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Motorcar Parts of America Reports Fiscal 2016 First Quarter Results

20:00 EDT 9 Aug 2015 | Globe Newswire

LOS ANGELES, Aug. 10, 2015 (GLOBE NEWSWIRE) -- Motorcar Parts of America, Inc. (Nasdaq:MPAA) today reported results for its fiscal 2016 first quarter– reflecting record sales and adjusted profitability for a first quarter, supported by new business and product-line expansion contributions.

Net sales for the fiscal 2016 first quarter increased 36.3 percent to $85.8 million from $63.0 million for the same period a year earlier. On an adjusted basis, net sales climbed 36.6 percent to $86.6 million from $63.4 million in the fiscal 2015 first quarter -- excluding certain customer allowances related to new business. The company's sales performance for the fiscal 2016 quarter reflects new rotating electrical business gains, as well as increased contributions from wheel hubs and the company's emerging master cylinder business.

Net income for the quarter was $1.9 million, or $0.10 per diluted share, compared with net income of $3.9 million, or $0.25 per diluted share, a year ago – reflecting the impact of certain unusual items, as well as an 18.6 percent increase in the diluted weighted average number of shares outstanding in the fiscal 2016 period.

Adjusted net income for the fiscal 2016 first quarter increased 77.0 percent to $8.4 million, or $0.44 per diluted share, from $4.7 million, or $0.30 per diluted share, the same period a year earlier -- excluding certain expenses noted in the Reconciliation of Non-GAAP Financial Measures tables below.

Gross profit increased 45.9 percent to $26.0 million from $17.8 million a year earlier. Gross profit as a percentage of sales for the fiscal 2016 first quarter was 30.3 percent compared with 28.3 percent a year earlier -- due primarily to product mix, overall lower per-unit costs related to improved purchasing, enhanced production and better overhead absorption. In addition, gross profit a year ago was impacted by certain start-up costs.

Adjusted gross profit was $26.8 million compared with $19.2 million a year ago, representing a 39.6 percent increase. Adjusted gross profit as a percentage of sales for the three months was 30.9 percent compared with 30.2 percent a year earlier.

"Results for the fiscal 2016 first quarter reflect sales gains across all product lines, and we are well-positioned for continued success -- supported by an aging vehicle population, increased miles driven, positive operating synergies and product line expansion opportunities," 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 the company'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 Adjusted EBITDA and adjusted net income (loss) to net income (loss) see the financial tables included in this 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 6:30 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 9:30 a.m. Pacific time today through 8:59 p.m. Pacific time on Monday, August 17, 2015 by calling (855)-859-2056 (domestic) or (404)-537-3406 (international) and using access code: 97569487

About Motorcar Parts of America, Inc.

Motorcar Parts of America is a remanufacturer, manufacturer and distributor of automotive aftermarket parts -- including alternators, starters, wheel hub assembly products and brake master cylinders 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 facilities located in California, Mexico, Malaysia and China, 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 2015 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 Income
(Unaudited)
     
  Three Months Ended
  June 30, 
  2015 2014
     
Net sales  $ 85,835,000  $ 62,975,000
Cost of goods sold  59,844,000  45,159,000
Gross profit  25,991,000  17,816,000
Operating expenses:    
General and administrative  11,360,000  5,392,000
Sales and marketing  2,280,000  1,826,000
Research and development  736,000  522,000
Total operating expenses  14,376,000  7,740,000
Operating income  11,615,000  10,076,000
Interest expense, net  8,437,000  3,413,000
Income before income tax expense  3,178,000  6,663,000
Income tax expense  1,268,000  2,714,000
Net income  $ 1,910,000  $ 3,949,000
     
Basic net income per share  $ 0.11  $ 0.26
     
Diluted net income per share  $ 0.10  $ 0.25
     
Weighted average number of shares outstanding:    
Basic 18,002,877 15,082,818
     
Diluted 18,888,013 15,921,367
 
 
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
     
  June 30, 2015 March 31, 2015
ASSETS (Unaudited)  
Current assets:    
Cash and cash equivalents  $ 17,349,000  $ 61,230,000
Short-term investments  878,000  699,000
Accounts receivable — net  10,629,000  24,799,000
Inventory— net  58,185,000  56,829,000
Inventory unreturned  8,442,000  7,833,000
Deferred income taxes  23,122,000  22,998,000
Prepaid expenses and other current assets  8,037,000  7,407,000
Total current assets  126,642,000  181,795,000
Plant and equipment — net  14,165,000  12,535,000
Long-term core inventory — net  202,002,000  188,950,000
Long-term core inventory deposits  32,567,000  31,571,000
Long-term deferred income taxes  240,000  261,000
Goodwill  1,847,000  --
Intangible assets — net  5,725,000  2,574,000
Other assets  3,306,000  3,195,000
TOTAL ASSETS  $ 386,494,000  $ 420,881,000
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities:     
Accounts payable  $ 67,313,000  $ 61,893,000
Accrued liabilities  7,435,000  10,096,000
Customer finished goods returns accrual  19,526,000  19,678,000
Accrued core payment  10,233,000  13,190,000
Revolving loan  15,000,000  -- 
Other current liabilities  2,789,000  2,471,000
Current portion of term loan  2,302,000  7,733,000
Total current liabilities  124,598,000  115,061,000
Term loan, less current portion  22,263,000  71,489,000
Long-term accrued core payment  21,956,000  23,880,000
Other liabilities  21,832,000  20,248,000
Total liabilities  190,649,000  230,678,000
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, 50,000,000 shares authorized;     
18,169,866 and 17,974,598 shares issued and outstanding at June 30, 2015 and     
March 31, 2015, respectively  182,000  180,000
Additional paid-in capital  195,364,000  191,279,000
Accumulated other comprehensive loss  (2,873,000)  (2,518,000)
Retained earnings  3,172,000  1,262,000
Total shareholders' equity  195,845,000  190,203,000
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $ 386,494,000  $ 420,881,000

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 months ended June 30, 2015 and 2014. 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 months ended June 30, 2015 and 2014 are as follows:

Reconciliation of Non-GAAP Financial Measures Exhibit 1
   
   Three Months Ended June 30,
  2015 2014
GAAP Results:    
Net sales  $ 85,835,000  $ 62,975,000
Net income  1,910,000  3,949,000
Diluted income per share (EPS)  0.10  0.25
Gross margin 30.3% 28.3%
Non-GAAP Adjusted Results:    
Non-GAAP adjusted net sales  $ 86,623,000  $ 63,417,000
Non-GAAP adjusted net income  8,354,000  4,719,000
Non-GAAP adjusted diluted earnings per share (EPS)  0.44  0.30
Non-GAAP adjusted gross margin 30.9% 30.2%
Non-GAAP adjusted EBITDA  17,715,000  11,782,000
     
Reconciliation of Non-GAAP Financial Measures   Exhibit 2
     
   Three Months Ended June 30,
  2015 2014
Net sales, as reported  $ 85,835,000  $ 62,975,000
Adjustments:    
Net sales    
Customer allowance - cost of new business  788,000  442,000
Adjusted net sales  $ 86,623,000  $ 63,417,000
       
       
Reconciliation of Non-GAAP Financial Measures      Exhibit 3
       
   Three Months Ended June 30, 
   2015   2014 
   $   Per Diluted
Share 
 $   Per Diluted
Share 
GAAP net income, as reported  $ 1,910,000  $ 0.10  $ 3,949,000  $ 0.25
Adjustments:        
Net sales        
Customer allowance - cost of new business  788,000  $ 0.04  442,000  $ 0.03
Cost of goods sold        
New product line start-up costs  --     189,000  $ 0.01
Lower of cost or market revaluation - cores on customers' shelves  --     731,000  $ 0.05
Operating expenses        
Disc. subsidiaries legal, severance, acquisition, financing and other costs  3,141,000  $ 0.17  560,000  $ 0.04
Share-based compensation expense  516,000  $ 0.03  498,000  $ 0.03
Mark-to-market losses (gains)  964,000  $ 0.05  (1,347,000)  $ (0.08)
Interest        
Write-off of prior deferred loan fees  5,108,000  $ 0.27    
Tax effected at 39% tax rate (a)  (4,073,000)  $ (0.22)  (303,000)  $ (0.02)
Adjusted net income  $ 8,354,000  $ 0.44  $ 4,719,000  $ 0.30
         
(a) Tax effect at 39% of the income from continuing operations before income tax expense (reflecting the adjustments)
       
Reconciliation of Non-GAAP Financial Measures     Exhibit 4
       
   Three Months Ended June 30, 
   2015   2014 
   Gross Margin   $   Gross Margin 
GAAP gross profit, as reported  $ 25,991,000 30.28%  $ 17,816,000 28.29%
Adjustments:        
Net sales        
Customer allowance - cost of new business  788,000    442,000  
Cost of goods sold        
New product line start-up costs  --     189,000  
Lower of cost or market revaluation - cores on customers' shelves  --     731,000  
Total adjustments  788,000 0.63%  1,362,000 1.95%
Adjusted gross profit  $ 26,779,000 30.91%  $ 19,178,000 30.24%
     
     
Reconciliation of Non-GAAP Financial Measures   Exhibit 5
     
   Three Months Ended June 30,
  2015 2014
GAAP net income, as reported  $ 1,910,000  $ 3,949,000
Interest expense, net  8,437,000  3,413,000
Income tax expense  1,268,000  2,714,000
Depreciation and amortization  691,000  633,000
EBITDA, as reported  $ 12,306,000  $ 10,709,000
     
Adjustments:    
Net sales    
Customer allowance - cost of new business  788,000  442,000
Cost of goods sold    
New product line start-up costs  --   189,000
Lower of cost or market revaluation - cores on customers' shelves  --   731,000
Operating expenses    
Disc. subsidiaries legal, severance, acquisition, financing and other costs  3,141,000  560,000
Share-based compensation expense  516,000  498,000
Mark-to-market losses (gains)  964,000  (1,347,000)
Adjusted EBITDA  $ 17,715,000  $ 11,782,000
CONTACT: Gary S. Maier
         Maier & Company, Inc.
         (310) 471-1288
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