Motorcar Parts of America, Inc. (NASDAQ:MPAA) Q2 2021 Results Conference Call November 9, 2020 1:00 PM ET Company Participants Gary Maier - IR Selwyn Joffe - Chairman, President and CEO David Lee - CFO Conference Call Participants Sarkis Sherbetchyan - B. Riley Securities Matt Koranda - ROTH Capital Brian Nagel - Oppenheimer Scott Stember - CL King Matt Dhane - Tieton Capital Operator Ladies and gentlemen, thank you for standing by, and welcome to the Motorcar Parts of America’s Fiscal 2021 Second Quarter C ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File No. 001-33861 MOTORCAR PARTS OF AMERICA, INC. (Exact name of registrant as specified in its charter) New York 11-2153962 (State or other jurisdiction ...

Motorcar Parts of America, Inc. (NASDAQ:MPAA) Q1 2021 Results Conference Call August 10, 2020 1:00 PM ET Company Participants Gary Maier - IR Selwyn Joffe - Chairman, President and CEO David Lee - CFO Conference Call Participants Matt Koranda - Roth Capital Ryan Sigdahl - Craig-Hallum Capital Brian Nagel - Oppenheimer Scott Stember - CL King Sarkis Sherbetchyan - B. Riley Bill Dezellem - Tieton Capital Operator Ladies and gentlemen, thank you for standing by and welcome to the Motorcar Parts of America, Inc ...

FOR THE TRANSITION PERIOD FROM TO UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 001-33861 MOTORCAR PARTS OF AMERICA, INC. (Exact name of registrant as specified in its charter) New York 11-2153962 (State or other jurisdiction of i ...

Investor Presentation – August 2020 ® motorcar parts of america, inc. "The Global Leader for Parts and Solutions That Move Our World Today and Tomorrow" Safe Harbor Statement 1 This presentation and any question and answer period or other communications afterwards may contain forward-looking statements with respect to the financial condition, results of operation and business of the company made pursuant to the safe harbor provisions of the Private Securities Litigation Act of 1995. These forward-looking st ...

Motorcar Parts of America, Inc. (NASDAQ:MPAA) Q4 2020 Earnings Conference Call June 15, 2020 1:00 PM ET Company Participants Gary Maier - Investor Relations Selwyn Joffe - Chairman, President and Chief Executive Officer David Lee - Chief Financial Officer Conference Call Participants Brian Nagel - Oppenheimer & Co. Ryan Sigdahl - Craig-Hallum Capital Scott Stember - CL King Associates Sarkis Sherbetchyan - B. Riley FBR William Dezellem - Tieton Capital Operator Ladies and gentlemen, thank you for standing ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to ______________ Commission File No. 001-33861 MOTORCAR PARTS OF AMERICA, INC. (Exact name of registrant as specified in its charter) | New York | 11-2153962 | | ...

PART I — FINANCIAL INFORMATION [Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Unaudited financial statements for December 31, 2019, reflect increased assets and liabilities, improved net income, and reduced operating cash outflow [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$726.7 million** by December 31, 2019, driven by higher inventory and new operating lease assets, with total liabilities also growing Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2019 | Mar 31, 2019 | | :--- | :--- | :--- | | **Total Assets** | **$726,742** | **$632,362** | | Inventory - net | $256,482 | $233,726 | | Operating lease assets | $65,652 | - | | Long-term contract assets | $224,569 | $221,876 | | **Total Liabilities** | **$442,416** | **$352,607** | | Revolving loan | $130,000 | $110,400 | | Operating lease liabilities (Current & Long-term) | $66,796 | - | | **Total Shareholders' Equity** | **$284,326** | **$279,755** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended December 31, 2019, net sales slightly increased, gross profit improved, and the company reported net income of **$865,000** Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Dec 31, 2019 | Three Months Ended Dec 31, 2018 | Nine Months Ended Dec 31, 2019 | Nine Months Ended Dec 31, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $125,574 | $124,113 | $385,096 | $343,720 | | Gross profit | $27,661 | $21,161 | $81,817 | $63,224 | | Operating income | $9,246 | $1,627 | $22,230 | $10,153 | | Net income (loss) | $865 | $(3,102) | $903 | $(5,084) | | Diluted EPS | $0.04 | $(0.16) | $0.05 | $(0.27) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly improved to **$4.4 million** for the nine months ended December 31, 2019, with financing activities providing **$13.5 million** Cash Flow Summary (Nine Months Ended Dec 31, in thousands) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,410) | $(20,328) | | Net cash used in investing activities | $(9,650) | $(13,244) | | Net cash provided by financing activities | $13,546 | $29,290 | | **Net decrease in cash and cash equivalents** | **$(453)** | **$(4,458)** | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail the adoption of ASC 842, significant customer concentration, and a pending **$17 million** customs duty claim - The company adopted the new lease guidance (ASC 842) on April 1, 2019, recording operating lease liabilities of **$53.0 million** and corresponding assets of **$50.8 million**[34](index=34&type=chunk) Significant Customer Concentration (as % of Net Sales) | Customer | Nine Months Ended Dec 31, 2019 | Nine Months Ended Dec 31, 2018 | | :--- | :--- | :--- | | Customer A | 39% | 36% | | Customer B | 21% | 23% | | Customer C | 23% | 23% | - The company is disputing a claim from U.S. Customs and Border Protection for approximately **$17 million** in additional duties from 2011 through mid-2018[93](index=93&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a **12.0%** increase in net sales, improved gross margins, and increased operating expenses, with liquidity supported by an amended credit facility [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Q3 net sales rose **1.2%** to **$125.6 million**, driven by new products and acquisitions, with gross margin expanding to **22.0%** due to product mix - For Q3 FY2020, the introduction of brake calipers contributed **$6.9 million** in net sales, and acquisitions from fiscal 2019 added **$6.1 million**[104](index=104&type=chunk) - Q3 gross profit margin improved by **5.0 percentage points** year-over-year, primarily due to a change in product mix and a smaller non-cash revaluation write-down of cores[105](index=105&type=chunk) - For the nine months ended Dec 31, 2019, net sales increased by **$41.4 million (12.0%)**, with acquisitions contributing **$17.3 million** and the new brake caliper line adding **$11.5 million**[115](index=115&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Working capital was **$75.1 million** as of December 31, 2019, with liquidity supported by an amended **$238.6 million** revolving credit facility and receivable discount programs - In June 2019, the company amended its credit facility, increasing the revolving loan facility from **$200.0 million** to **$238.6 million**[124](index=124&type=chunk)[132](index=132&type=chunk) - At December 31, 2019, the company had **$130.0 million** outstanding under its revolving facility and **$73.8 million** available for borrowing[136](index=136&type=chunk) - The company's share repurchase program had **$21.3 million** remaining available as of December 31, 2019, though no shares were repurchased during the quarter[126](index=126&type=chunk)[165](index=165&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk exposures have occurred since the Annual Report on Form 10-K for the fiscal year ended March 31, 2019 - There have been no material changes in market risk since the Annual Report on Form 10-K as of March 31, 2019[148](index=148&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective due to a material weakness in internal control over financial reporting, with remediation efforts underway - Management concluded that disclosure controls and procedures were not effective as of December 31, 2019, due to a previously identified material weakness[149](index=149&type=chunk) - The material weakness stems from an insufficient review of accounting policies and a lack of technical accounting resources, leading to inconsistent application and inadequate analysis[156](index=156&type=chunk) - Remediation efforts are underway, including hiring more experienced personnel and enhancing training and monitoring, with a target completion before the end of fiscal year 2020[152](index=152&type=chunk)[153](index=153&type=chunk) PART II — OTHER INFORMATION [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) No material changes to litigation matters have occurred since the Annual Report on Form 10-K for the fiscal year ended March 31, 2019 - No material changes to litigation matters have occurred since the last annual report[162](index=162&type=chunk) [Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the Annual Report on Form 10-K for the fiscal year ended March 31, 2019 - No material changes to risk factors have occurred since the last annual report[163](index=163&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No equity securities were repurchased during the quarter, with **$21.3 million** remaining available under the authorized share repurchase program - No shares were repurchased during the three months ended December 31, 2019[165](index=165&type=chunk) - As of December 31, 2019, **$21.3 million** remained available under the company's authorized share repurchase program[165](index=165&type=chunk) [Other Information](index=39&type=section&id=Item%205.%20Other%20Information) No additional material information is reported for this item - None[166](index=166&type=chunk) [Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents and Sarbanes-Oxley Act certifications - Exhibits filed with this report include certifications from the Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act[169](index=169&type=chunk)

Financial Data and Key Metrics Changes - Net sales for Q3 2020 increased to $125.6 million from $124.1 million year-over-year, with adjusted net sales rising to $127.7 million from $119.6 million [25] - Gross profit for Q3 2020 was $27.7 million, up from $21.2 million a year earlier, with gross profit as a percentage of net sales increasing to 22% from 17% [26] - Adjusted net income for Q3 2020 was $5.5 million or $0.28 per diluted share, compared to $6.7 million or $0.35 per share a year ago [34] Business Line Data and Key Metrics Changes - The company is focusing on maintaining growth rates in hard parts categories and launching into the multi-billion dollar brake parts category [14] - The facility expansion in Malaysia is substantially complete, allowing for increased capacity and reduced dependence on outsourcing [11] Market Data and Key Metrics Changes - The market for internal combustion engine vehicles in the U.S. is projected to increase by 36 million from 2020 to 2030, which will drive growth in the aftermarket parts replacement industry [12] - The company expects to generate approximately $534 million in net sales for fiscal 2020, representing a 13% year-over-year growth [20] Company Strategy and Development Direction - The company is executing strategic investments to create a transformative platform for growth and profitability within the $125 billion aftermarket hard parts industry [8] - The strategy includes leveraging channel relationships for aftermarket parts and expanding into electric vehicle diagnostics and testing [16] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the outlook for current and expanding product lines, despite short-term softness in demand due to mild weather and deferred orders [21] - The company expects continued year-over-year sales increases and improved adjusted gross margins and operating income for fiscal 2020 [18] Other Important Information - The company has established itself as a leader in supplying internal combustion vehicle hard parts, with significant growth expected in the aftermarket parts replacement industry [12] - The company has a net bank debt of approximately $145.6 million and total cash availability of about $83.2 million as of December 31, 2019 [38] Q&A Session Summary Question: Can you provide more detail on specifics driving the revenue mix? - Management indicated that nearly all underperformance was due to the deferral of over $12 million in product orders, which are expected to hit in future quarters [46] Question: How do you see the impact of the coronavirus on supply chains? - Management stated there has been no effect from the coronavirus as of now, but there are risks associated with unique update orders and componentry sourced from China [58] Question: What are the expectations for the new brake caliper line? - Management expects revenue from calipers to be closer to $25 million to $30 million, depending on order timing [63] Question: How do you feel about capacity and CapEx needs for fiscal 2021? - Management indicated that CapEx will drop dramatically as facilities are completed, and they are well set up to handle expected growth [54] Question: What is the company's plan for debt repayment moving forward? - Management plans to minimize outstanding debt from the revolver and will consider capital allocation for shareholder value once stable positive cash flows are achieved [72]

Financial Data and Key Metrics Changes - Net sales for Q2 2020 increased 17.5% to $150.4 million from $127.9 million year-over-year, driven by sales growth in both hard parts and diagnostic products [22] - Adjusted net sales for Q2 2020 rose 16.4% to $151.4 million from $130.2 million a year earlier [23] - Gross profit for Q2 2020 was $36.6 million, up from $25.7 million a year ago, with gross profit as a percentage of net sales at 24.3% compared to 20.1% [23] - Adjusted net income for Q2 2020 was $13 million or $0.68 per diluted share, compared to $11.5 million or $0.60 per diluted share a year earlier [30] Business Line Data and Key Metrics Changes - The hard parts business saw significant growth, particularly with the launch of the new brake caliper line, which began shipping in Q2 [10] - The diagnostic and testing business is emerging, with expectations for significant revenue generation opportunities in the automotive and aerospace sectors [13] Market Data and Key Metrics Changes - The company is positioned as a major multi-product supplier to the North American aftermarket, with a growing presence in electric vehicle diagnostics [16] - The number of prime placement age vehicles is increasing, supporting optimism for growth in the aftermarket industry over the next several years [19] Company Strategy and Development Direction - The company is focused on increasing absorption from newly expanded distribution centers and relocating operations to lower-cost locations in Mexico and Malaysia [11][12] - Strategic partnerships, such as with OPAL-RT, are enhancing the company's capabilities in electric vehicle powertrain development [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining a growth rate of over 16% in Q3 and anticipates exponential growth in Q4 due to large initiatives [42] - The company expects to generate positive cash flows from operations in the second half of the fiscal year, supported by reduced payments for core buybacks [37] Other Important Information - The company maintains its adjusted net sales guidance for fiscal year 2020 between $552 million and $562 million, representing 16% to 18% growth year-over-year [18] - Adjusted gross margin for fiscal year 2020 is expected to be approximately 27%, impacted by product mix [18] Q&A Session Summary Question: Revenue guidance for fiscal 2020 - Management is comfortable sustaining a 16% growth rate in Q3 and expects additional growth in Q4 due to large initiatives [42] Question: Price increases implementation - Price increases initiated in Q2 are expected to be fully reflected in Q3 [43] Question: Capacity utilization trends - Management anticipates improved operating efficiencies in the next six months as new facilities ramp up [44] Question: Gross margin guidance - Management indicated that ramp-up costs and new product costs are impacting gross margins, but efficiency improvements are expected [52] Question: Revenue growth drivers - Growth is attributed to existing product lines and market share gains, with a minor contribution from tariff passthrough [56] Question: Heavy-duty truck demand - Management is optimistic about heavy-duty product integration and expects gains from consolidating orders through the new distribution warehouse [58] Question: Accounts receivable increase - The increase in accounts receivable is due to record sales in September, which are expected to convert to cash in Q3 [73]