Motorcar Parts of America, Inc.
Feb 9, 2016
PDF

Motorcar Parts of America Reports Fiscal 2016 Third Quarter and Nine-Month Results

Strong Momentum Continues; Business Outlook Remains Favorable

LOS ANGELES, Feb. 09, 2016 (GLOBE NEWSWIRE) -- Motorcar Parts of America, Inc. (Nasdaq:MPAA) today reported results for its fiscal 2016 third quarter and nine months - reflecting record sales and profitability for a quarter, supported by strong growth across all product categories.

Net sales for the fiscal 2016 third quarter increased 11.9 percent to $94.0 million from $84.0 million for the same period a year earlier. The company's sales performance for the fiscal 2016 third 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's sales and profit performance for the prior fiscal 2015 third quarter reflects the benefits of recognizing net core revenue of $12.6 million that was previously deferred.

Net income for the fiscal 2016 third quarter was $7.7 million, or $0.41 per diluted share, compared with net income of $2.9 million, or $0.16 per diluted share, a year ago.

Adjusted net income for the fiscal 2016 third quarter increased 23.5 percent to $9.9 million, or $0.52 per diluted share, from $8.0 million, or $0.43 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 third quarter increased 18.3 percent to $28.9 million from $24.4 million a year earlier.  Gross profit as a percentage of sales for the fiscal 2016 second quarter was 30.7 percent compared with 29.1 percent a year earlier.  Gross margin benefited from better overhead absorption, including favorable purchasing and production metrics.

Adjusted gross profit was $29.7 million compared with $25.3 million a year ago.  Adjusted gross profit as a percentage of sales for the three months was 31.5 percent compared with 29.7 percent a year earlier.

Net sales for the fiscal 2016 nine-month period increased 24.7 percent to $271.5 million from $217.8 million for the same period a year earlier.  Adjusted for certain customer allowances for new business, net sales were $282.4 million compared with $229.8 million in the same nine-month period a year earlier.  As noted above, the company's sales and profit performance for the prior year period reflects the benefits of recognizing net core revenue of $12.6 million that was previously deferred.

Net income for the fiscal 2016 nine-month period was $8.3 million or $0.44 per diluted share, compared with net income of $8.4 million, or $0.49 per diluted share, a year ago.  Results for the fiscal 2016 nine-month period reflect the impact of 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, which was partially offset by a $5.8 million gain in connection with a separate litigation settlement related to discontinued subsidiaries.

Adjusted net income for the fiscal 2016 nine-month period increased 31.2 percent to $30.1 million, or $1.59 per diluted share, from $22.9 million, or $1.33 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 nine-month period increased 26.5 percent to $76.7 million from $60.7 million a year ago. Gross profit as a percentage of sales for the same period was 28.3 percent compared with 27.9 percent a year earlier.  

Adjusted gross profit was $87.8 million compared with $72.9 million last year.  Adjusted gross profit as a percentage of sales for the nine months was 31.1 percent compared with 31.7 percent a year earlier.

"Results for the fiscal 2016 third quarter reflect continued strength across all product lines - supported by an aging vehicle population, increased miles driven, positive operating synergies and product line expansion.  As always, 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 Tuesday, February 16, 2016 by calling (855)-859-2056 (domestic) or (404)-537-3406 (international) and using access code: 37132427.

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, Malaysia and Toronto.  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 Nine Months Ended 
  December 31,  December 31,  
   2015   2014   2015   2014  
           
Net sales $  94,022,000  $  83,992,000  $  271,527,000  $  217,807,000  
Cost of goods sold    65,123,000      59,564,000     194,817,000     157,143,000  
Gross profit    28,899,000     24,428,000     76,710,000     60,664,000  
Operating expenses:         
General and administrative    8,802,000     12,628,000     38,381,000     27,832,000  
Sales and marketing    2,671,000     2,281,000     7,583,000     5,944,000  
Research and development    711,000     601,000     2,093,000     1,662,000  
Total operating expenses    12,184,000     15,510,000     48,057,000     35,438,000  
Operating income    16,715,000     8,918,000     28,653,000     25,226,000  
Interest expense, net    2,516,000     3,165,000     13,566,000     9,917,000  
Income before income tax expense    14,199,000     5,753,000     15,087,000     15,309,000  
Income tax expense    6,451,000     2,826,000     6,821,000     6,958,000  
Net income $  7,748,000  $  2,927,000  $  8,266,000  $  8,351,000  
Basic net income per share $  0.42  $  0.16  $  0.45  $  0.51  
Diluted net income per share $  0.41  $  0.16  $  0.44  $  0.49  
Weighted average number of shares outstanding:          
Basic  18,319,531   17,921,682   18,180,039   16,331,168  
Diluted   19,095,704   18,822,664   18,981,421   17,206,069  
           

 

 

 

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
      
  December 31, 2015 March 31, 2015 
ASSETS (Unaudited)   
Current assets:     
Cash and cash equivalents $  13,701,000  $  61,230,000  
Short-term investments    1,510,000     699,000  
Accounts receivable — net    1,536,000     24,799,000  
Inventory — net    58,501,000     56,829,000  
Inventory unreturned    10,648,000     7,833,000  
Deferred income taxes    23,433,000     22,998,000  
Prepaid expenses and other current assets    6,263,000     7,407,000  
Total current assets    115,592,000     181,795,000  
Plant and equipment — net    15,143,000     12,535,000  
Long-term core inventory — net    236,201,000     188,950,000  
Long-term core inventory deposits    5,569,000      31,571,000  
Long-term deferred income taxes    243,000     261,000  
Goodwill     2,053,000     -  
Intangible assets — net    4,718,000     2,574,000  
Other assets    3,536,000     3,195,000  
TOTAL ASSETS $  383,055,000  $  420,881,000  
LIABILITIES AND SHAREHOLDERS'  EQUITY    
Current liabilities:     
Accounts payable $  61,992,000  $  61,893,000  
Accrued liabilities    8,649,000     10,096,000  
Customer finished goods returns accrual    23,358,000     19,678,000  
Accrued core payment    8,946,000     13,190,000  
Revolving loan    7,000,000     -   
Other current liabilities    3,744,000     2,471,000  
Current portion of term loan    3,067,000     7,733,000  
Total current liabilities    116,756,000     115,061,000  
Term loan, less current portion    20,738,000     71,489,000  
Long-term accrued core payment    19,794,000     23,880,000  
Other liabilities    22,480,000     20,248,000  
Total liabilities    179,768,000     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; 18,326,985 and 17,974,598 shares issued and outstanding at December 31, 2015 and   -   -  
March 31, 2015, respectively    183,000     180,000  
Additional paid-in capital     198,306,000     191,279,000  
Accumulated other comprehensive loss    (4,730,000)    (2,518,000) 
Retained earnings     9,528,000     1,262,000  
Total shareholders' equity    203,287,000     190,203,000  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $  383,055,000  $  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 nine months ended December 31, 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 nine months ended December 31, 2015 and 2014 are as follows:


Reconciliation of Non-GAAP Financial Measures  Exhibit 1 
     
   Three Months Ended December 31,   Nine Months Ended December 31, 
  2015   2014   2015   2014  
GAAP Results:         
Net sales$  94,022,000  $  83,992,000  $  271,527,000  $  217,807,000  
Net income (loss)   7,748,000     2,927,000     8,266,000     8,351,000  
Diluted income (loss) per share (EPS)   0.41     0.16     0.44     0.49  
Gross margin 30.7%  29.1%   28.3%  27.9% 
Non-GAAP Adjusted Results:        
Non-GAAP adjusted net sales$  94,022,000  $  85,047,000  $  282,390,000  $  229,849,000  
Non-GAAP adjusted net income    9,942,000     8,048,000     30,086,000     22,939,000  
Non-GAAP adjusted diluted earnings per share (EPS)   0.52     0.43     1.59     1.33  
Non-GAAP adjusted gross margin 31.5%  29.7%  31.1%  31.7% 
Non-GAAP adjusted EBITDA   19,596,000     16,975,000     59,992,000     49,387,000  
         
Note: Results for the prior fiscal year three and nine months ended December 31, 2014 include recognition of net revenue related 
to cores of $12,625,000, which was previously deferred (which has a $3,892,000 gross profit and EBITDA impact).   

 

Reconciliation of Non-GAAP Financial Measures  Exhibit 2
     
    Three Months Ended December 31,   Nine Months Ended December 31,
   2015   2014   2015   2014 
Net sales, as reported$  94,022,000  $  83,992,000  $  271,527,000  $ 217,807,000 
Adjustments:       
Net sales       
Return and stock adjustment accruals   -     1,055,000     -     1,615,000 
Customer allowances associated with inventory purchases related to new product lines and additional business   -     -     10,863,000     10,427,000 
Adjusted net sales$  94,022,000  $  85,047,000  $  282,390,000  $  229,849,000 
          
Note: Results for the prior fiscal year three and nine months ended December 31, 2014 include recognition of net revenue related to cores of $12,625,000, which was previously deferred.
        

 

Reconciliation of Non-GAAP Financial MeasuresExhibit 3 
    
   Three Months Ended December 31,  
    2015     2014   
    $   Per Diluted
Share
 
  $   Per Diluted
Share
 
 
GAAP net income (loss), as reported$  7,748,000  $  0.41  $  2,927,000  $  0.16  
Adjustments:        
Net sales        
Return and stock adjustment accruals   -       1,055,000  $  0.06  
Cost of goods sold        
Lower of cost or market revaluation - cores on customers' shelves and inventory step-up amortization    752,000  $  0.04     302,000   $  0.02  
Cost of inventory purchases related to new product lines and additional business, and stock adjustment accrual   -        (518,000) $  (0.03) 
Operating expenses        
Discontinued subsidiaries legal related, severance and other costs   873,000  $  0.05     3,140,000  $  0.17  
Payment received in connection with the settlement of litigation related to discontinued subsidiaries   (5,800,000) $  (0.30)    -    
Bad debt expense resulting from the bankruptcy filing by a customer   4,451,000  $  0.23     -    
Share-based compensation expense   753,000  $  0.04     599,000  $  0.03  
Mark-to-market losses (gains)   1,070,000  $  0.06     2,862,000  $  0.15  
Tax effected at 39% tax rate (a)   95,000  $  0.005     (2,319,000) $  (0.12) 
Adjusted net income$  9,942,000  $  0.52  $  8,048,000  $  0.43  
          
(a) Tax effect at 39% of the income before income tax expense (reflecting the adjustments)       
           
Note: Results for the prior fiscal year three months ended December 31, 2014 include recognition of net revenue related to cores of $12,625,000, which was previously deferred 
(which has a $0.11 earnings per share impact).        
          

 

Reconciliation of Non-GAAP Financial MeasuresExhibit 4 
    
   Nine Months Ended December 31,   
    2015     2014   
   $   Per Diluted Share   $   Per Diluted Share  
GAAP net income, as reported$  8,266,000  $  0.44  $  8,351,000  $  0.49  
Adjustments:        
Net sales        
Return and stock adjustment accruals   -       1,615,000  $  0.09  
Customer allowances associated with inventory purchases related to new product lines and additional business  10,863,000  $ 0.57    10,427,000  $  0.61  
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   1,078,000  $  0.06     1,033,000     0.06  
Cost of inventory purchases related to new product lines and additional business, and stock adjustment accrual   (809,000) $  (0.04)    (983,000)    (0.06) 
Operating expenses        
Discontinued subsidiaries legal related, severance, acquisition, financing and other costs   5,126,000  $  0.27     5,053,000     0.29  
Payment received in connection with the settlement of litigation related to discontinued subsidiaries   (5,800,000) $  (0.31)    -    
Bad debt expense resulting from the bankruptcy filing by a customer   4,451,000  $  0.23     -    
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   1,786,000  $  0.09     1,697,000  $  0.10  
Mark-to-market losses (gains)   3,181,000  $  0.17     3,265,000  $  0.19  
Interest        
Write-off of prior deferred loan fees   5,108,000  $  0.27     -    
Tax effected at 39% tax rate (a)  (12,414,000) $  (0.65)    (7,708,000) $  (0.45) 
Adjusted net income$30,086,000  $ 1.59  $ 22,939,000  $  1.33  
          
(a) Tax effect at 39% of the income before income tax expense (reflecting the adjustments)       
          
Note: Results for the prior fiscal year nine months ended December 31, 2014 include recognition of net revenue related to cores of $12,625,000, which was previously deferred  
(which has a $0.12 earnings per share impact).        
          

 

Reconciliation of Non-GAAP Financial Measures  Exhibit 5
   
   Three Months Ended December 31, 
    2015     2014  
   $   Gross Margin   $   Gross Margin 
GAAP gross profit, as reported$  28,899,000   30.7% $  24,428,000   29.1%
Adjustments:        
Net sales       
Return and stock adjustment accruals   -       1,055,000   
Cost of goods sold        
Lower of cost or market revaluation - cores on customers' shelves and inventory step-up amortization   752,000        302,000   
Cost of inventory purchases related to new product lines and additional business, and stock adjustment accrual   -       (518,000)  
Total adjustments   752,000   0.8%    839,000   0.6%
Adjusted gross profit$  29,651,000   31.5% $  25,267,000   29.7%
         
Note: Results for the prior fiscal year three months ended December 31, 2014 include recognition of net revenue related to cores of $12,625,000, which was previously deferred
(which has a $3,892,000 gross profit impact and 0.2% gross margin impact).    

 

Reconciliation of Non-GAAP Financial MeasuresExhibit 6
  
   Nine Months Ended December 31, 
    2015     2014  
   $   Gross Margin   $   Gross Margin 
GAAP gross profit, as reported$  76,710,000   28.25% $  60,664,000   27.85%
Adjustments:       
Net sales       
Return and stock adjustment accruals   -       1,615,000   
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   1,078,000       1,033,000    
Cost of inventory purchases related to new product lines and additional business, and stock adjustment accrual   (809,000)      (983,000)  
Total adjustments   11,132,000   2.86%    12,281,000   3.88%
Adjusted gross profit$  87,842,000   31.11% $  72,945,000   31.74%
         
Note: Results for the prior fiscal year nine months ended December 31, 2014 include recognition of net revenue related to cores of $12,625,000, which was previously deferred
(which has a $3,892,000 gross profit impact and (0.1%) gross margin impact).    

 

Reconciliation of Non-GAAP Financial Measures  Exhibit 7 
      
    Three Months Ended December 31,   Nine Months Ended December 31, 
   2015   2014   2015   2014  
GAAP net income (loss), as reported$  7,748,000  $  2,927,000  $  8,266,000  $  8,351,000  
Interest expense, net  2,516,000    3,165,000     13,566,000     9,917,000  
Income tax expense (benefit)   6,451,000     2,826,000     6,821,000     6,958,000  
Depreciation and amortization   782,000     617,000     2,213,000     1,865,000   
EBITDA, as reported$17,497,000  $ 9,535,000  $ 30,866,000  $ 27,091,000  
          
Adjustments:        
Net sales        
Return and stock adjustment accruals   -     1,055,000     -     1,615,000  
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   752,000     302,000     1,078,000     1,033,000  
Cost of inventory purchases related to new product lines and additional business, and stock adjustment accrual   -     (518,000)    (809,000)    (983,000) 
Operating expenses        
Discontinued subsidiaries legal related, severance, acquisition, financing and other costs   873,000     3,140,000     5,126,000     5,053,000  
Payment received in connection with the settlement of litigation related to discontinued subsidiaries   (5,800,000)    -     (5,800,000)    -  
Bad debt expense resulting from the bankruptcy filing by a customer   4,451,000     -     4,451,000     -  
Expense for the company's litigation settlement, net of insurance recoveries, in the June 2013 bankruptcy cases relating to discontinued subsidiaries   -     -     9,250,000     -  
Share-based compensation expense   753,000     599,000     1,786,000     1,697,000  
Mark-to-market losses (gains)   1,070,000     2,862,000     3,181,000     3,265,000  
Adjusted EBITDA$ 19,596,000  $16,975,000  $ 59,992,000  $ 49,387,000  
          
Note: Results for the prior fiscal year three and nine months ended December 31, 2014 include recognition of net revenue related to cores of $12,625,000, which was previously deferred (which has a $3,892,000 EBITDA impact). 
         
          
CONTACT:          

Gary S. Maier

Maier & Company, Inc.

(310) 471-1288

Primary Logo

Source: Motorcar Parts of America, Inc.

News Provided by Acquire Media