Motorcar Parts of America Reports Fiscal First Quarter Results
- Net sales for Q1 2024 were $159.7 million, reflecting a decrease compared to the prior year due to timing of orders.
- Net loss for Q1 2024 was $1.4 million, impacted by higher interest rates and changes in product mix.
- Gross profit for Q1 2024 was $26.6 million, with a gross margin of 16.6 percent.
- The company expects to realize annualized price increases throughout the fiscal year, contributing to net income enhancement.
- The company strategically lowered collection of receivables by $20 million, resulting in interest savings of approximately $1.3 million.
- The company's strong liquidity allowed it to pay down the term loan of $11.25 million.
- Sales volume is gaining momentum, ordering activity is strong, and extreme heat and industry fundamentals will enhance product demand.
- Overall gross profit is expected to increase, and operating efficiencies will contribute to enhanced cash flow.
- Interest expense increased by $4.8 million, impacting net loss for Q1 2024.
- Gross margin for Q1 2024 was impacted by changes in product mix and inflationary costs not fully absorbed by price increases.
- Non-cash items impacted results by $461,000, and cash items impacted results by $1.7 million for Q1 2024.
– Full-Year Outlook Remains On Track, With Strong Positive Cash Flow –
Fiscal 2024 First Quarter Results
Net sales for the fiscal 2024 first quarter were
Net loss for the fiscal 2024 first quarter was
Interest expense increased by
Results for the quarter were impacted by changes in product mix and lingering inflationary costs not fully absorbed by price increases. In addition to the above, non-cash items impacted results by
Gross profit for the fiscal 2024 first quarter was
Gross margin improvement is expected to be enhanced as price increases are realized; by higher sales volume; and further anticipated operational efficiencies. The most recent price increases late in the fiscal first quarter will be realized throughout the fiscal 2024 second quarter. Following the completion of the company’s second quarter, on a run-rate basis, all price increases will be realized.
Notwithstanding the use of cash for the quarter of
The company’s strong liquidity allowed it to execute this strategy and additionally, subsequent to quarter end, pay down the company’s
“With strong demand for critical non-discretionary automotive parts, we are on track to achieve our year-over-year targets, notwithstanding softness for the quarter – primarily due to timing of orders. Our optimism is supported by favorable industry trends, extreme hot weather across the country and further operational efficiency improvements with increasing sales volume,” said Selwyn Joffe, chairman, president, and chief executive officer.
Considerations as Fiscal 2024 Evolves
-
Sales volume is continuing to gain momentum.
- Ordering activity is strong.
- Extreme heat and strong industry fundamentals will enhance product demand.
-
Margin improvement expected.
- Price increases.
-
Better overhead absorption as the brake-related business grows.
- Overall gross profit is expected to increase in the interim.
- Operating efficiencies.
- Enhanced cash flow from working capital initiatives.
Use of Non-GAAP Measure
This press release includes the following non-GAAP measure – EBITDA, which is not a measure of financial performance under GAAP and should not be considered as an alternative to net income as a measure of financial performance. The company believes this non-GAAP measure, when considered together with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to the company’s results of operations. However, this non-GAAP measure has significant limitations in that it does not reflect all the costs and other items associated with the operation of the company’s business as determined in accordance with GAAP. In addition, the company’s non-GAAP measures may be calculated differently and are therefore not comparable to similar measures by other companies. Therefore, investors should consider non-GAAP measures in addition to, and not as a substitute for, or superior to, measures of financial performance in accordance with GAAP. For a definition and reconciliation of EBITDA to net income, its corresponding GAAP measure, see the financial tables included in this press release. Also, refer to our Form 8-K to which this release is attached, and other filings we make with the SEC, for further information regarding this measure.
Earnings Conference Call and Webcast
Selwyn Joffe, chairman, president and chief executive officer, and David Lee, chief financial officer, will host an investor conference call today at 10:00 a.m. Pacific time to discuss the company’s financial results and operations. The call will be open to all interested investors either through a live audio webcast at www.motorcarparts.com or live by calling (888) 440-5584 (domestic) or (646) 960-0457 (international). For those who are not available to listen to the live broadcast, the call will be archived on Motorcar Parts of America’s website www.motorcarparts.com. A telephone playback of the conference call will also be available from approximately 1:00 p.m. Pacific time on August 9, 2023 through 8:59 p.m. Pacific time on August 16, 2023 by calling (800) 770-2030 (domestic) or (647) 362-9199 (international) 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 Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements. The statements contained in this press release that are not historical facts are forward-looking statements based on the company’s current expectations and beliefs concerning future developments and their potential effects on the company. These forward-looking statements involve significant risks and uncertainties (some of which are beyond the control of the company) and are subject to change based upon various factors. Reference is also made to the Risk Factors set forth in the company’s Form 10-K Annual Report filed with the Securities and Exchange Commission (SEC) in June 2023 and in its Forms 10-Q filed with the SEC for additional risks and uncertainties facing the company. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.
(Financial tables follow)
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES |
|||||||
Consolidated Statements of Operations |
|||||||
(Unaudited) |
|||||||
|
|||||||
| Three Months Ended | |||||||
| June 30, | |||||||
2023 |
2022 |
||||||
| Net sales | $ |
159,705,000 |
|
$ |
163,985,000 |
|
|
| Cost of goods sold |
|
133,138,000 |
|
|
133,683,000 |
|
|
| Gross profit |
|
26,567,000 |
|
|
30,302,000 |
|
|
| Operating expenses: | |||||||
| General and administrative |
|
12,602,000 |
|
|
13,634,000 |
|
|
| Sales and marketing |
|
5,419,000 |
|
|
5,542,000 |
|
|
| Research and development |
|
2,375,000 |
|
|
3,113,000 |
|
|
| Foreign exchange impact of lease liabilities and forward contracts |
|
(4,270,000 |
) |
|
678,000 |
|
|
| Total operating expenses |
|
16,126,000 |
|
|
22,967,000 |
|
|
| Operating income |
|
10,441,000 |
|
|
7,335,000 |
|
|
| Other expenses: | |||||||
| Interest expense, net |
|
11,720,000 |
|
|
6,921,000 |
|
|
| Change in fair value of compound net derivative liability |
|
140,000 |
|
|
- |
|
|
| Total other expenses |
|
11,860,000 |
|
|
6,921,000 |
|
|
| (Loss) income before income tax (benefit) expense |
|
(1,419,000 |
) |
|
414,000 |
|
|
| Income tax (benefit) expense |
|
(9,000 |
) |
|
589,000 |
|
|
| Net loss | $ |
(1,410,000 |
) |
$ |
(175,000 |
) |
|
| Basic net loss per share | $ |
(0.07 |
) |
$ |
(0.01 |
) |
|
| Diluted net loss per share | $ |
(0.07 |
) |
$ |
(0.01 |
) |
|
| Weighted average number of shares outstanding: | |||||||
| Basic |
|
19,508,626 |
|
|
19,123,354 |
|
|
| Diluted |
|
19,508,626 |
|
|
19,123,354 |
|
|
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES |
||||||
Consolidated Balance Sheets |
||||||
|
||||||
| June 30, 2023 | March 31, 2023 | |||||
| ASSETS | (Unaudited) | |||||
| Current assets: | ||||||
| Cash and cash equivalents | $ |
10,887,000 |
$ |
11,596,000 |
|
|
| Short-term investments |
|
2,159,000 |
|
2,011,000 |
|
|
| Accounts receivable — net |
|
146,645,000 |
|
119,868,000 |
|
|
| Inventory |
|
364,187,000 |
|
356,254,000 |
|
|
| Contract assets |
|
27,732,000 |
|
25,443,000 |
|
|
| Prepaid expenses and other current assets |
|
20,566,000 |
|
22,306,000 |
|
|
| Total current assets |
|
572,176,000 |
|
537,478,000 |
|
|
| Plant and equipment — net |
|
44,244,000 |
|
46,052,000 |
|
|
| Operating lease assets |
|
88,760,000 |
|
87,619,000 |
|
|
| Long-term deferred income taxes |
|
32,417,000 |
|
32,625,000 |
|
|
| Long-term contract assets |
|
314,463,000 |
|
318,381,000 |
|
|
| Goodwill and intangible assets — net |
|
5,046,000 |
|
5,348,000 |
|
|
| Other assets |
|
1,081,000 |
|
1,062,000 |
|
|
| TOTAL ASSETS | $ |
1,058,187,000 |
$ |
1,028,565,000 |
|
|
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable and accrued liabilities | $ |
142,965,000 |
$ |
141,766,000 |
|
|
| Customer finished goods returns accrual |
|
33,378,000 |
|
37,984,000 |
|
|
| Contract liabilities |
|
49,003,000 |
|
40,340,000 |
|
|
| Revolving loan |
|
167,000,000 |
|
145,200,000 |
|
|
| Other current liabilities |
|
5,170,000 |
|
4,871,000 |
|
|
| Operating lease liabilities |
|
8,914,000 |
|
8,767,000 |
|
|
| Current portion of term loan |
|
12,020,000 |
|
3,664,000 |
|
|
| Total current liabilities |
|
418,450,000 |
|
382,592,000 |
|
|
| Term loan, less current portion |
|
- |
|
9,279,000 |
|
|
| Convertible notes, related party |
|
31,252,000 |
|
30,994,000 |
|
|
| Long-term contract liabilities |
|
194,708,000 |
|
193,606,000 |
|
|
| Long-term deferred income taxes |
|
1,985,000 |
|
718,000 |
|
|
| Long-term operating lease liabilities |
|
77,013,000 |
|
79,318,000 |
|
|
| Other liabilities |
|
11,340,000 |
|
11,583,000 |
|
|
| Total liabilities |
|
734,748,000 |
|
708,090,000 |
|
|
| Commitments and contingencies | ||||||
| Shareholders' equity: | ||||||
| Preferred stock; par value |
|
- |
|
- |
|
|
| Series A junior participating preferred stock; par value |
||||||
| 20,000 shares authorized; none issued |
|
- |
|
- |
|
|
| Common stock; par value |
||||||
| 19,599,145 and 19,494,615 shares issued and outstanding at June 30, 2023 and | ||||||
| March 31, 2023, respectively |
|
196,000 |
|
195,000 |
|
|
| Additional paid-in capital |
|
232,866,000 |
|
231,836,000 |
|
|
| Retained earnings |
|
87,337,000 |
|
88,747,000 |
|
|
| Accumulated other comprehensive income (loss) |
|
3,040,000 |
|
(303,000 |
) |
|
| Total shareholders' equity |
|
323,439,000 |
|
320,475,000 |
|
|
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ |
1,058,187,000 |
$ |
1,028,565,000 |
|
|
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 June 30, 2023 and 2022 |
Exhibit 1 |
||||||||||||||
|
|||||||||||||||
| Three Months Ended June 30, | |||||||||||||||
2023 |
2022 |
||||||||||||||
$ |
Per Share |
$ |
Per Share |
||||||||||||
| GAAP net loss | $ |
(1,410,000 |
) |
$ |
(0.07 |
) |
$ |
(175,000 |
) |
$ |
(0.01 |
) |
|||
| Non-cash items impacting net loss | |||||||||||||||
| Core and finished goods premium amortization | $ |
2,657,000 |
|
$ |
0.14 |
|
$ |
3,044,000 |
|
$ |
0.16 |
|
|||
| Revaluation - cores on customers' shelves |
|
778,000 |
|
|
0.04 |
|
|
572,000 |
|
|
0.03 |
|
|||
| Share-based compensation expenses |
|
1,310,000 |
|
|
0.07 |
|
|
1,249,000 |
|
|
0.07 |
|
|||
| Foreign exchange impact of lease liabilities and forward contracts |
|
(4,270,000 |
) |
|
(0.22 |
) |
|
678,000 |
|
|
0.04 |
|
|||
| Change in fair value of compound net derivative liability |
|
140,000 |
|
|
0.01 |
|
|
- |
|
|
- |
|
|||
| Tax effect (a) |
|
(154,000 |
) |
|
(0.01 |
) |
|
(1,386,000 |
) |
|
(0.07 |
) |
|||
| Total non-cash items impacting net loss | $ |
461,000 |
|
$ |
0.02 |
|
$ |
4,157,000 |
|
$ |
0.22 |
|
|||
| Cash items impacting net loss | |||||||||||||||
| Supply chain disruptions and related costs (b) | $ |
1,984,000 |
|
$ |
0.10 |
|
$ |
3,094,000 |
|
$ |
0.16 |
|
|||
| New product line start-up costs and transition expenses, and severance (c) |
|
335,000 |
|
|
0.02 |
|
|
618,000 |
|
|
0.03 |
|
|||
| Tax effect (a) |
|
(580,000 |
) |
|
(0.03 |
) |
|
(928,000 |
) |
|
(0.05 |
) |
|||
| Total cash items impacting net loss | $ |
1,739,000 |
|
$ |
0.09 |
|
$ |
2,784,000 |
|
$ |
0.15 |
|
|||
|
|||||||||||||||
(a) Tax effect is calculated by applying an income tax rate of |
|||||||||||||||
| (b) For the three-months ended June 30, 2023, consists of 1,984,000 impacting gross profit. | |||||||||||||||
| For the three-months ended June 30, 2022, consists of |
|||||||||||||||
| (c) For the three-months ended June 30, 2023, consists of |
|||||||||||||||
| For the three-months ended June 30, 2022, consists of |
|||||||||||||||
Items Impacting Gross Profit for the Three Months Ended June 30, 2023 and 2022 |
Exhibit 2 |
||||||||||
|
|||||||||||
| Three Months Ended June 30, | |||||||||||
2023 |
2022 |
||||||||||
| $ | Gross Margin |
$ | Gross Margin |
||||||||
| GAAP gross profit | $ |
26,567,000 |
16.6 |
% |
$ |
30,302,000 |
18.5 |
% |
|||
| Non-cash items impacting gross profit | |||||||||||
| Core and finished goods premium amortization | $ |
2,657,000 |
1.7 |
% |
$ |
3,044,000 |
1.9 |
% |
|||
| Revaluation - cores on customers' shelves |
|
778,000 |
0.5 |
% |
|
572,000 |
0.3 |
% |
|||
| Total non-cash items impacting gross profit | $ |
3,435,000 |
2.2 |
% |
$ |
3,616,000 |
2.2 |
% |
|||
| Cash items impacting gross profit | |||||||||||
| Supply chain disruptions and related costs | $ |
1,984,000 |
1.0 |
% |
$ |
2,548,000 |
1.6 |
% |
|||
| Total cash items impacting gross profit | $ |
1,984,000 |
1.0 |
% |
$ |
2,548,000 |
1.6 |
% |
|||
Items Impacting EBITDA for the Three Months Ended June 30, 2023 and 2022 |
Exhibit 3 |
||||||
|
|||||||
| Three Months Ended June 30, | |||||||
2023 |
2022 |
||||||
| GAAP net loss | $ |
(1,410,000 |
) |
$ |
(175,000 |
) |
|
| Interest expense, net |
|
11,720,000 |
|
|
6,921,000 |
|
|
| Income tax (benefit) expense |
|
(9,000 |
) |
|
589,000 |
|
|
| Depreciation and amortization |
|
3,033,000 |
|
|
3,124,000 |
|
|
| EBITDA | $ |
13,334,000 |
|
$ |
10,459,000 |
|
|
| Non-cash items impacting EBITDA | |||||||
| Core and finished goods premium amortization | $ |
2,657,000 |
|
$ |
3,044,000 |
|
|
| Revaluation - cores on customers' shelves |
|
778,000 |
|
|
572,000 |
|
|
| Share-based compensation expenses |
|
1,310,000 |
|
|
1,249,000 |
|
|
| Foreign exchange impact of lease liabilities and forward contracts |
|
(4,270,000 |
) |
|
678,000 |
|
|
| Change in fair value of compound net derivative liability |
|
140,000 |
|
|
- |
|
|
| Total non-cash items impacting EBITDA | $ |
615,000 |
|
$ |
5,543,000 |
|
|
| Cash items impacting EBITDA | |||||||
| Supply chain disruptions and related costs | $ |
1,984,000 |
|
$ |
3,094,000 |
|
|
| New product line start-up costs and transition expenses, and severance |
|
335,000 |
|
|
618,000 |
|
|
| Total cash items impacting EBITDA | $ |
2,319,000 |
|
$ |
3,712,000 |
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230809450202/en/
Gary S. Maier
Vice President, Corporate Communications & IR
(310) 972-5124
Source: Motorcar Parts of America, Inc.
FAQ
What were Motorcar Parts of America's net sales for Q1 2024?
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