November 9, 2015

Motorcar Parts of America Reports Fiscal 2016 Second Quarter and Six-Month Results

Strong Momentum Continues; Business Outlook Remains Favorable

LOS ANGELES, Nov. 09, 2015 (GLOBE NEWSWIRE) -- Motorcar Parts of America, Inc. (Nasdaq:MPAA) today reported results for its fiscal 2016 second quarter- reflecting record sales and adjusted profitability, supported by strong growth in all product categories.

Net sales for the fiscal 2016 second quarter increased 29.4 percent to $91.7 million from $70.8 million for the same period a year earlier.  Adjusted for certain customer allowances for new business, net sales climbed 25.0 percent to $101.7 million from $81.4 million in the fiscal 2015 second quarter. The company's sales performance for the fiscal 2016 second quarter reflects continued strength of its rotating electrical and wheel hub business, as well as increased contributions from the company's emerging master cylinder product line.  The company recently introduced full-line master cylinder coverage, which includes remanufactured units.

The company reported a net loss for the fiscal second quarter of $1.4 million, or $0.08 per share, compared with net income of $1.5 million, or $0.09 per diluted share, a year ago - reflecting a one-time $9.3 million expense for the company's litigation settlement, net of insurance recoveries, in the June 2013 bankruptcy cases relating to discontinued subsidiaries.

Adjusted net income for the fiscal 2016 second quarter increased 15.9 percent to $11.8 million, or $0.62 per diluted share, from $10.2 million, or $0.60 per diluted share, in the same period a year earlier - as noted in the Reconciliation of Non-GAAP Financial Measures tables below.

Gross profit for the fiscal 2016 second quarter increased 18.5 percent to $21.8 million from $18.4 million a year earlier.  Gross profit as a percentage of sales for the fiscal 2016 second quarter was 23.8 percent compared with 26.0 percent a year earlier.  Gross margin was impacted by product mix, as well as customer allowances related to the company's new remanufactured brake master cylinder line and additional rotating electrical business.

Adjusted gross profit was $31.4 million compared with $28.5 million a year ago.  Adjusted gross profit as a percentage of sales for the three months was 30.9 percent compared with an unusually strong 35.0 percent a year earlier.

Net sales for the fiscal 2016 six-month period increased 32.6 percent to $177.5 million from $133.8 million for the same period a year earlier.  Adjusted for certain customer allowances for new business, net sales climbed 30.1 percent to $188.4 million from $144.8 million in the same six-month period a year earlier.  The company's sales performance for first half of fiscal 2016, as noted above for the quarter, reflects continued strength of its rotating electrical and wheel hub business, as well as increased contributions from the company's emerging master cylinder product line.

Net income for the fiscal 2016 six-month period was $518,000 or $0.03 per diluted share, compared with net income of $5.4 million, or $0.33 per diluted share, a year ago - reflecting a one-time $9.3 million expense for the company's litigation settlement, net of insurance recoveries, in the June 2013 bankruptcy cases relating to discontinued subsidiaries.

Adjusted net income for the fiscal 2016 six-month period increased 35.3 percent to $20.1 million, or $1.07 per diluted share, from $14.9 million, or $0.91 per diluted share, in the same period a year earlier - as noted in the Reconciliation of Non-GAAP Financial Measures tables below.

Gross profit for the fiscal 2016 six-month period increased 31.9 percent to $47.8 million from $36.2 million a year ago. Gross profit as a percentage of sales for the same period was 26.9 percent compared with 27.1 percent a year earlier.  As noted above, gross margin was impacted by product mix, as well as customer allowances related to the company's new remanufactured brake master cylinder line and additional rotating electrical business.

Adjusted gross profit was $58.2 million compared with $47.7 million last year.  Adjusted gross profit as a percentage of sales for the six months was 30.9 percent compared with 32.9 percent a year earlier.

 "Results for the fiscal 2016 second quarter reflect continued strength across all product lines which bodes well for our success in the second half of fiscal 2016 - supported by an aging vehicle population, increased miles driven, positive operating synergies and product line expansion opportunities.  Our growth and success are attributable to the dedication of our entire team and their daily commitment to excellence, customer service and the company," said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America.

Use of Non-GAAP Measures

Adjusted net sales, adjusted net income (loss), adjusted EBITDA, adjusted gross profit and adjusted gross profit margin 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.  Adjusted net sales, adjusted net income (loss), adjusted EBITDA, adjusted gross profit and adjusted gross profit margin have significant limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of the company's results as reported under GAAP.  For a reconciliation of adjusted net sales, adjusted net income (loss), adjusted EBITDA, adjusted gross profit and adjusted gross profit margin to their corresponding GAAP measures, see the financial tables included in this press release.

Teleconference and Web Cast

Selwyn Joffe, chairman, president and chief executive officer, and David Lee, chief financial officer, will host an investor conference call today at 6:30 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 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 9:30 a.m. Pacific time today through 8:59 p.m. Pacific time on Monday, November 16, 2015 by calling (855)-859-2056 (domestic) or (404)-537-3406 (international) and using access code: 67847676.

About Motorcar Parts of America, Inc.

Motorcar Parts of America is a remanufacturer, manufacturer and distributor of automotive aftermarket parts -- including alternators, starters, wheel hub assembly products and brake master cylinders utilized in imported and domestic passenger vehicles, light trucks and heavy duty applications. Motorcar Parts of America's products are sold to automotive retail outlets and the professional repair market throughout the United States and Canada, with facilities located in California, Mexico, Malaysia and China, and administrative offices located in California, Tennessee, Mexico, Singapore and Malaysia.  Additional information is available at www.motorcarparts.com.

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 2015 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 Income 
(Unaudited)
 
  
  Three Months Ended
September 30,
  Six Months Ended
September 30,
 
  2015  2014  2015  2014 
Net sales $91,670,000  $70,840,000  $177,505,000  $133,815,000 
Cost of goods sold  69,850,000   52,420,000   129,694,000   97,579,000 
Gross profit  21,820,000   18,420,000   47,811,000   36,236,000 
Operating expenses:                 
General and administrative  18,219,000   9,812,000   29,579,000   15,204,000 
Sales and marketing  2,632,000   1,837,000   4,912,000   3,663,000 
Research and development  646,000   539,000   1,382,000   1,061,000 
Total operating expenses  21,497,000   12,188,000   35,873,000   19,928,000 
Operating income  323,000   6,232,000   11,938,000   16,308,000 
Interest expense, net  2,613,000   3,339,000   11,050,000   6,752,000 
(Loss) income before income tax (benefit) expense  (2,290,000)  2,893,000   888,000   9,556,000 
Income tax (benefit) expense  (898,000)  1,418,000   370,000    4,132,000 
Net (loss) income $(1,392,000) $1,475,000  $ 518,000  $5,424,000 
Basic net (loss) income per share $(0.08) $ 0.09  $0.03  $0.35 
Diluted net (loss) income per share $(0.08 ) $0.09  $0.03  $0.33 
Weighted average number of shares outstanding:                 
Basic  18,215,783   15,975,437   18,109,912   15,531,566 
Diluted  18,215,783   16,826,427   18,887,153   16,372,726 


  
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES

Consolidated Balance Sheets
 
  
  September 30, 2015  March 31, 2015 
ASSETS (Unaudited)    
Current assets:      
Cash and cash equivalents $31,698,000  $61,230,000 
Short-term investments  1,339,000   699,000 
Accounts receivable — net  899,000   24,799,000 
Inventory— net  53,973,000   56,829,000 
Inventory unreturned  10,641,000   7,833,000 
Deferred income taxes  23,219,000   22,998,000 
Prepaid expenses and other current assets  11,265,000   7,407,000 
Total current assets  133,034,000   181,795,000 
Plant and equipment — net  15,360,000   12,535,000 
Long-term core inventory — net  231,382,000   188,950,000 
Long-term core inventory deposits  5,569,000   31,571,000 
Long-term deferred income taxes  238,000   261,000 
Goodwill  2,552,000   - 
Intangible assets — net  4,863,000   2,574,000 
Other assets  3,418,000   3,195,000 
TOTAL ASSETS $396,416,000  $420,881,000 
LIABILITIES AND SHAREHOLDERS' EQUITY        
Current liabilities:        
Accounts payable $69,648,000  $61,893,000 
Accrued liabilities  16,948,000   10,096,000 
Customer finished goods returns accrual  19,205,000   19,678,000 
Accrued core payment  8,916,000   13,190,000 
Revolving loan  15,000,000   - 
Other current liabilities  3,748,000   2,471,000 
Current portion of term loan  3,070,000   7,733,000 
Total current liabilities  136,535,000   115,061,000 
Term loan, less current portion  21,517,000    71,489,000 
Long-term accrued core payment  22,024,000   23,880,000 
Other liabilities  21,400,000   20,248,000 
Total liabilities  201,476,000   230,678,000 
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; 18,315,871 and 17,974,598 shares issued and outstanding at September 30, 2015 and March 31, 2015, respectively  183,000   180,000 
Additional paid-in capital  197,327,000   191,279,000 
Accumulated other comprehensive loss  (4,350,000)  (2,518,000)
Retained earnings  1,780,000   1,262,000 
Total shareholders' equity  194,940,000   190,203,000  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $396,416,000  $420,881,000 
  

Reconciliation of 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 non-GAAP adjusted financial measures in this press release and in the webcast to discuss the Company's financial results for the three and six months ended September 30, 2015 and 2014. Each of these non-GAAP adjusted financial measures is adjusted from results based on GAAP to exclude certain expenses and gains.  Among other things, the Company uses such non-GAAP adjusted financial measures in addition to and in conjunction with corresponding GAAP measures to help analyze the performance of its business. 

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 September 30, 2015 and 2014 are as follows:

                 
Reconciliation of Non-GAAP Financial Measures              Exhibit 1  
  
  Three Months Ended September 30,  Six Months Ended September 30, 
  2015  2014  2015  2014 
GAAP Results:            
Net sales  91,670,000  $70,840,000  $177,505,000  $133,815,000 
Net income (loss)  (1,392,000)  1,475,000   518,000   5,424,000 
Diluted income (loss) per share (EPS)  (0.08)  0.09   0.03   0.33 
Gross margin  23.8%  26.0%  26.9%  27.1%
Non-GAAP Adjusted Results:                
Non-GAAP adjusted net sales $101,745,000  $81,385,000  $188,368,000  $144,802,000 
Non-GAAP adjusted net income  11,790,000   10,172,000   20,144,000   14,891,000 
Non-GAAP adjusted diluted earnings per share (EPS)  0.62   0.60   1.07    0.91 
Non-GAAP adjusted gross margin  30.9%  35.0%  30.9 %  32.9%
Non-GAAP adjusted EBITDA  22,681,000   20,630,000   40,396,000   32,412,000 


                 
Reconciliation of Non-GAAP Financial Measures              Exhibit 2 
  
  Three Months Ended September 30,  Six Months Ended September 30, 
  2015  2014  2015  2014 
Net sales, as reported $91,670,000  $70,840,000  $177,505,000  $133,815,000 
Adjustments:                 
Net sales                
Return and stock adjustment accruals  -   560,000   -   560,000 
Customer allowances associated with inventory purchases related to new product lines and additional business  10,075,000   9,985,000   10,863,000    10,427,000 
Adjusted net sales $101,745,000  $81,385,000  $188,368,000  $144,802,000 


  
Reconciliation of Non-GAAP Financial Measures           Exhibit 3 
  
  Three Months Ended September 30, 
  2015  2014 
  $  Per Diluted
Share
  $  Per Diluted
Share
 
GAAP net income (loss), as reported $(1,392,000) $(0.08) $1,475,000  $0.09 
Adjustments:                
Net sales                
Return and stock adjustment accruals  -       560,000  $0.03 
Customer allowances associated with inventory purchases related to new product lines and additional business  10,075,000  $0.53   9,985,000  $0.59 
Cost of goods sold                
Lower of cost or market revaluation - cores on customers' shelves and inventory step-up amortization  326,000  $0.02         
Cost of inventory purchases related to new product lines and additional business, and stock adjustment accrual  (809,000) $(0.04)  (465,000) $(0.03)
Operating expenses                 
Discontinued subsidiaries legal and other costs  1,112,000  $0.06   1,353,000  $0.08 
Expense for the company's litigation settlement, net of insurance recoveries, in the June 2013 bankruptcy cases relating to discontinued subsidiaries  9,250,000  $0.49         
Share-based compensation expense   517,000  $0.03   600,000  $0.04 
Mark-to-market losses (gains)   1,147,000  $0.06   1,750,000  $0.10 
Tax effected at 39% tax rate (a)  (8,436,000) $(0.45)  (5,086,000) $(0.30)
Adjusted net income $11,790,000  $0.62  $10,172,000  $0.60 

(a) Tax effect at 39% of the income before income tax expense (reflecting the adjustments)

  
Reconciliation of Non-GAAP Financial Measures  Exhibit 4 
  
  Six Months Ended September 30, 
   2015  2014 
  $  Per Diluted
Share
  $  Per Diluted
Share
 
GAAP net income, as reported  $518,000  $0.03  $5,424,000  $0.33 
Adjustments:                
Net sales                 
Return and stock adjustment accruals  -       560,000  $0.03 
Customer allowances associated with inventory purchases related to new product lines and additional business  10,863,000  $0.58   10,427,000  $0.64 
Cost of goods sold                
New product line start-up costs  -       189,000   0.01 
Lower of cost or market revaluation - cores on customers' shelves and inventory step-up amortization  326,000  $0.02    731,000   0.04 
Cost of inventory purchases related to new product lines and additional business, and stock adjustment accrual  (809,000) $(0.04)  (465,000)  (0.03)
Operating expenses                
Discontinued subsidiaries legal, severance, acquisition, financing and other costs  4,253,000  $0.23   1,913,000   0.12 
Expense for the company's litigation settlement, net of insurance recoveries, in the June 2013 bankruptcy cases relating to discontinued subsidiaries  9,250,000  $0.49         
Share-based compensation expenses  1,033,000  $0.05   1,098,000  $0.07 
Mark-to-market losses (gains)  2,111,000  $0.11   403,000   $0.02 
Interest                
Write-off of prior deferred loan fees  5,108,000  $0.27          
Tax effected at 39% tax rate (a)  (12,509,000) $(0.66)  (5,389,000) $(0.33)
Adjusted net income $20,144,000  $1.07  $14,891,000  $0.91 

(a) Tax effect at 39% of the income before income tax expense (reflecting the adjustments)

  
Reconciliation of Non-GAAP Financial Measures Exhibit 5 
  
  Three Months Ended September 30, 
  2015  2014 
  $  Gross Margin  $   Gross Margin 
GAAP gross profit, as reported $21,820,000   23.8% $18,420,000   26.0%
Adjustments:                
Net sales                
Return and stock adjustment accruals  -       560,000     
Customer allowances associated with inventory purchases related to new product lines and additional business  10,075,000       9,985,000     
Cost of goods sold                
Lower of cost or market revaluation - cores on customers' shelves and inventory step-up amortization  326,000             
Cost of inventory purchases related to new product lines and additional business, and stock adjustment accrual   (809,000)      (465,000)    
Total adjustments  9,592,000   7.1%  10,080,000   9.0%
Adjusted gross profit $31,412,000   30.9% $28,500,000   35.0%


  
Reconciliation of Non-GAAP Financial Measures Exhibit 6 
  
  Six Months Ended September 30, 
  2015  2014 
  $   Gross Margin  $  Gross Margin 
GAAP gross profit, as reported $47,811,000   26.9% $36,236,000   27.1%
Adjustments:                 
Net sales                
Return and stock adjustment accruals  -       560,000     
Customer allowances associated with inventory purchases related to new product lines and additional business  10,863,000       10,427,000     
Cost of goods sold                
New product line start-up costs  -       189,000     
Lower of cost or market revaluation - cores on customers' shelves and inventory step-up amortization  326,000       731,000     
Cost of inventory purchases related to new product lines and additional business, and stock adjustment accrual  (809,000)      (465,000)    
Total adjustments   10,380,000   4.0%  11,442,000   5.8%
Adjusted gross profit $58,191,000   30.9% $47,678,000   32.9%


  
Reconciliation of Non-GAAP Financial Measures Exhibit 7 
  
  Three Months Ended September 30,  Six Months Ended September 30, 
  2015  2014  2015  2014 
GAAP net income (loss), as reported $(1,392,000) $1,475,000  $518,000  $5,424,000 
Interest expense, net  2,613,000   3,339,000   11,050,000   6,752,000 
Income tax expense (benefit)  (898,000)  1,418,000   370,000    4,132,000 
Depreciation and amortization  740,000   615,000   1,431,000    1,248,000 
EBITDA, as reported $1,063,000  $6,847,000  $13,369,000  $17,556,000 
                 
Adjustments:                
Net sales                
Return and stock adjustment accruals  -   560,000   -   560,000 
Customer allowances associated with inventory purchases related to new product lines and additional business  10,075,000   9,985,000   10,863,000   10,427,000 
Cost of goods sold                
New product line start-up costs               189,000 
Lower of cost or market revaluation - cores on customers' shelves and inventory step-up amortization  326,000       326,000   731,000 
Cost of inventory purchases related to new product lines and additional business, and stock adjustment accrual  (809,000)  (465,000)  (809,000)  (465,000)
Operating expenses                
Discontinued subsidiaries legal, severance, acquisition, financing and other costs  1,112,000   1,353,000   4,253,000   1,913,000 
Expense for the company's litigation settlement, net of insurance recoveries, in the June 2013 bankruptcy cases relating to discontinued subsidiaries  9,250,000       9,250,000     
Share-based compensation expense  517,000   600,000   1,033,000    1,098,000 
Mark-to-market losses (gains)  1,147,000   1,750,000    2,111,000   403,000 
Adjusted EBITDA $22,681,000  $ 20,630,000  $40,396,000  $32,412,000 

 

CONTACT: Gary S. Maier

Maier & Company, Inc.

(310) 471-1288

Primary Logo

Source: Motorcar Parts of America, Inc.

News Provided by Acquire Media


Close window | Back to top

Copyright 2017 Motorcar Parts of America, Inc.