Motorcar Parts of America Reports Results for Fiscal Third Quarter and Nine Months

Motorcar Parts of America, Inc. (Nasdaq: MPAA) today reported results for its fiscal 2024 third quarter and nine-months ended December 31, 2023 -- reflecting a strong increase in net sales, operating income and cash flow from operating activities.

Key highlights for the fiscal third quarter.

Net sales increased 13.2 percent to $171.9 million.

Gross margin improved by 3.7 percentage points.

Gross profit increased 43.1 percent to $30.0 million.

Operating income increased 170.1 percent to $9.5 million.

The company generated cash of approximately $53.6 million.

Net sales for the fiscal 2024 third quarter increased 13.2 percent to $171.9 million from $151.8 million in the prior year.

Gross profit for the fiscal 2024 third quarterincreased 43.1 percent to $30.0 million from $21.0 million a year earlier. Gross margin for the fiscal 2024 third quarter was 17.5 percent compared with 13.8 percent a year earlier. Gross margin for the fiscal 2024 third quarter was impacted by $4.4 million, or 2.6 percent, of non-cash items, and $1.6 million, or 0.9 percent, of cash items, as detailed in Exhibit 3.

Operating income for the fiscal 2024 third quarter increased 170.1 percent to $9.5 million from $3.5 million in the prior year.

Interest expense for the fiscal third quarter increased by $6.8 million, or $0.26 per share, to $18.3 million from $11.5 million a year ago-primarily due to higher market interest rates and higher utilization of the accounts receivable discount programs offered by customers due to higher net sales.

Due primarily to $40.4 million, or $2.06 per share, of non-cash items, including a $37.5 million U.S. federal and state deferred tax asset valuation allowance under U.S. GAAP,or $1.91 per share,net loss for the fiscal 2024 third quarter was $47.2 million, or $2.40 per share, compared with net income of $1.0 million, or $0.05 per diluted share, a year ago. The valuation allowance does not impact any operating metrics. The non-cash items discussed above, and cash items of $1.4 million, or $0.07 per share, are detailed in Exhibit 1.

The company generated approximately $53.6 million of cash from operating activities during the quarter and approximately $48.4 million of cash from operating activities for the nine-month period. During the nine-month period, the company reduced net bank debt by $43.7 million to $102.8 million from $146.5 million.

'Our year-to-date results reflect significant progress in achieving three major initiatives: increasing cash flow from profits and neutralizing working capital, and increasing sales and profitability, despite some unexpected softness throughout the industry in November and December. Our brake-related product categories continue to gain momentum, and we expect to realize ongoing improvements in operational efficiencies as volume further increases. Finally, we remain focused on executing our strategic plans and leveraging our leadership position,' said Selwyn Joffe, chairman, president, and chief executive officer.

Nine-Month Results

Net sales for the fiscal 2024 nine-month period increased 8.2 percent to a record $528.2 million from $488.3 million.

Gross profit for the fiscal 2024 nine-month period increased 25.6 percent to $97.8 million from $77.8 million a year earlier. Gross margin for the fiscal 2024 nine-month period was 18.5 percent compared with 15.9 percent a year earlier. Gross margin for the fiscal 2024 nine-month period was impacted by $12.6 million, or 2.4 percent, of non-cash items, and $6.7 million, or 1.3 percent, of cash items, as detailed in Exhibit 4.

Operating income for the fiscal 2024 nine-month period increased 166.7 percent to $33.9 million from $12.7 million in the prior year.

Interest expense increased by $17.7 million, or $0.68 per share, for the nine months to $45.4 million from $27.7 million a year ago, primarily due to higher market interest rates and higher utilization of the accounts receivable discount programs due to higher net sales, as noted above.

Due primarily to $49.5 million, or $2.53 per share, of non-cash items, including a $37.5 million U.S. federal and state deferred tax asset valuation allowance under U.S. GAAP,or $1.91 per share, noted above, net loss for the fiscal 2024 nine-month period was $50.6 million, or $2.58 per share, compared with a net loss of $5.7 million, or $0.29 per share, a year ago. The valuation allowance does not impact any operating metrics. The non-cash items discussed above, and cash items of $5.8 million, or $0.30 per share, are detailed in Exhibit 2.

Use of Non-GAAP Measure

This press release includes the following non-GAAP measure - EBITDA, which is not a measure of financial performance under GAAP and should not be considered as an alternative to net income as a measure of financial performance. The company believes this non-GAAP measure, when considered together with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to the company's results of operations. However, this non-GAAP measure has significant limitations in that it does not reflect all the costs and other items associated with the operation of the company's business as determined in accordance with GAAP. In addition, the company's non-GAAP measures may be calculated differently and are therefore not comparable to similar measures by other companies. Therefore, investors should consider non-GAAP measures in addition to, and not as a substitute for, or superior to, measures of financial performance in accordance with GAAP. For a definition and reconciliation of EBITDA to net income, its corresponding GAAP measure, see the financial tables included in this press release. Also, refer to our Form 8-K to which this release is attached, and other filings we make with the SEC, for further information regarding this measure.

Earnings Conference Call and Webcast

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 webcast at www.motorcarparts.com or live by calling [phone] (domestic) or [phone] (international). For those who are not available to listen to the live broadcast, the call will be archived 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 on February 9, 2024 through 8:59 p.m. Pacific time on February 16, 2024 by calling [phone] (domestic) or [phone] (international) and using access code: 1545314.

About Motorcar Parts of America, Inc.

Motorcar Parts of America, Inc. is a remanufacturer, manufacturer, and distributor of automotive aftermarket parts-including alternators, starters, wheel bearings and hub assemblies, brake calipers, brake pads, brake rotors, brake master cylinders, brake power boosters, turbochargers, and diagnostic testing equipment utilized in imported and domestic passenger vehicles, light trucks, and heavy-duty applications. Its products are sold to automotive retail outlets and the professional repair market throughout the United States, Canada, and Mexico, with facilities located in California, New York, Mexico, Malaysia, China and India, and administrative offices located in California, Tennessee, Mexico, Singapore, Malaysia, and Canada. In addition, the company's electrical vehicle subsidiary designs and manufactures testing solutions for performance, endurance, and production of multiple components in the electric power train - providing simulation, emulation, and production applications for the electrification of both automotive and aerospace industries, including electric vehicle charging systems. 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 2023 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.

Contact:

Gary S. Maier

Vice President, Corporate Communications & IR

Tel: [phone]

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