the impact of the COVID-19 pandemic, and the impact of national and
regional shelter-in-place orders.  As many of the national and regional
shelter-in-place orders were eased, Engine Management's net sales strengthened
in May 2020, and continued into June 2020.

Temperature Control's net sales decreased $12 million, or 14.2%, to $72.4
million for the three months ended June 30, 2020.  Net sales in the compressors
product group for the three months ended June 30, 2020 were $44.9 million, a
decrease of $7.6 million, or 14.5%, compared to $52.5 million in the same period
of 2019.  Net sales in the other climate control parts product group for the
three months ended June 30, 2020 were $27.5 million, a decrease of $4.4 million,
or 13.8%, compared to $31.9 million in the three months ended June 30, 2019.
Temperature Control's decrease in net sales for the second quarter of 2020
compared to the same period in 2019 results primarily from the impact of the
COVID-19 pandemic, and the impact of national and regional shelter-in-place
orders.  As many of the national and regional shelter-in-place orders were
eased, Temperature Control's net sales strengthened in May 2020, and continued
into June 2020.  Demand for our Temperature Control products may vary
significantly with summer weather conditions and customer inventory levels.

Gross Margins.  Gross margins, as a percentage of consolidated net sales,
decreased to 26% in the second quarter of 2020, compared to 29.1% in the second
quarter of 2019.  The following table summarizes gross margins by segment for
the three months ended June 30, 2020 and 2019, respectively (in thousands):

  Three Months Ended         Engine         Temperature
       June 30,            Management         Control         Other        Total
2020
Net sales                 $    173,153     $      72,392     $ 2,394     $ 247,939
Gross margins                   46,230            16,520       1,608        64,358
Gross margin percentage           26.7 %            22.8 %         -            26 %

2019
Net sales                 $    218,042     $      84,406     $ 2,724     $ 305,172
Gross margins                   63,780            22,551       2,574        88,905
Gross margin percentage           29.3 %            26.7 %         -          29.1 %



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Compared to the second quarter of 2019, gross margins at Engine Management
decreased 2.6 percentage points from 29.3% to 26.7%, while gross margins at
Temperature Control decreased 3.9 percentage points from 26.7% to 22.8%. The
gross margin percentage decrease in Engine Management compared to the prior year
primarily reflects the negative impact of lower year-over-year absorption due to
lower sales levels and production volumes, and was also partly impacted by the
negative impact of unfavorable product and customer mix.  The gross margin
percentage decrease in Temperature Control compared to the prior year reflects
primarily the negative impact of lower year-over-year absorption due to lower
production volumes. The lower production volumes at both Engine Management and
Temperature Control is reflective of the general slowdown in the worldwide
economy caused by the COVID-19 pandemic, as we temporarily reduced production
levels in several of our facilities in line with lower customer demand.  As
customer demand began to increase during the second quarter of 2020, the
production levels at all of our facilities have been adjusted to meet the
increase in customer demand.  We continue to closely monitor customer demand and
inventory levels as we manage the production levels at all of our facilities.

Selling, General and Administrative Expenses.  Selling, general and
administrative expenses ("SG&A") were $48.3 million, or 19.5% of consolidated
net sales, in the second quarter of 2020, as compared to $60.5 million, or 19.8%
of consolidated net sales, in the second quarter of 2019.  The $12.2 million
decrease in SG&A expenses as compared to the second quarter of 2019 is
principally due to (1) lower selling, marketing and distribution costs
associated with lower sales volumes, (2) lower costs incurred related to our
accounts receivable supply chain financing arrangements resulting from lower
sales volumes, as well as lower discount rates, (3) lower incentive compensation
expenses and, (4) lower other general and administrative expenses resulting from
the impact of our cost reduction measures implemented in the second quarter of
2020, including the reduction of discretionary spending.

Restructuring and Integration Expenses.  Restructuring and integration expenses
for the second quarter of 2020 were $9,000 compared to restructuring and
integration expenses of $0.6 million for the second quarter of 2019.  The
restructuring and integration expenses incurred in the second quarter of 2020
and 2019 consist of costs related to residual relocation activities in our
Engine Management segment in connection with our integration of the Pollak
business of Stoneridge, Inc., acquired in April 2019.  As of June 30, 2020, all
restructuring and integration initiatives have been substantially completed.

Operating Income.  Operating income decreased to $16 million in the second
quarter of 2020, compared to $27.7 million in the second quarter of 2019.  The
year-over-year decrease in operating income of $11.7 million is the result of
the impact of lower consolidated net sales, and lower gross margins as a
percentage of consolidated net sales, offset, in part, by lower SG&A expenses,
and lower restructuring and integration expenses.

Other Non-Operating Income, Net.  Other non-operating income, net was $0.6
million in the second quarter of 2020, compared to $1.4 million in the second
quarter of 2019.  The year-over-year decrease in other non-operating income, net
results primarily from the decrease in year-over-year equity income from our
joint ventures.  The lower year-over-year equity income from our joint ventures
is reflective of the general slowdown in the worldwide economy caused by the
COVID-19 pandemic.

Interest Expense. Interest expense decreased to $0.8 million in the second quarter of 2020, compared to $1.7 million in the second quarter of 2019. The year-over-year decrease in interest expense reflects the impact of lower year-over-year average interest rates on our revolving credit facility, and slightly lower average outstanding borrowings in 2020 when compared to 2019.



Income Tax Provision.  The income tax provision in the second quarter of 2020
was $4 million at an effective tax rate of 25.3% compared to $6.9 million at an
effective tax rate of 25% for the same period in 2019.  The slightly higher
effective tax rate in the second quarter of 2020 compared to the second quarter
of 2019 results primarily from lower mix of foreign income from our joint
ventures compared to our U.S. taxable income.

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Loss from Discontinued Operations.  During the second quarter of 2020 and 2019,
the loss from discontinued operations, net of tax was $0.9 million and $1.1
million, respectively. The loss from discontinued operations, net of tax,
reflects legal expenses associated with our asbestos-related liability.  As
discussed more fully in Note 16, "Commitments and Contingencies" in the notes to
our consolidated financial statements (unaudited), we are responsible for
certain future liabilities relating to alleged exposure to asbestos containing
products.

For further information regarding the impact of the COVID-19 pandemic on our
business, refer to the paragraphs entitled, "Impact of the Novel Coronavirus
(COVID-19)" and "Impact of CARES Act," in Item 2, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" of this Form 10Q.

Comparison of the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019

Sales. Consolidated net sales for the six months ended June 30, 2020 were $502.2 million, a decrease of $86.7 million, or 14.7%, compared to $588.9 million in the same period of 2019, with the majority of our net sales to customers in the United States. Consolidated net sales decreased in both our Engine Management and Temperature Control Segments.



The following table summarizes consolidated net sales by segment and by major
product group within each segment for the six months ended June 30, 2020 and
2019 (in thousands):

                                                                 Six Months Ended June 30,
                                                                   2020               2019
Engine Management:
Ignition, Emission Control, Fuel and Safety Related System
Products                                                       $     307,313       $  357,892
Wire and Cable                                                        66,958           73,339
Total Engine Management                                              374,271          431,231

Temperature Control:
Compressors                                                           70,226           92,304
Other Climate Control Parts                                           53,608           61,026
Total Temperature Control                                            123,834          153,330

All Other                                                              4,136            4,377

Total                                                          $     502,241       $  588,938



Engine Management's net sales decreased $57 million, or 13.2%, to $374.3 million
for the first six months of 2020.  Net sales in ignition, emission control, fuel
and safety related system products for the six months ended June 30, 2020 were
$307.3 million, a decrease of $50.6 million, or 14.1%, compared to $357.9
million in the same period of 2019.  Net sales in the wire and cable product
group for the six months ended June 30, 2020 were $67 million, a decrease of
$6.3 million, or 8.7%, compared to $73.3 million in the six months ended June
30, 2019.  In April 2019, we acquired certain assets and liabilities of the
Pollak business of Stoneridge, Inc.  Incremental sales from our acquisition of
the Pollak business of $9.5 million were included in the net sales of the
ignition, emission control, fuel and safety related system products market for
the six months ended June 30, 2020.  Excluding the incremental sales from the
acquisition, net sales in the ignition, emission control, fuel and safety
related system products market decreased $60.1 million, or 16.8%, and Engine
Management net sales decreased $66.5 million, or 15.4%.  Engine Management's
decrease in net sales for the first six months of 2020 compared to the same
period in 2019 results primarily from the impact of the COVID-19 pandemic and
the impact of national and regional shelter-in-place orders related thereto; and
to a lesser extent the impact of several pipeline orders from certain customers
in the first quarter of 2019 that did not recur in the same period of 2020.

As

many of the national and regional shelter-in-place orders were eased, Engine Management's net sales strengthened in May 2020, and continued into June 2020.


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Temperature Control's net sales decreased $29.5 million, or 19.2%, to $123.8
million for the first six months of 2020.  Net sales in the compressors product
group for the six months ended June 30, 2020 were $70.2 million, a decrease of
$22.1 million, or 23.9%, compared to $92.3 million in the same period of 2019.
Net sales in the other climate control parts product group for the six months
ended June 30, 2020 were $53.6 million, a decrease of $7.4 million, or 12.1%,
compared to $61 million in the six months ended June 30, 2019.  Temperature
Control's decrease in net sales for the first six months of 2020 compared to the
same period in 2019 results from the impact of the COVID-19 pandemic and the
impact of national and regional shelter-in-place orders related thereto; and to
the impact of strong pre-season orders in the first quarter of 2019 that did not
occur in the first quarter of 2020, which resulted from the impact of a somewhat
mild summer in 2019 which left inventory levels at our customers higher than the
prior year. As many of the national and regional shelter-in-place orders were
eased, Temperature Control's net sales strengthened in May, 2020, and continued
into June 2020.  Demand for our Temperature Control products may vary
significantly with summer weather conditions and customer inventory levels.

Gross Margins.  Gross margins, as a percentage of consolidated net sales,
decreased to 26.8% in the first six months of 2020, compared to 28.3% during the
same period in 2019.  The following table summarizes gross margins by segment
for the six months ended June 30, 2020 and 2019, respectively (in thousands):

   Six Months Ended          Engine         Temperature
       June 30,            Management         Control         Other        Total
2020
Net sales                 $    374,271     $     123,834     $ 4,136     $ 502,241
Gross margins                  102,935            28,616       3,202       134,753
Gross margin percentage           27.5 %            23.1 %         -          26.8 %

2019
Net sales                 $    431,231     $     153,330     $ 4,377     $ 588,938
Gross margins                  123,473            38,742       4,653       166,868
Gross margin percentage           28.6 %            25.3 %         -          28.3 %



Compared to the first six months of 2019, gross margins at Engine Management
decreased 1.1 percentage points from 28.6% to 27.5%, while gross margins at
Temperature Control decreased 2.2 percentage points from 25.3% to 23.1%.  The
gross margin percentage decrease in Engine Management compared to the prior year
primarily reflects the negative impact of lower year-over-year absorption due to
lower sales levels and production volumes, and was also partly due to the
negative impact of unfavorable product and customer mix.  The gross margin
percentage decrease in Temperature Control compared to the prior year reflects
primarily the negative impact of lower year-over-year absorption due to lower
production volumes.  The lower production volumes at both Engine Management and
Temperature Control is reflective of the general slowdown in the worldwide
economy caused by the COVID-19 pandemic, as we temporarily reduced production
levels in several of our facilities in line with lower customer demand.  As
customer demand began to increase during the second quarter of 2020, the
production levels at all of our facilities have been adjusted to meet the
increase in customer demand.  We continue to closely monitor customer demand and
inventory levels as we manage the production levels at all of our facilities.

Selling, General and Administrative Expenses.  Selling, general and
administrative expenses ("SG&A") decreased to $104.2 million, or 20.7% of
consolidated net sales, in the first six months of 2020, as compared to $120.5
million, or 20.5% of consolidated net sales in the first six months of 2019.
The $16.3 million decrease in SG&A expenses as compared to the second quarter of
2019 is principally due to (1) lower selling, marketing and distribution costs
associated with lower sales volumes, (2) lower costs incurred related to our
accounts receivable supply chain financing arrangements resulting from lower
sales volumes, as well as lower discount rates, (3) lower incentive compensation
expenses and, (4) lower other general and administrative expenses resulting from
the impact of our cost reduction measures implemented in the second quarter of
2020, including the reduction of discretionary spending, all of which more than
offset the impact of incremental expenses of $1.1 million from our April 2019
acquisition of certain assets and liabilities of the Pollak business of
Stoneridge. Inc., including amortization of intangible assets acquired.

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Restructuring and Integration Expenses.  Restructuring and integration expenses
for the six months ended June 30, 2020 were $0.2 million compared to
restructuring and integration expenses of $0.6 million in the same period of
2019.  The restructuring and integration expenses incurred for the six months
ended June 30, 2020 and 2019 consist of costs related to residual relocation
activities in our Engine Management segment in connection with our integration
of the Pollak business of Stoneridge, Inc., acquired in April 2019.  As of June
30, 2020, all restructuring and integration initiatives have been substantially
completed.

Operating Income.  Operating income was $30.3 million in the first six months of
2020, compared to $45.7 million for the same period in 2019.  The year-over-year
decrease in operating income of $15.4 million is the result of the impact of
lower consolidated net sales, and lower gross margins as a percentage of
consolidated net sales, offset, in part, by lower SG&A expenses and lower
restructuring and integration expenses.

Other Non-Operating Income, Net.  Other non-operating income, net was $0.1
million in the first six months of 2020, compared to other non-operating income,
net of $2.1 million in the first six months of 2019.  The year-over-year
decrease in other non-operating income, net results primarily from the decrease
in year-over-year equity income from our joint ventures and the unfavorable
impact of changes in foreign currency exchange rates.  The lower year-over-year
equity income from our joint ventures is reflective of the general slowdown in
the worldwide economy caused by the COVID-19 pandemic.

Interest Expense. Interest expense decreased to $1.6 million in the first six months of 2020, compared to $2.8 million for the same period in 2019. The year-over-year decrease in interest expense reflects the impact of lower year-over-year average interest rates on our revolving credit facility, and slightly lower average outstanding borrowings in 2020 when compared to 2019.



Income Tax Provision.  The income tax provision for the six months ended June
30, 2020 was $7.3 million at an effective tax rate of 25.4%, compared to $11.3
million at an effective tax rate of 25.1% for the same period in 2019.  The
slightly higher effective tax rate in the first six months of 2020 compared to
the first six months of 2019 results primarily from lower mix of foreign income
from our joint ventures compared to our U.S. taxable income.

Loss from Discontinued Operations.  During the first six months of 2020 and
2019, the loss from discontinued operations, net of tax was $1.9 million and $2
million, respectively.  The loss from discontinued operations, net of tax,
reflects legal expenses associated with our asbestos-related liability.  As
discussed more fully in Note 16, "Commitments and Contingencies" in the notes to
our consolidated financial statements (unaudited), we are responsible for
certain future liabilities relating to alleged exposure to asbestos containing
products.

For further information regarding the impact of the COVID-19 pandemic on our
business, refer to the paragraphs entitled, "Impact of the Novel Coronavirus
(COVID-19)" and "Impact of CARES Act," in Item 2, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" of this Form 10Q.

Restructuring and Integration Programs

All of our restructuring and integration programs have been substantially completed. For a detailed discussion on the restructuring and integration costs, see Note 4, "Restructuring and Integration Expenses," of the notes to our consolidated financial statements (unaudited).


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Liquidity and Capital Resources



Operating Activities. During the first six months of 2020, cash used in
operating activities was $0.9 million compared to $19.5 million in the same
period of 2019; and cash provided by operating activities in the second quarter
of 2020 was $31.9 million compared to $7.2 million in the second quarter of
2019.  The decrease in cash used in operating activities during the first six
months of 2020 compared to the same period in 2019 resulted primarily from the
decrease in inventories compared to an increase in inventories in the prior
year, the decrease in prepaid expenses and other current assets compared an
increase in prepaid expenses and other current assets in the prior year, and the
increase in sundry payables and accrued expenses compared to a decrease in
sundry payables and accrued expenses in the prior year, partially offset by the
decrease net earnings, the larger year-over-year increase in accounts
receivable, and the larger year-over-year decrease in accounts payable.

Net earnings during the first six months of 2020 were $19.6 million compared to
$31.6 million in the first six month of 2019.  During the first six of 2020, (1)
the increase in accounts receivable was $51.3 million compared to the
year-over-year increase in accounts receivable of $26.6 million in 2019; (2) the
decrease in inventories was $12.7 million compared to the year-over-year
increase in inventories of $19.7 million in 2019; (3) the decrease in accounts
payable was $21.8 million compared to the year-over-year decrease in accounts
payable of $7 million in 2019; (4) the decrease in prepaid expenses and other
current assets was $5.7 million compared to the year-over-year increase in
prepaid expenses and other current assets of $6.4 million in 2019; and (5) the
increase in sundry payables and accrued expenses was $14.8 million compared to
the year-over-year decrease in sundry payables of $7.5 million in 2019.  We
continue to actively manage our working capital to maximize our operating cash
flow.

Investing Activities.  Cash used in investing activities was $9 million in the
first six months of 2020, compared to $41.2 million in the same period of 2019;
and cash used in investing activities in the second quarter of 2020 was $4.6
million compared to $42.9 million in the second quarter of 2019.  Investing
activities during the first six months of 2020 consisted of capital expenditures
of $9 million; while investing activities during the first six months of 2019
consisted of (1) net cash proceeds of $4.8 million received in January 2019 from
the December 2018 sale of our property in Grapevine, Texas; (2) the payment of
$38.4 million for our April 2019 acquisition of certain assets and liabilities
of the Pollak business of Stoneridge, Inc.; and (3) capital expenditures of $7.6
million.

Financing Activities.  Cash provided by financing activities was $21.8 million
in the first six months of 2020 as compared to $66.6 million in the same period
of 2019; and cash used in financing activities in the second quarter of 2020 was
$18.1 million compared to cash provided by financing activities of $41.4 million
in the second quarter of 2019.  During the first six months of 2020, (1) we
increased borrowings under our revolving credit facility by $32.5 million as
compared to the increase in borrowings under our revolving credit facility of
$86.3 million in 2019; (2) we made cash payments in the first six months of 2020
for the repurchase of shares of our common stock of $8.7 million as compared to
$10.7 million in 2019; and (3) we paid dividends of $5.6 million in the first
six months of 2020 as compared to $10.3 million in the comparable period last
year.  In January 2020, our Board of Directors voted to increase our quarterly
dividend from $0.23 per share in 2019 to $0.25 per share in 2020.  In April
2020, in response to the impact of the COVID-19 pandemic on our business, our
Board of Directors approved to temporarily suspend our quarterly cash dividend
payments and stock repurchases until further notice, and we borrowed $75 million
under our revolving credit facility as a precautionary measure to increase our
cash position and preserve financial flexibility. In June 2020, we repaid the
additional $75 million of borrowed funds.

In December 2018, we amended our Credit Agreement with JPMorgan Chase Bank,
N.A., as agent, and a syndicate of lenders.  The amended credit agreement
provides for a senior secured revolving credit facility with a line of credit of
up to $250 million (with an additional $50 million accordion feature) and
extends the maturity date to December 2023.  The line of credit under the
amended credit agreement also allows for a $10 million line of credit to Canada
as part of the $250 million available for borrowing.  Direct borrowings under
the amended credit agreement bear interest at LIBOR plus a margin ranging from
1.25% to 1.75% based on our borrowing availability, or floating at the alternate
base rate plus a margin ranging from 0.25% to 0.75% based on our borrowing
availability, at our option.  The amended credit agreement is guaranteed by
certain of our subsidiaries and secured by certain of our assets.

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Borrowings under the amended credit agreement are secured by substantially all
of our assets, including accounts receivable, inventory and certain fixed
assets, and those of certain of our subsidiaries.  Availability under the
amended credit agreement is based on a formula of eligible accounts receivable,
eligible drafts presented to the banks under our supply chain financing
arrangements and eligible inventory.  After taking into account outstanding
borrowings under the amended credit agreement there was an additional $146.4
million available for us to borrow pursuant to the formula at June 30, 2020.
Outstanding borrowings under the amended credit agreement, which are classified
as current liabilities, were $85 million and $52.5 million at June 30, 2020 and
December 31, 2019, respectively; while letters of credit outstanding under the
amended credit agreement were $3.1 million at June 30, 2020 and December 31,
2019.  Borrowings under the amended credit agreement have been classified as
current liabilities based upon accounting rules and certain provisions in the
agreement.

At June 30, 2020, the weighted average interest rate on our amended credit
agreement was 1.4%, which consisted of $85 million in direct borrowings.  At
December 31, 2019, the weighted average interest rate on our amended credit
agreement was 3.5%, which consisted of $40 million in direct borrowings at 2.3%
and an alternative base rate loan of $12.5 million at 5%. During the six months
ended June 30, 2020, our average daily alternative base rate loan balance was
$1.7 million, compared to a balance of $1.6 million for the six months ended
June 30, 2019, and a balance of $1.7 million for the year ended December 31,
2019.

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, among other provisions, a financial covenant requiring
us, on a consolidated basis, to maintain a fixed charge coverage ratio of 1:1 at
the end of each fiscal quarter (rolling four quarters).  As of June 30, 2020, 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.

Our Polish subsidiary, SMP Poland sp. z.o.o., has entered into an overdraft
facility with HSBC France (Spolka Akcyjna) Oddzial w Polsce, formerly HSBC Bank
Polska S.A., for Zloty 30 million (approximately $7.5 million).  The facility,
as amended, expires in December 2020.  Borrowings under the overdraft facility
will bear interest at a rate equal to WIBOR + 0.75% and are guaranteed by
Standard Motor Products, Inc., the ultimate parent company.  At June 30, 2020
and December 31, 2019, borrowings under the overdraft facility were Zloty 24.1
million (approximately $6 million) and Zloty 16.7 million (approximately $4.4
million), respectively.

In order to reduce our accounts receivable balances and improve our cash flow,
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 $147.7 million and $297.9 million of
receivables during the three months and six months ended June 30, 2020,
respectively, and $190 million and $361 million for the comparable periods in
2019, all of which were reflected as a reduction of accounts receivable in the
consolidated balance sheet at the time of sale.  A charge in the amount of $3.1
million and $5.9 million related to the sale of receivables was included in
selling, general and administrative expense in our consolidated statements of
operations for the three months and six months ended June 30, 2020,
respectively, and $6.4 million and $12.1 million for the comparable periods in
2019.

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 the LIBOR rate, as it is a component of the discount rate
applicable to each arrangement.  If the LIBOR 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.

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In May 2018, our Board of Directors authorized the purchase of up to $20 million
of our common stock under a stock repurchase program.  Stock will be purchased
from time to time, in the open market or through private transactions, as market
conditions warrant.  Under this program, during the year ended December 31, 2018
and six months ended June 30, 2019, we repurchased 201,484 and 221,748 shares of
our common stock, respectively, at a total cost of $9.3 million and $10.7
million, respectively, thereby completing the 2018 Board of Directors
authorization.

In March 2020, our Board of Directors authorized the purchase of up to $20
million of our common stock under a new stock repurchase program.  Stock will be
purchased from time to time, in the open market or through private transactions,
as market conditions warrant.  Under this program, during the three months ended
March 31, 2020, we repurchased 222,741 shares of our common stock at a total
cost of $8.7 million. Our last common stock repurchase was made on March 20,
2020.  In April 2020, in response to the impact of the COVID-19 pandemic on our
business, our Board of Directors approved to temporarily suspend our stock
repurchases until further notice.  As of June 30, 2020, there was approximately
$11.3 million available for future stock purchases under the program.

We anticipate that our cash flow from operations, available cash and available
borrowings under our revolving credit facility will be adequate to meet our
future liquidity needs for at least the next twelve months.  Significant
assumptions underlie this belief, including, among other things, that we will be
able to mitigate the impact of the COVID-19 pandemic on our business and
operating cash flow by managing our inventories and production levels to align
with customer demand for our products, and effectively managing our costs and
expenses, and that there will be no material adverse developments in our
business, liquidity or capital requirements.  If material adverse developments
were to occur in any of these areas, there can be no assurance that our business
will generate sufficient cash flow from operations, or that future borrowings
will be available to us under our revolving credit facility in amounts
sufficient to enable us to pay the principal and interest on our indebtedness,
or to fund our other liquidity needs.  In addition, if we default on any of our
indebtedness, or breach any financial covenant in our revolving credit facility,
our business could be adversely affected.

For further information regarding the risks of our business, refer to Item 1A
"Risk Factors" in this Report and Item 1A "Risk Factors" of our Annual Report on
Form 10-K for the year ending December 31, 2019.

The following table summarizes our contractual commitments as of June 30, 2020 and expiration dates of commitments through 2028 (a):



(In thousands)     2020          2021          2022          2023          2024          2025-2028       Total
Operating
lease
obligations      $   4,461     $   8,421     $   7,020     $   5,685     $   3,881     $     7,844     $  37,312
Postretirement
benefits                18            32            29            25            25              50           179
Severance
payments
related to
restructuring
and
integration            105           142            28             1             -               -           276
Total
commitments      $   4,584     $   8,595     $   7,077     $   5,711     $   3,906     $     7,894     $  37,767

(a) Indebtedness under our revolving credit facility is not included in the table

above as it is reported as a current liability in our consolidated balance

sheets. As of June 30, 2020, amounts outstanding under our revolving credit

facilities were $85 million.

Critical Accounting Policies



We have identified several accounting policies as critical to our business
operations and the understanding of our results of operations.  The impact and
any associated risks related to these policies on our business operations is
discussed throughout "Management's Discussion and Analysis of Financial
Condition and Results of Operations," where such policies affect our reported
and expected financial results. There have been no material changes to our
critical accounting policies and estimates from the information provided in Note
1 of the notes to our consolidated financial statements in our Annual Report on
Form 10-K for the year ended December 31, 2019.

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You should be aware that preparation of our consolidated quarterly financial
statements in this Report requires us 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 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 of the COVID-19 pandemic based upon the volatility,
uncertainty and potential economic disruption caused by the pandemic, 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.

Recently Issued Accounting Pronouncements

For a detailed discussion on recently issued accounting pronouncements and their impact on our consolidated financial statements, see Note 2, "Summary of Significant Accounting Policies" of the notes to our consolidated financial statements (unaudited).


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