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Yahoo
8 hours ago
- Automotive
- Yahoo
Motorcar Parts of America Reports Fiscal Year Results
- Record Sales and Gross Profit with Strong Cash Flow Generation - LOS ANGELES, June 09, 2025--(BUSINESS WIRE)--Motorcar Parts of America, Inc. (Nasdaq: MPAA) today reported strong results for its fiscal 2025 fourth quarter, with record net sales and gross profit, and strong cash flow generation for the year ended March 31, 2025. Key highlights for the fiscal year Net sales increased 5.5 percent to a record $757.4 million. Gross profit increased 16.1 percent to a record $153.8 million. Generated cash from operating activities of $45.5 million and reduced net bank debt by $32.6 million to $81.4 million. Repurchased 542,134 shares for $4.8 million. Fiscal 2025 Fourth Quarter Results Net sales for the fiscal 2025 fourth quarter increased 1.9 percent to $193.1 million from $189.5 million in the prior year. Gross profit for the fiscal 2025 fourth quarter increased 10.6 percent to a fourth quarter record $38.5 million from $34.8 million a year earlier. Gross margin for the fiscal 2025 fourth quarter was 19.9 percent compared with 18.4 percent a year earlier. Gross margin for the fiscal 2025 fourth quarter was impacted by $3.2 million, or 1.7 percent, of non-cash expenses, and $4.6 million, or 2.4 percent, for certain tariffs costs paid for products sold before price increases were effective, as detailed in Exhibit 3. Interest expense for the fiscal fourth quarter decreased by $2.1 million to $12.5 million from $14.6 million a year ago, impacted by lower average outstanding balances under the company's credit facility and lower interest rates. Net loss for the fiscal 2025 fourth quarter was $722,000, or $0.04 per share, reflecting the impact of $4.6 million, or $0.24 per share pre-tax, for certain tariffs costs paid for products sold before price increases were effective, as mentioned above. Net loss was also impacted by certain non-cash items of $2.6 million, or $0.14 per share, as detailed in Exhibit 1. Net income for the prior year was $1.3 million, including the impact of non-cash expenses and cash expenses as detailed in Exhibit 1. "We remain focused on continuing to execute and capitalize on our leadership position within the non-discretionary automotive aftermarket business, following a solid fiscal year," said Selwyn Joffe, chairman, president, and chief executive officer. He noted that the company is working with its suppliers and customers to address the current geopolitical environment and related challenges -- specifically tariffs and pricing. The company's solid financial position and cash flow generation support its competitive position and anticipated future growth. Joffe noted that over the last several years, the company proactively has focused on significantly reducing its reliance on Chinese suppliers, which today represents less than 25 percent, and has an established footprint in North America that could be utilized to further reduce this reliance going forward. Joffe highlighted that the company generated cash of approximately $45.5 million from operating activities during fiscal 2025, reduced net bank debt by $32.6 million for the fiscal year to $81.4 million from $114.0 million and also utilized $4.8 million for share repurchases. Twelve-Month Results Net sales for fiscal 2025 increased 5.5 percent to a record $757.4 million from $717.7 million a year ago. Gross profit for fiscal 2025 increased 16.1 percent to a record $153.8 million from $132.6 million a year earlier. Gross margin for fiscal 2025 was 20.3 percent compared with 18.5 percent a year earlier. Gross margin for fiscal 2025 was impacted by $13.5 million, or 1.8 percent, of non-cash expenses, and $5.9 million, or 0.8 percent, of one-time cash expenses, as detailed in Exhibit 4. Interest expense decreased by $4.5 million for fiscal 2025 to $55.6 million from $60.0 million a year ago, impacted by lower average outstanding balances under the company's credit facility and lower interest rates. Net loss for fiscal 2025 was $19.5 million, or $0.99 per share, including the impact of non-cash expenses of $25.0 million, or $1.27 per share, and one-time cash expenses of $6.9 million, or $0.35 per share, as detailed in Exhibit 2. Net loss for the prior fiscal year was $49.2 million, or $2.51 per share, including the impact of non-cash expenses of $50.3 million, or $2.56 per share, and cash expenses of $7.0 million, or $0.36 per share, as detailed in Exhibit 2. Share Repurchase During fiscal 2025 fourth quarter, the company repurchased 274,004 shares for $2.7 million at an average share price of $9.98, and for the full fiscal year, the company repurchased 542,134 shares for $4.8 million at an average share price of $8.91 under its current authorization program, supported by solid cash generation from operating activities. The company anticipates further opportunities to build shareholder value through enhanced profitability and strong cash generation. Fiscal 2026 Guidance Motorcar Parts of America expects net sales for the fiscal year ending March 31, 2026 to be between $780 million to $800 million, representing between 3.0 percent and 5.6 percent year-over-year growth. Operating income is expected to be between $86 million and $91 million, representing between 4.3 percent and 10.4 percent year-over-year growth. The company estimates depreciation and amortization will be approximately $11 million. These estimates do not include certain non-cash items and one-time expenses and exclude the impact of tariffs recently enacted due to the uncertainty and continuing changes. 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 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 A telephone playback of the conference call will also be available from approximately 1:00 p.m. Pacific time on June 9, 2025 through 8:59 p.m. Pacific time on June 16, 2025 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 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 2025 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, 2025 2024 2025 2024 (Unaudited) Net sales $ 193,105,000 $ 189,478,000 $ 757,354,000 $ 717,684,000 Cost of goods sold 154,610,000 154,685,000 603,526,000 585,133,000 Gross profit 38,495,000 34,793,000 153,828,000 132,551,000 Operating expenses: General and administrative 16,113,000 15,644,000 64,047,000 57,769,000 Sales and marketing 5,657,000 5,443,000 22,561,000 22,481,000 Research and development 3,521,000 2,643,000 11,405,000 9,995,000 Foreign exchange impact of lease liabilities and forward contracts (3,074,000 ) (1,155,000 ) 15,892,000 (3,814,000 ) Total operating expenses 22,217,000 22,575,000 113,905,000 86,431,000 Operating income 16,278,000 12,218,000 39,923,000 46,120,000 Other expenses: Interest expense, net 12,546,000 14,640,000 55,550,000 60,040,000 Change in fair value of compound net derivative liability 2,520,000 (2,710,000 ) 60,000 (1,020,000 ) Loss on extinguishment of debt - - - 168,000 Total other expenses 15,066,000 11,930,000 55,610,000 59,188,000 Income (loss) before income tax expense (benefit) 1,212,000 288,000 (15,687,000 ) (13,068,000 ) Income tax expense (benefit) 1,934,000 (1,050,000 ) 3,783,000 36,176,000 Net (loss) income $ (722,000 ) $ 1,338,000 $ (19,470,000 ) $ (49,244,000 ) Basic net (loss) income per share $ (0.04 ) $ 0.07 $ (0.99 ) $ (2.51 ) Diluted net loss per share $ (0.04 ) $ (0.03 ) $ (0.99 ) $ (2.51 ) Weighted average number of shares outstanding: Basic 19,519,836 19,662,380 19,685,322 19,601,204 Diluted 19,519,836 22,085,292 19,685,322 19,601,204 MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES Consolidated Balance Sheets March 31, 2025 March 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 9,429,000 $ 13,974,000 Short-term investments 1,881,000 1,837,000 Accounts receivable — net 91,064,000 96,296,000 Inventory — net 341,209,000 377,040,000 Inventory unreturned 18,460,000 20,288,000 Contract assets 29,606,000 27,139,000 Income tax receivable 4,208,000 5,683,000 Prepaid expenses and other current assets 15,614,000 18,202,000 Total current assets 511,471,000 560,459,000 Plant and equipment — net 31,990,000 38,338,000 Operating lease assets 66,603,000 83,973,000 Deferred income taxes 4,569,000 2,976,000 Long-term contract assets 336,268,000 320,282,000 Goodwill 3,205,000 3,205,000 Intangible assets — net 552,000 1,069,000 Other assets 2,978,000 1,700,000 TOTAL ASSETS $ 957,636,000 $ 1,012,002,000 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 141,906,000 $ 154,977,000 Accrued liabilities 30,211,000 30,205,000 Customer finished goods returns accrual 34,411,000 38,312,000 Contract liabilities 38,158,000 37,591,000 Revolving loan 90,787,000 128,000,000 Other current liabilities 5,570,000 7,021,000 Operating lease liabilities 9,982,000 8,319,000 Total current liabilities 351,025,000 404,425,000 Convertible notes, related party 35,207,000 30,776,000 Contract liabilities, less current portion 241,404,000 212,068,000 Deferred income taxes 362,000 511,000 Operating lease liabilities, less current portion 65,308,000 72,240,000 Other liabilities 6,631,000 6,872,000 Total liabilities 699,937,000 726,892,000 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; 19,435,706 and 19,662,380 shares issued and outstanding at March 31, 2025 and 2024, respectively 194,000 197,000 Additional paid-in capital 234,413,000 236,255,000 Retained earnings 20,033,000 39,503,000 Accumulated other comprehensive income 3,059,000 9,155,000 Total shareholders' equity 257,699,000 285,110,000 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 957,636,000 $ 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 twelve months ended March 31, 2025 and 2024. 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, 2025 and 2024 Exhibit 1 Three Months Ended March 31, 2025 2024 $ Per DilutedShare $ Per DilutedShare GAAP net (loss) income $ (722,000 ) $ (0.04 ) $ 1,338,000 $ (0.03 ) Non-cash items impacting net income Core and finished goods premium amortization $ 2,725,000 $ 0.14 $ 2,761,000 $ 0.13 Revaluation - cores on customers' shelves 489,000 0.03 973,000 0.04 Share-based compensation expenses 868,000 0.04 432,000 0.02 Foreign exchange impact of lease liabilities and forward contracts (3,074,000 ) (0.16 ) (1,155,000 ) (0.05 ) Change in fair value of compound net derivative liability 2,520,000 0.13 (2,710,000 ) (0.12 ) Tax effect (a) (882,000 ) (0.05 ) (75,000 ) (0.00 ) Tax valuation allowance - - 548,000 0.02 Total non-cash items impacting net income $ 2,646,000 $ 0.14 $ 774,000 $ 0.04 Cash items impacting net income Supply chain disruptions and related costs (b) $ - $ - $ 734,000 $ 0.03 New product line start-up costs and transition expenses, and severance and other (c) 160,000 0.01 840,000 0.04 Tariff costs paid for products sold before price increases were effective 4,607,000 0.24 - - Tax effect (a) (1,192,000 ) (0.06 ) (394,000 ) (0.02 ) Total cash items impacting net income $ 3,575,000 $ 0.18 $ 1,180,000 $ 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. (c) For the three months ended March 31, 2025, consists of $160,000 included in operating expenses. For the three months ended March 31, 2024, consists of $840,000 included in operating expenses. Items Impacting Net Income for the Twelve Months Ended March 31, 2025 and 2024 Exhibit 2 Twelve Months Ended March 31, 2025 2024 $ Per DilutedShare $ Per DilutedShare GAAP net loss $ (19,470,000 ) $ (0.99 ) $ (49,244,000 ) $ (2.51 ) Non-cash items impacting net income Core and finished goods premium amortization $ 10,738,000 $ 0.55 $ 10,963,000 $ 0.56 Revaluation - cores on customers' shelves 2,805,000 0.14 5,353,000 0.27 Share-based compensation expenses 3,877,000 0.20 4,700,000 0.24 Foreign exchange impact of lease liabilities and forward contracts 15,892,000 0.81 (3,814,000 ) (0.19 ) Change in fair value of compound net derivative liability and loss on extinguishment of debt 60,000 0.00 (852,000 ) (0.04 ) Tax effect (a) (8,343,000 ) (0.42 ) (4,088,000 ) (0.21 ) Tax valuation allowance - - 38,009,000 1.94 Total non-cash items impacting net income $ 25,029,000 $ 1.27 $ 50,271,000 $ 2.56 Cash items impacting net income Supply chain disruptions and related costs (b) $ - $ - $ 7,472,000 $ 0.38 New product line start-up costs and transition expenses, and severance and other (c) 4,598,000 0.23 1,820,000 0.09 Tariff costs paid for products sold before price increases were effective 4,607,000 0.23 - - Tax effect (a) (2,301,000 ) (0.12 ) (2,323,000 ) (0.12 ) Total cash items impacting net income $ 6,904,000 $ 0.35 $ 6,969,000 $ 0.36 (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. (c) For the twelve months ended March 31, 2025, consists of $1,298,000 impacting gross profit and $3,300,000 included in operating expenses. For the twelve months ended March 31, 2024, consists of $1,820,000 included in operating expenses. Items Impacting Gross Profit for the Three Months Ended March 31, 2025 and 2024 Exhibit 3 Three Months Ended March 31, 2025 2024 $ Gross Margin $ Gross Margin GAAP gross profit $ 38,495,000 19.9% $ 34,793,000 18.4% Non-cash items impacting gross profit Core and finished goods premium amortization $ 2,725,000 1.4% $ 2,761,000 1.5% Revaluation - cores on customers' shelves 489,000 0.3% 973,000 0.5% Total non-cash items impacting gross profit $ 3,214,000 1.7% $ 3,734,000 2.0% Cash items impacting gross profit Supply chain disruptions and related costs $ - - $ 734,000 0.4% Tariff costs paid for products sold before price increases were effective 4,607,000 2.4% - - Total cash items impacting gross profit $ 4,607,000 2.4% $ 734,000 0.4% Items Impacting Gross Profit for the Twelve Months Ended March 31, 2025 and 2024 Exhibit 4 Twelve Months Ended March 31, 2025 2024 $ Gross Margin $ Gross Margin GAAP gross profit $ 153,828,000 20.3% $ 132,551,000 18.5% Non-cash items impacting gross profit Core and finished goods premium amortization $ 10,738,000 1.4% $ 10,963,000 1.5% Revaluation - cores on customers' shelves 2,805,000 0.4% 5,353,000 0.7% Total non-cash items impacting gross profit $ 13,543,000 1.8% $ 16,316,000 2.3% Cash items impacting gross profit Supply chain disruptions and related costs $ - - $ 7,472,000 1.0% New product line start-up costs and transition expenses 1,298,000 0.2% - - Tariff costs paid for products sold before price increases were effective 4,607,000 0.6% - - Total cash items impacting gross profit $ 5,905,000 0.8% $ 7,472,000 1.0% Items Impacting EBITDA for the Three and Twelve Months Ended March 31, 2025 and 2024 Exhibit 5 Three Months Ended March 31, Twelve Months Ended March 31, 2025 2024 2025 2024 GAAP net (loss) income $ (722,000 ) $ 1,338,000 $ (19,470,000 ) $ (49,244,000 ) Interest expense, net 12,546,000 14,640,000 55,550,000 60,040,000 Income tax expense (benefit) 1,934,000 (1,050,000 ) 3,783,000 36,176,000 Depreciation and amortization 2,538,000 2,775,000 10,400,000 11,619,000 EBITDA $ 16,296,000 $ 17,703,000 $ 50,263,000 $ 58,591,000 Non-cash items impacting EBITDA Core and finished goods premium amortization $ 2,725,000 $ 2,761,000 $ 10,738,000 $ 10,963,000 Revaluation - cores on customers' shelves 489,000 973,000 2,805,000 5,353,000 Share-based compensation expenses 868,000 432,000 3,877,000 4,700,000 Foreign exchange impact of lease liabilities and forward contracts (3,074,000 ) (1,155,000 ) 15,892,000 (3,814,000 ) Change in fair value of compound net derivative liability and loss on extinguishment of debt 2,520,000 (2,710,000 ) 60,000 (852,000 ) Total non-cash items impacting EBITDA $ 3,528,000 $ 301,000 $ 33,372,000 $ 16,350,000 Cash items impacting EBITDA Supply chain disruptions and related costs $ - $ 734,000 $ - $ 7,472,000 New product line start-up costs and transition expenses, and severance and other 160,000 840,000 4,598,000 1,820,000 Tariff costs paid for products sold before price increases were effective 4,607,000 - 4,607,000 - Total cash items impacting EBITDA $ 4,767,000 $ 1,574,000 $ 9,205,000 $ 9,292,000 View source version on Contacts Gary S. MaierVice President, Corporate Communications & IR(310) 972-5124
Business Wire
8 hours ago
- Automotive
- Business Wire
Motorcar Parts of America Reports Fiscal Year Results
LOS ANGELES--(BUSINESS WIRE)--Motorcar Parts of America, Inc. (Nasdaq: MPAA) today reported strong results for its fiscal 2025 fourth quarter, with record net sales and gross profit, and strong cash flow generation for the year ended March 31, 2025. Key highlights for the fiscal year Net sales increased 5.5 percent to a record $757.4 million. Gross profit increased 16.1 percent to a record $153.8 million. Generated cash from operating activities of $45.5 million and reduced net bank debt by $32.6 million to $81.4 million. Repurchased 542,134 shares for $4.8 million. Fiscal 2025 Fourth Quarter Results Net sales for the fiscal 2025 fourth quarter increased 1.9 percent to $193.1 million from $189.5 million in the prior year. Gross profit for the fiscal 2025 fourth quarter increased 10.6 percent to a fourth quarter record $38.5 million from $34.8 million a year earlier. Gross margin for the fiscal 2025 fourth quarter was 19.9 percent compared with 18.4 percent a year earlier. Gross margin for the fiscal 2025 fourth quarter was impacted by $3.2 million, or 1.7 percent, of non-cash expenses, and $4.6 million, or 2.4 percent, for certain tariffs costs paid for products sold before price increases were effective, as detailed in Exhibit 3. Interest expense for the fiscal fourth quarter decreased by $2.1 million to $12.5 million from $14.6 million a year ago, impacted by lower average outstanding balances under the company's credit facility and lower interest rates. Net loss for the fiscal 2025 fourth quarter was $722,000, or $0.04 per share, reflecting the impact of $4.6 million, or $0.24 per share pre-tax, for certain tariffs costs paid for products sold before price increases were effective, as mentioned above. Net loss was also impacted by certain non-cash items of $2.6 million, or $0.14 per share, as detailed in Exhibit 1. Net income for the prior year was $1.3 million, including the impact of non-cash expenses and cash expenses as detailed in Exhibit 1. 'We remain focused on continuing to execute and capitalize on our leadership position within the non-discretionary automotive aftermarket business, following a solid fiscal year,' said Selwyn Joffe, chairman, president, and chief executive officer. He noted that the company is working with its suppliers and customers to address the current geopolitical environment and related challenges -- specifically tariffs and pricing. The company's solid financial position and cash flow generation support its competitive position and anticipated future growth. Joffe noted that over the last several years, the company proactively has focused on significantly reducing its reliance on Chinese suppliers, which today represents less than 25 percent, and has an established footprint in North America that could be utilized to further reduce this reliance going forward. Joffe highlighted that the company generated cash of approximately $45.5 million from operating activities during fiscal 2025, reduced net bank debt by $32.6 million for the fiscal year to $81.4 million from $114.0 million and also utilized $4.8 million for share repurchases. Twelve-Month Results Net sales for fiscal 2025 increased 5.5 percent to a record $757.4 million from $717.7 million a year ago. Gross profit for fiscal 2025 increased 16.1 percent to a record $153.8 million from $132.6 million a year earlier. Gross margin for fiscal 2025 was 20.3 percent compared with 18.5 percent a year earlier. Gross margin for fiscal 2025 was impacted by $13.5 million, or 1.8 percent, of non-cash expenses, and $5.9 million, or 0.8 percent, of one-time cash expenses, as detailed in Exhibit 4. Interest expense decreased by $4.5 million for fiscal 2025 to $55.6 million from $60.0 million a year ago, impacted by lower average outstanding balances under the company's credit facility and lower interest rates. Net loss for fiscal 2025 was $19.5 million, or $0.99 per share, including the impact of non-cash expenses of $25.0 million, or $1.27 per share, and one-time cash expenses of $6.9 million, or $0.35 per share, as detailed in Exhibit 2. Net loss for the prior fiscal year was $49.2 million, or $2.51 per share, including the impact of non-cash expenses of $50.3 million, or $2.56 per share, and cash expenses of $7.0 million, or $0.36 per share, as detailed in Exhibit 2. Share Repurchase During fiscal 2025 fourth quarter, the company repurchased 274,004 shares for $2.7 million at an average share price of $9.98, and for the full fiscal year, the company repurchased 542,134 shares for $4.8 million at an average share price of $8.91 under its current authorization program, supported by solid cash generation from operating activities. The company anticipates further opportunities to build shareholder value through enhanced profitability and strong cash generation. Fiscal 2026 Guidance Motorcar Parts of America expects net sales for the fiscal year ending March 31, 2026 to be between $780 million to $800 million, representing between 3.0 percent and 5.6 percent year-over-year growth. Operating income is expected to be between $86 million and $91 million, representing between 4.3 percent and 10.4 percent year-over-year growth. The company estimates depreciation and amortization will be approximately $11 million. These estimates do not include certain non-cash items and one-time expenses and exclude the impact of tariffs recently enacted due to the uncertainty and continuing changes. 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 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 A telephone playback of the conference call will also be available from approximately 1:00 p.m. Pacific time on June 9, 2025 through 8:59 p.m. Pacific time on June 16, 2025 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 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 2025 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 Balance Sheets March 31, 2025 March 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 9,429,000 $ 13,974,000 Short-term investments 1,881,000 1,837,000 Accounts receivable — net 91,064,000 96,296,000 Inventory — net 341,209,000 377,040,000 Inventory unreturned 18,460,000 20,288,000 Contract assets 29,606,000 27,139,000 Income tax receivable 4,208,000 5,683,000 Prepaid expenses and other current assets 15,614,000 18,202,000 Total current assets 511,471,000 560,459,000 Plant and equipment — net 31,990,000 38,338,000 Operating lease assets 66,603,000 83,973,000 Deferred income taxes 4,569,000 2,976,000 Long-term contract assets 336,268,000 320,282,000 Goodwill 3,205,000 3,205,000 Intangible assets — net 552,000 1,069,000 Other assets 2,978,000 1,700,000 TOTAL ASSETS $ 957,636,000 $ 1,012,002,000 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 141,906,000 $ 154,977,000 Accrued liabilities 30,211,000 30,205,000 Customer finished goods returns accrual 34,411,000 38,312,000 Contract liabilities 38,158,000 37,591,000 Revolving loan 90,787,000 128,000,000 Other current liabilities 5,570,000 7,021,000 Operating lease liabilities 9,982,000 8,319,000 Total current liabilities 351,025,000 404,425,000 Convertible notes, related party 35,207,000 30,776,000 Contract liabilities, less current portion 241,404,000 212,068,000 Deferred income taxes 362,000 511,000 Operating lease liabilities, less current portion 65,308,000 72,240,000 Other liabilities 6,631,000 6,872,000 Total liabilities 699,937,000 726,892,000 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; 19,435,706 and 19,662,380 shares issued and outstanding at March 31, 2025 and 2024, respectively 194,000 197,000 Additional paid-in capital 234,413,000 236,255,000 Retained earnings 20,033,000 39,503,000 Accumulated other comprehensive income 3,059,000 9,155,000 Total shareholders' equity 257,699,000 285,110,000 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 957,636,000 $ Expand 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, 2025 and 2024. 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, 2025 and 2024 Exhibit 1 Expand Three Months Ended March 31, 2025 2024 $ Per Diluted Share $ Per Diluted Share GAAP net (loss) income $ (722,000 ) $ (0.04 ) $ 1,338,000 $ (0.03 ) Non-cash items impacting net income Core and finished goods premium amortization $ 2,725,000 $ 0.14 $ 2,761,000 $ 0.13 Revaluation - cores on customers' shelves 489,000 0.03 973,000 0.04 Share-based compensation expenses 868,000 0.04 432,000 0.02 Foreign exchange impact of lease liabilities and forward contracts (3,074,000 ) (0.16 ) (1,155,000 ) (0.05 ) Change in fair value of compound net derivative liability 2,520,000 0.13 (2,710,000 ) (0.12 ) Tax effect (a) (882,000 ) (0.05 ) (75,000 ) (0.00 ) Tax valuation allowance - - 548,000 0.02 Total non-cash items impacting net income $ 2,646,000 $ 0.14 $ 774,000 $ 0.04 Cash items impacting net income Supply chain disruptions and related costs (b) $ - $ - $ 734,000 $ 0.03 New product line start-up costs and transition expenses, and severance and other (c) 160,000 0.01 840,000 0.04 Tariff costs paid for products sold before price increases were effective 4,607,000 0.24 - - Tax effect (a) (1,192,000 ) (0.06 ) (394,000 ) (0.02 ) Total cash items impacting net income $ 3,575,000 $ 0.18 $ 1,180,000 $ 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. (c) For the three months ended March 31, 2025, consists of $160,000 included in operating expenses. For the three months ended March 31, 2024, consists of $840,000 included in operating expenses. Expand Items Impacting Net Income for the Twelve Months Ended March 31, 2025 and 2024 Exhibit 2 Expand Twelve Months Ended March 31, 2025 2024 $ Per Diluted Share $ Per Diluted Share GAAP net loss $ (19,470,000 ) $ (0.99 ) $ (49,244,000 ) $ (2.51 ) Non-cash items impacting net income Core and finished goods premium amortization $ 10,738,000 $ 0.55 $ 10,963,000 $ 0.56 Revaluation - cores on customers' shelves 2,805,000 0.14 5,353,000 0.27 Share-based compensation expenses 3,877,000 0.20 4,700,000 0.24 Foreign exchange impact of lease liabilities and forward contracts 15,892,000 0.81 (3,814,000 ) (0.19 ) Change in fair value of compound net derivative liability and loss on extinguishment of debt 60,000 0.00 (852,000 ) (0.04 ) Tax effect (a) (8,343,000 ) (0.42 ) (4,088,000 ) (0.21 ) Tax valuation allowance - - 38,009,000 1.94 Total non-cash items impacting net income $ 25,029,000 $ 1.27 $ 50,271,000 $ 2.56 Cash items impacting net income Supply chain disruptions and related costs (b) $ - $ - $ 7,472,000 $ 0.38 New product line start-up costs and transition expenses, and severance and other (c) 4,598,000 0.23 1,820,000 0.09 Tariff costs paid for products sold before price increases were effective 4,607,000 0.23 - - Tax effect (a) (2,301,000 ) (0.12 ) (2,323,000 ) (0.12 ) Total cash items impacting net income $ 6,904,000 $ 0.35 $ 6,969,000 $ 0.36 (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. (c) For the twelve months ended March 31, 2025, consists of $1,298,000 impacting gross profit and $3,300,000 included in operating expenses. For the twelve months ended March 31, 2024, consists of $1,820,000 included in operating expenses. Expand Items Impacting Gross Profit for the Three Months Ended March 31, 2025 and 2024 Exhibit 3 Expand Items Impacting Gross Profit for the Twelve Months Ended March 31, 2025 and 2024 Exhibit 4 Expand Items Impacting EBITDA for the Three and Twelve Months Ended March 31, 2025 and 2024 Exhibit 5 Expand Three Months Ended March 31, Twelve Months Ended March 31, 2025 2024 2025 2024 GAAP net (loss) income $ (722,000 ) $ 1,338,000 $ (19,470,000 ) $ (49,244,000 ) Interest expense, net 12,546,000 14,640,000 55,550,000 60,040,000 Income tax expense (benefit) 1,934,000 (1,050,000 ) 3,783,000 36,176,000 Depreciation and amortization 2,538,000 2,775,000 10,400,000 11,619,000 EBITDA $ 16,296,000 $ 17,703,000 $ 50,263,000 $ 58,591,000 Non-cash items impacting EBITDA Core and finished goods premium amortization $ 2,725,000 $ 2,761,000 $ 10,738,000 $ 10,963,000 Revaluation - cores on customers' shelves 489,000 973,000 2,805,000 5,353,000 Share-based compensation expenses 868,000 432,000 3,877,000 4,700,000 Foreign exchange impact of lease liabilities and forward contracts (3,074,000 ) (1,155,000 ) 15,892,000 (3,814,000 ) Change in fair value of compound net derivative liability and loss on extinguishment of debt 2,520,000 (2,710,000 ) 60,000 (852,000 ) Total non-cash items impacting EBITDA $ 3,528,000 $ 301,000 $ 33,372,000 $ 16,350,000 Cash items impacting EBITDA Supply chain disruptions and related costs $ - $ 734,000 $ - $ 7,472,000 New product line start-up costs and transition expenses, and severance and other 160,000 840,000 4,598,000 1,820,000 Tariff costs paid for products sold before price increases were effective 4,607,000 - 4,607,000 - Total cash items impacting EBITDA $ 4,767,000 $ 1,574,000 $ 9,205,000 $ 9,292,000 Expand
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11-02-2025
- Automotive
- Yahoo
Q3 2025 Motorcar Parts of America Inc Earnings Call
Gary Maier; Vice President - Corporate Communications and Investor Relations; Motorcar Parts of America Inc Selwyn Joffe; Chairman of the Board, President, Chief Executive Officer; Motorcar Parts of America Inc David Lee; Chief Financial Officer; Motorcar Parts of America Inc Derek Soderberg; Analyst; Cantor Fitzgerald & Co. William Dezellem; Analyst; Tieton Capital Management Operator Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Motorcar Parts of America, Inc. Fiscal 2025 Third Quarter Conference Call and Webcast. (Operator Instructions) I would now like to turn the conference over to Gary Maier, Vice President, Corporate Communications and Investor Relations at Motorcar Parts of America. Please go ahead. Gary Maier Thank you, Regina, and thanks, everyone, for joining us for our call this morning. Before I begin, I turn the call over to Selwyn Joffe, Chairman, President and Chief Executive Officer; and David Lee, the company's Chief Financial Officer, let me remind everyone of the safe harbor statement included in today's press release. Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward-looking statements, including statements made during today's conference call. Such forward-looking statements are based on the company's current expectations and beliefs concerning future developments and their potential effects on the company. There can be no assurance that future developments affecting the company will be those anticipated by Motorcar Parts of America. Actual results may differ from those projected in the forward-looking statements. 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. In particular, expectations about anticipated future growth and opportunities with customers may not be achieved. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a more detailed discussion of some of the ongoing risks and uncertainties of the company's business, I refer you to the various SEC filings. With that, I'd like to begin the call and turn it over to Selwyn. Selwyn Joffe Thank you, Gary. I appreciate everyone joining us today. We are certainly encouraged by our record sales, gross margin improvement and solid cash flow generation for the fiscal '25 third quarter. Our initiatives to enhance profitability are gaining traction. Our team continues to be focused on continuous improvements, and we are excited by the opportunities for the balance of fiscal 2025 and beyond. We generated approximately $34.4 million of cash from operating activities during the fiscal third quarter, primarily due to strong operating profits. We remain focused on initiatives to enhance profitability, including gross margin expansion and neutralizing working capital, which should continue to result in strong cash flow generation. With regard to our balance sheet, our positive cash flow and related initiatives enabled us to reduce net debt by $30.3 million for the fiscal third quarter, resulting in a 26% reduction to $84 million from $114 million. In addition, as highlighted in our earnings press release this morning, we repurchased 268,130 shares for $2.1 million at an average price of $7.82 under our current repurchase authorization program. We anticipate further opportunities to enhance shareholder value through strong cash generation and the neutralization of working capital. I should mention that rotating electrical, a 50-plus year old flagship category continues to generate solid performance, and we expect further opportunities to add retail and traditional customers despite some recent market softness. As I've mentioned many times, the replacement of alternators and starters cannot be deferred. If these products are broken, your car is not drivable. And the aging car park remains a favorable tailwind with multiple replacement opportunities for the life of vehicles. We are also particularly excited by the continued success of our emerging and second largest category, brake-related products. We expect continued success in this category based on our quality, customer service and capacity to meet demand, and we anticipate strong demand as we enter the important spring repair season. Equally important, these accelerating brake-related product sales support purchasing and production efficiencies, which contribute to gross margin improvement. Our team is doing an exceptional job to further enhance performance metrics, and we look forward to continued sales growth for this important nondiscretionary product category. As I've previously mentioned and as referenced in the exhibits to our earnings release, there are various factors relating to our financial performance that are noncash and beyond our control, particularly the current sharply unfavorable noncash mark-to-market foreign exchange loss from Mexican lease liabilities and forward contracts. A strengthening dollar versus the peso results in large noncash mark-to-market expenses, which we internally eliminate when evaluating our underlying results. We are continuing to look at opportunities to minimize these noncash expenses, including funding our Mexico operations with pesos from sales in Mexico. As our sales in Mexico continue to grow, we will purchase fewer forward contracts to meet our peso obligations, which will lessen the impact of noncash foreign exchange expense fluctuations. Obviously, interest rates, particularly applicable to vendor finance programs utilized by our customers, are a headwind. On a positive note, interest rates have decreased. If this trend continues, this should benefit profitability. Utilizing our low-cost global footprint will facilitate further operating efficiencies. We are actively implementing additional initiatives to further enhance gross margins. Let me take a moment to highlight a few key near-term strategic initiatives that support our favorable outlook. With respect to our diagnostic business, as I've previously mentioned, we are experiencing great success with our JBT-1 Bench Top test, and we remain focused on achieving the $100 million milestone for diagnostic equipment. Additional service-related revenues expected as more testers are deployed, which includes repair software and database updates. These contributions will increase as the installed base matures. We also expect more opportunities outside North America as the business evolves. With regard to our heavy-duty business, we continue to leverage our reputation and industry position in this market, particularly with regard to supplying alternators and starters to our channel partners who are leaders in the heavy-duty aftermarket segments. Our growth opportunities continue to gain momentum across multiple platforms such as agriculture, Class 8 trucks, refrigeration, construction, material handling and transit and motor coach. Our Dixie brand is also evolving as an important supplier to the heavy-duty original equipment manufacturers. We will remain focused on sales growth, profitability and neutralizing working capital. As I noted earlier, we expect our sales and profitability will continue to grow organically. From a strategic standpoint, we are continuing to leverage our strengths, including great products manufactured at state-of-the-art facilities, solid customer relationships, industry-leading SKU coverage and auto fill, not to mention our value-added merchandising and marketing support. Our hard part sales in Mexico continue to gain momentum as we experienced increased demand for our aftermarket parts. The rate of growth in this market is exciting and we are well positioned to utilize our footprint to meet the growing demand. We are focused on increasing share in this region. We continue to benefit and grow sales via our relationships with U.S.-based retailers warehouse distributors who are gaining a presence in this emerging market as well as through Mexican distributors. Favorable long-term dynamics continue to bode well for the company, and we are extremely well positioned for suitable top and bottom line growth in our hard parts business as well as testing solutions. We are focused on growth across all product lines, including our quality built brand, which is gaining market share within the professional installer market, this includes our most recent additions to our portfolio of brake calipers, brake pads and rotors. I reiterate that as we grow these product lines, we expect overall gross margin accretion. We are beginning to see the benefits. It is worth reiterating that 98.8% of the U.S. car park is comprised of internal combustion engines and hybrid engine vehicles. Nondiscretionary aftermarket parts for the internal combustion engine market will be here for decades, an outlook supported by recently updated industry data showing that the average age of vehicles is now 12.8 years plus. One of our key competitive advantage is the ability to offer a broad range of applications for all makes and models. We remain focused on newer model applications and our ability to meet expected demand as these vehicles enter the replacement market. I'll now turn the call over to David to review our results in greater detail. David Lee Thank you, Selwyn, and good morning, everyone. I encourage everyone to read the earnings press release issued this morning as well as a 10-Q that will be filed later today. Let me first reiterate key financial performance metrics for the fiscal '25 third quarter that we highlighted in this morning's news release. Net sales increased 8.3% to a fiscal third quarter record $186.2 million. Gross profit increased 49.4% to a record $44.9 million. Net income for the quarter was $2.3 million, generated cash from operating activities of $34.4 million and reduced net bank debt by $30.3 million. Repurchased 268,130 shares for $2.1 million. Noncash items reduced net income by $5 million and gross profit by $3.4 million for the quarter, as detailed in the exhibits. Net sales for the fiscal '25 third quarter increased 8.3% to a third quarter record $186.2 million from $171.9 million in the prior year. Gross profit for the fiscal '25 third quarter increased 49.4% to a record $44.9 million from $30 million a year earlier. I should mention that gross profit for the quarter was impacted by noncash expenses. The noncash expenses reflect core and finished good premium amortization and revaluation of cores on customer shelves, which are unique to certain of our products and required by GAAP. The total for these noncash expenses in the quarter was approximately $3.4 million or a 1.8% impact to gross margin. Gross margin for the fiscal '25 third quarter was 24.1% compared with 17.5% a year earlier. Aside from higher sales volume, particularly from certain of our newer product offerings, which supports increased absorption of cost, we are also focused on other initiatives to enhance gross margin, predominantly due to a $2.5 million noncash mark-to-market foreign exchange loss compared with a $3.1 million noncash mark-to-market foreign exchange gain in the prior year and a $1.8 million increased expense resulting from currency exchange rates compared with a year ago compared with $20.5 million last year. I should note that excluding these items above, operating expense decreased by $627,000 to $23.6 million compared with $24.2 million a year earlier. For those of you who are not familiar with our operations, our leases in Mexico are U.S. dollar-denominated leases. However, the leases are recorded in pesos at our Mexico subsidiary. As a result, the fixed U.S. dollar leases, which are paid in U.S. dollars, are remeasured at the end of every period to reflect the current exchange rate resulting in a $1.9 million noncash foreign exchange impact of lease liabilities for the third quarter. Additionally, the company purchases forward peso contracts, which are also remeasured at the end of every period to reflect the current exchange rate, which resulted in a $585,000 noncash foreign exchange impact of forward contracts for the fiscal third quarter. I might add that we are starting to reduce the purchase of peso forward contracts by utilizing pesos generated through our Mexican sales subsidiary to fund our operations there, which will reduce the impact of gains and losses from the remeasurement at the end of each period to reflect the current exchange rate. We are continuing to analyze opportunities to reduce exposure to the foreign exchange impact of lease liabilities and the impact of foreign currency forward contracts. Interest expense for the fiscal third quarter decreased by $3.9 million to $14.4 million from $18.3 million a year ago, impacted by lower average outstanding balances under the company's credit facility and lower interest rates. For the third quarter, income tax expense was $1.1 million compared with $37.3 million income tax expense for the prior year, primarily due to a $37.5 million U.S. federal and state deferred tax asset valuation allowance under U.S. GAAP for the prior year, which is noncash and does not impact any operating metrics. The effective tax rate for the fiscal third quarter was due in part to the inability to recognize the benefit of losses at specific jurisdictions. However, we expect these losses will be utilized against future profits, which will benefit future tax rates. Obviously, there are various factors impacting the tax effect. Net income for the fiscal '25 third quarter was $2.3 million or $0.11 per diluted share, including the impact of noncash expenses of $5 million or $0.24 per diluted share as detailed in Exhibit 1 in this morning's earnings press release. Net loss for the prior year was $47.2 million or $2.40 per share including the impact of noncash expenses of $40.4 million or $2.06 per share and cash expenses of $1.4 million or $0.07 per share as detailed in Exhibit 1. As previously explained, higher sales volume and operating efficiencies will further improve results. EBITDA for the fiscal third quarter was $20.4 million, reflecting the $6.6 million impact of noncash expenses detailed on Exhibit 5 of this morning's earnings press release. EBITDA before the impact of noncash expenses mentioned above, was $27 million for the third quarter. Now let me discuss the 9-month results. Net sales for the fiscal '25 9-month period increased 6.8% to a record $564.2 million from $528.2 million a year ago. Gross profit for the fiscal '25 9-month period increased 18% to a record $115.3 million from $97.8 million a year earlier. Gross margin for the fiscal '25 9-month period was 20.4% compared with 18.5% a year earlier. Gross margin for the fiscal '25 9-month period was impacted by $10.3 million or 1.8% of noncash expenses, and $1.3 million or 0.2% of onetime cash expenses, as detailed in Exhibit 4 in this morning's earnings press release. In addition to the items detailed on Exhibit 4, gross profit for the current 9-month period was also impacted by $4 million or 0.7% of certain onetime expenses for onboarding new business. Net loss for the fiscal '25 9-month period was $18.7 million or $0.95 per share, including the impact of noncash expenses of $22.4 million or $1.13 per share and onetime cash expenses of $3.3 million or $0.17 per share as detailed in Exhibit 2 in this morning's earnings press release. Net loss for the prior 9-month period was $50.6 million or $2.58 per share, including the impact of noncash expenses of $49.5 million or $2.53 per share and cash expenses of $5.8 million or $0.30 per share as detailed in Exhibit 2. In addition to the items detailed in Exhibit 2, as previously noted, results for the current 9-month period were also impacted by $4 million or $0.15 per share of certain onetime expenses for onboarding new business. EBITDA for the fiscal '25 9-month period was $34 million. EBITDA was impacted by $29.8 million of noncash expenses as well as $4.4 million in onetime cash expenses detailed in Exhibit 5 of this morning's earnings press release. EBITDA before the impact of noncash and cash expenses mentioned above, was $68.2 million for the current period despite the impact of certain onetime $4 million of expenses for onboarding new business. Now we will move on to cash flow and key corporate items. The company generated cash of approximately $34.4 million and operating activities during the fiscal '25 third quarter. We anticipate an increase in operating profit and gross margin on a year-over-year basis for fiscal '25 and the generation of positive cash flow for the year, supported by organic growth from customer demand and operating efficiencies from our global footprint expansion. In addition to our goal of generating increased operating profits, we are diligently focused on opportunities to neutralize working capital, including customer product demand planning, enhanced inventory management and further extending our vendor payment terms. We expect increasing financial performance from both the new and existing product lines, including our emerging brake categories. Net bank debt decreased by $30.3 million during the fiscal third quarter to $84 million from $114.3 million. Total cash and availability was approximately $138.8 million. I should mention that for every one point reduction in interest rates, interest expense for accounts receivable discount programs offered by customers, is reduced by approximately $6 million. For further explanation on the reconciliation of items that impacted results and non-GAAP financial measures, please refer to Exhibit 1 through 5 in this morning's earnings press release. I would now like to open the line for questions. Operator (Operator Instructions) Derek Soderberg, Cantor Fitzgerald. Derek Soderberg Yeah, good morning, guys. Thanks for taking my questions. Just wanted to start with the tariff environment quick. Selwyn, you've sort of been through a similar tariff environment before, can you sort of clue us in on what conversations you're having with suppliers and customers? How we should think about the potential impact of tariffs on the business? And then given your fairly global manufacturing footprint, is there a scenario where you shift around manufacturing at all? Selwyn Joffe Okay. So let me -- there's a lot there. And obviously, it's very fast evolving and a lot going on. Just start with the general environment is that there are hundreds of suppliers that are implementing tariff surcharges for the Chinese tariffs, and we're one of them. So we have implemented tariff surcharges. And I'm sure -- and again, this is speculation, but I've listened to various public forums where our customers are talking about passing these tariffs on to the consumer. We have been somewhat fortunate in that -- over the last number of years, we've become less dependent on China even though we still do have a relatively decent sized tariff base that we'd have to pay tariffs [off]. We don't believe that our out-of-pocket will be material. And so at this point, again, we're managing through it, but we think we're going to be fine. Derek Soderberg Got it. That's helpful. And then just on the gross margins, it looks like the story is playing out really nicely here. Is there any way you could maybe quantify some of the gross margin expansion quite a big step-up year-over-year? It sounds like you've gotten some favorable scale pricing accretion. Is there any way to quantify those buckets that drove that expansion? And then -- Selwyn Joffe Let me deal with that one. We can only talk about the segments, and we don't -- we have limited -- but I think the story is on a simplistic basis, which nothing is simple is wherever we have product revenue, we have initiatives going to implement more and more efficiencies. And as our revenue continues to grow -- that the overhead absorption is a natural, and we talked about production and purchasing efficiencies. It all comes naturally as well as us working through it and various automation initiatives and all sorts of initiatives to continue and they're paying off. And we relocated a Torrance facility, and that is essentially, there's no more production or distribution there. So that's all into Mexico right now. As far as changing our footprint, I think you had asked that, I don't think we're any worse off than anybody, but -- and I will comment is I think we're better off than the general competitive space. It seems that there's a floor of 25% tariffs on Chinese goods right now. And now there is extra 10% surcharge, so it is 35%. And if we look at our other main operating menus, Mexico, obviously, we came close to having tariffs there. But it looks like -- I don't -- and again, I don't know, but my -- from my reading, it looks like the Mexican U.S. government would cooperated. Canada is relatively minor for us. So I don't see us moving right now any production or anything from that respect. Derek Soderberg Got it. That's helpful. And David, just looking at cash generation, been pretty strong here, paying down debt. It looks like interest expense is going to come down. I guess, looking ahead, how do you plan on using cash? You bought back some shares here. Is that the expectation to continue that? Can you just talk about use of cash going forward? David Lee Yes, you hit it on the nail. So we're going to continue to generate good cash flow, pay down debt, be opportunistic with share repurchase and do all the right things to increase shareholder value. Derek Soderberg Got it, that's helpful. It's all for me. Thanks, guys. Selwyn Joffe Thank you, appreciate. Operator Bill Dezellem, Tieton Capital Management. William Dezellem Thank you. I also want to follow up on gross margin and hoping you can provide a bit more perspective. In this context, your gross -- or pardon me, your sales in December were lower than they were in September. I think that's the normal seasonal pattern. And yet your gross profit dollars were higher in December at nearly $45 million versus about $41 million in the December quarter -- or pardon me, September quarter. So you had lower sales and higher gross profit dollars. Would you talk in more detail about kind of that specific swing and the success there? David Lee We continue to be focused on every quarter being more efficient in our operating model. So in the December quarter, we were even more efficient than the September quarter. So all those initiatives we have to expand gross margin -- dollars and percentage are really paying off, and we will continue to be focused on expanding margins. William Dezellem And following up on that, what initiative or initiatives were most impactful sequentially? Selwyn Joffe People used to asking us about the restaurant business, what does it take to have a successful business -- in the restaurant business? And I use to -- the answer, I used to quote -- a famous restaurant, it's not one thing, it's a 1,000 little things. And so I mean, it's focused around build production efficiencies is really where there's a lot of activity as we scale the production facility. So when you have economies of scale and you're able to reallocate and allocate production volume in the most -- in a more efficient manner, I mean that's why you get these results. It's sort of like you're able to fill each of the channels of need for production, the different production arena. So -- volume, and we've been talking about this volume is definitely a part of that. And then the ability of us to have a seasoned workforce. We have a great workforce, a very knowledgeable workforce. And as they grow and get more seasoned on the new product lines, and we're seeing tremendous inroads and great innovation in terms of, again, becoming more efficient. So there's no one thing. I mean I think that our strategy is eliminate waste wherever we can and neutralize working capital. And at the same time, we need to keep growing our sales because that makes it easier to do [all those]. William Dezellem I think that's where my favorable surprise was, is that your sales sequentially were down even if seasonally the norm and yet your gross profit was up, that seemed extraordinary. Selwyn Joffe Yes. Then it also relates to how much production you've got in the quarter. We had new business coming on for production. So the volume is not -- for manufacturing activities, volume for us is not directly related to sales always. I mean we have -- we're ramping up for new business. So -- and again, the different initiatives take effect, our purchasing initiatives take effect, and that applies to volume and no volume, but having overall volume allows you to get those concessions. William Dezellem And I think you all have talked to -- on the last call or 2, how you have additional brake business that would be ramping in calendar 2025, so this calendar year. So are we seeing the production benefits flow-through margin of that business that will then see the sales benefits in the March and the following quarters? Selwyn Joffe We're actually seeing a little bit of it. It's true. We do have new business that's being ramped up. But in the beginning, as you're building inventory for this new business, there's some inefficiencies because you're building some lower volume items, we should see those margins get better as we roll this business out and that's going quite well. Thank you. William Dezellem All right. That's helpful. And relative to the brake caliper ramp up to whatever normalized volumes are, where are we at in that ramp process? Selwyn Joffe I would say it's hard to tell that to give you a number. I will give you a number in a moment. But the one thing is you set out to begin a new category, you design a facility that you think can hit a certain benchmark. And as you become -- as you operate it, you learn from it and I'm happy to say that I think that our capacity is -- will end up being greater than we anticipated to be. So our expansion opportunities in that facility will be greater. But -- so it's a moving target as to what the denominator is, the numerator, we know what we're doing. But there's a lot of opportunity for growth that I -- so I don't want to I mean I can give you a percentage, but it's not a helpful percentage because we're more efficient at a lower percentage of capacity today than we thought we would ever be. And so -- and what that means is that the factory opportunity has grown without additional CapEx or we were able to produce more units, and then we'll even get more efficient out of that facility as time goes on. But we are a major player. I mean, I don't know if we're the second largest brake caliper provider in the U.S. today or not, but we're certainly up there. William Dezellem And just to make sure I'm clear on all that, that's really helpful that you mentioned in your opening remarks that the rotating electrical business is operating efficiency -- efficiently and that continues to be the case. And then historically, the brake caliper business has not been running efficiently simply because of the low volumes as you start to ramp that business. But as you're growing towards #2 or #1 in the country, you are having better margins or better efficiency even at the lower volumes than you anticipated as your staff as employees have learned how to simply do things better. And this happens to be the quarter where a lot of that culminated and becomes more visible. Is that a fair characterization before I step off line? Selwyn Joffe No. No. Let me just clarify one thing is that we're still doing higher volumes, but what I'm -- the point I'm trying to make is that capacity has actually grown from what our initial anticipation is. So yes, we're getting these efficiencies. These efficiencies are still evolving. They're not culminated. I mean this is definitely an evolving program that we're doing. And again, as new product lines get more mature, they perform that. So it's mostly accurate, but we are producing higher volumes already. But we have -- what I would say is additional opportunity to take that capacity up even higher than we thought it could go. William Dezellem Great, thank you for the clarification and congratulations. Selwyn Joffe Thank you. I appreciate the questions. Operator And that will conclude our question-and-answer session. And I will now turn the meeting back over to Selwyn Joffe for closing remarks. Selwyn Joffe Okay. Well, in summary, we remain bullish about our outlook. We remain laser-focused on further efficiencies and fully benefiting from a not easily duplicated global platform to meet demand for nondiscretionary products as well as from our diagnostic testing capabilities. Recent proposals by the Trump administration about tariffs continue to make headlines. At this point, there's a lot of speculation we will take appropriate action as necessary, including customer surcharges to offset the tariffs and goods from Mexico and Canada should they be imposed. With regard to China, we have notified our customers that we are implementing a surcharge to offset China's recently announced tariffs. We continue to leverage our expertise and solid customer and supplier partnerships. This includes our supply chain [of] program that benefits our suppliers. Our liquidity is strong, and we have the resources, capacity and capability to enhance shareholder value. In closing, I must recognize the contributions of all our team members who are continuously focused on providing the highest level of servers. We are all committed to being the industry leader for parts and solutions that move our world today and tomorrow. We also appreciate the continued support of our shareholders, and thank everyone again for joining us for the call. We look forward to speaking to you with you when we host our fiscal 2025 4th quarter call in June and at various investor conferences and meetings. Thank you. Operator That will conclude today's meeting. Thank you all for joining. You may now disconnect. Sign in to access your portfolio
Yahoo
11-02-2025
- Automotive
- Yahoo
Motorcar Parts of America Inc (MPAA) Q3 2025 Earnings Call Highlights: Record Sales and ...
Net Sales: Increased 8.3% to a record $186.2 million for the fiscal third quarter. Gross Profit: Increased 49.4% to a record $44.9 million. Gross Margin: Improved to 24.1% from 17.5% a year earlier. Net Income: $2.3 million for the fiscal third quarter. Cash from Operating Activities: Generated $34.4 million during the fiscal third quarter. Net Debt Reduction: Reduced by $30.3 million to $84 million. Share Repurchase: 268,130 shares repurchased for $2.1 million at an average price of $7.82. EBITDA: $20.4 million, with $27 million before noncash expenses. Interest Expense: Decreased by $3.9 million to $14.4 million. Operating Expenses: $27.3 million, with a decrease to $23.6 million excluding certain items. Warning! GuruFocus has detected 6 Warning Signs with MPAA. Release Date: February 10, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Motorcar Parts of America Inc (NASDAQ:MPAA) reported record sales of $186.2 million for the fiscal third quarter, marking an 8.3% increase from the previous year. The company achieved a significant gross profit increase of 49.4% to $44.9 million, reflecting improved operational efficiencies. MPAA generated $34.4 million in cash from operating activities, which contributed to a reduction in net debt by $30.3 million. The company repurchased 268,130 shares for $2.1 million, indicating a commitment to enhancing shareholder value. The brake-related product category continues to show strong performance, supporting gross margin improvements and operational efficiencies. MPAA faced noncash mark-to-market foreign exchange losses due to Mexican lease liabilities and forward contracts, impacting financial results. Interest rates, particularly those affecting vendor finance programs, remain a headwind despite recent decreases. Operating expenses increased to $27.3 million from $20.5 million in the previous year, although some of this was offset by noncash adjustments. The company is exposed to potential tariff impacts, particularly from China, which could affect cost structures and pricing strategies. Noncash expenses reduced net income by $5 million and gross profit by $3.4 million for the quarter, highlighting ongoing financial challenges. Q: Can you provide insights on the impact of tariffs on your business and any potential shifts in manufacturing? A: Selwyn Joffe, CEO, explained that while tariffs are a concern, Motorcar Parts of America has implemented tariff surcharges and has reduced dependency on China over the years. The company believes that the out-of-pocket impact will not be material and is managing the situation effectively. Q: What factors contributed to the significant gross margin expansion year-over-year? A: Selwyn Joffe, CEO, noted that the expansion is due to increased efficiencies across product lines, better overhead absorption, and production and purchasing efficiencies. The relocation of the Torrance facility to Mexico also contributed to these improvements. Q: How does the company plan to use its strong cash generation moving forward? A: David Lee, CFO, stated that the company will continue to generate strong cash flow, pay down debt, and be opportunistic with share repurchases to enhance shareholder value. Q: Can you explain the sequential increase in gross profit despite lower sales in the December quarter? A: David Lee, CFO, attributed the increase to improved operational efficiencies and ongoing initiatives to expand gross margins. The company continues to focus on enhancing production efficiencies and scaling production facilities. Q: What is the status of the brake caliper ramp-up and its impact on margins? A: Selwyn Joffe, CEO, mentioned that the brake caliper business is ramping up, and while initial inefficiencies exist due to lower volumes, margins are expected to improve as the business scales. The company is seeing better-than-anticipated capacity and efficiency gains. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
Yahoo
07-02-2025
- Automotive
- Yahoo
Motorcar Parts of America, Inc.'s (NASDAQ:MPAA) latest 17% decline adds to one-year losses, institutional investors may consider drastic measures
Institutions' substantial holdings in Motorcar Parts of America implies that they have significant influence over the company's share price A total of 8 investors have a majority stake in the company with 53% ownership Insiders have been buying lately Every investor in Motorcar Parts of America, Inc. (NASDAQ:MPAA) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 63% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk). And institutional investors saw their holdings value drop by 17% last week. The recent loss, which adds to a one-year loss of 41% for stockholders, may not sit well with this group of investors. Institutions or "liquidity providers" control large sums of money and therefore, these types of investors usually have a lot of influence over stock price movements. Hence, if weakness in Motorcar Parts of America's share price continues, institutional investors may feel compelled to sell the stock, which might not be ideal for individual investors. Let's delve deeper into each type of owner of Motorcar Parts of America, beginning with the chart below. View our latest analysis for Motorcar Parts of America Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing. Motorcar Parts of America already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Motorcar Parts of America's earnings history below. Of course, the future is what really matters. Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. It looks like hedge funds own 16% of Motorcar Parts of America shares. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Private Capital Management, LLC is currently the company's largest shareholder with 13% of shares outstanding. 325 Capital, LLC is the second largest shareholder owning 10% of common stock, and Azarias Capital Management, L.P. holds about 5.5% of the company stock. Additionally, the company's CEO Selwyn Joffe directly holds 2.4% of the total shares outstanding. We did some more digging and found that 8 of the top shareholders account for roughly 53% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat. While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage. The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO. Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group. We can see that insiders own shares in Motorcar Parts of America, Inc.. As individuals, the insiders collectively own US$7.1m worth of the US$120m company. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling. With a 15% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Motorcar Parts of America. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders. I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Motorcar Parts of America , and understanding them should be part of your investment process. If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts. NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
