Motorcar Parts of America Reports Fiscal Second Quarter Results
- Record Sales and Gross Profit with Strong Cash Flow Generation -
Full-Year Outlook Remains on Track
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
Gross profit for the fiscal 2025 second quarter increased to a record
Interest expense for the fiscal second quarter decreased by
Net loss for the fiscal 2025 second quarter was
“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
The company generated approximately
Six-Month Results
Net sales for the fiscal 2025 six-month period increased 6.1 percent to a record
Gross profit for the fiscal 2025 six-month period increased to a record
Interest expense increased by
Net loss for the fiscal 2025 six-month period was
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
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
Earnings Conference Call and Webcast
About
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
(Financial tables follow)
|
|
||||||||||||||||
|
Consolidated Statements of Operations |
||||||||||||||||
|
(Unaudited) |
||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
|
|
|
|||||||||||||||
| 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 |
|
||||
|
|
||||||
|
Consolidated Balance Sheets |
||||||
|
|
|
|||||
| 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 |
||
|
|
|
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 |
|
- |
|
- |
||
| Series A junior participating preferred stock; par value |
- |
- |
||||
| Common stock; par value |
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
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 |
Exhibit 1 |
||||||||||||||
|
Three Months Ended |
|||||||||||||||
|
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 |
|
(c) |
For the three months ended |
| For the three months ended |
|
|
Items Impacting Net Income for the Six Months Ended |
Exhibit 2 |
||||||||||||||
|
Six Months Ended |
|||||||||||||||
|
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 |
|
(c) |
For the six months ended |
|
For the six months ended |
|
|
Items Impacting Gross Profit for the Three Months Ended |
Exhibit 3 |
||||||||||
|
Three Months Ended |
|||||||||||
|
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 |
Exhibit 4 |
||||||||||
|
Six Months Ended |
|||||||||||
|
2024 |
2023 |
||||||||||
| $ |
Gross Margin |
$ |
Gross Margin |
||||||||
| 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 |
Exhibit 5 |
||||||||||||||
|
Three Months Ended |
Six Months Ended |
||||||||||||||
|
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/
Vice President,
(310) 972-5124
Source:
