News Column

Motorcar Parts of America Reports Record Sales for Fiscal 2014 Third Quarter and Nine-Months

February 10, 2014

LOS ANGELES, Feb. 10, 2014 (GLOBE NEWSWIRE) -- Motorcar Parts of America, Inc. (Nasdaq:MPAA) today reported results for its fiscal 2014 third quarter and nine-month period ended December 31, 2013 – reflecting continued growth of its rotating electrical business and the second full quarter of contributions from the company's wheel hub product line.

Net sales for the fiscal 2014 third quarter increased 29.4 percent to $65.6 million from $50.7 million for the same period last year. Net income for the quarter was $1.1 million, or $0.08 per diluted share, compared with net income of $935,000, or $0.06 per diluted share, a year ago – reflecting the impact of mark-to-market warrant expense due to stock appreciation and the write-off of prior deferred loan origination fees associated with the previous loan.

Excluding certain costs and non-cash expenses noted in the Reconciliation of Non-GAAP Financial Measures tables below, adjusted net income for the fiscal 2014 third quarter was $5.9 million, or $0.39 per diluted share, compared with $2.7 million, or $0.18 per diluted share, for the same period a year earlier.

Gross profit for the fiscal 2014 third quarter was $21.9 million compared with $16.3 million a year earlier. Gross profit as a percentage of sales was 33.4 percent compared with 32.2 percent a year earlier. Gross profit in the current fiscal year benefited from enhanced utilization of our facilities, due in part to higher production and purchasing volume.

Net sales for the nine months increased 17.3 percent to $182.0 million from $155.1 million a year ago. Net income for the fiscal 2014 nine-month period was $104.3 million, or $7.04 per diluted share, compared with a net loss of $17.9 million, or $1.25 per share, a year ago. Results for the fiscal 2014 nine-month period reflect a nonrecurring gain on the deconsolidation of assets and liabilities of the company's discontinued subsidiaries realized in the first fiscal quarter of 2014.

Excluding certain costs and non-cash expenses noted in the Reconciliation of Non-GAAP Financial Measures tables below, adjusted net income for the nine-month period was $14.5 million, or $0.98 per diluted share, compared with $10.1 million, or $0.71 per diluted share, for the same period a year earlier.

"Results for the quarter benefitted from continued strong industry dynamics within the non-discretionary automotive aftermarket sector. We anticipate this momentum will continue, supported by an aging vehicle population and recent extreme weather conditions throughout most of the nation. I appreciate our team's efforts in accomplishing industry-leading customer service levels," said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America.

Use of Non-GAAP Measures

We define adjusted net income (loss) as net income (loss) adjusted for certain items related to thecompany's discontinued subsidiaries, as well as financing, consulting and other fees. We define Adjusted EBITDA as adjusted net income (loss), plus interest expense, income tax expense and depreciation and amortization. Adjusted net income (loss) does not reflect many items that affect the company's net income (loss), including many items related to company's discontinued subsidiaries.  Adjusted EBITDA does not reflect the impact of a number of items that affect the company's net income, including financing costs and matters related to the company's discontinued subsidiaries.  Adjusted EBITDA and adjusted net income (loss) are not measures of financial performance under GAAP, and should not be considered as alternatives to net income or income from operations as a measure of liquidity.  Adjusted EBITDA and adjusted net income (loss) 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 net income (loss) to Adjusted EBITDA and adjusted net income (loss) see the financial tables included in the 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 10:00 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 1:00 p.m. Pacific time today through 8:59 p.m. Pacific time on Monday, February 17, 2014 by calling (855)-859-2056 (domestic) or (404)-537-3406 (international) and using access code: 49666177.

About Motorcar Parts of America

Motorcar Parts of America, Inc. is a remanufacturer, manufacturer and distributor of automotive aftermarket parts -- including alternators, starters and wheel hub assembly products 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 remanufacturing facilities located in California, Mexico and Malaysia, 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 2013 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 Operations
(Unaudited)
         
 Three Months EndedNine Months Ended
 December 31, December 31, 
 2013201220132012
         
Net sales  $ 65,568,000  $ 50,658,000  $ 181,987,000  $ 155,109,000
Cost of goods sold  43,642,000  34,332,000  124,342,000  103,868,000
Gross profit  21,926,000  16,326,000  57,645,000  51,241,000
Operating expenses:        
General and administrative  9,580,000  8,848,000  27,918,000  19,154,000
Sales and marketing  1,905,000  1,983,000  5,779,000  5,479,000
Research and development  452,000  445,000  1,399,000  1,342,000
Total operating expenses  11,937,000  11,276,000  35,096,000  25,975,000
Operating income  9,989,000  5,050,000  22,549,000  25,266,000
Interest expense, net  6,524,000  2,384,000  15,112,000  8,373,000
Income from continuing operations before income tax expense  3,465,000  2,666,000  7,437,000  16,893,000
Income tax expense  2,317,000  880,000  4,022,000  6,237,000
Income from continuing operations  1,148,000  1,786,000  3,415,000  10,656,000
Income (loss) from discontinued operations  --   (851,000)  100,877,000  (28,516,000)
         
Net income (loss)  $ 1,148,000  $ 935,000  $ 104,292,000  $ (17,860,000)
         
         
Basic net income per share from continuing operations  $ 0.08  $ 0.12  $ 0.24  $ 0.75
Basic net income (loss) per share from discontinued operations  --   $ (0.06)  6.95  (2.00)
         
Basic net income (loss) per share  $ 0.08  $ 0.06  $ 7.19  $ (1.25)
         
         
Diluted net income per share from continuing operations  $ 0.08  $ 0.12  $ 0.23  $ 0.74
Diluted net income (loss) per share from discontinued operations  --   $ (0.06)  6.81  $ (1.99)
         
Diluted net income (loss) per share  $ 0.08  $ 0.06  $ 7.04  $ (1.25)
         
Weighted average number of shares outstanding:        
Basic 14,618,930 14,463,782 14,513,864 14,283,080
         
Diluted 15,262,497 14,525,613 14,820,341 14,348,814
 
 
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
     
     
 December 31, 2013March 31, 2013
ASSETS(Unaudited)  
Current assets:    
Cash   $ 33,330,000  $ 19,346,000
Short-term investments   496,000  411,000
Accounts receivable — net   2,634,000  3,689,000
Inventory— net   43,220,000  31,838,000
Inventory unreturned   7,199,000  6,981,000
Deferred income taxes   13,909,000  30,075,000
Prepaid expenses and other current assets   2,369,000  8,195,000
Current assets of discontinued operations   --  52,096,000
Total current assets   103,157,000  152,631,000
Plant and equipment — net   10,392,000  10,036,000
Long-term core inventory — net   134,517,000  118,211,000
Long-term core inventory deposits   28,857,000  27,610,000
Long-term deferred income taxes   13,189,000  2,546,000
 Intangible assets — net   3,425,000  3,983,000
Other assets   3,803,000  5,618,000
Long-term assets of discontinued operations   --  44,334,000
TOTAL ASSETS   $ 297,340,000  $ 364,969,000
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities:     
Accounts payable   $ 49,997,000  $ 39,152,000
Accrued liabilities   7,717,000  9,326,000
Customer finished goods returns accrual   12,930,000  14,289,000
Revolving loan   10,000,000  -- 
Other current liabilities   1,036,000  1,192,000
Current portion of term loan (Net of discount of $557,000 and $125,000, respectively)   7,843,000  3,775,000
Current liabilities of discontinued operations   --   151,914,000
Total current liabilities   89,523,000  219,648,000
Term loan, less current portion (Net of discount of $5,372,000 and $1,980,000, respectively)   81,228,000  78,130,000
Deferred core revenue   13,410,000  12,014,000
Other liabilities   7,746,000  3,481,000
Long-term liabilities of discontinued operations   --   55,210,000
Total liabilities   191,907,000  368,483,000
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, 20,000,000 shares authorized;     
14,836,980 and 14,460,979 shares issued and outstanding at December 31, 2013 and     
March 31, 2013, respectively   148,000  145,000
Additional paid-in capital   119,418,000  114,737,000
Accumulated other comprehensive loss   (875,000)  (846,000)
Accumulated deficit   (13,258,000)  (117,550,000)
Total shareholders' equity (deficit)   105,433,000  (3,514,000)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 297,340,000  $ 364,969,000


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, 2013 and 2012. 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, 2013 and 2012 are as follows:

           
Reconciliation of Non-GAAP Financial Measures      Exhibit 1  
           
 Three months ended December 31, 2013 (Unaudited)
   Adjustment  Adjusted  
Income statementAs Reported(Non-GAAP)  (Non-GAAP)  
           
Net sales  $ 65,568,000  $ --     $ 65,568,000  
Cost of goods sold  43,642,000  --     43,642,000  
Gross profit  21,926,000  --     21,926,000  
Gross margin 33.4%     33.4%  
Operating expenses:          
General and administrative  9,580,000  (3,417,000)  (1)   6,163,000  
Sales and marketing  1,905,000      1,905,000  
Research and development  452,000      452,000  
Total operating expenses  11,937,000  (3,417,000)    8,520,000  
Operating income  9,989,000  3,417,000    13,406,000  
Interest expense, net  6,524,000  (2,809,000)  (2)   3,715,000 (B)
Income from continuing operations before income tax expense  3,465,000  6,226,000    9,691,000  
Income tax expense  2,317,000  1,462,000  (3)   3,779,000 (B)
Income from continuing operations  1,148,000  4,764,000    5,912,000  
Net income (loss)  $ 1,148,000  $ 4,764,000    $ 5,912,000 (A)
           
Diluted net income per share      $ 0.39  
Weighted average number of shares outstanding:          
Diluted     15,262,497  
Depreciation and amortization    675,000 (B)
Adjusted EBITDA - Sum of (A) and (B)        $ 14,081,000  
           
           
(1) Discontinued subsidiaries legal, severance and other costs  478,000        
 Share-based compensation expense  309,000        
 Mark-to-market losses  2,630,000        
 Total  3,417,000        
(2) Write-off of prior deferred loan fees  2,809,000        
(3) Tax effected at 39% tax rate          
           
Reconciliation of Non-GAAP Financial Measures      Exhibit 2  
           
 Three months ended December 31, 2012 (Unaudited)
   Adjustment  Adjusted  
Income statementAs Reported(Non-GAAP)  (Non-GAAP)  
           
Net sales  $ 50,658,000  $ --     $ 50,658,000  
Cost of goods sold  34,332,000  --     34,332,000  
Gross profit  16,326,000  --     16,326,000  
Gross margin 32.2%     32.2%  
Operating expenses:          
General and administrative  8,848,000  (3,222,000)  (1)   5,626,000  
Sales and marketing  1,983,000  --     1,983,000  
Research and development  445,000  --     445,000  
Total operating expenses  11,276,000  (3,222,000)    8,054,000  
Operating income  5,050,000  3,222,000    8,272,000  
Interest expense, net  2,384,000  1,501,000  (2)   3,885,000 (B)
Income from continuing operations before income tax expense  2,666,000  1,721,000    4,387,000  
Income tax expense  880,000  831,000  (3)   1,711,000 (B)
Income from continuing operations  1,786,000  890,000    2,676,000  
Income (loss) from discontinued operations  (851,000)  851,000  (4)   --   
Net income (loss)  $ 935,000  $ 1,741,000    $ 2,676,000 (A)
           
Diluted net income per share        $ 0.18  
Weighted average number of shares outstanding:          
Diluted       14,525,613  
Depreciation and amortization        699,000 (B)
Adjusted EBITDA - Sum of (A) and (B)        $ 8,971,000  
           
(1) Financing and other fees  1,443,000        
 Share-based compensation expense  917,000        
 Mark-to-market losses  862,000        
 Total  3,222,000        
(2) Intersegment interest income  1,501,000        
(3) Tax effected at 39% tax rate          
(4) Discontinued operations  851,000        
           
Reconciliation of Non-GAAP Financial Measures      Exhibit 3  
           
 Nine months ended December 31, 2013 (Unaudited)
   Adjustment  Adjusted  
Income statementAs Reported(Non-GAAP)  (Non-GAAP)  
           
Net sales  $ 181,987,000  $ 1,412,000  (1)   $ 183,399,000  
Cost of goods sold  124,342,000  29,000  (2)   124,371,000  
Gross profit  57,645,000  1,383,000    59,028,000  
Gross margin 31.7%     32.2%  
Operating expenses:          
General and administrative  27,918,000  (11,360,000)  (3)   16,558,000  
Sales and marketing  5,779,000  (21,000)  (4)   5,758,000  
Research and development  1,399,000  (75,000)  (5)   1,324,000  
Total operating expenses  35,096,000  (11,456,000)    23,640,000  
Operating income  22,549,000  12,839,000    35,388,000  
Interest expense, net  15,112,000  (3,462,000)  (6)   11,650,000 (B)
Income from continuing operations before income tax expense  7,437,000  16,301,000    23,738,000  
Income tax expense  4,022,000  5,235,000  (7)   9,258,000 (B)
Income from continuing operations  3,415,000  11,066,000    14,480,000  
Income (loss) from discontinued operations  100,877,000  (100,877,000)  (8)   --   
Net income (loss)  $ 104,292,000  $ (89,811,000)    $ 14,480,000 (A)
           
Diluted net income per share        $ 0.98  
Weighted average number of shares outstanding:          
Diluted       14,820,341  
Depreciation and amortization        2,091,000 (B)
Adjusted EBITDA - Sum of (A) and (B)        $ 37,479,000  
           
(1) Return, stock adjustment and rebates accruals  1,412,000        
(2) Cost of stock adjustment accrual and discontinued subsidiaries costs  (29,000)        
(3) Discontinued subsidiaries legal, financing, severance and other costs  3,386,000        
 Share-based compensation expense  550,000        
 Mark-to-market losses  7,424,000        
 Total  11,360,000        
(4) Discontinued subsidiaries-related expenses  21,000        
(5) Consulting fees  75,000        
(6) Discontinued subsidiaries' supplier revolving credit line interest and write-off of prior deferred loan fees  3,462,000        
(7) Tax effected at 39% tax rate          
(8) Discontinued operations  (100,877,000)        
           
Reconciliation of Non-GAAP Financial Measures      Exhibit 4  
           
 Nine months ended December 31, 2012 (Unaudited)
   Adjustment  Adjusted  
Income statementAs Reported(Non-GAAP)  (Non-GAAP)  
           
Net sales  $ 155,109,000  $ --     $ 155,109,000  
Cost of goods sold  103,868,000  --     103,868,000  
Gross profit  51,241,000  --     51,241,000  
Gross margin 33.0%     33.0%  
Operating expenses:          
General and administrative  19,154,000  (3,363,000)  (1)   15,791,000  
Sales and marketing  5,479,000  --     5,479,000  
Research and development  1,342,000  --     1,342,000  
Total operating expenses  25,975,000  (3,363,000)    22,612,000  
Operating income  25,266,000  3,363,000    28,629,000  
Interest expense, net  8,373,000  3,669,000  (2)   12,042,000 (B)
Income from continuing operations before income tax expense  16,893,000  (306,000)    16,587,000  
Income tax expense  6,237,000  232,000  (3)   6,469,000 (B)
Income from continuing operations  10,656,000  (538,000)    10,118,000  
Income (loss) from discontinued operations  (28,516,000)  28,516,000  (4)   --   
Net income (loss)  $ (17,860,000)  $ 27,978,000    $ 10,118,000 (A)
           
Diluted net income per share      $ 0.71  
Weighted average number of shares outstanding:          
Diluted     14,348,814  
Depreciation and amortization    2,137,000 (B)
Adjusted EBITDA - Sum of (A) and (B)        $ 30,766,000  
           
(1) Financing and other fees  1,982,000        
 Share-based compensation expense  917,000        
 Mark-to-market (gains)  464,000        
 Total  3,363,000        
(2) Intersegment interest income  3,669,000        
(3) Tax effected at 39% tax rate          
(4) Discontinued operations  28,516,000        

CONTACT: Gary S. MaierMaier & Company, Inc. (310) 471-1288

Source: Motorcar Parts of America


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