Motorcar Parts of America Reports Fiscal First Quarter Results
- Record Sales for a First Quarter; Full-Year Outlook Remains on Track
Key highlights for the fiscal first quarter.
-
Net sales increased 6.4 percent to
$169.9 million . -
Gross profit increased 9.8 percent to
$29.2 million . - Gross margin increased modestly to 17.2 percent.
-
Operating results impacted by an unfavorable non-cash
$11.1 million foreign exchange loss from lease liabilities and forward contracts. -
Implemented cost-reduction initiatives to provide annualized savings of approximately
$7 million .
Fiscal 2025 First Quarter Results
Net sales for the fiscal 2025 first quarter increased 6.4 percent to a first quarter record
Gross profit for the fiscal 2025 first quarter increased 9.8 percent to
Due primarily to a
Interest expense for the fiscal first quarter increased by
As a result of the items discussed above, net loss for the fiscal 2025 first quarter was
Results were impacted by
“As we begin a new fiscal year, we remain optimistic about our year-over-year outlook and the company’s ability to further leverage its leadership position within the non-discretionary aftermarket parts market. We anticipate meaningful improvements to gross margins, gross profit and cash flow in the quarters ahead, supported by ongoing strategic actions throughout the entire organization, such as the realignment of resources, as previously noted. While there are a variety of factors related to financial performance beyond our control, such as non-cash items and interest rates, we are determined to enhance shareholder value through improved operational efficiencies, a critical evaluation of our electric vehicle offerings, and rational pricing,” said
Joffe noted the company’s continued focus on Environmental, Social and Governance improvement, highlighting a recent board refreshment commitment, and the subsequent nomination of two new directors standing for election at the company’s 2024 annual meeting scheduled for
Further Considerations
-
Sales volume improving:
- Ordering activity has gained momentum.
- Industry fundamentals are improving and will drive product demand.
-
Margin improvement:
- Enhanced by multiple rounds of price increases.
- Improving overhead absorption as brake-related business gains further momentum.
- Improving operational efficiencies.
- Positive cash flow outlook.
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 | ||||||||
|
||||||||
2024 |
2023 |
|||||||
Net sales |
$ |
169,887,000 |
|
$ |
159,705,000 |
|
||
Cost of goods sold |
|
140,713,000 |
|
|
133,138,000 |
|
||
Gross profit |
|
29,174,000 |
|
|
26,567,000 |
|
||
Operating expenses | ||||||||
General and administrative |
|
16,670,000 |
|
|
12,602,000 |
|
||
Sales and marketing |
|
5,449,000 |
|
|
5,419,000 |
|
||
Research and development |
|
2,433,000 |
|
|
2,375,000 |
|
||
Foreign exchange impact of lease liabilities and forward contracts |
|
11,078,000 |
|
|
(4,270,000 |
) |
||
Total operating expenses |
|
35,630,000 |
|
|
16,126,000 |
|
||
Operating (loss) income |
|
(6,456,000 |
) |
|
10,441,000 |
|
||
Other expenses: | ||||||||
Interest expense, net |
|
14,387,000 |
|
|
11,720,000 |
|
||
Change in fair value of compound net derivative liability |
|
(2,580,000 |
) |
|
140,000 |
|
||
Total other expenses. |
|
11,807,000 |
|
|
11,860,000 |
|
||
Loss before income tax benefit |
|
(18,263,000 |
) |
|
(1,419,000 |
) |
||
Income tax benefit |
|
(178,000 |
) |
|
(9,000 |
) |
||
Net loss |
$ |
(18,085,000 |
) |
$ |
(1,410,000 |
) |
||
Basic net loss per share |
$ |
(0.92 |
) |
$ |
(0.07 |
) |
||
Diluted net loss per share |
$ |
(0.92 |
) |
$ |
(0.07 |
) |
||
Weighted average number of shares outstanding: | ||||||||
Basic |
|
19,674,539 |
|
|
19,508,626 |
|
||
Diluted |
|
19,674,539 |
|
|
19,508,626 |
|
|
||||||
Consolidated Balance Sheets |
||||||
|
|
|||||
ASSETS | (Unaudited) | |||||
Current assets: | ||||||
Cash and cash equivalents |
$ |
7,531,000 |
$ |
13,974,000 |
||
Short-term investments |
|
1,887,000 |
|
1,837,000 |
||
Accounts receivable — net |
|
78,624,000 |
|
96,296,000 |
||
Inventory — net |
|
402,931,000 |
|
397,328,000 |
||
Contract assets |
|
27,317,000 |
|
27,139,000 |
||
Prepaid expenses and other current assets |
|
21,753,000 |
|
23,885,000 |
||
Total current assets |
|
540,043,000 |
|
560,459,000 |
||
Plant and equipment — net |
|
35,010,000 |
|
38,338,000 |
||
Operating lease assets |
|
77,057,000 |
|
83,973,000 |
||
Long-term deferred income taxes |
|
3,960,000 |
|
2,976,000 |
||
Long-term contract assets |
|
315,463,000 |
|
320,282,000 |
||
|
|
4,102,000 |
|
4,274,000 |
||
Other assets |
|
2,320,000 |
|
1,700,000 |
||
TOTAL ASSETS |
$ |
977,955,000 |
$ |
1,012,002,000 |
||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable and accrued liabilities |
$ |
159,627,000 |
$ |
185,182,000 |
||
Customer finished goods returns accrual |
|
28,893,000 |
|
38,312,000 |
||
Contract liabilities |
|
41,504,000 |
|
37,591,000 |
||
Revolving loan |
|
143,834,000 |
|
128,000,000 |
||
Other current liabilities |
|
8,363,000 |
|
7,021,000 |
||
Operating lease liabilities |
|
9,083,000 |
|
8,319,000 |
||
Total current liabilities |
|
391,304,000 |
|
404,425,000 |
||
Convertible notes, related party |
|
31,676,000 |
|
30,776,000 |
||
Long-term contract liabilities |
|
210,378,000 |
|
212,068,000 |
||
Long-term deferred income taxes |
|
39,000 |
|
511,000 |
||
Long-term operating lease liabilities |
|
71,044,000 |
|
72,240,000 |
||
Other liabilities |
|
6,345,000 |
|
6,872,000 |
||
Total liabilities |
|
710,786,000 |
|
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 |
|
237,073,000 |
|
236,255,000 |
||
Retained earnings |
|
21,418,000 |
|
39,503,000 |
||
Accumulated other comprehensive income |
|
8,480,000 |
|
9,155,000 |
||
Total shareholders' equity |
|
267,169,000 |
|
285,110,000 |
||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
977,955,000 |
$ |
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 |
$ |
(18,085,000 |
) |
$ |
(0.92 |
) |
$ |
(1,410,000 |
) |
$ |
(0.07 |
) |
|||
Non-cash items impacting net income | |||||||||||||||
Core and finished goods premium amortization |
$ |
2,728,000 |
|
$ |
0.14 |
|
$ |
2,657,000 |
|
$ |
0.14 |
|
|||
Revaluation - cores on customers' shelves |
|
394,000 |
|
|
0.02 |
|
|
778,000 |
|
|
0.04 |
|
|||
Share-based compensation expenses |
|
1,000,000 |
|
|
0.05 |
|
|
1,310,000 |
|
|
0.07 |
|
|||
Foreign exchange impact of lease liabilities and forward contracts |
|
11,078,000 |
|
|
0.56 |
|
|
(4,270,000 |
) |
|
(0.22 |
) |
|||
Change in fair value of compound net derivative liability |
|
(2,580,000 |
) |
|
(0.13 |
) |
|
140,000 |
|
|
0.01 |
|
|||
Tax effect (a) |
|
(3,155,000 |
) |
|
(0.16 |
) |
|
(154,000 |
) |
|
(0.01 |
) |
|||
Total non-cash items impacting net income |
$ |
9,465,000 |
|
$ |
0.48 |
|
$ |
461,000 |
|
$ |
0.02 |
|
|||
Cash items impacting net income | |||||||||||||||
Supply chain disruptions and related costs (b) |
$ |
- |
|
$ |
- |
|
$ |
1,984,000 |
|
$ |
0.10 |
|
|||
New product line start-up costs and transition expenses, and severance (c) |
|
2,940,000 |
|
|
0.15 |
|
|
335,000 |
|
|
0.02 |
|
|||
Tax effect (a) |
|
(735,000 |
) |
|
(0.04 |
) |
|
(580,000 |
) |
|
(0.03 |
) |
|||
Total cash items impacting net income |
$ |
2,205,000 |
|
$ |
0.11 |
|
$ |
1,739,000 |
|
$ |
0.09 |
|
|||
(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 Gross Profit for the Three Months Ended |
Exhibit 2 |
||||||||||
Three Months Ended |
|||||||||||
2024 |
2023 |
||||||||||
$ | Gross Margin | $ | Gross Margin | ||||||||
GAAP gross profit |
$ |
29,174,000 |
17.2 |
% |
$ |
26,567,000 |
16.6 |
% |
|||
Non-cash items impacting gross profit | |||||||||||
Core and finished goods premium amortization |
$ |
2,728,000 |
1.6 |
% |
$ |
2,657,000 |
1.7 |
% |
|||
Revaluation - cores on customers' shelves |
|
394,000 |
0.2 |
% |
|
778,000 |
0.5 |
% |
|||
Total non-cash items impacting gross profit |
$ |
3,122,000 |
1.8 |
% |
$ |
3,435,000 |
2.2 |
% |
|||
Cash items impacting gross profit | |||||||||||
Supply chain disruptions and related costs |
$ |
- |
0.0 |
% |
$ |
1,984,000 |
1.2 |
% |
|||
Total cash items impacting gross profit |
$ |
- |
0.0 |
% |
$ |
1,984,000 |
1.2 |
% |
Items Impacting EBITDA for the Three Months Ended |
Exhibit 3 |
||||||
Three Months Ended |
|||||||
2024 |
2023 |
||||||
GAAP net loss |
$ |
(18,085,000 |
) |
$ |
(1,410,000 |
) |
|
Interest expense, net |
|
14,387,000 |
|
|
11,720,000 |
|
|
Income tax benefit |
|
(178,000 |
) |
|
(9,000 |
) |
|
Depreciation and amortization |
|
2,729,000 |
|
|
3,033,000 |
|
|
EBITDA |
$ |
(1,147,000 |
) |
$ |
13,334,000 |
|
|
Non-cash items impacting EBITDA | |||||||
Core and finished goods premium amortization |
$ |
2,728,000 |
|
$ |
2,657,000 |
|
|
Revaluation - cores on customers' shelves |
|
394,000 |
|
|
778,000 |
|
|
Share-based compensation expenses |
|
1,000,000 |
|
|
1,310,000 |
|
|
Foreign exchange impact of lease liabilities and forward contracts |
|
11,078,000 |
|
|
(4,270,000 |
) |
|
Change in fair value of compound net derivative liability |
|
(2,580,000 |
) |
|
140,000 |
|
|
Total non-cash items impacting EBITDA |
$ |
12,620,000 |
|
$ |
615,000 |
|
|
Cash items impacting EBITDA | |||||||
Supply chain disruptions and related costs |
$ |
- |
|
$ |
1,984,000 |
|
|
New product line start-up costs and transition expenses, and severance |
|
2,940,000 |
|
|
335,000 |
|
|
Total cash items impacting EBITDA |
$ |
2,940,000 |
|
$ |
2,319,000 |
|
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(310) 972-5124
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