-- Record Sales for Quarter and Fiscal Year
with Strong Profitability --
Motorcar Parts of America, Inc. (Nasdaq: MPAA) today
reported results for its fiscal 2021 fourth quarter and year ended
March 31, 2021 – reflecting record sales for the quarter and fiscal
year with strong profitability.
Fiscal 2021 Fourth Quarter Results
Net sales for the fiscal 2021
fourth quarter increased 11.5 percent to a record $168.1 million
from $150.7 million, which was a record a year ago.
Net income for the fiscal 2021
fourth quarter was $835,000, or $0.04 per diluted share, compared
with a net loss of $8.2 million, or $0.43 per share, a year ago.
Details of items impacting net income are shown in Exhibit 1.
“Despite the significant impact of the COVID-19 global pandemic,
we achieved record sales and strong profitability for the fourth
quarter and for fiscal 2021. The company is well-positioned across
multiple non-discretionary product lines and we remain focused on
leveraging our strength as consumer demand for automotive
aftermarket parts continues to gain momentum. This is supported by
vaccination availability, a return to more normal patterns in our
daily lives and strong demand for used vehicles,” said Selwyn
Joffe, chairman, president and chief executive officer of Motorcar
Parts of America.
“In addition, as the electric vehicle market evolves, we
anticipate increasing demand for the technology offered by our
wholly owned D&V subsidiary – benefitting from our ability to
support the development of the electric vehicle, including battery
power emulation, and the testing and development of inverters,
electric motors, and high-speed battery-charging station
applications,” Joffe added.
Results for the fiscal fourth quarter were impacted by COVID-19
expenses related to safety, health initiatives and incrementally
higher freight costs, reflecting approximately $2.8 million on a
pre-tax basis, or $0.11 per share on a tax-effected basis, for cost
of goods sold and operating expenses. Approximately $603,000 of the
$2.8 million was due to incremental bonuses and wages paid to the
company’s dedicated operating employees on the front line. The
balance reflects costs for personal protection equipment (PPE),
social distancing initiatives and higher freight costs.
Net cash used in operating activities was $16.4 million for the
fiscal 2021 fourth quarter and net debt was $88.9 million at March
31, 2021 compared with $67.6 million at December 31, 2020,
reflecting working capital requirements to support the record sales
and inventory increases for anticipated business growth in fiscal
2022.
Gross profit for the fiscal 2021
fourth quarter was $32.1 million compared with $36.6 million a year
earlier. Gross profit as a percentage of net sales for the fiscal
2021 fourth quarter was 19.1 percent compared with 24.3 percent a
year earlier. Gross margin was primarily impacted by brake caliper
start-up costs and other product relocation expenses related to the
expansion in Mexico, both of which are now nearing completion;
higher costs related to COVID-19; and other items, including
non-cash and non-economic expenses totaling 6.4 percent as detailed
in Exhibit 3 of the press release.
Fiscal 2021 Full-Year Results
Net sales for fiscal 2021 were
$540.8 million compared with $535.8 million a year earlier,
impacted by the sharp drop in demand in April due to the global
pandemic. In addition, net sales were impacted by current pandemic
supply chain challenges in the third and fourth quarters. This was
partially offset by the benefit of $12.8 million due to a
realignment of inventory at two customer distribution centers with
expected future sales benefits as product mix changes.
Net income for fiscal 2021 was
$21.5 million, or $1.11 per diluted share, compared with a net loss
of $7.3 million, or $0.39 per share, a year ago. Details of items
impacting net income are shown in Exhibit 2.
Net cash generated from operating activities was $56.1 million
during the year ended March 31, 2021, and net debt was reduced to
$88.9 million at March 31, 2021 from $126.5 million at March 31,
2020.
Gross profit for fiscal 2021 was
$109.5 million compared with $118.4 million a year earlier. Gross
profit as a percentage of net sales for fiscal 2021 was 20.2
percent compared with 22.1 percent a year earlier. Gross margin was
primarily impacted by brake caliper start-up costs and other
product relocation expenses related to the expansion in Mexico,
both of which are now nearing completion; higher costs related to
COVID-19; and other items, including non-cash and non-economic
expenses totaling 5.5 percent as detailed in Exhibit 4 of the press
release.
FISCAL 2022 OUTLOOK
“Given the ongoing global pandemic and near-term related
considerations, the company believes it is still not prudent at
this time to provide specific annual sales and gross margin
guidance. We will reevaluate this policy as fiscal 2022 evolves.
However, we are encouraged by continued strong customer demand for
our aftermarket parts.
“As I stated since the beginning of the global pandemic, our
industry and our company are resilient and we are continuing to
execute our strategic plans for growth and profitability. We are
guardedly optimistic about the near and long-term opportunities as
an essential supplier in the $125 billion hard parts industry and
an evolving provider to the fast-growing electric vehicle and
aerospace markets,” Joffe said.
Use of Non-GAAP Measure
This press release includes the following non-GAAP measure -
EBITDA, which is not a measure of financial performance under GAAP
and should not be considered as an alternative to net income as a
measure of financial performance. The company believes this
non-GAAP measure, when considered together with the corresponding
GAAP measures, provides useful information to investors and
management regarding financial and business trends relating to the
company’s results of operations. However, this non-GAAP measure has
significant limitations in that it does not reflect all the costs
and other items associated with the operation of the company’s
business as determined in accordance with GAAP. In addition, the
company’s non-GAAP measures may be calculated differently and are
therefore not comparable to similar measures by other companies.
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 EBITDA to its 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 measures.
Teleconference and Web Cast
Selwyn 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 will be open to all interested investors either through
a live audio Web broadcast at www.motorcarparts.com or live by
calling (833)-968-1924 (domestic) or (825)-312-2355
(international). For those who are not available to listen to the
live broadcast, the call will be archived 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 June 14, 2021 through 8:59 p.m. Pacific time
on June 21, 2021 by calling (800)-585-8367 (domestic) or
(416)-621-4642 (international) and using access code: 1085627.
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 bearings and hub assemblies,
brake calipers, brake master cylinders, brake power boosters,
turbochargers, and diagnostic testing equipment utilized in
imported and domestic passenger vehicles, light trucks, and
heavy-duty applications. Its products are sold to automotive retail
outlets and the professional repair market throughout the United
States, Canada, and Mexico, with facilities located in California,
New York, Mexico, Malaysia, China and India, and administrative
offices located in California, Tennessee, Mexico, Singapore,
Malaysia, and Canada. In addition, the company’s electrical vehicle
subsidiary designs and manufactures testing solutions for
performance, endurance, and production of multiple components in
the electric power train – providing simulation, emulation, and
production applications for the electrification of both automotive
and aerospace industries, including electric vehicle charging
systems. 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 2021 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.
MOTORCAR PARTS OF AMERICA,
INC. AND SUBSIDIARIES
Consolidated Statements of
Operations
Three Months Ended March
31,
Year Ended March 31,
2021
2020
2021
2020
(Unaudited) Net sales
$
168,128,000
$
150,735,000
$
540,782,000
$
535,831,000
Cost of goods sold
136,021,000
114,152,000
431,321,000
417,431,000
Gross profit
32,107,000
36,583,000
109,461,000
118,400,000
Operating expenses: General and administrative
15,637,000
13,814,000
53,847,000
53,224,000
Sales and marketing
4,800,000
5,047,000
18,024,000
21,037,000
Research and development
2,549,000
2,506,000
8,563,000
9,200,000
Foreign exchange impact of lease liabilities and forward contracts
3,651,000
20,708,000
(17,606,000
)
18,201,000
Total operating expenses
26,637,000
42,075,000
62,828,000
101,662,000
Operating income (loss)
5,470,000
(5,492,000
)
46,633,000
16,738,000
Interest expense, net
3,696,000
5,464,000
15,770,000
25,039,000
Income (loss) before income tax expense (benefit)
1,774,000
(10,956,000
)
30,863,000
(8,301,000
)
Income tax expense (benefit)
939,000
(2,763,000
)
9,387,000
(1,011,000
)
Net income (loss)
$
835,000
$
(8,193,000
)
$
21,476,000
$
(7,290,000
)
Basic net income (loss) per share
$
0.04
$
(0.43
)
$
1.13
$
(0.39
)
Diluted net income (loss) per share
$
0.04
$
(0.43
)
$
1.11
$
(0.39
)
Weighted average number of shares outstanding: Basic
19,044,407
18,967,865
19,023,145
18,913,788
Diluted
19,585,638
18,967,865
19,387,555
18,913,788
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets March 31,2021 March
31,2020 ASSETS Current assets: Cash and cash equivalents
$
15,523,000
$
49,616,000
Short-term investments
1,652,000
850,000
Accounts receivable — net
63,122,000
91,748,000
Inventory — net
288,361,000
225,659,000
Inventory unreturned
14,552,000
9,021,000
Contract assets
26,940,000
20,332,000
Income tax receivable
405,000
3,282,000
Prepaid expenses and other current assets
12,301,000
8,608,000
Total current assets
422,856,000
409,116,000
Plant and equipment — net
53,854,000
44,957,000
Operating lease assets
71,513,000
53,029,000
Deferred income taxes
19,381,000
18,950,000
Long-term contract assets
270,213,000
239,540,000
Goodwill
3,205,000
3,205,000
Intangible assets — net
5,329,000
6,393,000
Other assets
1,531,000
1,839,000
TOTAL ASSETS
$
847,882,000
$
777,029,000
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
Accounts payable
$
129,331,000
$
78,664,000
Accrued liabilities
23,404,000
16,419,000
Customer finished goods returns accrual
31,524,000
25,326,000
Contract liabilities
41,072,000
27,911,000
Revolving loan
84,000,000
152,000,000
Other current liabilities
6,683,000
9,390,000
Operating lease liabilities
6,439,000
5,104,000
Current portion of term loan
3,678,000
3,678,000
Total current liabilities
326,131,000
318,492,000
Term loan, less current portion
16,786,000
20,462,000
Contract liabilities, less current portion
125,223,000
92,101,000
Deferred income taxes
73,000
79,000
Operating lease liabilities, less current portion
70,551,000
61,425,000
Other liabilities
7,973,000
8,950,000
Total liabilities
546,737,000
501,509,000
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; 19,045,386 and 18,969,380 shares issued and outstanding
at March 31, 2021 and
-
-
2020, respectively
190,000
190,000
Additional paid-in capital
223,058,000
218,581,000
Retained earnings
85,593,000
64,117,000
Accumulated other comprehensive loss
(7,696,000
)
(7,368,000
)
Total shareholders' equity
301,145,000
275,520,000
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
847,882,000
$
777,029,000
Additional Information and 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 additional
information and non-GAAP financial measures for the three months
and years ended March 31, 2021 and 2020. Among other things, the
company uses such additional information and non-GAAP adjusted
financial measures in addition to and together with corresponding
GAAP measures to help analyze the performance of its business.
The company believes this information helps provide a more
complete understanding of the company's results of operations and
the factors and trends affecting the company's business. However,
this information should be considered as a supplement to, and not
as a substitute for, or superior to, information contained in the
company’s financial statements prepared in accordance with GAAP. In
addition, the company’s non-GAAP measures may be calculated
differently and are therefore not comparable to similar measures by
other companies.
The company defines EBITDA as earnings before interest, taxes,
depreciation, and amortization. A reconciliation of EBITDA to net
income is provided below along with information regarding such
items.
Items Impacting Net Income (Loss) for
the Three Months Ended March 31, 2021 and 2020
Exhibit 1
Three Months Ended March
31,
2021
2020
$
Per Share
$
Per Share
GAAP net income (loss)
$
835,000
$
0.04
$
8,193,000
)
$
(0.43
)
Items impacting net income (loss) Customer allowances
related to new business
$
101,000
$
0.01
$
(54,000
)
$
(0.00
)
Core premium amortization impacting net sales
2,321,000
0.12
958,000
0.05
Impact of tariffs
306,000
0.02
-
-
New product line start-up costs and transition expenses (a)
5,203,000
0.27
2,816,000
0.15
Revaluation - cores on customers' shelves
1,020,000
0.05
932,000
0.05
Increased expenses related to COVID-19 (b)
2,825,000
0.14
-
-
Earn-out accruals and severance
1,372,000
0.07
(553,000
)
(0.03
)
Share-based compensation expenses
1,488,000
0.08
1,029,000
0.05
Foreign exchange impact of lease liabilities and forward contracts
3,651,000
0.19
20,708,000
1.09
Tax effect (c)
(4,572,000
)
(0.23
)
(6,459,000
)
(0.34
)
Total items impacting net income (loss)
$
13,715,000
$
0.70
$
19,377,000
$
1.02
(a)
Consists of $4,781,000 included in cost of
goods sold and $422,000 included in operating expenses for the
three months ended March 31, 2021 and $2,508,000 included in cost
of goods sold and $308,000 included in operating expenses for the
three months ended March 31, 2020.
(b)
Consists of higher freight costs of
$1,462,000 and expenses of $843,000 included in cost of goods sold
and $520,000 included in operating expenses due to COVID-19 for the
three months ended March 31, 2021.
(c)
Tax effect is calculated by applying an
income tax rate of 25.0% to items listed above; this rate may
differ from the period's actual income tax rate.
Items Impacting Net Income (Loss) for
the Years Ended March 31, 2021 and 2020
Exhibit 2
Year Ended March 31,
2021
2020
$
Per Share
$
Per Share
GAAP net income (loss)
$
21,476,000
$
1.11
$
(7,290,000
)
$
(0.39
)
Items impacting net income (loss) Customer allowances,
return accruals and changeover costs (a) related to new business,
net of costs
$
408,000
$
0.02
$
1,177,000
$
0.06
Core premium amortization impacting net sales
6,590,000
0.34
4,501,000
0.24
Impact of tariffs
(3,229,000
)
(0.17
)
1,067,000
0.06
Cost in connection with a cancelled contract
-
-
133,000
0.01
New product line start-up costs and transition expenses (b)
17,767,000
0.92
10,281,000
0.54
Revaluation - cores on customers' shelves, and gain due to
realignment of inventory at two customer distribution centers
209,000
0.01
10,799,000
0.57
Increased expenses related to COVID-19 (c)
9,101,000
0.47
-
-
Acquisition costs, earn-out accruals, severance and
restatement-related fees
1,391,000
0.07
(261,000
)
(0.01
)
Share-based compensation expenses
5,247,000
0.27
4,141,000
0.22
Foreign exchange impact of lease liabilities and forward contracts
(17,606,000
)
(0.91
)
18,201,000
0.96
Tax effect (d)
(4,970,000
)
(0.26
)
(12,510,000
)
(0.66
)
Total items impacting net income (loss)
$
14,908,000
$
0.77
$
37,529,000
$
1.98
(a)
Includes changeover costs related to new
business of $112,000 recorded in operating expenses for the year
ended March 31, 2020.
(b)
Consists of $16,353,000 included in cost
of goods sold and $1,414,000 included in operating expenses for the
year ended March 31, 2021 and $8,337,000 included in cost of goods
sold and $1,944,000 included in operating expenses for the year
ended March 31, 2020.
(c)
Consists of higher freight costs of
$1,785,000 and expenses of $5,268,000 included in cost of goods
sold and $2,048,000 included in operating expenses due to COVID-19
for the year ended March 31, 2021.
(d)
Tax effect is calculated by applying an
income tax rate of 25.0% to items listed above; this rate may
differ from the period's actual income tax rate.
Items Impacting Gross Profit for the
Three Months Ended March 31, 2021 and 2020
Exhibit 3
Three Months Ended March
31,
2021
2020
$
Gross Margin
$
Gross Margin
GAAP gross profit
$
32,107,000
19.1
%
$
36,583,000
24.3
%
Items impacting gross profit Customer allowances related to
new business
$
101,000
0.1
%
$
(54,000
)
0.0
%
Core premium amortization impacting net sales
2,321,000
1.4
%
958,000
0.6
%
Impact of tariffs
306,000
0.2
%
-
-
New product line start-up costs and transition expenses
4,781,000
2.8
%
2,508,000
1.7
%
Revaluation - cores on customers' shelves
1,020,000
0.6
%
932,000
0.6
%
Increased expenses related to COVID-19
2,305,000
1.4
%
-
-
Total items impacting gross profit
$
10,834,000
6.4
%
$
4,344,000
2.9
%
Items Impacting Gross Profit for the
Years Ended March 31, 2021 and 2020
Exhibit 4
Year Ended March 31,
2021
2020
$
Gross Margin
$
Gross Margin
GAAP gross profit
$
109,461,000
20.2
%
$
118,400,000
22.1
%
Items impacting gross profit Customer allowances and return
accruals related to new business, net of costs
$
408,000
0.1
%
$
1,065,000
0.2
%
Core premium amortization impacting net sales
6,590,000
1.2
%
4,501,000
0.8
%
Impact of tariffs
(3,229,000
)
-0.6
%
1,067,000
0.2
%
Cost in connection with a cancelled contract
-
-
133,000
0.0
%
New product line start-up costs and transition expenses…
16,353,000
3.0
%
8,337,000
1.6
%
Revaluation - cores on customers' shelves, and gain due to
realignment of inventory at two customer distribution centers (a)
209,000
0.5
%
10,799,000
2.0
%
Increased expenses related to COVID-19
7,053,000
1.3
%
-
-
Total items impacting gross profit
$
27,384,000
5.5
%
$
25,902,000
4.8
%
(a)
Gross profit and gross margin impact to
net sales and cost of goods sold
Items Impacting EBITDA for the Three
Months and Years Ended March 31, 2021 and 2020
Exhibit 5
Three Months Ended March
31,
Year Ended March 31,
2021
2020
2021
2020
GAAP net income (loss)
$
835,000
$
(8,193,000
)
$
21,476,000
$
(7,290,000
)
Interest expense, net
3,696,000
5,464,000
15,770,000
25,039,000
Income tax expense (benefit)
939,000
(2,763,000
)
9,387,000
(1,011,000
)
Depreciation and amortization
3,054,000
2,542,000
11,144,000
9,561,000
EBITDA
$
8,524,000
$
(2,950,000
)
$
57,777,000
$
26,299,000
Items impacting EBITDA Customer allowances, return accruals
and changeover costs related to new business, net of costs
$
101,000
$
(54,000
)
$
408,000
$
1,177,000
Core premium amortization impacting net sales
2,321,000
958,000
6,590,000
4,501,000
Impact of tariffs
306,000
-
(3,229,000
)
1,067,000
Cost in connection with a cancelled contract
-
-
-
133,000
New product line start-up costs and transition expenses (a)
4,969,000
2,752,000
17,204,000
9,998,000
Revaluation - cores on customers' shelves, and gain due to
realignment of inventory at two customer distribution centers
1,020,000
932,000
209,000
10,799,000
Increased expenses related to COVID-19
2,825,000
-
9,101,000
-
Acquisition costs, earn-out accruals, severance and
restatement-related fees
1,372,000
(553,000
)
1,391,000
(261,000
)
Share-based compensation expenses
1,488,000
1,029,000
5,247,000
4,141,000
Foreign exchange impact of lease liabilities and forward contracts
3,651,000
20,708,000
(17,606,000
)
18,201,000
Total items impacting EBITDA
$
18,053,000
$
25,772,000
$
19,315,000
$
49,756,000
(a)
Excludes depreciation, which is included
in the depreciation and amortization line item.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210614005186/en/
Gary S. Maier (310) 972-5124
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