- Record Sales for the Fiscal Year;
Operating Income Up Sharply; Solid Outlook with Strong Cash
Flow
Motorcar Parts of America, Inc. (Nasdaq: MPAA) today
reported results for its fiscal 2024 fourth quarter and year ended
March 31, 2024 – reflecting year-over-year increases in sales,
operating income and cash flow from operating activities, despite
industry softness in the fourth quarter.
Key highlights for the fiscal year.
- Net sales increased 5.1 percent to $717.7 million.
- Gross profit increased 16.3 percent to $132.6 million.
- Gross margin increased 1.8 percentage points to 18.5
percent.
- Operating income increased 26.5 percent to $46.1 million.
- The company generated cash from operations of approximately
$39.2 million.
Fiscal 2024 Fourth Quarter Results
Net sales for the fiscal 2024 fourth quarter were $189.5
million compared with $194.7 million in the prior year, impacted by
industry softness. Sales in April and May 2024 indicate a strong
start to the new fiscal year.
Gross profit for the fiscal 2024 fourth quarter was $34.8
million compared with $36.2 million a year earlier. Gross margin
for the fiscal 2024 fourth quarter was 18.4 percent compared with
18.6 percent a year earlier. Gross margin for the fiscal 2024
fourth quarter was impacted by $3.7 million, or 2.0 percent, of
non-cash items, and approximately $700,000, or 0.4 percent, of
non-recurring cash items, as detailed in Exhibit 3.
Operating income for the fiscal 2024 fourth quarter was
$12.2 million compared with $23.7 million in the prior year,
impacted by $5.6 million of less favorable foreign exchange rate
related gains associated with lease liabilities and forward
contracts compared with the prior year and a $5.1 million employee
retention credit benefit in the prior year.
Interest expense for the fiscal fourth quarter increased by $2.8
million, or $0.09 per diluted share, to $14.6 million from $11.9
million a year ago, primarily due to higher market interest rates
and increased collection of receivables utilizing accounts
receivable discount programs on higher sales, partially offset by
lower average outstanding balances under the company’s credit
facility.
Net income for the fiscal 2024 fourth quarter was $1.3 million
compared with $1.5 million for the prior year. Net income for the
fiscal 2024 fourth quarter was impacted by approximately $800,000,
or $0.04 per diluted share, of non-cash items, and $1.2 million, or
$0.05 per diluted share, of cash items, as detailed in Exhibit
1.
“Our fiscal 2024 results indicate continued progress in growing
sales, increasing gross margins and gross profit and generating
positive cash flow, which we expect to continue in the new fiscal
year. Our brake-related product categories continue to gain
momentum, which will result in gross margin accretion. We remain
focused on executing our strategic plans, supported by positive
cash flow and neutralizing working capital,” said Selwyn Joffe,
chairman, president, and chief executive officer.
Twelve-Month Results
Net sales for fiscal 2024 increased 5.1 percent to a
record $717.7 million from $683.1 million, despite the industry
softness in the fourth quarter as noted above.
Gross profit for fiscal 2024 increased 16.3 percent to
$132.6 million from $114.0 million a year earlier. Gross margin for
fiscal 2024 increased to 18.5 percent from 16.7 percent a year
earlier. Gross margin for fiscal 2024 was impacted by $16.3
million, or 2.3 percent, of non-cash items, and $7.5 million, or
1.0 percent, of non-recurring cash items, as detailed in Exhibit
4.
Operating income for fiscal 2024 increased 26.5 percent
to $46.1 million from $36.4 million in the prior year.
Interest expense for fiscal 2024 increased by $20.5 million, or
$0.78 per share, to $60.0 million from $39.6 million a year ago,
primarily due to higher market interest rates and increased
collection of receivables utilizing accounts receivable discount
programs on higher sales, partially offset by lower average
outstanding balances under the company’s credit facility.
Due primarily to $50.3 million, or $2.56 per share, of non-cash
items, including a $38.0 million U.S. federal and state deferred
tax asset valuation allowance under U.S. GAAP, or $1.94 per share,
net loss for fiscal 2024 was $49.2 million, or $2.51 per share,
compared with a net loss of $4.2 million, or $0.22 per share, a
year ago. The valuation allowance does not impact any operating
metrics. The non-cash items discussed above, and cash items of $7.0
million, or $0.36 per share, are detailed in Exhibit 2.
The company generated approximately $39.2 million of cash from
operating activities during fiscal 2024 and reduced net bank debt
by $32.5 million to $114.0 million from $146.5 million,
notwithstanding $9.3 million cash used in operating activities
during the fourth quarter due to seasonality of the company’s
business.
Further Considerations
- Sales volume improving:
- Ordering activity has gained momentum.
- Industry fundamentals are improving and will drive product
demand.
- Margin improvement:
- Enhanced by multiple rounds of price increases.
- Improving overhead absorption as brake-related business gains
further momentum.
- Improving operational efficiencies through volume
increases.
- Strong cash flow outlook.
Fiscal 2025 Guidance
Motorcar Parts of America expects net sales for its fiscal year
ending March 31, 2025 to be between $746 million to $766 million,
representing between 3.9 percent and 6.7 percent year-over-year
growth. Operating income is expected to be between $62 million and
$67 million, before the non-cash foreign exchange impact of lease
liabilities and forward contracts and the non-cash impact of
revaluation of cores on customers’ shelves. The company estimates
other non-cash items will be approximately $17 million, including
core and finished goods premium amortization and share-based
compensation. The company estimates depreciation and amortization
will be approximately $11 million.
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 definition and
reconciliation of EBITDA to net income, its corresponding GAAP
measure, 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 this measure.
Earnings Conference Call and Webcast
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 webcast at
www.motorcarparts.com or live by calling (888) 440-5584 (domestic)
or (646) 960-0457 (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 11, 2024 through
8:59 p.m. Pacific time on June 18, 2024 by calling (800) 770-2030
(domestic) or (609) 800-9909 (toll) and using access code:
1545314.
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 pads, brake rotors, 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 2023 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
Operations
Three Months Ended March
31,
Year Ended March 31,
2024
2023
2024
2023
(Unaudited)
Net sales
$
189,478,000
$
194,727,000
$
717,684,000
$
683,074,000
Cost of goods sold
154,685,000
158,576,000
585,133,000
569,112,000
Gross profit
34,793,000
36,151,000
132,551,000
113,962,000
Operating expenses: General and administrative
15,644,000
12,677,000
57,769,000
54,756,000
Sales and marketing
5,443,000
4,487,000
22,481,000
21,729,000
Research and development
2,643,000
1,992,000
9,995,000
10,322,000
Foreign exchange impact of lease liabilities and forward contracts
(1,155,000
)
(6,738,000
)
(3,814,000
)
(9,291,000
)
Total operating expenses
22,575,000
12,418,000
86,431,000
77,516,000
Operating income
12,218,000
23,733,000
46,120,000
36,446,000
Other expenses: Interest expense, net
14,640,000
11,880,000
60,040,000
39,555,000
Change in fair value of compound net derivative liability
(2,710,000
)
-
(1,020,000
)
-
Loss on extinguishment of debt
-
-
168,000
-
Total other expenses
11,930,000
11,880,000
59,188,000
39,555,000
Income (loss) before income tax (benefit) expense
288,000
11,853,000
(13,068,000
)
(3,109,000
)
Income tax (benefit) expense
(1,050,000
)
10,394,000
36,176,000
1,098,000
Net income (loss)
$
1,338,000
$
1,459,000
$
(49,244,000
)
$
(4,207,000
)
Basic net income (loss) per share
$
0.07
$
0.07
$
(2.51
)
$
(0.22
)
Diluted net income (loss) per share
$
(0.03
)
$
0.07
$
(2.51
)
$
(0.22
)
Weighted average number of shares outstanding: Basic
19,662,380
19,492,962
19,601,204
19,340,246
Diluted
22,085,292
19,603,394
19,601,204
19,340,246
MOTORCAR PARTS OF AMERICA,
INC. AND SUBSIDIARIES
Consolidated Balance
Sheets
March 31, 2024
March 31, 2023
ASSETS Current assets: Cash and cash equivalents
$
13,974,000
$
11,596,000
Short-term investments
1,837,000
2,011,000
Accounts receivable — net
96,296,000
119,868,000
Inventory — net
377,040,000
339,675,000
Inventory unreturned
20,288,000
16,579,000
Contract assets
27,139,000
25,443,000
Income tax receivable
5,683,000
2,156,000
Prepaid expenses and other current assets
18,202,000
20,150,000
Total current assets
560,459,000
537,478,000
Plant and equipment — net
38,338,000
46,052,000
Operating lease assets
83,973,000
87,619,000
Deferred income taxes
2,976,000
32,625,000
Long-term contract assets
320,282,000
318,381,000
Goodwill
3,205,000
3,205,000
Intangible assets — net
1,069,000
2,143,000
Other assets
1,700,000
1,062,000
TOTAL ASSETS
$
1,012,002,000
$
1,028,565,000
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
Accounts payable
$
154,977,000
$
119,437,000
Accrued liabilities
30,205,000
22,329,000
Customer finished goods returns accrual
38,312,000
37,984,000
Contract liabilities
37,591,000
40,340,000
Revolving loan
128,000,000
145,200,000
Other current liabilities
7,021,000
4,871,000
Operating lease liabilities
8,319,000
8,767,000
Current portion of term loan
-
3,664,000
Total current liabilities
404,425,000
382,592,000
Term loan, less current portion
-
9,279,000
Convertible notes, related party
30,776,000
30,994,000
Contract liabilities, less current portion
212,068,000
193,606,000
Deferred income taxes
511,000
718,000
Operating lease liabilities, less current portion
72,240,000
79,318,000
Other liabilities
6,872,000
11,583,000
Total liabilities
726,892,000
708,090,000
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; 19,662,380 and 19,494,615 shares issued and outstanding
at March 31, 2024 and 2023, respectively
197,000
195,000
Additional paid-in capital
236,255,000
231,836,000
Retained earnings
39,503,000
88,747,000
Accumulated other comprehensive income (loss)
9,155,000
(303,000
)
Total shareholders' equity
285,110,000
320,475,000
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
1,012,002,000
$
1,028,565,000
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 and
twelve months ended March 31, 2024 and 2023. 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 for the
Three Months Ended March 31, 2024 and 2023
Exhibit 1
Three Months Ended March
31,
2024
2023
$
Per Share
$
Per Share
GAAP net income
$
1,338,000
$
(0.03
)
$
1,459,000
$
0.07
Non-cash items impacting net income Core and finished
goods premium amortization
$
2,761,000
$
0.13
$
2,608,000
$
0.13
Revaluation - cores on customers' shelves
973,000
0.04
1,032,000
0.05
Share-based compensation expenses
432,000
0.02
1,164,000
0.06
Foreign exchange impact of lease liabilities and forward contracts
(1,155,000
)
(0.05
)
(6,738,000
)
(0.34
)
Change in fair value of compound net derivative liability
(2,710,000
)
(0.12
)
-
-
Tax effect (a)
(75,000
)
(0.00
)
484,000
0.02
Tax valuation allowance
548,000
0.02
-
-
Total non-cash items impacting net income
$
774,000
$
0.04
$
(1,450,000
)
$
(0.07
)
Cash items impacting net income Supply chain
disruptions and related costs (b)
$
734,000
$
0.03
$
2,951,000
$
0.15
New product line start-up costs and transition expenses, and
severance (c)
840,000
0.04
923,000
0.05
Employee retention credit (d)
-
-
(5,104,000
)
(0.26
)
Tax effect (a)
(394,000
)
(0.02
)
308,000
0.02
Total cash items impacting net income
$
1,180,000
$
0.05
$
(922,000
)
$
(0.05
)
(a)
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.
(b)
For the three-months ended March
31, 2024, consists of $734,000 impacting gross profit.
For the three-months ended March
31, 2023, consists of $2,913,000 impacting gross profit and $38,000
included in operating expenses.
(c)
For the three-months ended March
31, 2024, consists of $840,000 included in operating expenses.
For the three-months ended March
31, 2023, consists of $923,000 included in operating expenses.
(d)
For the three-months ended March
31, 2023, consists of ($2,034,000) impacting gross profit and
($3,070,000) included in operating expenses.
Items Impacting Net Income for the
Twelve Months Ended March 31, 2024 and 2023
Exhibit 2
Twelve Months Ended March
31,
2024
2023
$
Per Share
$
Per Share
GAAP net loss
$
(49,244,000
)
$
(2.51
)
$
(4,207,000
)
$
(0.22
)
Non-cash items impacting net loss Core and finished
goods premium amortization
$
10,963,000
$
0.56
$
11,791,000
$
0.61
Revaluation - cores on customers' shelves
5,353,000
0.27
3,736,000
0.19
Share-based compensation expenses
4,700,000
0.24
4,685,000
0.24
Foreign exchange impact of lease liabilities and forward contracts
(3,814,000
)
(0.19
)
(9,291,000
)
(0.48
)
Change in fair value of compound net derivative liability and loss
on extinguishment of debt
(852,000
)
(0.04
)
-
-
Tax effect (a)
(4,088,000
)
(0.21
)
(2,730,000
)
(0.14
)
Tax valuation allowance
38,009,000
1.94
-
-
Total non-cash items impacting net loss
$
50,271,000
$
2.56
$
8,191,000
$
0.42
Cash items impacting net loss Supply chain
disruptions and related costs (b)
$
7,472,000
$
0.38
$
12,914,000
$
0.67
New product line start-up costs and transition expenses, and
severance (c)
1,820,000
0.09
3,565,000
0.18
Employee retention credit (d)
-
-
(5,104,000
)
(0.26
)
Tax effect (a)
(2,323,000
)
(0.12
)
(2,844,000
)
(0.15
)
Total cash items impacting net loss
$
6,969,000
$
0.36
$
8,531,000
$
0.44
(a)
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.
(b)
For the twelve-months ended March
31, 2024, consists of $7,472,000 impacting gross profit.
For the twelve-months ended March
31, 2023, consists of $11,485,000 impacting gross profit and
$1,429,000 included in operating expenses.
(c)
For the twelve-months ended March
31, 2024, consists of $1,820,000 included in operating
expenses.
For the twelve-months ended March
31, 2023, consists of $3,565,000 included in operating
expenses.
(d)
For the twelve-months ended March
31, 2023, consists of ($2,034,000) impacting gross profit and
($3,070,000) included in operating expenses.
Items Impacting Gross Profit for the
Three Months Ended March 31, 2024 and 2023
Exhibit 3
Three Months Ended March
31,
2024
2023
$
Gross Margin
$
Gross Margin
GAAP gross profit
$
34,793,000
18.4
%
$
36,151,000
18.6
%
Non-cash items impacting gross profit Core and
finished goods premium amortization
$
2,761,000
1.5
%
$
2,608,000
1.3
%
Revaluation - cores on customers' shelves
973,000
0.5
%
1,032,000
0.5
%
Total non-cash items impacting gross profit
$
3,734,000
2.0
%
$
3,640,000
1.9
%
Cash items impacting gross profit Supply chain
disruptions and related costs
$
734,000
0.4
%
$
2,913,000
1.5
%
Employee retention credit
-
-
(2,034,000
)
-1.0
%
Total cash items impacting gross profit
$
734,000
0.4
%
$
879,000
0.5
%
Items Impacting Gross Profit for the
Twelve Months Ended March 31, 2024 and 2023
Exhibit 4
Twelve Months Ended March
31,
2024
2023
$
Gross Margin
$
Gross Margin
GAAP gross profit
$
132,551,000
18.5
%
$
113,962,000
16.7
%
Non-cash items impacting gross profit Core and
finished goods premium amortization
$
10,963,000
1.5
%
$
11,791,000
1.7
%
Revaluation - cores on customers' shelves
5,353,000
0.7
%
3,736,000
0.5
%
Total non-cash items impacting gross profit
$
16,316,000
2.3
%
$
15,527,000
2.3
%
Cash items impacting gross profit Supply chain
disruptions and related costs
$
7,472,000
1.0
%
$
11,485,000
1.7
%
Employee retention credit
-
-
(2,034,000
)
-0.3
%
Total cash items impacting gross profit
$
7,472,000
1.0
%
$
9,451,000
1.4
%
Items Impacting EBITDA for the Three
and Twelve Months Ended March 31, 2024 and 2023
Exhibit 5
Three Months Ended March
31,
Twelve Months Ended March
31,
2024
2023
2024
2023
GAAP net income (loss)
$
1,338,000
$
1,459,000
$
(49,244,000
)
$
(4,207,000
)
Interest expense, net
14,640,000
11,880,000
60,040,000
39,555,000
Income tax expense (benefit)
(1,050,000
)
10,394,000
36,176,000
1,098,000
Depreciation and amortization
2,775,000
3,122,000
11,619,000
12,444,000
EBITDA
$
17,703,000
$
26,855,000
$
58,591,000
$
48,890,000
Non-cash items impacting EBITDA Core and finished
goods premium amortization
$
2,761,000
$
2,608,000
$
10,963,000
$
11,791,000
Revaluation - cores on customers' shelves
973,000
1,032,000
5,353,000
3,736,000
Share-based compensation expenses
432,000
1,164,000
4,700,000
4,685,000
Foreign exchange impact of lease liabilities and forward contracts
(1,155,000
)
(6,738,000
)
(3,814,000
)
(9,291,000
)
Change in fair value of compound net derivative liability and loss
on extinguishment of debt
(2,710,000
)
-
(852,000
)
-
Total non-cash items impacting EBITDA
$
301,000
$
(1,934,000
)
$
16,350,000
$
10,921,000
Cash items impacting EBITDA Supply chain disruptions
and related costs
$
734,000
$
2,951,000
$
7,472,000
$
12,914,000
New product line start-up costs and transition expenses, and
severance
840,000
923,000
1,820,000
3,565,000
Employee retention credit
-
(5,104,000
)
-
(5,104,000
)
Total cash items impacting EBITDA
$
1,574,000
$
(1,230,000
)
$
9,292,000
$
11,375,000
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version on businesswire.com: https://www.businesswire.com/news/home/20240611899769/en/
Gary S. Maier Vice President, Corporate Communications & IR
(310) 972-5124
Motorcar Parts and Assoc... (NASDAQ:MPAA)
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Motorcar Parts and Assoc... (NASDAQ:MPAA)
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