Motorcar Parts of America(MPAA) - 2026 Q1 - Quarterly Results

Executive Summary & Fiscal First Quarter 2026 Performance Key Financial Highlights Motorcar Parts of America reported record sales and gross profit for its fiscal 2026 first quarter, alongside a significant improvement in operating income and a return to net income. The company also generated solid cash flow from operations and reduced net bank debt | Metric | Q1 FY2026 (June 30, 2025) | Q1 FY2025 (June 30, 2024) | Change (%) | | :-------------------------------- | :------------------------ | :------------------------ | :--------- | | Net Sales | $188.4 million | $169.9 million | 10.9% | | Gross Profit | $33.9 million | $29.2 million | 16.3% | | Gross Margin | 18.0% | 17.2% | 0.8 pp | | Operating Income (Loss) | $20.1 million | $(6.5) million | N/A | | Net Income (Loss) | $3.0 million | $(18.1) million | N/A | | Diluted EPS | $0.15 | $(0.92) | N/A | | Cash from Operating Activities | $10.0 million | $(20.8) million | N/A | | Net Bank Debt | $74.4 million | $81.4 million | (8.6%) | - Operating income, excluding non-cash foreign exchange impact, increased 153.6% to $11.7 million from $4.6 million in the prior year[6] - Interest expense decreased by $1.6 million to $12.8 million, driven by lower average outstanding balances and reduced interest rates[8] Management Commentary CEO Selwyn Joffe expressed satisfaction with the record first-quarter results, emphasizing the company's focus on supply chain and operating efficiencies. He highlighted favorable industry dynamics, including an increasing number of vehicles and an aging car parc, and noted proactive efforts to reduce reliance on Chinese suppliers - The company is focused on enhancing its supply chain and operating efficiencies to capitalize on its prominent position in the non-discretionary automotive aftermarket business[10][12] - Favorable industry dynamics, such as an increasing number of vehicles on the road and an aging car parc (currently 12.8 years in the U.S.), continue to drive the automotive aftermarket[11] - Reliance on Chinese suppliers has been significantly reduced to less than 25% of parts and components, with optimism for a successful resolution of current global economic events related to tariffs[12] Share Repurchase Activity During the fiscal 2026 first quarter, the company repurchased shares under its current authorization program, supported by strong cash generation | Metric | Q1 FY2026 | | :-------------------- | :---------- | | Shares Repurchased | 197,796 | | Total Value | $2.0 million | | Average Price per Share | $9.94 | - The company anticipates further opportunities to build shareholder value through enhanced profitability and strong cash generation[14] Fiscal 2026 Guidance Update Motorcar Parts of America has increased its fiscal 2026 sales guidance, reflecting a strong start to the fiscal year and the impact of tariff passthroughs. Operating income guidance remains reaffirmed, incorporating tariff passthroughs and cost mitigation | Metric | Updated Fiscal 2026 Guidance | | :-------------------- | :--------------------------- | | Net Sales | $800 million to $820 million | | YoY Sales Growth | 5.6% to 8.3% | | Operating Income | $86 million to $91 million | | YoY Operating Income Growth | 4.3% to 10.4% | | Depreciation & Amortization | Approximately $11 million | - The sales guidance increase incorporates the impact of tariff passthroughs[15] - Operating income guidance reflects a combination of tariff passthroughs and cost mitigation measures[15] Company Information About Motorcar Parts of America, Inc. Motorcar Parts of America is a remanufacturer, manufacturer, and distributor of automotive aftermarket parts for various vehicle types, serving retail and professional repair markets across North America. The company also has an electrical vehicle subsidiary focused on testing solutions for the electrification of automotive and aerospace industries - The company's core business involves remanufacturing, manufacturing, and distributing automotive aftermarket parts such as alternators, starters, brake components, and turbochargers[18] - Products are sold to automotive retail outlets and the professional repair market in the United States, Canada, and Mexico[18] - An electrical vehicle subsidiary designs and manufactures testing solutions for performance, endurance, and production of multiple components in the electric power train, including EV charging systems[18] Safe Harbor Statement The Private Securities Litigation Reform Act of 1995 provides a 'safe harbor' for forward-looking statements made in this press release. These statements are based on current expectations and involve significant risks and uncertainties, as detailed in the company's SEC filings - Forward-looking statements are subject to significant risks and uncertainties, some beyond the company's control, and are subject to change[19] - Investors are referred to the Risk Factors in the company's Form 10-K and 10-Q filings with the SEC for additional information on risks and uncertainties[19] Consolidated Financial Statements Consolidated Statements of Operations (Unaudited) The consolidated statements of operations show a strong performance for Q1 FY2026, with significant increases in net sales and gross profit, and a shift from an operating loss to a substantial operating income, leading to positive net income | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :----------------------------------------- | :------------------------------- | :------------------------------- | | Net sales | $188,364,000 | $169,887,000 | | Cost of goods sold | $154,447,000 | $140,713,000 | | Gross profit | $33,917,000 | $29,174,000 | | Total operating expenses | $13,848,000 | $35,630,000 | | Operating income (loss) | $20,069,000 | $(6,456,000) | | Interest expense, net | $12,812,000 | $14,387,000 | | Income (loss) before income tax expense (benefit) | $5,467,000 | $(18,263,000) | | Net income (loss) | $3,042,000 | $(18,085,000) | | Diluted net income (loss) per share | $0.15 | $(0.92) | Consolidated Balance Sheets The balance sheet as of June 30, 2025, shows an increase in total assets and shareholders' equity compared to March 31, 2025, reflecting improved financial health. Cash and cash equivalents also increased | Metric | June 30, 2025 (Unaudited) | March 31, 2025 | | :-------------------------------- | :-------------------------- | :------------- | | ASSETS | | | | Cash and cash equivalents | $12,479,000 | $9,429,000 | | Total current assets | $519,382,000 | $511,471,000 | | TOTAL ASSETS | $973,350,000 | $957,636,000 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Total current liabilities | $360,616,000 | $351,025,000 | | Revolving loan | $86,856,000 | $90,787,000 | | Total liabilities | $713,237,000 | $699,937,000 | | Total shareholders' equity | $260,113,000 | $257,699,000 | | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $973,350,000 | $957,636,000 | - Cash and cash equivalents increased by $3.05 million from March 31, 2025, to June 30, 2025[24] - The revolving loan balance decreased by $3.931 million from March 31, 2025, to June 30, 2025[24] Non-GAAP Financial Measures and Additional Information Use of Non-GAAP Measures Explanation The company uses non-GAAP measures, such as EBITDA, to provide investors and management with additional insights into financial and business trends. These measures are supplementary to GAAP and should not be considered substitutes, as they have limitations and may not be comparable to other companies' metrics - EBITDA is defined as earnings before interest, taxes, depreciation, and amortization[16][27] - Non-GAAP measures do not reflect all costs and items associated with business operations in accordance with GAAP and may differ from similar measures used by other companies[16][26] Items Impacting Net Income (Exhibit 1) Exhibit 1 provides a reconciliation of GAAP net income (loss) to adjusted net income by detailing non-cash and cash items impacting net income for the three months ended June 30, 2025 and 2024 | Item | Q1 FY2026 ($) | Q1 FY2026 (Per Diluted Share) | Q1 FY2025 ($) | Q1 FY2025 (Per Diluted Share) | | :---------------------------------------------------------- | :------------ | :---------------------------- | :------------ | :---------------------------- | | GAAP net income (loss) | $3,042,000 | $0.15 | $(18,085,000) | $(0.92) | | Total non-cash items impacting net income | $(1,304,000) | $(0.07) | $9,465,000 | $0.48 | | Foreign exchange impact of lease liabilities and forward contracts | $(8,348,000) | $(0.42) | $11,078,000 | $0.56 | | Total cash items impacting net income | $1,069,000 | $0.05 | $2,205,000 | $0.11 | | Net tariff costs paid for products sold before price increases were effective | $1,426,000 | $0.07 | - | - | Items Impacting Gross Profit (Exhibit 2) Exhibit 2 details the non-cash and cash items that impacted gross profit and gross margin for the three months ended June 30, 2025 and 2024 | Item | Q1 FY2026 ($) | Q1 FY2026 (Gross Margin %) | Q1 FY2025 ($) | Q1 FY2025 (Gross Margin %) | | :---------------------------------------------------------- | :------------ | :------------------------- | :------------ | :------------------------- | | GAAP gross profit | $33,917,000 | 18.0% | $29,174,000 | 17.2% | | Total non-cash items impacting gross profit | $3,873,000 | 2.1% | $3,122,000 | 1.8% | | Core and finished goods premium amortization | $2,847,000 | 1.5% | $2,728,000 | 1.6% | | Total cash items impacting gross profit | $1,426,000 | 0.8% | - | 0.0% | | Net tariff costs paid for products sold before price increases were effective | $1,426,000 | 0.8% | - | - | Items Impacting EBITDA (Exhibit 3) Exhibit 3 provides a reconciliation of GAAP net income (loss) to EBITDA, along with the non-cash and cash items impacting EBITDA for the three months ended June 30, 2025 and 2024 | Item | Q1 FY2026 ($) | Q1 FY2025 ($) | | :---------------------------------------------------------- | :------------ | :------------ | | GAAP net income (loss) | $3,042,000 | $(18,085,000) | | Interest expense, net | $12,812,000 | $14,387,000 | | Income tax expense (benefit) | $2,425,000 | $(178,000) | | Depreciation and amortization | $2,449,000 | $2,729,000 | | EBITDA | $20,728,000 | $(1,147,000) | | Total non-cash items impacting EBITDA | $(1,739,000) | $12,620,000 | | Foreign exchange impact of lease liabilities and forward contracts | $(8,348,000) | $11,078,000 | | Total cash items impacting EBITDA | $1,426,000 | $2,940,000 | Earnings Conference Call and Webcast Motorcar Parts of America hosted an investor conference call and webcast to discuss its financial results and operations, with replay options available - The conference call was held on August 11, 2025, at 10:00 a.m. Pacific time[17] - Access was available via live audio webcast at www.motorcarparts.com or by phone[17] - A telephone playback of the conference call was available until August 18, 2025[17]