-- Record First Quarter Sales to Start New
Fiscal Year as Solid Demand For Aftermarket Parts Continues
--
Motorcar Parts of America, Inc. (Nasdaq: MPAA) today
reported results for its fiscal 2022 first quarter ended June 30,
2021 – reflecting record sales for a fiscal first quarter.
Net sales for the fiscal 2022 first
quarter increased 56.3 percent to $149.0 million from $95.4 million
a year ago, and 36.5 percent from the pre-COVID fiscal first
quarter two years ago.
Net income for the fiscal 2022
first quarter was $861,000, or $0.04 per diluted share, compared
with a net loss of $3.0 million, or $0.16 per share, a year ago.
Details of items impacting net income are shown in Exhibit 1.
“Net sales and profitability for the fiscal first quarter
benefitted, despite global supply chain-related disruptions, from
continued strong demand for non-discretionary aftermarket parts --
enhanced by the success of our multi-year strategic footprint
expansion, including brake-related product line growth,” said
Selwyn Joffe, chairman, president and chief executive officer of
Motorcar Parts of America.
Joffe noted that the first quarter benefitted from the opening
up of the economy and stimulus payments. He added that customers
purchased products earlier than normal to accommodate the
anticipated stronger demand. “The success of the brake caliper
program, which is seasonally stronger in the fiscal first quarter,
contributed to solid growth early in our fiscal year,” Joffe
emphasized.
“In addition, our presence in the electric vehicle market
continued to gain momentum driven by increasing demand for battery
power emulation, testing and development of inverters, electric
motors, and high-speed battery-charging station applications
offered by our wholly owned D&V subsidiary,” Joffe added.
Gross profit and operating expenses for the fiscal first quarter
were impacted by COVID-19 expenses related to safety, health
initiatives, inefficiencies in the supply chain and incrementally
higher freight costs of approximately $5.3 million on a pre-tax
basis, or $0.20 per share on a tax-effected basis.
Net cash used in operating activities was $4.7 million for the
fiscal 2022 first quarter and net debt was $97.6 million at June
30, 2021 compared with $88.9 million at March 31, 2021, reflecting
working capital requirements to support the record first quarter
sales and inventory increases for anticipated business growth in
fiscal 2022.
Gross profit for the fiscal 2022
first quarter was $23.6 million compared with $13.4 million a year
earlier. Gross profit as a percentage of net sales for the fiscal
2022 first quarter was 15.8 percent compared with 14.0 percent a
year earlier. Gross margin was primarily impacted by higher costs
related to COVID-19; brake caliper start-up costs and other product
relocation expenses related to the expansion in Mexico, both of
which are now nearing completion; and other items, including
non-cash and non-economic expenses totaling 7.0 percent, as
detailed in Exhibit 2 of the press release. In addition to the
above items, gross profit was further impacted by growth
initiatives in connection with the expansion of our new product
lines, and inflationary costs related to the global pandemic,
especially disruptions with worldwide supply chain and logistics
services.
“We are encouraged by the strong demand for automotive
replacement parts, despite the global challenges related to the
pandemic. Our product line expansion strategy continues to gain
momentum and we remain focused on sales growth and opportunities to
achieve further operating efficiencies, and enhanced
profitability,” 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 August 9, 2021 through 8:59 p.m. Pacific time
on August 16, 2021 by calling (800)-585-8367 (domestic) or
(416)-621-4642 (international) and using access code: 4699341.
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
(Unaudited)
Three Months Ended
June 30,
2021
2020
Net sales
$
149,034,000
$
95,356,000
Cost of goods sold
125,463,000
81,969,000
Gross profit
23,571,000
13,387,000
Operating expenses: General and administrative
12,486,000
11,687,000
Sales and marketing
5,368,000
4,200,000
Research and development
2,501,000
1,942,000
Foreign exchange impact of lease liabilities and forward contracts
(2,533,000
)
(4,817,000
)
Total operating expenses
17,822,000
13,012,000
Operating income
5,749,000
375,000
Interest expense, net
3,941,000
4,409,000
Income (loss) before income tax expense (benefit)
1,808,000
(4,034,000
)
Income tax expense (benefit)
947,000
(1,022,000
)
Net income (loss)
$
861,000
$
(3,012,000
)
Basic net income (loss) per share
$
0.05
$
(0.16
)
Diluted net income (loss) per share
$
0.04
$
(0.16
)
Weighted average number of shares outstanding: Basic
19,054,481
18,976,178
Diluted
19,659,057
18,976,178
MOTORCAR PARTS OF AMERICA,
INC. AND SUBSIDIARIES
Consolidated Balance
Sheets
June 30, 2021
March 31, 2021
ASSETS (Unaudited) Current assets: Cash and cash
equivalents
$
24,883,000
$
15,523,000
Short-term investments
1,823,000
1,652,000
Accounts receivable — net
54,019,000
63,122,000
Inventory
320,685,000
302,913,000
Contract assets
26,264,000
26,940,000
Prepaid expenses and other current assets
13,307,000
12,706,000
Total current assets
440,981,000
422,856,000
Plant and equipment — net
53,287,000
53,854,000
Operating lease assets
87,924,000
71,513,000
Long-term deferred income taxes
19,150,000
19,381,000
Long-term contract assets
293,158,000
270,213,000
Goodwill and intangible assets — net
8,194,000
8,534,000
Other assets
1,246,000
1,531,000
TOTAL ASSETS
$
903,940,000
$
847,882,000
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
Accounts payable and accrued liabilities
$
141,451,000
$
152,735,000
Customer finished goods returns accrual
35,261,000
31,524,000
Contract liabilities
40,988,000
41,072,000
Revolving loan
103,000,000
84,000,000
Other current liabilities
5,774,000
6,683,000
Operating lease liabilities
5,434,000
6,439,000
Current portion of term loan
3,670,000
3,678,000
Total current liabilities
335,578,000
326,131,000
Term loan, less current portion
15,804,000
16,786,000
Long-term contract liabilities
153,504,000
125,223,000
Long-term deferred income taxes
76,000
73,000
Long-term operating lease liabilities
85,889,000
70,551,000
Other liabilities
7,862,000
7,973,000
Total liabilities
598,713,000
546,737,000
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; 19,101,092 and 19,045,386 shares issued and outstanding
at June 30, 2021 and March 31, 2021, respectively
191,000
190,000
Additional paid-in capital
224,445,000
223,058,000
Retained earnings
86,454,000
85,593,000
Accumulated other comprehensive loss
(5,863,000
)
(7,696,000
)
Total shareholders' equity
305,227,000
301,145,000
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
903,940,000
$
847,882,000
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
ended June 30, 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 June 30, 2021 and 2020
Exhibit 1
Three Months Ended June
30,
2021
2020
$
Per Share
$
Per Share
GAAP net income (loss)
$
861,000
$
0.04
$
(3,012,000
)
$
(0.16
)
Items impacting net income (loss) Customer allowances and
return accruals related to new business, net of costs
$
146,000
$
0.01
$
307,000
$
0.02
Core premium amortization impacting net sales
2,531,000
0.13
1,223,000
0.06
New product line start-up costs and transition expenses (a)
2,183,000
0.11
3,586,000
0.19
Revaluation - cores on customers' shelves
984,000
0.05
1,384,000
0.07
Increased expenses related to COVID-19 (b)
5,297,000
0.27
2,295,000
0.12
Earn-out accruals and severance
(33,000
)
(0.00
)
(7,000
)
(0.00
)
Share-based compensation expenses
1,576,000
0.08
1,043,000
0.05
Foreign exchange impact of lease liabilities and forward contracts
(2,533,000
)
(0.13
)
(4,817,000
)
(0.25
)
Tax effect (c)
(2,538,000
)
(0.13
)
(1,254,000
)
(0.07
)
Total items impacting net income (loss)
$
7,613,000
$
0.39
$
3,760,000
$
0.20
(a)
For the three-months ended June
30, 2021, consists of $1,947,000 included in cost of goods sold and
$236,000 included in operating expenses. For the three-months ended
June 30, 2020, consists of $3,301,000 included in cost of goods
sold and $285,000 included in operating expenses.
(b)
For the three-months ended June
30, 2021, consists of higher expenses due to COVID-19 of $4,761,000
impacting gross profit (primarily related to increased freight
costs of $2,990,000) and $536,000 included in operating expenses.
For the three-months ended June 30, 2020, consists of higher
expenses due to COVID-19 of $1,840,000 impacting gross profit and
$455,000 included in operating expenses.
(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 Gross Profit
for the Three Months Ended June 30, 2021 and 2020
Exhibit 2
Three Months Ended June
30,
2021
2020
$
Gross Margin
$
Gross Margin
GAAP gross profit
$
23,571,000
15.8
%
$
13,387,000
14.0
%
Items impacting gross profit Customer allowances and return
accruals related to new business, net of costs
$
146,000
0.1
%
$
307,000
0.3
%
Core premium amortization impacting net sales
2,531,000
1.7
%
1,223,000
1.3
%
New product line start-up costs and transition expenses
1,947,000
1.3
%
3,301,000
3.5
%
Revaluation - cores on customers' shelves
984,000
0.7
%
1,384,000
1.5
%
Increased expenses related to COVID-19
4,761,000
3.2
%
1,840,000
1.9
%
Total items impacting gross profit
$
10,369,000
7.0
%
$
8,055,000
8.4
%
Items Impacting EBITDA for the Three
Months Ended June 30, 2021 and 2020
Exhibit 3
Three Months Ended June 30,
2021
2020
GAAP net income (loss)
$
861,000
$
(3,012,000
)
Interest expense, net
3,941,000
4,409,000
Income tax expense (benefit)
947,000
(1,022,000
)
Depreciation and amortization
3,145,000
2,551,000
EBITDA
$
8,894,000
$
2,926,000
Items impacting EBITDA Customer allowances and return
accruals related to new business, net of costs
$
146,000
$
307,000
Core premium amortization impacting net sales
2,531,000
1,223,000
New product line start-up costs and transition expenses (a)
2,016,000
3,496,000
Revaluation - cores on customers' shelves
984,000
1,384,000
Increased expenses related to COVID-19
5,297,000
2,295,000
Earn-out accruals and severance
(33,000
)
(7,000
)
Share-based compensation expenses
1,576,000
1,043,000
Foreign exchange impact of lease liabilities and forward contracts
(2,533,000
)
(4,817,000
)
Total items impacting EBITDA
$
9,984,000
$
4,924,000
(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/20210809005137/en/
Gary S. Maier (310) 972-5124
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