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Motorcar Parts Of America Reports Fiscal 2013 Third Quarter

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.

Beginning with the first quarter of fiscal year 2012, the Company has begun providing segment information. The two segments are defined as rotating electrical and acquired Fenco products now referred to as the undercar segment. Income statement information relating to the Company's reportable segments for the three months and nine months ended December 31, 2012 is as follows:
Reconciliation of Non-GAAP Financial Measures   Exhibit 1
   
  Three months ended December 31, 2012 (Unaudited)
Income statement Rotating Electrical Undercar Product Line Eliminations As Reported Consolidated   Adjustment  (Non-GAAP)    (1)  Adjusted Consolidated  (Non-GAAP)   
Net sales  $ 50,658,000  $ 65,617,000  $ --   $ 116,275,000  $ (42,093,000)  (2)   $ 74,182,000  
Cost of goods sold  34,332,000  57,900,000  --   92,232,000  (30,219,000)  (3)   62,013,000  
Gross profit (loss)  16,326,000  7,717,000  --   24,043,000  (11,874,000)    12,169,000  
Gross margin 32.2% 11.8%   20.7%     16.4%  
Operating expenses:                
General and administrative  8,848,000  3,931,000  --   12,779,000  (4,054,000)  (4)   8,725,000  
Sales and marketing  1,983,000  704,000  --   2,687,000      2,687,000  
Research and development  445,000  362,000  --   807,000      807,000  
Total operating expenses  11,276,000  4,997,000  --   16,273,000  (4,054,000)    12,219,000  
Operating income (loss)  5,050,000  2,720,000  --   7,770,000  (7,820,000)    (50,000)  
Interest expense, net  2,384,000  3,505,000  --   5,889,000  --   (5)   5,889,000 (B)
Income (loss) before income tax expense  2,666,000  (785,000)  --   1,881,000  (7,820,000)    (5,939,000)  
Income tax expense  880,000  66,000  --   946,000 831,000  (6)  1,777,000  (B)
Net income (loss)  $ 1,786,000  $ (851,000)  $ --   $ 935,000  $ (8,651,000)    $ (7,716,000) (A)
Undercar product lines not supported       1,379,000  (7)  1,379,000  
Net income (loss) - Adjusted      $ (7,272,000)    $ (6,337,000)  
                 
Diluted net income (loss) per share    $ 0.06  $ (0.60)    $ (0.53)  
Undercar product lines not supported        $ 0.09  (7)   $ 0.09  
Diluted net income (loss) per share - Adjusted      $ (0.50)    $ (0.44)  
Weighted average number of shares outstanding:              
Diluted   14,525,613 14,525,613   14,525,613  
Depreciation and amortization              1,263,000 (B)
Adjusted EBITDA - Sum of (A) and (B)            $ 1,213,000  
Undercar product lines not supported              1,379,000  
Adjusted EBITDA total              $ 2,592,000  
             
(1) See following Exhibits for detailed segment analysis of results of operations.
  Rotating Electrical Undercar Product Line Total          
(2) Contractual customer penalties/unique customer allowances   --   769,000  769,000  
Stock adjustment - sales  --   7,921,000  7,921,000    
Core revenue - discontinued customer  --   (50,783,000)  (50,783,000)          
Total  --   (42,093,000)  (42,093,000)          
(3) Unusual inventory purchases and freight expenses  --   349,000  349,000          
Stock adjustment - cost of goods sold  --   (5,116,000)  (5,116,000)          
Inventory obsolescence/write-down/inefficiency  --   3,337,000  3,337,000          
Core cost of revenue - discontinued customer  --   31,649,000  31,649,000          
Total  --   30,219,000  30,219,000          
(4) Financing, severance, professional and other fees  1,443,000  808,000  2,251,000          
Share-based compensation expense  917,000  24,000  941,000          
Mark-to-market (gain)/loss  862,000  --   862,000          
Total  3,222,000  832,000  4,054,000          
(5) Intersegment interest income for the rotating electrical segment and intersegment interest expense for the Undercar product line segment is $1,501,000.
(6) Tax effected for Rotating Electrical at 39% tax rate and Undercar product line at 0% tax rate after further adjusting for intercompany interest income and expense.
(7) Certain Undercar product lines not supported resulted in a loss for the period from October 1, 2012 to December 31, 2012 of $1,379,000 - ($0.09) per share.

                                                                           
   
Reconciliation of Non-GAAP Financial Measures Exhibit 2
   
  Nine months ended December 31, 2012 (Unaudited)
Income statement Rotating Electrical Undercar Product Line Eliminations As Reported Consolidated   Adjustment (Non-GAAP)    (1)  Adjusted Consolidated  (Non-GAAP)   
Net sales  $ 155,109,000  $ 161,821,000  $ --   $ 316,930,000  $ (38,711,000)  (2)   $ 278,219,000  
Cost of goods sold  103,868,000  160,184,000  --   264,052,000  (33,018,000)  (3)   231,034,000  
Gross profit (loss)  51,241,000  1,637,000  --   52,878,000  (5,693,000)    47,185,000  
Gross margin 33.0% 1.0%   16.7%     17.0%  
Operating expenses:                
General and administrative  19,154,000  16,382,000  --   35,536,000  (10,026,000)  (4)   25,510,000  
Sales and marketing  5,479,000  4,651,000  --   10,130,000  (747,000)  (5)   9,383,000  
Research and development  1,342,000  362,000  --   1,704,000  --     1,704,000  
Total operating expenses  25,975,000  21,395,000  --   47,370,000  (10,773,000)    36,597,000  
Operating income (loss)  25,266,000  (19,758,000)  --   5,508,000  5,080,000    10,588,000  
Interest expense, net  8,373,000  8,762,000  --   17,135,000  --   (6)   17,135,000 (B)
Income (loss) before income tax expense  16,893,000  (28,520,000)  --   (11,627,000)  5,080,000    (6,547,000)  
Income tax expense  6,237,000  (4,000)  --   6,233,000  232,000  (7)   6,465,000 (B)
Net income (loss)  $ 10,656,000  $ (28,516,000)  $ --   $ (17,860,000)  $ 4,848,000    $ (13,012,000) (A)
Undercar product lines not supported        2,885,000  (8)  2,885,000  
Net income (loss) - Adjusted    $ 7,733,000    $ (10,127,000)  
                 
Diluted net income (loss) per share    $ (1.25)  $ 0.34    $ (0.91)  
Undercar product lines not supported        $ 0.20  (8)   $ 0.20  
Diluted net income (loss) per share - Adjusted    $ 0.54    $ (0.71)  
Weighted average number of shares outstanding:              
Diluted   14,283,080 14,283,080   14,283,080  
Depreciation and amortization              3,991,000 (B)
Adjusted EBITDA - Sum of (A) and (B)              $ 14,579,000  
Undercar product lines not supported              2,885,000  
Adjusted EBITDA total              $ 17,464,000  
                 
(1) See following Exhibits for detailed segment analysis of results of operations.          
  Rotating Electrical Undercar Product Line Total          
(2) Contractual customer penalties/unique customer allowances   --   4,151,000  4,151,000          
Stock adjustment - sales  --   7,921,000  7,921,000          
Core revenue - discontinued customer  --   (50,783,000)  (50,783,000)          
Total  --   (38,711,000)  (38,711,000)          
(3) Third-party warehouse exit termination fees  --   1,402,000  1,402,000          
Severance  --   1,272,000  1,272,000          
Unusual inventory purchases and freight expenses  --   474,000  474,000          
Stock adjustment - cost of goods sold  --   (5,116,000)  (5,116,000)          
Inventory obsolescence/write-down/inefficiency  --   3,337,000  3,337,000          
Core cost of revenue - discontinued customer  --   31,649,000  31,649,000          
Total  --   33,018,000  33,018,000          
(4) Financing, severance, professional and other fees  1,982,000  6,639,000  8,621,000          
Share-based compensation expense  917,000  24,000  941,000          
Mark-to-market (gain)/loss  464,000  --   464,000          
Total  3,363,000  6,663,000  10,026,000          
(5) Severance  --   747,000  747,000          
(6) Intersegment interest income for the rotating electrical segment and intersegment interest expense for the Undercar product line segment is $3,669,000.
(7) Tax effected for Rotating Electrical at 39% tax rate and Undercar product line at 0% tax rate after further adjusting for intercompany interest income and expense.
(8) Certain Undercar product lines not supported resulted in a loss for the period from April 1, 2012 to December 31, 2012 of $2,885,000 - ($0.20) per share.
                 
   
Reconciliation of Non-GAAP Financial Measures                                                                            Exhibit 3
   
  Three months ended December 31, 2012 (Unaudited)
Income statement As Reported Undercar Product Line Adjustment (Non-GAAP)   Adjusted Undercar Product Line (Non-GAAP)  
Net sales  $ 65,617,000  $ (42,093,000)  (2)   $ 23,524,000  
Cost of goods sold  57,900,000  (30,219,000)  (3)   27,681,000  
Gross profit (loss)  7,717,000  (11,874,000)    (4,157,000)  
Gross margin 11.8%     -17.7% (1)
Operating expenses:          
General and administrative  3,931,000  (832,000)  (4)   3,099,000  
Sales and marketing  704,000      704,000  
Research and development  362,000      362,000  
Total operating expenses  4,997,000  (832,000)    4,165,000  
Operating income (loss)  2,720,000  (11,042,000)    (8,322,000)  
Interest expense, net  3,505,000  (1,501,000)  (5)   2,004,000 (B)
Income (loss) before income tax expense  (785,000)  (9,541,000)    (10,326,000)  
Income tax expense  66,000  --   (6)   66,000 (B)
Net income (loss)  $ (851,000)  $ (9,541,000)    $ (10,392,000) (A)
Undercar product lines not supported        1,379,000 (7)
Net income (loss) - Adjusted        $ (9,013,000)  
           
Diluted net income (loss) per share        $ (0.72)   
Undercar product lines not supported       $ 0.09  (7)
Diluted net income (loss) per share - Adjusted       $ (0.62)   
Weighted average number of shares outstanding:          
Diluted       14,525,613   
Depreciation and amortization        564,000 (B)
Adjusted EBITDA - Sum of (A) and (B)        $ (7,758,000)  
Undercar product lines not supported        1,379,000   
Adjusted EBITDA total       $ (6,379,000)   
           
(1) Adjusted further for the impact on gross margins from the loss from Undercar product lines not supported of 5.6%, 
total gross margin would have been negative (12.1%) for the Undercar product line segment.  
(2) Contractual customer penalties/unique customer allowances   769,000        
Stock adjustment - sales  7,921,000        
Core revenue - discontinued customer  (50,783,000)        
Total  (42,093,000)        
(3) Unusual inventory purchases and freight expenses  349,000        
Stock adjustment - cost of goods sold  (5,116,000)        
Inventory obsolescence/write-down/inefficiency  3,337,000        
Core cost of revenue - discontinued customer  31,649,000        
Total  30,219,000        
(4) Financing, severance, professional and other fees  808,000        
Share-based compensation expense  24,000        
Total  832,000        
(5) Intersegment interest expense for the Undercar product line segment is $1,501,000.  
(6) Tax effected for Undercar product line at 0% tax rate.          
(7) Certain Undercar product lines not supported resulted in a loss for the period from October 1, 2012 to December 31, 2012 
of $1,379,000 - ($0.09) per share.          
       
Reconciliation of Non-GAAP Financial Measures   Exhibit 4
     
  Nine months ended December 31, 2012 (Unaudited)  
Income statement As Reported Undercar Product Line Adjustment (Non-GAAP)   Adjusted Undercar Product Line (Non-GAAP)  
Net sales  $ 161,821,000  $ (38,711,000)  (2)   $ 123,110,000  
Cost of goods sold  160,184,000  (33,018,000)  (3)   127,166,000  
Gross profit (loss)  1,637,000  (5,693,000)    (4,056,000)  
Gross margin 1.0%     -3.3%  (1) 
Operating expenses:          
General and administrative  16,382,000  (6,663,000)  (4)   9,719,000  
Sales and marketing  4,651,000  (747,000)  (5)   3,904,000  
Research and development  362,000      362,000  
Total operating expenses  21,395,000  (7,410,000)    13,985,000  
Operating income (loss)  (19,758,000)  1,717,000    (18,041,000)  
Interest expense, net  8,762,000  (3,669,000)  (6)   5,093,000 (B)
Income (loss) before income tax expense  (28,520,000)  5,386,000    (23,134,000)  
Income tax expense  (4,000)  --   (7)   (4,000) (B)
Net income (loss)  $ (28,516,000)  $ 5,386,000    $ (23,130,000) (A)
Undercar product lines not supported      2,885,000  (8) 
Net income (loss) - Adjusted    $ (20,245,000)  
           
Diluted net income (loss) per share      $ (1.62)  
Undercar product lines not supported      $ 0.20  (8) 
Diluted net income (loss) per share - Adjusted    $ (1.42)  
Weighted average number of shares outstanding:          
Diluted     14,283,080  
Depreciation and amortization    1,854,000 (B)
Adjusted EBITDA - Sum of (A) and (B)        $ (16,187,000)  
Undercar product lines not supported      2,885,000  
Adjusted EBITDA total        $ (13,302,000)  
           
(1) Adjusted further for the impact on gross margins from the loss from Undercar product lines not supported of 2.3%,   
total gross margin would have been negative (1.0%) for the Undercar product line segment.      
(2) Contractual customer penalties/unique customer allowances   4,151,000        
 Stock adjustment - sales  7,921,000        
 Core revenue - discontinued customer  (50,783,000)        
 Total  (38,711,000)        
(3) Third-party warehouse exit termination fees  1,402,000        
 Severance  1,272,000        
 Unusual inventory purchases and freight expenses  474,000        
 Stock adjustment - cost of goods sold  (5,116,000)        
 Inventory obsolescence/write-down/inefficiency  3,337,000        
 Core cost of revenue - discontinued customer  31,649,000        
 Total  33,018,000        
(4) Financing, severance, professional and other fees  6,639,000        
 Share-based compensation expense  24,000        
 Total  6,663,000        
(5) Severance  747,000        
(6) Intersegment interest expense for the Undercar product line segment is $3,669,000.      
(7) Tax effected for Undercar product line at 0% tax rate.          
(8) Certain Undercar product lines not supported resulted in a loss for the period from April 1, 2012 to September 30, 2012 
of $2,885,000 - ($0.20) per share.          
           
  Reconciliation of Non-GAAP Financial Measures         Exhibit 5
           
    Three months ended December 31, 2012 (Unaudited)
Income statement As Reported Rotating Electrical Adjustment (Non-GAAP)   Adjusted Rotating Electrical (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 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)
Net income  $ 1,786,000  $ 890,000    $ 2,676,000 (A)
           
Diluted net income per share      $ 0.19  
Weighted average number of shares outstanding:          
Diluted     14,165,613  (4) 
Depreciation and amortization    699,000 (B)
Adjusted EBITDA - Sum of (A) and (B)        $ 8,971,000  
           
(1) Financing, severance and other fees  1,443,000        
 Share-based compensation expense  917,000        
 Mark-to-market (gain)/loss  862,000        
 Total  3,222,000        
(2) Intersegment interest income from the Undercar product line segment is $1,501,000.      
(3) Tax effected for Rotating Electrical at 39% tax rate.      
(4) Excludes the impact of 360,000 shares in connection with the consideration for the May 6, 2011 Fenco acquisition.
   
Reconciliation of Non-GAAP Financial Measures Exhibit 6
   
  Nine months ended December 31, 2012 (Unaudited)
Income statement As Reported Rotating Electrical Adjustment (Non-GAAP)   Adjusted Rotating Electrical (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 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)
Net income  $ 10,656,000  $ (538,000)    $ 10,118,000 (A)
           
Diluted net income per share      $ 0.73  
Weighted average number of shares outstanding:          
Diluted     13,923,080  (4) 
Depreciation and amortization    2,137,000 (B)
Adjusted EBITDA - Sum of (A) and (B)        $ 30,766,000  
           
(1) Financing, severance and other fees  1,982,000        
 Share-based compensation expense  917,000        
 Mark-to-market (gain)/loss  464,000        
 Total  3,363,000        
(2) Intersegment interest income from the Undercar product line segment is $3,669,000.  
(3) Tax effected for Rotating Electrical at 39% tax rate.  
(4) Excludes the impact of 360,000 shares in connection with the consideration for the May 6, 2011 Fenco acquisition.  
     
Reconciliation of Non-GAAP Financial Measures Exhibit 7  
   
  Three months ended December 31, 2011 (Unaudited)  
Income statement As Reported Rotating Electrical Adjustment (Non-GAAP)   Adjusted Rotating Electrical (Non-GAAP)  
Net sales  $ 42,136,000  $ (241,000)  (1)   $ 41,895,000  
Cost of goods sold  29,500,000  --     29,500,000  
Gross profit  12,636,000  (241,000)    12,395,000  
Gross margin 30.0%     29.6%  
Operating expenses:          
General and administrative  4,495,000  (136,000)  (2)   4,359,000  
Sales and marketing  2,058,000  (112,000)  (3)   1,946,000  
Research and development  453,000  --     453,000  
Total operating expenses  7,006,000  (248,000)    6,758,000  
Operating income  5,630,000  7,000    5,637,000  
Interest expense, net  767,000  782,000  (4)   1,549,000 (B)
Income before income tax expense  4,863,000  (775,000)    4,088,000  
Income tax expense  1,835,000  (241,000)  (5)   1,594,000 (B)
Net income  $ 3,028,000  $ (534,000)    $ 2,494,000 (A)
           
Diluted net income per share      $ 0.20  
Weighted average number of shares outstanding:          
Diluted     12,297,749  (6) 
Depreciation and amortization    857,000 (B)
Adjusted EBITDA - Sum of (A) and (B)        $ 6,494,000  
           
(1) Intersegment revenue, net of cost of goods sold  241,000        
(2) Fenco, financing, professional and other fees  624,000        
 Mark-to-market (gain)/loss  (488,000)        
 Total  136,000        
(3) Fenco related sales and marketing expenses  112,000        
(4) Intersegment interest income from the Undercar product line segment is $782,000.      
(5) Tax effected for Rotating Electrical at 39% tax rate.          
(6) Excludes the impact of 360,000 shares in connection with the consideration for the May 6, 2011 Fenco acquisition.  
   
Reconciliation of Non-GAAP Financial Measures Exhibit 8
   
  Nine months ended December 31, 2011 (Unaudited)
Income statement As Reported Rotating Electrical Adjustment (Non-GAAP)   Adjusted Rotating Electrical (Non-GAAP)  
Net sales  $ 128,501,000  $ (1,853,000)  (1)   $ 126,648,000  
Cost of goods sold  88,018,000  --     88,018,000  
Gross profit  40,483,000  (1,853,000)    38,630,000  
Gross margin 31.5%     30.5%  
Operating expenses:          
General and administrative  16,809,000  (4,223,000)  (2)   12,586,000  
Sales and marketing  5,789,000  (238,000)  (3)   5,551,000  
Research and development  1,270,000  --     1,270,000  
Acquisition costs  713,000  (713,000)  (4)   --   
Total operating expenses  24,581,000  (5,174,000)    19,407,000  
Operating income  15,902,000  3,321,000    19,223,000  
Interest expense, net  2,272,000  1,727,000  (5)   3,999,000 (B)
Income before income tax expense  13,630,000  1,594,000    15,224,000  
Income tax expense  5,350,000  588,000  (6)   5,937,000 (B)
Net income  $ 8,280,000  $ 1,006,000    $ 9,287,000 (A)
           
Diluted net income per share      $ 0.75  
Weighted average number of shares outstanding:          
Diluted     12,459,762  (7) 
Depreciation and amortization    2,634,000 (B)
Adjusted EBITDA - Sum of (A) and (B)        $ 21,857,000  
           
(1) Intersegment revenue, net of cost of goods sold  1,853,000        
(2) Fenco, financing, professional and other fees  2,824,000        
 Mark-to-market (gain)/loss  1,399,000        
 Total  4,223,000        
(3) Fenco related sales and marketing expenses  238,000        
(4) Fenco related acquisition costs  713,000        
(5) Intersegment interest income from the Undercar product line segment is $1,727,000  
(6) Tax effected for Rotating Electrical at 39% tax rate.  
(7) Excludes the impact of 312,873 shares in connection with the consideration for the May 6, 2011 Fenco acquisition.  
CONTACT: Gary S. Maier
         Maier & Company, Inc.
         (310) 471-1288

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