LOS ANGELES, Feb. 09, 2017 (GLOBE NEWSWIRE) -- Motorcar Parts of America, Inc. (Nasdaq:MPAA) today reported results for its fiscal 2017 third quarter -- reflecting record profitability on a reported and adjusted basis.

Net sales for the fiscal 2017 third quarter were $112.6 million compared with $94.0 million for the same period a year earlier. The company's sales performance for the fiscal 2017 third quarter reflects continued strength of its rotating electrical business, as well as contributions from its other product lines -- including the company's emerging brake power boosters, which began shipping in August. The increase in sales also benefitted from $9.3 million due to a change in estimate in the accrual for anticipated stock adjustment returns.  Additional details are included in the attached financial tables.

All results labeled as "adjusted" in this press release are non-GAAP measures as discussed more fully below under the heading " Use of Non-GAAP Measures ."

Adjusted net sales for the fiscal 2017 third quarter were $112.9 million compared with $94.0 million a year earlier.

Net income for the fiscal 2017 third quarter was $11.1 million, or $0.57 per diluted share, compared with $7.7 million, or $0.41 per share, a year ago.

Adjusted net income for the fiscal 2017 third quarter was $11.7 million, or $0.60 per diluted share, compared with $9.9 million, or $0.52 per diluted share, in the same period a year earlier.

Gross profit for the fiscal 2017 third quarter was $32.4 million compared with $28.9 million a year earlier.  Gross profit as a percentage of net sales for the fiscal 2017 third quarter was 28.7 percent compared with 30.7 percent a year earlier, impacted by volume and stock update discounts for rotating electrical products and customer allowances related to new business.

Adjusted gross profit for the fiscal 2017 third quarter was $33.9 million compared with $29.7 million a year ago.  Adjusted gross profit as a percentage of adjusted net sales for the three months was 30.1 percent compared with 31.5 percent a year earlier.

Net sales for the fiscal 2017 nine-month period were $306.8 million compared with $271.5 million a year earlier.

Adjusted net sales for the nine-month period were $319.1 million compared with $282.4 million last year.

Net income for the nine-month period was $27.8 million, or $1.43 per diluted share, compared with $8.3 million, or $0.44 per diluted share, in fiscal 2016.

Adjusted net income for the fiscal 2017 nine-month period was $34.3 million, or $1.77 per diluted share, compared with $30.1 million, or $1.59 per diluted share, in fiscal 2016.

Gross profit for the fiscal 2017 nine-month period was $83.4 million compared with $76.7 million a year earlier.  Gross profit as a percentage of net sales for the same period was 27.2 percent compared with 28.3 percent a year earlier, impacted by customer allowances and initial return accruals related to new business.

Adjusted gross profit for the fiscal 2017 nine-month period was $98.7 million compared with $87.8 million a year ago.  Adjusted gross profit as a percentage of adjusted net sales for the nine months was 30.9 percent compared with 31.1 percent a year earlier.

"As we approach the end of fiscal 2017, we are well-positioned within a $116 billion aftermarket hard parts industry.  We anticipate continued growth in all of our product lines, and we are encouraged by the additional opportunities we are seeing.  Our adjusted double-digit sales growth over the last five years highlights the company's success and we remain optimistic about the future," said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America.

"The company is poised for further growth as we harness our distribution relationships and leverage our scale, global footprint and financial strength to deliver growth and profits to shareholders.  Our positive outlook is supported by an aging vehicle population, increased miles driven and related factors, all of which should continue to contribute to overall growth in the aftermarket industry.  As always, we thank our entire team for their day-in and day-out commitment to excellence and our company," Joffe said.

Use of Non-GAAP Measures

This press release includes the following non-GAAP measures - adjusted net sales, adjusted net income (loss), adjusted EBITDA, adjusted gross profit and adjusted gross margin, which are not measures of financial performance under GAAP, and should not be considered as alternatives to net sales, net income (loss), EBITDA, income from operations, gross profit or gross profit margin as a measure of financial performance.  The Company believes these non-GAAP measures, when considered together with the corresponding GAAP measures, provide useful information to investors and management regarding financial and business trends relating to the company's results of operations.  However, these non-GAAP measures have significant limitations in that they do not reflect all of the costs associated with the operations of the company's business as determined in accordance with GAAP.  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 reconciliation of adjusted net sales, adjusted net income (loss), adjusted EBITDA, adjusted gross profit and adjusted gross margin to their corresponding GAAP measures, 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 these adjustments.

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 this morning 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 on February 9, 2017 through 8:59 p.m. Pacific time on Thursday, February 16, 2017 by calling (855)-859-2056 (domestic) or (404)-537-3406 (international) and using access code: 64192462.

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, brake master cylinders, brake power boosters and turbochargers 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, Virginia, Mexico, Singapore, Malaysia and Toronto.  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 2016 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   Nine Months Ended
    December 31,     December 31,  
      2016     2015     2016     2015
                 
Net sales   $ 112,595,000   $ 94,022,000   $ 306,843,000   $ 271,527,000
Cost of goods sold     80,225,000     65,123,000     223,424,000     194,817,000
Gross profit     32,370,000     28,899,000     83,419,000     76,710,000
Operating expenses:                
General and administrative     7,952,000     8,802,000     21,446,000     38,381,000
Sales and marketing     3,234,000     2,671,000     8,575,000     7,583,000
Research and development     1,039,000     711,000     2,813,000     2,093,000
Total operating expenses     12,225,000     12,184,000     32,834,000     48,057,000
Operating income     20,145,000     16,715,000     50,585,000     28,653,000
Interest expense, net     3,357,000     2,516,000     9,365,000     13,566,000
Income before income tax expense     16,788,000     14,199,000     41,220,000     15,087,000
Income tax expense     5,678,000     6,451,000     13,459,000     6,821,000
                 
Net income   $ 11,110,000   $ 7,748,000   $ 27,761,000   $ 8,266,000
                 
Basic net income per share   $ 0.59   $ 0.42   $ 1.49   $ 0.45
                 
Diluted net income per share   $ 0.57   $ 0.41   $ 1.43   $ 0.44
                 
Weighted average number of shares outstanding:                
                 
Basic     18,675,125     18,319,531     18,587,946     18,180,039
                         
Diluted     19,441,265     19,095,704     19,399,857     18,981,421
                 

 

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
 
    December 31, 2016   March 31, 2016
ASSETS   (Unaudited)    
Current assets:        
Cash and cash equivalents   $ 3,941,000     $ 21,897,000  
Short-term investments     1,966,000       1,813,000  
Accounts receivable — net     22,667,000       8,548,000  
Inventory— net     71,340,000       58,060,000  
Inventory unreturned     5,098,000       10,520,000  
Deferred income taxes     34,723,000       33,347,000  
Prepaid expenses and other current assets     7,478,000       5,900,000  
Total current assets     147,213,000       140,085,000  
Plant and equipment — net     18,243,000       16,099,000  
Long-term core inventory — net     257,198,000       241,100,000  
Long-term core inventory deposits     5,569,000       5,569,000  
Long-term deferred income taxes     456,000       236,000  
Goodwill     2,551,000       2,053,000  
Intangible assets — net     4,150,000       4,573,000  
Other assets     7,649,000       3,657,000  
TOTAL ASSETS   $ 443,029,000     $ 413,372,000  
LIABILITIES AND SHAREHOLDERS'   EQUITY        
Current liabilities:        
Accounts payable   $ 77,552,000     $ 72,152,000  
Accrued liabilities     8,716,000       9,101,000  
Customer finished goods returns accrual     12,567,000       26,376,000  
Accrued core payment     11,791,000       8,989,000  
Revolving loan     18,001,000       7,000,000  
Other current liabilities     11,579,000       4,698,000  
Current portion of term loan     3,064,000       3,067,000  
Total current liabilities     143,270,000       131,383,000  
Term loan, less current portion     17,691,000       19,980,000  
Long-term accrued core payment     15,181,000       17,550,000  
Long-term deferred income taxes     13,577,000       14,315,000  
Other liabilities     13,374,000       19,336,000  
Total liabilities     203,093,000       202,564,000  
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;        
18,693,779 and 18,531,751 shares issued and outstanding at December 31, 2016 and        
March 31, 2016, respectively     187,000       185,000  
Additional paid-in capital     206,619,000       203,650,000  
Retained earnings     40,478,000       11,825,000  
Accumulated other comprehensive loss     (7,348,000 )     (4,852,000 )
Total shareholders' equity     239,936,000       210,808,000  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 443,029,000     $ 413,372,000  
         

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, 2016 and 2015. 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, 2016 and 2015 are as follows:

Reconciliation of Non-GAAP Financial Measures             Exhibit 1
       
    Three Months Ended December 31,     Nine Months Ended December 31,
    2016       2015       2016       2015  
GAAP Results:              
Net sales $ 112,595,000     $ 94,022,000     $ 306,843,000     $ 271,527,000  
Net income   11,110,000       7,748,000       27,761,000       8,266,000  
Diluted income per share (EPS)   0.57       0.41       1.43       0.44  
Gross margin   28.7 %     30.7 %     27.2 %     28.3 %
Non-GAAP Adjusted Results:              
Non-GAAP adjusted net sales $ 112,853,000     $ 94,022,000     $ 319,058,000     $ 282,390,000  
Non-GAAP adjusted net income   11,744,000       9,942,000       34,260,000       30,086,000  
Non-GAAP adjusted diluted earnings per share (EPS)   0.60       0.52       1.77       1.59  
Non-GAAP adjusted gross margin   30.1 %     31.5 %     30.9 %     31.1 %
Non-GAAP adjusted EBITDA $ 23,558,000     $ 19,596,000     $ 68,247,000     $ 59,992,000  
               
Note: Results for the three and nine months ended December 31, 2016 include revenue due to the change in estimate in the accrual for anticipated stock adjustment returns of $9,261,000 (which had a $4,066,000 gross profit and EBITDA impact, $2,551,000 net income impact and $0.13 earnings per diluted share impact).  The change in estimate also had a 1.3% and 0.5% gross margin impact for the three and nine months ended December 31, 2016, respectively.
               

 
Reconciliation of Non-GAAP Financial Measures           Exhibit 2
         
      Three Months Ended December 31,     Nine Months Ended December 31,
      2016     2015     2016     2015
GAAP net sales   $ 112,595,000   $ 94,022,000   $ 306,843,000   $ 271,527,000
Adjustments:                
Net sales                
Initial return and stock adjustment accruals related to new business     -     -     3,168,000     -
Customer allowances related to new business     258,000     -     9,047,000     10,863,000
Adjusted net sales   $ 112,853,000   $ 94,022,000   $ 319,058,000   $ 282,390,000
                 

 
Reconciliation of Non-GAAP Financial Measures                     Exhibit 3  
     
      Three Months Ended December 31,  
        2016           2015    
    $   Per Diluted Share     $     Per Diluted Share
GAAP net income   $ 11,110,000     $ 0.57     $ 7,748,000     $ 0.41  
Adjustments:                
Net sales              
Customer allowances related to new business   258,000     $ 0.01       -     $ -  
Cost of goods sold              
Lower of cost or market revaluation - cores on customers' shelves and inventory step-up amortization   1,295,000     $ 0.07       752,000     $ 0.04  
Operating expenses              
Legal, severance, acquisition, financing, transition and other costs   92,000     $ 0.00       873,000     $ 0.05  
Payment received in connection with the settlement of litigation related to discontinued subsidiaries   -     $ -       (5,800,000 )   $ (0.30 )
Bad debt expense (recovery) resulting from the bankruptcy filing by a customer   -     $ -       4,451,000     $ 0.23  
Share-based compensation expenses   818,000     $ 0.04       753,000     $ 0.04  
Mark-to-market losses (gains)   2,000     $ 0.00       1,070,000     $ 0.06  
Tax effected at 39% tax rate (a)   (1,831,000 )   $ (0.09 )     95,000     $ 0.00  
Adjusted net income   $ 11,744,000     $ 0.60     $ 9,942,000     $ 0.52  
 
(a) Adjusted net income is calculated by applying an income tax rate of 39%; this rate may differ from the period's actual income tax rate

 
Reconciliation of Non-GAAP Financial Measures                     Exhibit 4  
     
      Nine Months Ended December 31,  
        2016           2015    
    $   Per Diluted Share   $   Per Diluted Share
GAAP net income   $ 27,761,000     $ 1.43     $ 8,266,000     $ 0.44  
Adjustments:                
Net sales              
Initial return and stock adjustment accruals related to new business   3,168,000     $ 0.16       -     $ -  
Customer allowances related to new business   9,047,000     $ 0.47       10,863,000     $ 0.57  
Cost of goods sold              
New product line start-up costs   140,000     $ 0.01       -     $ -  
Lower of cost or market revaluation - cores on customers' shelves and inventory step-up amortization   3,488,000     $ 0.18       1,078,000     $ 0.06  
Cost of customer allowances and stock adjustment accruals related to new business   (568,000 )   $ (0.03 )     (809,000 )   $ (0.04 )
Operating expenses              
Legal, severance, acquisition, financing, transition and other costs   707,000     $ 0.04       5,126,000     $ 0.27  
Payment received in connection with the settlement of litigation related to discontinued subsidiaries   -     $ -       (5,800,000 )   $ (0.31 )
Bad debt expense resulting from the bankruptcy filing by a customer   -     $ -       4,451,000     $ 0.23  
Payment made in connection with the settlement of litigation, net of insurance recoveries, related to discontinued subsidiaries   -     $ -       9,250,000     $ 0.49  
Share-based compensation expenses   2,555,000     $ 0.13       1,786,000     $ 0.09  
Mark-to-market losses (gains)   (3,593,000 )   $ (0.19 )     3,181,000     $ 0.17  
Interest              
Write-off of prior deferred loan fees   -     $ -       5,108,000     $ 0.27  
Tax effected at 39% tax rate (a)   (8,445,000 )   $ (0.44 )     (12,414,000 )   $ (0.65 )
Adjusted net income   $ 34,260,000     $ 1.77     $ 30,086,000     $ 1.59  
 
(a) Adjusted net income is calculated by applying an income tax rate of 39%; this rate may differ from the period's actual income tax rate

 
Reconciliation of Non-GAAP Financial Measures                 Exhibit 5  
                     
      Three Months Ended December 31,  
        2016           2015    
    $   Gross Margin     $   Gross Margin  
GAAP gross profit   $ 32,370,000   28.7 %   $ 28,899,000   30.7 %
Adjustments:                
Net sales              
Customer allowances related to new business   258,000         -    
Cost of goods sold              
Lower of cost or market revaluation - cores on customers' shelves and inventory step-up amortization     1,295,000         752,000    
Total adjustments     1,553,000   1.4 %     752,000   0.8 %
Adjusted gross profit   $ 33,923,000   30.1 %   $ 29,651,000   31.5 %
                 

 
Reconciliation of Non-GAAP Financial Measures                   Exhibit 6  
 
      Nine Months Ended December 31,  
      2016       2015  
    $   Gross Margin   $   Gross Margin
GAAP gross profit   $ 83,419,000     27.2 %   $ 76,710,000     28.3 %
Adjustments:                
Net sales              
Initial return and stock adjustment accruals related to new business   3,168,000           -      
Customer allowances related to new business   9,047,000           10,863,000      
Cost of goods sold              
New product line start-up costs   140,000           -      
Lower of cost or market revaluation - cores on customers' shelves and inventory step-up amortization     3,488,000           1,078,000      
Cost of customer allowances and stock adjustment accruals related to new business   (568,000 )         (809,000 )    
Total adjustments     15,275,000     3.7 %     11,132,000     2.8 %
Adjusted gross profit   $ 98,694,000     30.9 %   $ 87,842,000     31.1 %
                 

 
Reconciliation of Non-GAAP Financial Measures           Exhibit 7
 
      Three Months Ended December 31,     Nine Months Ended December 31,
      2016     2015       2016       2015  
GAAP net income   $ 11,110,000   $ 7,748,000     $ 27,761,000     $ 8,266,000  
Interest expense, net     3,357,000     2,516,000       9,365,000       13,566,000  
Income tax expense     5,678,000     6,451,000       13,459,000       6,821,000  
Depreciation and amortization     948,000     782,000       2,718,000       2,213,000  
EBITDA   $ 21,093,000   $ 17,497,000     $ 53,303,000     $ 30,866,000  
                 
Adjustments:                
Net sales              
Initial return and stock adjustment accruals related to new business   -     -       3,168,000       -  
Customer allowances related to new business   258,000     -       9,047,000       10,863,000  
Cost of goods sold           -      
New product line start-up costs   -     -       140,000       -  
Lower of cost or market revaluation - cores on customers' shelves and inventory step-up amortization   1,295,000     752,000       3,488,000       1,078,000  
Cost of customer allowances and stock adjustment accruals related to new business   -     -       (568,000 )     (809,000 )
Operating expenses           -      
Legal, severance, acquisition, financing, transition and other costs   92,000     873,000       707,000       5,126,000  
Payment received in connection with the settlement of litigation related to discontinued subsidiaries   -     (5,800,000 )     -       (5,800,000 )
Bad debt expense (recovery) resulting from the bankruptcy filing by a customer   -     4,451,000       -       4,451,000  
Payment made in connection with the settlement of litigation, net of insurance recoveries, related to discontinued subsidiaries   -     -       -       9,250,000  
Share-based compensation expenses   818,000     753,000       2,555,000       1,786,000  
Mark-to-market losses (gains)   2,000     1,070,000       (3,593,000 )     3,181,000  
Adjusted EBITDA   $ 23,558,000   $ 19,596,000     $ 68,247,000     $ 59,992,000  
                 
CONTACT: 	Gary S. Maier (310) 471-1288

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