Motorcar Parts of America Reports Fiscal 2018 Second Quarter Results
Net sales for the fiscal 2018 second quarter increased 2.7 percent to
All results labeled as "adjusted" in this press release are non-GAAP measures as discussed more fully below under the heading "Use of Non-GAAP Measures."
Adjusted net sales for the fiscal 2018 second quarter increased 1.7 percent to
Net income for the fiscal 2018 second quarter was
Adjusted net income for the fiscal 2018 second quarter was
Gross profit for the fiscal 2018 second quarter was
Adjusted gross profit for the fiscal 2018 second quarter was
Net sales for the fiscal 2018 six-month period increased 6.5 percent to
Adjusted net sales for the fiscal 2018 six-month period increased 1.5 percent to
Net income for the fiscal 2018 six-month period was
Adjusted net income for the fiscal 2018 six-month period was
Gross profit for the fiscal 2018 six-month period was
Adjusted gross profit for the fiscal 2018 the six-month period was
"The first half of fiscal 2018 was a challenging period, even though we achieved market share gains. As widely reported by industry observers, we are experiencing industry softness and related headwinds. Nonetheless, we remain enthusiastic about our longer-term prospects within the
Joffe added that sales for the fiscal year 2018 second quarter were adversely impacted by a general softness in the market, as indicated above, and by approximately five percent due to certain customer inventory reduction initiatives.
Joffe noted that adjusted gross margins were negatively affected by lower purchasing volume impacting overhead absorption and higher returns as a percentage of adjusted sales related to existing business. "We expect gross margins will improve as sales volume increases," Joffe said.
"Our acquisition in July of
"We are encouraged by our recent market share gains and anticipate further increasing our overall sales volume in the second half of our fiscal year. As always, we thank our entire team for their day-in and day-out commitment to excellence as we continue to build shareholder value," Joffe said.
Use of Non-GAAP Measures
This press release includes the following non-GAAP measures - adjusted net sales, adjusted net income (loss), adjusted EBITDA, adjusted gross profit and adjusted gross margin, which are not measures of financial performance under GAAP, and should not be considered as alternatives to net sales, net income (loss), EBITDA, income from operations, gross profit or gross profit
margin as a measure of financial performance. The Company believes these non-GAAP measures, when considered together with the corresponding GAAP measures, provide useful information to investors and management regarding financial and business trends relating to the company's results of operations. However, these non-GAAP measures have significant limitations in that they do not reflect all of the costs associated with the operations of the company's business as determined in accordance with GAAP. 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 reconciliation of adjusted net sales, adjusted net income (loss), adjusted EBITDA, adjusted gross profit and adjusted gross margin to their corresponding GAAP measures, 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
Teleconference and Web Cast
The call will be open to all interested investors either through a live audio Web broadcast at www.motorcarparts.com
or live by calling (877)-776-4016 (domestic) or (973)-638-3231 (international). For those who are not available to listen to the live broadcast, the call will be archived for seven days on Motorcar Parts of America's website www.motorcarparts.com. A telephone playback of the conference call will also be available from approximately
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 Income (Unaudited) | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Net sales | $ | 111,774,000 | $ | 108,836,000 | $ | 206,837,000 | $ | 194,248,000 | ||||
Cost of goods sold | 84,612,000 | 78,178,000 | 153,836,000 | 143,199,000 | ||||||||
Gross profit | 27,162,000 | 30,658,000 | 53,001,000 | 51,049,000 | ||||||||
Operating expenses: | ||||||||||||
General and administrative | 8,615,000 | 9,869,000 | 14,802,000 | 13,494,000 | ||||||||
Sales and marketing | 3,457,000 | 2,707,000 | 6,851,000 | 5,341,000 | ||||||||
Research and development | 1,240,000 | 905,000 | 2,242,000 | 1,774,000 | ||||||||
Total operating expenses | 13,312,000 | 13,481,000 | 23,895,000 | 20,609,000 | ||||||||
Operating income | 13,850,000 | 17,177,000 | 29,106,000 | 30,440,000 | ||||||||
Interest expense, net | 3,522,000 | 3,189,000 | 6,836,000 | 6,008,000 | ||||||||
Income before income tax expense | 10,328,000 | 13,988,000 | 22,270,000 | 24,432,000 | ||||||||
Income tax expense | 4,027,000 | 4,845,000 | 8,343,000 | 7,781,000 | ||||||||
Net income | $ | 6,301,000 | $ | 9,143,000 | $ | 13,927,000 | $ | 16,651,000 | ||||
Basic net income per share | $ | 0.34 | $ | 0.49 | $ | 0.75 | $ | 0.90 | ||||
Diluted net income per share | $ | 0.33 | $ | 0.47 | $ | 0.72 | $ | 0.86 | ||||
Weighted average number of shares outstanding: | ||||||||||||
Basic | 18,718,709 | 18,641,324 | 18,687,179 | 18,544,118 | ||||||||
Diluted | 19,356,809 | 19,429,390 | 19,371,144 | 19,384,668 | ||||||||
Consolidated Balance Sheets | |||||||||
ASSETS | (Unaudited) | ||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 15,090,000 | $ | 9,029,000 | |||||
Short-term investments | 2,568,000 | 2,140,000 | |||||||
Accounts receivable — net | 12,393,000 | 26,017,000 | |||||||
Inventory — net | 88,902,000 | 67,516,000 | |||||||
Inventory unreturned | 7,704,000 | 7,581,000 | |||||||
Prepaid expenses and other current assets | 17,178,000 | 9,848,000 | |||||||
Total current assets | 143,835,000 | 122,131,000 | |||||||
Plant and equipment — net | 19,868,000 | 18,437,000 | |||||||
Long-term core inventory — net | 265,564,000 | 262,922,000 | |||||||
Long-term core inventory deposits | 5,569,000 | 5,569,000 | |||||||
Long-term deferred income taxes | 14,079,000 | 13,546,000 | |||||||
Goodwill | 2,551,000 | 2,551,000 | |||||||
Intangible assets — net | 4,191,000 | 3,993,000 | |||||||
Other assets | 5,807,000 | 6,990,000 | |||||||
TOTAL ASSETS | $ | 461,464,000 | $ | 436,139,000 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 85,028,000 | $ | 85,960,000 | |||||
Accrued liabilities | 9,061,000 | 10,077,000 | |||||||
Customer finished goods returns accrual | 13,421,000 | 17,667,000 | |||||||
Accrued core payment | 11,360,000 | 11,714,000 | |||||||
Revolving loan | 36,000,000 | 11,000,000 | |||||||
Other current liabilities | 3,565,000 | 3,300,000 | |||||||
Current portion of term loan | 3,060,000 | 3,064,000 | |||||||
Total current liabilities | 161,495,000 | 142,782,000 | |||||||
Term loan, less current portion | 15,401,000 | 16,935,000 | |||||||
Long-term accrued core payment | 6,808,000 | 12,349,000 | |||||||
Long-term deferred income taxes | 205,000 | 180,000 | |||||||
Other liabilities | 3,459,000 | 15,212,000 | |||||||
Total liabilities | 187,368,000 | 187,458,000 | |||||||
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 | |||||||||
19,062,869 and 18,648,854 shares issued and outstanding at | |||||||||
March 31, 2017, respectively | 191,000 | 186,000 | |||||||
Additional paid-in capital | 216,176,000 | 205,646,000 | |||||||
Retained earnings | 64,217,000 | 50,290,000 | |||||||
Accumulated other comprehensive loss | (6,488,000 | ) | (7,441,000 | ) | |||||
Total shareholders' equity | 274,096,000 | 248,681,000 | |||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 461,464,000 | $ | 436,139,000 | |||||
Reconciliation of Non-GAAP Financial Measures
To supplement the consolidated financial statements presented in accordance with
These non-GAAP adjusted financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of the Company's results of operations and the factors and trends affecting the Company's business. However, these non-GAAP adjusted financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.
Income statement information for the three and six months ended
Reconciliation of Non-GAAP Financial Measures | Exhibit 1 | |||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
GAAP Results: | ||||||||||||||||
Net sales | $ | 111,774,000 | $ | 108,836,000 | $ | 206,837,000 | $ | 194,248,000 | ||||||||
Net income | 6,301,000 | 9,143,000 | 13,927,000 | 16,651,000 | ||||||||||||
Diluted income per share (EPS) | 0.33 | 0.47 | 0.72 | 0.86 | ||||||||||||
Gross margin | 24.3 | % | 28.2 | % | 25.6 | % | 26.3 | % | ||||||||
Non-GAAP Adjusted Results: | ||||||||||||||||
Non-GAAP adjusted net sales | $ | 114,270,000 | $ | 112,383,000 | $ | 209,333,000 | $ | 206,205,000 | ||||||||
Non-GAAP adjusted net income | 9,683,000 | 12,426,000 | 17,031,000 | 22,516,000 | ||||||||||||
Non-GAAP adjusted diluted earnings per share (EPS) | 0.50 | 0.64 | 0.88 | 1.16 | ||||||||||||
Non-GAAP adjusted gross margin | 28.2 | % | 30.7 | % | 28.4 | % | 31.4 | % | ||||||||
Non-GAAP adjusted EBITDA | $ | 20,509,000 | $ | 24,470,000 | $ | 36,908,000 | $ | 44,689,000 | ||||||||
Reconciliation of Non-GAAP Financial Measures | Exhibit 2 | ||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
GAAP net sales | $ | 111,774,000 | $ | 108,836,000 | $ | 206,837,000 | $ | 194,248,000 | |||||
Adjustments: | |||||||||||||
Net sales | |||||||||||||
Initial return and stock adjustment accruals related to new business | 2,496,000 | 1,315,000 | 2,496,000 | 3,168,000 | |||||||||
Customer allowances related to new business | - | 2,232,000 | 8,789,000 | ||||||||||
Adjusted net sales | $ | 114,270,000 | $ | 112,383,000 | $ | 209,333,000 | $ | 206,205,000 | |||||
Reconciliation of Non-GAAP Financial Measures | Exhibit 3 | |||||||||||||||
Three Months Ended | ||||||||||||||||
2017 | 2016 | |||||||||||||||
$ | Per Diluted Share | $ | Per Diluted Share | |||||||||||||
GAAP net income | $ | 6,301,000 | $ | 0.33 | $ | 9,143,000 | $ | 0.47 | ||||||||
Adjustments: | ||||||||||||||||
Net sales | ||||||||||||||||
Initial return and stock adjustment accruals related to new business | 2,496,000 | $ | 0.13 | 1,315,000 | $ | 0.07 | ||||||||||
Customer allowances related to new business | - | $ | - | 2,232,000 | $ | 0.11 | ||||||||||
Cost of goods sold | ||||||||||||||||
New product line start-up and ramp-up costs | - | $ | - | 16,000 | $ | 0.00 | ||||||||||
Lower of cost or net realizable value revaluation - cores on customers' shelves and inventory step-up amortization | 2,955,000 | $ | 0.15 | 475,000 | $ | 0.02 | ||||||||||
Cost of customer allowances and stock adjustment accruals related to new business | (362,000 | ) | $ | (0.02 | ) | (213,000 | ) | $ | (0.01 | ) | ||||||
Operating expenses | ||||||||||||||||
Legal, severance, acquisition, financing, transition and other costs | 236,000 | $ | 0.01 | 219,000 | $ | 0.01 | ||||||||||
Share-based compensation expenses | 910,000 | $ | 0.05 | 1,008,000 | $ | 0.05 | ||||||||||
Mark-to-market losses (gains) | (690,000 | ) | $ | (0.04 | ) | 1,331,000 | $ | 0.07 | ||||||||
Tax effected at 39% tax rate (a) | (2,163,000 | ) | $ | (0.11 | ) | (3,100,000 | ) | $ | (0.16 | ) | ||||||
Adjusted net income | $ | 9,683,000 | $ | 0.50 | $ | 12,426,000 | $ | 0.64 | ||||||||
(a) Adjusted net income is calculated by applying an income tax rate of 39%; this rate may differ from the period's actual income tax rate | ||||||||||||||||
Reconciliation of Non-GAAP Financial Measures | Exhibit 4 | ||||||||||||||||
Six Months Ended | |||||||||||||||||
2017 | 2016 | ||||||||||||||||
$ | Per Diluted Share | $ | Per Diluted Share | ||||||||||||||
GAAP net income | $ | 13,927,000 | $ | 0.72 | $ | 16,651,000 | $ | 0.86 | |||||||||
Adjustments: | |||||||||||||||||
Net sales | |||||||||||||||||
Initial return and stock adjustment accruals related to new business | 2,496,000 | $ | 0.13 | 3,168,000 | $ | 0.16 | |||||||||||
Customer allowances related to new business | - | $ | - | 8,789,000 | $ | 0.45 | |||||||||||
Cost of goods sold | |||||||||||||||||
New product line start-up and ramp-up costs | - | $ | - | 140,000 | $ | 0.01 | |||||||||||
Lower of cost or net realizable value revaluation - cores on customers' shelves and inventory step-up amortization | 4,305,000 | $ | 0.22 | 2,193,000 | $ | 0.11 | |||||||||||
Cost of customer allowances and stock adjustment accruals related to new business | (362,000 | ) | $ | (0.02 | ) | (568,000 | ) | $ | (0.03 | ) | |||||||
Operating expenses | |||||||||||||||||
Legal, severance, acquisition, financing, transition and other costs | 501,000 | $ | 0.03 | 615,000 | $ | 0.03 | |||||||||||
Share-based compensation expenses | 1,744,000 | $ | 0.09 | 1,737,000 | $ | 0.09 | |||||||||||
Mark-to-market losses (gains) | (3,035,000 | ) | $ | (0.16 | ) | (3,595,000 | ) | $ | (0.19 | ) | |||||||
Tax effected at 39% tax rate (a) | (2,545,000 | ) | $ | (0.13 | ) | (6,614,000 | ) | $ | (0.34 | ) | |||||||
Adjusted net income | $ | 17,031,000 | $ | 0.88 | $ | 22,516,000 | $ | 1.16 | |||||||||
(a) Adjusted net income is calculated by applying an income tax rate of 39%; this rate may differ from the period's actual income tax rate | |||||||||||||||||
Reconciliation of Non-GAAP Financial Measures | Exhibit 5 | |||||||||||||
Three Months Ended | ||||||||||||||
2017 | 2016 | |||||||||||||
$ | Gross Margin | $ | Gross Margin | |||||||||||
GAAP gross profit | $ | 27,162,000 | 24.3 | % | $ | 30,658,000 | 28.2 | % | ||||||
Adjustments: | ||||||||||||||
Net sales | ||||||||||||||
Initial return and stock adjustment accruals related to new business | 2,496,000 | 1,315,000 | ||||||||||||
Customer allowances related to new business | - | 2,232,000 | ||||||||||||
Cost of goods sold | ||||||||||||||
New product line start-up and ramp-up costs | - | 16,000 | ||||||||||||
Lower of cost or net realizable value revaluation -
cores on customers' shelves and inventory step-up amortization | 2,955,000 | 475,000 | ||||||||||||
Cost of customer allowances and stock adjustment accruals related to new business | (362,000 | ) | (213,000 | ) | ||||||||||
Total adjustments | 5,089,000 | 3.9 | % | 3,825,000 | 2.5 | % | ||||||||
Adjusted gross profit | $ | 32,251,000 | 28.2 | % | $ | 34,483,000 | 30.7 | % | ||||||
Reconciliation of Non-GAAP Financial Measures | Exhibit 6 | ||||||||||||||
Six Months Ended | |||||||||||||||
2017 | 2016 | ||||||||||||||
$ | Gross Margin | $ | Gross Margin | ||||||||||||
GAAP gross profit | $ | 53,001,000 | 25.6 | % | $ | 51,049,000 | 26.3 | % | |||||||
Adjustments: | |||||||||||||||
Net sales | |||||||||||||||
Initial return and stock adjustment accruals related to new business | 2,496,000 | 3,168,000 | |||||||||||||
Customer allowances related to new business | - | 8,789,000 | |||||||||||||
Cost of goods sold | |||||||||||||||
New product line start-up and ramp-up costs | - | 140,000 | |||||||||||||
Lower of cost or net realizable value revaluation - cores on customers' shelves and inventory step-up amortization | 4,305,000 | 2,193,000 | |||||||||||||
Cost of customer allowances and stock adjustment accruals related to new business | (362,000 | ) | (568,000 | ) | |||||||||||
Total adjustments | 6,439,000 | 2.8 | % | 13,722,000 | 5.1 | % | |||||||||
Adjusted gross profit | $ | 59,440,000 | 28.4 | % | $ | 64,771,000 | 31.4 | % | |||||||
Reconciliation of Non-GAAP Financial Measures | Exhibit 7 | ||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
GAAP net income | $ | 6,301,000 | $ | 9,143,000 | $ | 13,927,000 | $ | 16,651,000 | |||||||||
Interest expense, net | 3,522,000 | 3,189,000 | 6,836,000 | 6,008,000 | |||||||||||||
Income tax expense | 4,027,000 | 4,845,000 | 8,343,000 | 7,781,000 | |||||||||||||
Depreciation and amortization | 1,114,000 | 910,000 | 2,153,000 | 1,770,000 | |||||||||||||
EBITDA | $ | 14,964,000 | $ | 18,087,000 | $ | 31,259,000 | $ | 32,210,000 | |||||||||
Adjustments: | |||||||||||||||||
Net sales | |||||||||||||||||
Initial return and stock adjustment accruals related to new business | 2,496,000 | 1,315,000 | 2,496,000 | 3,168,000 | |||||||||||||
Customer allowances related to new business | - | 2,232,000 | - | 8,789,000 | |||||||||||||
Cost of goods sold | - | ||||||||||||||||
New product line start-up and ramp-up costs | - | 16,000 | - | 140,000 | |||||||||||||
Lower of cost or net realizable value revaluation - cores on customers' shelves and inventory step-up amortization | 2,955,000 | 475,000 | 4,305,000 | 2,193,000 | |||||||||||||
Cost of customer allowances and stock adjustment accruals related to new business | (362,000 | ) | (213,000 | ) | (362,000 | ) | (568,000 | ) | |||||||||
Operating expenses | - | ||||||||||||||||
Legal, severance, acquisition, financing, transition and other costs | 236,000 | 219,000 | 501,000 | 615,000 | |||||||||||||
Share-based compensation expenses | 910,000 | 1,008,000 | 1,744,000 | 1,737,000 | |||||||||||||
Mark-to-market losses (gains) | (690,000 | ) | 1,331,000 | (3,035,000 | ) | (3,595,000 | ) | ||||||||||
Adjusted EBITDA | $ | 20,509,000 | $ | 24,470,000 | $ | 36,908,000 | $ | 44,689,000 | |||||||||
CONTACT:Source:Gary S. Maier (310) 471-1288
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