Motorcar Parts of America Q3 Earnings Call Highlights

Core Insights - The company expects fiscal 2026 sales to be impacted by approximately $50 million due to store closures and distribution center consolidation, leading to a revised sales guidance of $750–760 million and operating income of $72–79 million [1][6][12] Financial Performance - The third-quarter performance fell short of expectations primarily due to a significant sales disruption from a large customer, although demand is beginning to recover [3][6] - Gross margin decreased to 19.6% from 24.1% year-over-year, but showed sequential improvement from 18.0% in Q1 to 19.6% in Q3, with management expecting further gains [5][8][10] - The company generated $23.7 million in cash over the first nine months of fiscal 2026 and reduced net bank debt to $70.5 million, maintaining a net bank debt-to-EBITDA ratio of 0.84 [4][13][16] Strategic Focus - The company aims to be a leading supplier of nondiscretionary automotive aftermarket parts, benefiting from an aging vehicle fleet, with the average age of U.S. light vehicles increasing to 12.8 years [17] - Growth initiatives include expanding the Quality-Built offering, momentum in the Heavy Duty business, and demand growth in Mexico, where the vehicle count increased by 2.8% year-over-year [17][18] - The company is exploring strategic alternatives for its EV Emulator business, which is considered a non-core asset, while investing in next-generation technology for the EV market [20] Future Outlook - The company plans to provide fiscal 2027 guidance during its fiscal year-end call in June and remains optimistic about future growth despite current challenges [21]