- Record Sales and Gross Profit with Strong
Cash Flow Generation -
Full-Year Outlook Remains on Track
Motorcar Parts of America, Inc. (Nasdaq: MPAA) today
reported results for its fiscal 2025 second quarter and six-month
period ended September 30, 2024, with a continued favorable
full-year outlook supported by record sales and gross profit, and
the ongoing benefits of strategic initiatives to further enhance
profitability.
Key highlights for the fiscal second quarter.
- Net sales increased 5.9 percent to a record $208.2
million.
- Gross profit increased to a record $41.3 million, impacted by
certain one-time expenses of $2.7 million for onboarding new
business, and $1.3 million of transition expenses related to the
recent strategic relocation of certain operations with expected
annualized savings of $7.1 million.
- Generated cash from operating activities of $22.9 million and
reduced net bank debt by $22.0 million.
- Results were impacted by non-cash items totaling $10.6 million
as detailed in the exhibits.
Fiscal 2025 Second Quarter Results
Net sales for the fiscal 2025 second quarter increased
5.9 percent to an all-time record $208.2 million from $196.6
million in the prior year.
Gross profit for the fiscal 2025 second quarter increased
to a record $41.3 million from $41.1 million a year earlier. Gross
margin for the fiscal 2025 second quarter was 19.8 percent compared
with 20.9 percent a year earlier. Gross margin for the fiscal 2025
second quarter was impacted by $3.8 million, or 1.8 percent, of
non-cash expenses, and $1.3 million, or 0.6 percent, of one-time
cash expenses, as detailed in Exhibit 3. In addition to the items
detailed in Exhibit 3, gross profit for the current quarter was
also impacted by $2.7 million, or 1.3 percent, of certain one-time
expenses for onboarding new business.
Interest expense for the fiscal second quarter decreased by $1.2
million to $14.2 million from $15.4 million a year ago, primarily
due to lower average outstanding balances under the company’s
credit facility and lower interest rates.
Net loss for the fiscal 2025 second quarter was $3.0 million, or
$0.15 per share, impacted by non-cash expenses of $8.0 million, or
$0.40 per share, and one-time cash expenses of $1.1 million, or
$0.06 per share, compared with a net loss of $2.0 million, or $0.10
per share, a year ago, impacted by various items detailed in
Exhibit 1. In addition to the items detailed in Exhibit 1, as
previously explained, results for the current quarter were also
impacted by $2.7 million, or $0.10 per share, of certain one-time
expenses for onboarding new business.
“As we enter the second half of fiscal 2025, we remain
optimistic about our year-over-year outlook. We anticipate
continued improvements to gross margins, gross profit and cash flow
in the quarters ahead, supported by opportunities to further
leverage our leadership position within the non-discretionary
aftermarket parts market. Our ongoing strategic actions throughout
the entire organization are gaining traction as expected, enhanced
by volume increases and improved operating efficiencies.
“While there are a variety of factors related to financial
performance beyond our control, such as non-cash items and interest
rates, which are improving, the underlying fundamentals of our
business continue to be strong. We remain focused on enhancing
shareholder value and continued success in the second half,” said
Selwyn Joffe, chairman, president, and chief executive officer.
The company generated approximately $22.9 million of cash from
operating activities during fiscal 2025 second quarter and reduced
net bank debt by $22.0 million to $114.3 million from $136.3
million.
Six-Month Results
Net sales for the fiscal 2025 six-month period increased
6.1 percent to a record $378.1 million from $356.3 million a year
ago.
Gross profit for the fiscal 2025 six-month period
increased to a record $70.5 million from $67.7 million a year
earlier. Gross margin for the fiscal 2025 six-month period was 18.6
percent compared with 19.0 percent a year earlier. Gross margin for
the fiscal 2025 six-month period was impacted by $6.9 million, or
1.8 percent, of non-cash expenses, and $1.3 million, or 0.3
percent, of one-time cash expenses, as detailed in Exhibit 4. In
addition to the items detailed in Exhibit 4, gross profit for the
current six-month period was also impacted by $2.7 million, or 0.7
percent, of certain one-time expenses for onboarding new
business.
Interest expense increased by $1.5 million for the six months to
$28.6 million from $27.1 million a year ago, primarily due to
increased collection of receivables utilizing accounts receivable
discount programs resulting from higher sales, partially offset by
lower average outstanding balances under the company’s credit
facility and lower interest rates.
Net loss for the fiscal 2025 six-month period was $21.0 million,
or $1.07 per share, impacted by non-cash expenses of $17.4 million,
or $0.88 per share, and one-time cash expenses of $3.3 million, or
$0.17 per share, compared with a net loss of $3.4 million, or $0.17
per share, a year ago, impacted by various items detailed in
Exhibit 2. In addition to the items detailed in Exhibit 2, as
previously explained, results for the current six-month period were
also impacted by $2.7 million, or $0.10 per share, of certain
one-time expenses for onboarding new business.
Further Considerations
- Continued sales volume increases:
- Ordering activity has gained momentum.
- The company’s fundamentals are improving.
- Margin improvement:
- Enhanced by multiple rounds of price increases.
- Improving overhead absorption as brake-related business gains
further momentum.
- Improving operational efficiencies.
- Positive cash flow outlook.
Fiscal 2025 Guidance
As noted in the company’s prior fiscal year 2024 earnings press
release, net sales for the fiscal year ending March 31, 2025 are
estimated to be between $746 million to $766 million, representing
between 3.9 percent and 6.7 percent year-over-year growth. The
company expects gross margin accretion from operating efficiencies,
increased volume and cost absorption. Operating income is expected
to be between $79 million and $84 million, before certain non-cash
items and one-time expenses. 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 November 12, 2024
through 8:59 p.m. Pacific time on November 19, 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 2024 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
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30, 2024 2023
2024 2023 Net sales
$
208,186,000
$
196,639,000
$
378,073,000
$
356,344,000
Cost of goods sold
166,909,000
155,491,000
307,622,000
288,629,000
Gross profit
41,277,000
41,148,000
70,451,000
67,715,000
Operating expenses: General and administrative
15,052,000
14,325,000
31,722,000
26,927,000
Sales and marketing
5,834,000
5,688,000
11,283,000
11,107,000
Research and development
2,443,000
2,438,000
4,876,000
4,813,000
Foreign exchange impact of lease liabilities and forward contracts
5,428,000
4,760,000
16,506,000
490,000
Total operating expenses
28,757,000
27,211,000
64,387,000
43,337,000
Operating income
12,520,000
13,937,000
6,064,000
24,378,000
Other expenses: Interest expense, net
14,182,000
15,383,000
28,569,000
27,103,000
Change in fair value of compound net derivative liability
380,000
390,000
(2,200,000
)
530,000
Loss on extinguishment of debt
-
168,000
-
168,000
Total other expenses
14,562,000
15,941,000
26,369,000
27,801,000
Loss before income tax expense (benefit)
(2,042,000
)
(2,004,000
)
(20,305,000
)
(3,423,000
)
Income tax expense (benefit)
912,000
(46,000
)
734,000
(55,000
)
Net loss
$
(2,954,000
)
$
(1,958,000
)
$
(21,039,000
)
$
(3,368,000
)
Basic net loss per share
$
(0.15
)
$
(0.10
)
$
(1.07
)
$
(0.17
)
Diluted net loss per share
$
(0.15
)
$
(0.10
)
$
(1.07
)
$
(0.17
)
Weighted average number of shares outstanding: Basic
19,760,028
19,599,162
19,717,517
19,554,142
Diluted
19,760,028
19,599,162
19,717,517
19,554,142
MOTORCAR PARTS OF AMERICA,
INC. AND SUBSIDIARIES
Consolidated Balance
Sheets
September 30, 2024 March 31, 2024
ASSETS (Unaudited) Current assets: Cash and cash
equivalents
$
10,413,000
$
13,974,000
Short-term investments
1,901,000
1,837,000
Accounts receivable — net
112,699,000
96,296,000
Inventory — net
378,776,000
397,328,000
Contract assets
24,956,000
27,139,000
Prepaid expenses and other current assets
19,457,000
23,885,000
Total current assets
548,202,000
560,459,000
Plant and equipment — net
32,561,000
38,338,000
Operating lease assets
71,792,000
83,973,000
Long-term deferred income taxes
5,637,000
2,976,000
Long-term contract assets
321,303,000
320,282,000
Goodwill and intangible assets — net
3,984,000
4,274,000
Other assets
2,763,000
1,700,000
TOTAL ASSETS
$
986,242,000
$
1,012,002,000
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
Accounts payable and accrued liabilities
$
168,548,000
$
185,182,000
Customer finished goods returns accrual
37,495,000
38,312,000
Contract liabilities
45,517,000
37,591,000
Revolving loan
124,691,000
128,000,000
Other current liabilities
8,419,000
7,021,000
Operating lease liabilities
9,272,000
8,319,000
Total current liabilities
393,942,000
404,425,000
Convertible notes, related party
32,340,000
30,776,000
Long-term contract liabilities
219,891,000
212,068,000
Long-term deferred income taxes
573,000
511,000
Long-term operating lease liabilities
69,419,000
72,240,000
Other liabilities
6,114,000
6,872,000
Total liabilities
722,279,000
726,892,000
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; 19,776,373 and 19,662,380 shares issued and outstanding
at September 30, 2024 and March 31, 2024, respectively
198,000
197,000
Additional paid-in capital
238,089,000
236,255,000
Retained earnings
18,464,000
39,503,000
Accumulated other comprehensive income
7,212,000
9,155,000
Total shareholders' equity
263,963,000
285,110,000
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
986,242,000
$
1,012,002,000
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 six
months ended September 30, 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 September 30, 2024 and 2023
Exhibit 1
Three Months Ended September 30,
2024
2023
$ Per Share $ Per Share GAAP net loss
$
(2,954,000
)
$
(0.15
)
$
(1,958,000
)
$
(0.10
)
Non-cash items impacting net income Core and finished
goods premium amortization
$
2,621,000
$
0.13
$
2,707,000
$
0.14
Revaluation - cores on customers' shelves
1,164,000
0.06
1,995,000
0.10
Share-based compensation expenses
1,016,000
0.05
1,533,000
0.08
Foreign exchange impact of lease liabilities and forward contracts
5,428,000
0.27
4,760,000
0.24
Change in fair value of compound net derivative liability and loss
on extinguishment of debt
380,000
0.02
558,000
0.03
Tax effect (a)
(2,652,000
)
(0.13
)
(2,888,000
)
(0.15
)
Total non-cash items impacting net income
$
7,957,000
$
0.40
$
8,665,000
$
0.44
Cash items impacting net income Supply chain
disruptions and related costs (b)
$
-
$
-
$
3,199,000
$
0.16
New product line start-up costs and transition expenses, and
severance and other (c)
1,498,000
0.08
349,000
0.02
Tax effect (a)
(375,000
)
(0.02
)
(887,000
)
(0.05
)
Total cash items impacting net income
$
1,123,000
$
0.06
$
2,661,000
$
0.14
(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 September 30,
2023, consists of $3,199,000 impacting gross profit.
(c)
For the three months ended September 30,
2024, consists of $1,298,000 impacting gross profit and $200,000
included in operating expenses.
For the three months ended September 30, 2023, consists of $349,000
included in operating expenses.
Items Impacting Net Income for the Six
Months Ended September 30, 2024 and 2023
Exhibit 2
Six Months Ended September 30,
2024
2023
$ Per Share $ Per Share GAAP net loss
$
(21,039,000
)
$
(1.07
)
$
(3,368,000
)
$
(0.17
)
Non-cash items impacting net income Core and finished
goods premium amortization
$
5,349,000
$
0.27
$
5,364,000
$
0.27
Revaluation - cores on customers' shelves
1,558,000
0.08
2,773,000
0.14
Share-based compensation expenses
2,016,000
0.10
2,843,000
0.15
Foreign exchange impact of lease liabilities and forward contracts
16,506,000
0.84
490,000
0.03
Change in fair value of compound net derivative liability and loss
on extinguishment of debt
(2,200,000
)
(0.11
)
698,000
0.04
Tax effect (a)
(5,807,000
)
(0.29
)
(3,042,000
)
(0.16
)
Total non-cash items impacting net income
$
17,422,000
$
0.88
$
9,126,000
$
0.47
Cash items impacting net income Supply chain
disruptions and related costs (b)
$
-
$
-
$
5,183,000
$
0.27
New product line start-up costs and transition expenses, and
severance and other (c)
4,438,000
0.23
684,000
0.03
Tax effect (a)
(1,110,000
)
(0.06
)
(1,467,000
)
(0.08
)
Total cash items impacting net income
$
3,328,000
$
0.17
$
4,400,000
$
0.23
(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 six months ended September 30,
2023, consists of $5,183,000 impacting gross profit.
(c)
For the six months ended September 30,
2024, consists of $1,298,000 impacting gross profit and $3,140,000
included in operating expenses.
For the six months ended September 30,
2023, consists of $684,000 included in operating expenses.
Items Impacting Gross Profit for the
Three Months Ended September 30, 2024 and 2023
Exhibit 3
Three Months Ended September 30,
2024
2023
$ Gross Margin $ Gross Margin GAAP
gross profit
$
41,277,000
19.8
%
$
41,148,000
20.9
%
Non-cash items impacting gross profit Core and
finished goods premium amortization
$
2,621,000
1.3
%
$
2,707,000
1.4
%
Revaluation - cores on customers' shelves
1,164,000
0.6
%
1,995,000
1.0
%
Total non-cash items impacting gross profit
$
3,785,000
1.8
%
$
4,702,000
2.4
%
Cash items impacting gross profit Supply chain
disruptions and related costs
$
-
-
$
3,199,000
1.6
%
New product line start-up costs and transition expenses
1,298,000
0.6
%
-
-
Total cash items impacting gross profit
$
1,298,000
0.6
%
$
3,199,000
1.6
%
Items Impacting Gross Profit for the
Six Months Ended September 30, 2024 and 2023
Exhibit 4
Six Months Ended September 30,
2024
2023
$ GrossMargin $ GrossMargin GAAP gross
profit
$
70,451,000
18.6
%
$
67,715,000
19.0
%
Non-cash items impacting gross profit Core and
finished goods premium amortization
$
5,349,000
1.4
%
$
5,364,000
1.5
%
Revaluation - cores on customers' shelves
1,558,000
0.4
%
2,773,000
0.8
%
Total non-cash items impacting gross profit
$
6,907,000
1.8
%
$
8,137,000
2.3
%
Cash items impacting gross profit Supply chain
disruptions and related costs
$
-
-
$
5,183,000
1.5
%
New product line start-up costs and transition expenses
1,298,000
0.3
%
-
-
Total cash items impacting gross profit
$
1,298,000
0.3
%
$
5,183,000
1.5
%
Items Impacting EBITDA for the Three
and Six Months Ended September 30, 2024 and 2023
Exhibit 5
Three Months Ended September 30, Six Months Ended
September 30,
2024
2023
2024
2023
GAAP net loss
$
(2,954,000
)
$
(1,958,000
)
$
(21,039,000
)
$
(3,368,000
)
Interest expense, net
14,182,000
15,383,000
28,569,000
27,103,000
Income tax expense (benefit)
912,000
(46,000
)
734,000
(55,000
)
Depreciation and amortization
2,601,000
2,933,000
5,330,000
5,966,000
EBITDA
$
14,741,000
$
16,312,000
$
13,594,000
$
29,646,000
Non-cash items impacting EBITDA Core and finished
goods premium amortization
$
2,621,000
$
2,707,000
$
5,349,000
$
5,364,000
Revaluation - cores on customers' shelves
1,164,000
1,995,000
1,558,000
2,773,000
Share-based compensation expenses
1,016,000
1,533,000
2,016,000
2,843,000
Foreign exchange impact of lease liabilities and forward contracts
5,428,000
4,760,000
16,506,000
490,000
Change in fair value of compound net derivative liability and loss
on extinguishment of debt
380,000
558,000
(2,200,000
)
698,000
Total non-cash items impacting EBITDA
$
10,609,000
$
11,553,000
$
23,229,000
$
12,168,000
Cash items impacting EBITDA Supply chain disruptions
and related costs
$
-
$
3,199,000
$
-
$
5,183,000
New product line start-up costs and transition expenses, and
severance and other
1,498,000
349,000
4,438,000
684,000
Total cash items impacting EBITDA
$
1,498,000
$
3,548,000
$
4,438,000
$
5,867,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241112790410/en/
Gary S. Maier Vice President, Corporate Communications & IR
(310) 972-5124
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