Motorcar Parts of America, Inc. (NASDAQ:MPAA) today reported record
sales for its fiscal 2018 first quarter on a reported and adjusted
basis.
Net sales for the fiscal 2018 first quarter increased 11.3
percent to $95.1 million from $85.4 million for the same period a
year earlier. The company’s sales performance for the fiscal 2018
first quarter reflects continued strength of its rotating
electrical business, as well as contributions from its other
product lines -- including the company’s emerging brake power
boosters, which began shipping last August.
All results labeled as “adjusted” in this press release are
non-GAAP measures as discussed more fully below under the heading
“Use of Non-GAAP Measures.”
Adjusted net sales for the fiscal 2018 first quarter increased
1.3 percent to $95.1 million from $93.8 million a year earlier.
Net income for the fiscal 2018 first quarter was $7.6 million,
or $0.39 per diluted share, compared with $7.5 million, or $0.39
per share, a year ago.
Adjusted net income for the fiscal 2018 first quarter was $7.3
million, or $0.38 per diluted share, compared with $10.1 million,
or $0.52 per diluted share, in the same period a year earlier.
Gross profit for the fiscal 2018 first quarter was $25.8 million
compared with $20.4 million a year earlier. Gross profit as a
percentage of net sales for the fiscal 2018 first quarter was 27.2
percent compared with 23.9 percent a year earlier. The gross
profit as a percentage of net sales for the year ago period was
impacted by customer allowances and return accruals related to new
business.
Adjusted gross profit for the fiscal 2018 first quarter was
$27.2 million compared with $30.3 million a year ago.
Adjusted gross profit as a percentage of adjusted net sales for the
three months was 28.6 percent compared with 32.3 percent a year
earlier. The current quarter adjusted gross profit as a
percentage of net sales was impacted by higher returns.
“We begin our new fiscal year well-positioned within a $125
billon aftermarket hard parts industry, with a strong focus on
organic growth, product line expansion and complementary
acquisition opportunities,” said Selwyn Joffe, chairman, president
and chief executive officer of Motorcar Parts of America.
“Despite some industry-wide softness in the first quarter due to
various factors, including a mild winter as has been widely
discussed by industry leaders, we achieved record sales for the
quarter on a reported and adjusted basis. The outlook for
non-discretionary automotive parts is strong, and we remain
encouraged by the numerous opportunities for growth as we harness
our distribution relationships, leverage our scale, global
footprint and financial strength to deliver growth and profits to
shareholders. We anticipate increased sales volume as demand
and order timing re-align to support the favorable industry
dynamics. As always, we thank our entire team for their
day-in and day-out commitment to excellence and our company,” Joffe
said.
As previously announced, Motorcar Parts of America last month
acquired D&V Electronics, an Ontario, Canada-based company
focused on designing and manufacturing leading edge tester systems
utilized for a variety of applications – including: alternators,
starters, electric motors, inverters and belt starter generators
for both the OE and aftermarket.
Use of Non-GAAP MeasuresThis press release
includes the following non-GAAP measures - adjusted net sales,
adjusted net income (loss), adjusted EBITDA, adjusted gross profit
and adjusted gross margin, which are not measures of financial
performance under GAAP, and should not be considered as
alternatives to net sales, net income (loss), EBITDA, income from
operations, gross profit or gross profit margin as a measure of
financial performance. The Company believes these non-GAAP
measures, when considered together with the corresponding GAAP
measures, provide useful information to investors and management
regarding financial and business trends relating to the company’s
results of operations. However, these non-GAAP measures have
significant limitations in that they do not reflect all of the
costs associated with the operations of the company’s business as
determined in accordance with GAAP. Therefore, investors
should consider non-GAAP measures in addition to, and not as a
substitute for, or superior to, measures of financial performance
in accordance with GAAP. For a reconciliation of adjusted net
sales, adjusted net income (loss), adjusted EBITDA, adjusted gross
profit and adjusted gross margin to their corresponding GAAP
measures, see the financial tables included in this press
release. Also, refer to our Form 8-K to which this release is
attached, and other filings we make with the SEC, for further
information regarding these adjustments.
Teleconference and Web CastSelwyn Joffe,
chairman, president and chief executive officer, and David Lee,
chief financial officer, will host an investor conference call
today at 10:00 a.m. Pacific time to discuss the company’s financial
results and operations.
The call this morning will be open to all interested investors
either through a live audio Web broadcast at www.motorcarparts.com
or live by calling (877)-776-4016 (domestic) or (973)-638-3231
(international). For those who are not available to listen to
the live broadcast, the call will be archived for seven days on
Motorcar Parts of America’s website www.motorcarparts.com. A
telephone playback of the conference call will also be available
from approximately 1:00 p.m. Pacific time on August 9, 2017 through
8:59 p.m. Pacific time on Wednesday, August 16, 2017 by calling
(855)-859-2056 (domestic) or (404)-537-3406 (international) and
using access code: 57489797.
About Motorcar Parts of America,
Inc.Motorcar Parts of America, Inc. is a
remanufacturer, manufacturer and distributor of automotive
aftermarket parts -- including alternators, starters, wheel bearing
and hub assemblies, brake master cylinders, brake power boosters
and turbochargers utilized in imported and domestic passenger
vehicles, light trucks and heavy-duty applications. In
addition, the company designs and manufactures test equipment for
performance, endurance and production testing of alternators,
starters, electric motors, inverters and belt starter generators
for both the OE and aftermarket. Motorcar Parts of America’s
products are sold to automotive retail outlets and the professional
repair market throughout the United States and Canada, with
facilities located in California, Mexico, Malaysia and China, and
administrative offices located in California, Tennessee, Mexico,
Singapore, Malaysia and Canada. Additional information is
available at www.motorcarparts.com.
The Private Securities Litigation Reform Act of 1995 provides a
“safe harbor” for certain forward-looking statements. The
statements contained in this press release that are not historical
facts are forward-looking statements based on the company’s current
expectations and beliefs concerning future developments and their
potential effects on the company. These forward-looking statements
involve significant risks and uncertainties (some of which are
beyond the control of the company) and are subject to change based
upon various factors. Reference is also made to the Risk
Factors set forth in the company’s Form 10-K Annual Report filed
with the Securities and Exchange Commission (SEC) in June 2017 and
in its Forms 10-Q filed with the SEC for additional risks and
uncertainties facing the company. The company undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as the result of new information, future events
or otherwise.
(Financial tables follow)
MOTORCAR PARTS OF AMERICA, INC. AND
SUBSIDIARIES |
Consolidated Statements of Income |
(Unaudited) |
|
|
|
|
|
Three Months Ended |
|
June 30, |
|
2017 |
|
2016 |
Net sales |
$ |
95,063,000 |
|
$ |
85,412,000 |
Cost of goods sold |
69,224,000 |
|
65,021,000 |
Gross
profit |
25,839,000 |
|
20,391,000 |
Operating
expenses: |
|
|
|
General
and administrative |
6,187,000 |
|
3,625,000 |
Sales and
marketing |
3,394,000 |
|
2,634,000 |
Research
and development |
1,002,000 |
|
869,000 |
Total
operating expenses |
10,583,000 |
|
7,128,000 |
Operating income |
15,256,000 |
|
13,263,000 |
Interest expense, net |
3,314,000 |
|
2,819,000 |
Income
before income tax expense |
11,942,000 |
|
10,444,000 |
Income
tax expense |
4,316,000 |
|
2,936,000 |
Net
income |
$ |
7,626,000 |
|
$ |
7,508,000 |
Basic net
income per share |
$ |
0.41 |
|
$ |
0.40 |
Diluted
net income per share |
$ |
0.39 |
|
$ |
0.39 |
Weighted average number
of shares outstanding:
|
|
|
|
Basic |
18,655,304 |
|
18,545,621 |
Diluted |
19,421,352 |
|
19,484,938 |
MOTORCAR PARTS OF AMERICA, INC. AND
SUBSIDIARIES |
Consolidated Balance Sheets |
|
|
June 30, 2017 |
|
March 31, 2017 |
ASSETS |
(Unaudited) |
|
|
Current
assets: |
|
|
|
Cash
and cash equivalents |
$ |
8,120,000 |
|
$ |
9,029,000 |
Short-term investments |
2,407,000 |
|
2,140,000 |
Accounts receivable — net |
9,704,000 |
|
26,017,000 |
Inventory— net |
82,246,000 |
|
67,516,000 |
Inventory unreturned |
7,701,000 |
|
7,581,000 |
Prepaid expenses and other current assets |
9,664,000 |
|
9,848,000 |
Total
current assets |
119,842,000 |
|
122,131,000 |
Plant
and equipment — net |
18,318,000 |
|
18,437,000 |
Long-term core inventory — net |
264,726,000 |
|
262,922,000 |
Long-term core inventory deposits |
5,569,000 |
|
5,569,000 |
Long-term deferred income taxes |
13,642,000 |
|
13,546,000 |
Goodwill |
2,551,000 |
|
2,551,000 |
Intangible assets — net |
3,848,000 |
|
3,993,000 |
Other
assets |
6,398,000 |
|
6,990,000 |
TOTAL
ASSETS |
$ |
434,894,000 |
|
$ |
436,139,000 |
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
82,953,000 |
|
$ |
85,960,000 |
Accrued
liabilities |
7,843,000 |
|
10,077,000 |
Customer
finished goods returns accrual |
13,877,000 |
|
17,667,000 |
Accrued
core payment |
11,728,000 |
|
11,714,000 |
Revolving
loan |
15,000,000 |
|
11,000,000 |
Other
current liabilities |
5,624,000 |
|
3,300,000 |
Current
portion of term loan |
3,060,000 |
|
3,064,000 |
Total
current liabilities |
140,085,000 |
|
142,782,000 |
Term
loan, less current portion |
16,155,000 |
|
16,935,000 |
Long-term accrued core payment |
9,401,000 |
|
12,349,000 |
Long-term deferred income taxes |
185,000 |
|
180,000 |
Other
liabilities |
13,814,000 |
|
15,212,000 |
Total
liabilities |
179,640,000 |
|
187,458,000 |
Commitments and contingencies |
|
|
|
Shareholders' equity: |
|
|
|
Preferred
stock; par value $.01 per share, 5,000,000 shares authorized; none
issued |
- |
|
- |
Series A
junior participating preferred stock; par value $.01 per
share, 20,000 shares authorized; none issued |
- |
|
- |
Common
stock; par value $.01 per share, 50,000,000 shares
authorized; 18,635,099 and 18,648,854 shares issued and
outstanding at June 30, 2017 and March 31, 2017,
respectively |
186,000 |
|
186,000 |
Additional paid-in capital |
204,308,000 |
|
205,646,000 |
Retained
earnings |
57,916,000 |
|
50,290,000 |
Accumulated other comprehensive loss |
(7,156,000) |
|
(7,441,000) |
Total
shareholders' equity |
255,254,000 |
|
248,681,000 |
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
434,894,000 |
|
$ |
436,139,000 |
Reconciliation of Non-GAAP Financial
Measures
To supplement the consolidated financial statements presented in
accordance with U.S. generally accepted accounting principles
("GAAP"), the Company has included the following non-GAAP adjusted
financial measures in this press release and in the webcast to
discuss the Company's financial results for the three months ended
June 30, 2017 and 2016. Each of these non-GAAP adjusted financial
measures is adjusted from results based on GAAP to exclude certain
expenses and gains. Among other things, the Company uses such
non-GAAP adjusted financial measures in addition to and in
conjunction with corresponding GAAP measures to help analyze the
performance of its business.
These non-GAAP adjusted financial measures reflect an additional
way of viewing aspects of the Company's operations that, when
viewed with the GAAP results and the reconciliations to
corresponding GAAP financial measures, provide a more complete
understanding of the Company's results of operations and the
factors and trends affecting the Company's business. However,
these non-GAAP adjusted financial measures should be considered as
a supplement to, and not as a substitute for, or superior to, the
corresponding measures calculated in accordance with GAAP.
Income statement information for the three months ended June 30,
2017 and 2016 are as follows:
Reconciliation of Non-GAAP Financial Measures |
Exhibit 1 |
|
|
|
Three Months Ended June
30, |
|
2017 |
|
2016 |
GAAP
Results: |
|
|
|
Net
sales |
$ |
95,063,000 |
|
$ |
85,412,000 |
Net
income |
7,626,000 |
|
7,508,000 |
Diluted
income per share (EPS) |
0.39 |
|
0.39 |
Gross
margin |
27.2% |
|
23.9% |
Non-GAAP
Adjusted Results: |
|
|
|
Non-GAAP
adjusted net sales |
$ |
95,063,000 |
|
$ |
93,822,000 |
Non-GAAP
adjusted net income |
7,348,000 |
|
10,089,000 |
Non-GAAP
adjusted diluted earnings per share (EPS)
|
0.38 |
|
0.52 |
Non-GAAP
adjusted gross margin |
28.6% |
|
32.3% |
Non-GAAP
adjusted EBITDA |
$ |
16,399,000 |
|
$ |
20,219,000 |
Reconciliation of Non-GAAP Financial Measures |
Exhibit 2 |
|
|
|
Three Months Ended June
30, |
|
2017 |
|
2016 |
GAAP net
sales |
$ |
95,063,000 |
|
$ |
85,412,000 |
Adjustments: |
|
|
|
Net
sales |
|
|
|
Initial
return and stock adjustment accruals related to new business
|
- |
|
1,853,000 |
Customer
allowances related to new business |
- |
|
6,557,000 |
Adjusted
net sales |
$ |
95,063,000 |
|
$ |
93,822,000 |
Reconciliation of Non-GAAP Financial Measures |
Exhibit 3 |
|
|
|
Three Months Ended June
30, |
|
2017 |
|
2016 |
|
$ |
|
Per Diluted Share |
|
$ |
|
Per Diluted Share |
GAAP net
income |
$ |
7,626,000 |
|
$ |
0.39 |
|
$ |
7,508,000 |
|
$ |
0.39 |
Adjustments: |
|
|
|
|
|
|
|
Net
sales |
|
|
|
|
|
|
|
Initial
return and stock adjustment accruals related to new business… |
- |
|
$ |
- |
|
1,853,000 |
|
$ |
0.10 |
Customer
allowances related to new business |
- |
|
$ |
- |
|
6,557,000 |
|
$ |
0.34 |
Cost of
goods sold |
|
|
|
|
|
|
|
New
product line start-up and ramp-up costs |
- |
|
$ |
- |
|
124,000 |
|
$ |
0.01 |
Lower of
cost or net realizable value revaluation - cores on customers'
shelves |
1,350,000 |
|
$ |
0.07 |
|
1,718,000 |
|
$ |
0.09 |
Cost of
customer allowances and stock adjustment accruals related to new
business |
- |
|
$ |
- |
|
(355,000) |
|
$ |
(0.02) |
Operating
expenses |
|
|
|
|
|
|
|
Legal,
severance, acquisition, financing, transition and other costs |
265,000 |
|
$ |
0.01 |
|
396,000 |
|
$ |
0.02 |
Share-based compensation expenses |
834,000 |
|
$ |
0.04 |
|
729,000 |
|
$ |
0.04 |
Mark-to-market losses (gains) |
(2,345,000) |
|
$ |
(0.12) |
|
(4,926,000) |
|
$ |
(0.25) |
Tax
effected at 39% tax rate (a) |
(382,000) |
|
$ |
(0.02) |
|
(3,515,000) |
|
$ |
(0.18) |
Adjusted
net income |
$ |
7,348,000 |
|
$ |
0.38 |
|
$ |
10,089,000 |
|
$ |
0.52 |
|
|
|
|
|
|
|
|
(a) Adjusted net income is calculated by applying an income
tax rate of 39%; this rate may differ from the period's actual
income tax rate |
Reconciliation of Non-GAAP Financial Measures |
Exhibit 4 |
|
|
|
Three Months Ended June
30, |
|
2017 |
|
2016 |
|
$ |
|
GrossMargin |
|
$ |
|
Gross Margin |
GAAP
gross profit |
$ |
25,839,000 |
|
27.2% |
|
$ |
20,391,000 |
|
23.9% |
Adjustments: |
|
|
|
|
|
|
|
Net
sales |
|
|
|
|
|
|
|
Initial
return and stock adjustment accruals related to new business |
- |
|
|
|
1,853,000 |
|
|
Customer
allowances related to new business |
- |
|
|
|
6,557,000 |
|
|
Cost of
goods sold |
|
|
|
|
|
|
|
New
product line start-up and ramp-up costs |
- |
|
|
|
124,000 |
|
|
Lower of
cost or net realizable value revaluation - cores on customers'
shelves |
1,350,000 |
|
|
|
1,718,000 |
|
|
Cost of
customer allowances and stock adjustment accruals related to new
business |
- |
|
|
|
(355,000) |
|
|
Total
adjustments |
1,350,000 |
|
1.4% |
|
9,897,000 |
|
8.4% |
Adjusted
gross profit |
$ |
27,189,000 |
|
28.6% |
|
$ |
30,288,000 |
|
32.3% |
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial
Measures |
Exhibit 5 |
|
|
|
Three Months Ended June
30, |
|
2017 |
|
2016 |
GAAP net
income |
$ |
7,626,000 |
|
$ |
7,508,000 |
Interest
expense, net |
3,314,000 |
|
2,819,000 |
Income
tax expense |
4,316,000 |
|
2,936,000 |
Depreciation and amortization |
1,039,000 |
|
860,000 |
EBITDA |
$ |
16,295,000 |
|
$ |
14,123,000 |
|
|
|
|
Adjustments: |
|
|
|
Net
sales |
|
|
|
Initial
return and stock adjustment accruals related to new business
|
- |
|
1,853,000 |
Customer
allowances related to new business |
- |
|
6,557,000 |
Cost of
goods sold |
|
|
|
New
product line start-up and ramp-up costs |
- |
|
124,000 |
Lower of
cost or net realizable value revaluation - cores on customers'
shelves |
1,350,000 |
|
1,718,000 |
Cost of
customer allowances and stock adjustment accruals related to new
business |
- |
|
(355,000) |
Operating
expenses |
|
|
|
Legal,
severance, acquisition, financing, transition and other costs |
265,000 |
|
396,000 |
Share-based compensation expenses |
834,000 |
|
729,000 |
Mark-to-market losses (gains) |
(2,345,000) |
|
(4,926,000) |
Adjusted
EBITDA |
$ |
16,399,000 |
|
$ |
20,219,000 |
CONTACT:
Gary S. Maier
(310) 471-1288
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