LOS ANGELES, June 15, 2009 -- Motorcar Parts of America, Inc. (Nasdaq:MPAA) today reported an increase in sales for fiscal 2009 compared with the prior year. Sales were less robust than anticipated due to significant events in the fourth quarter that impacted two of its largest customers and delayed product shipments.
Net sales for the fiscal 2009 fourth quarter ended March 31, 2009 were $29.9 million compared with $35.9 million for the same period last year. The company indicated that sales momentum started to resume in the latter part of its fiscal 2010 first quarter.
Gross profit for the fiscal 2009 fourth quarter was $6.0 million (or 20.2% gross margin) compared with $11.3 million (or 31.4% gross margin) for the same period a year ago. In addition to the factors noted above, gross margin was impacted by higher stock adjustment accruals, lower scrap metal commodity prices and lower production levels, but positively impacted by lower direct labor cost per unit.
For the fiscal 2009 fourth quarter, the company reported an operating loss of $680,000 compared with operating income of $5.3 million in the same period a year ago.
The company reported a net loss for its fiscal 2009 fourth quarter of $1.2 million, or $0.10 per diluted share, compared with a net income of $2.7 million, or $0.22 per diluted share, for the comparable period a year earlier.
Net sales for fiscal 2009 were $134.9 million compared with $133.3 million a year ago. Gross profit for fiscal 2009 was $39.5 million compared with $37.2 million a year earlier, with gross margin of 29.3 percent compared with 27.9 percent in fiscal 2008.
Operating income for fiscal 2009 was $10.6 million compared with $12.8 million a year earlier -- reflecting the impact of a non-cash goodwill impairment charge of $2.2 million, or $0.11 per diluted share, and a non-cash charge of $1.2 million, or $0.06 per diluted share, representing the impact of mark-to-market accounting for foreign exchange contracts and the decline in the value of the Mexican Peso. The company noted that fiscal 2008 results did not include a goodwill impairment charge. In addition, mark-to-market accounting for foreign exchange contracts resulted in a gain of $152,000 in fiscal 2008.
Net income for fiscal 2009 was $3.9 million, or $0.32 per diluted share, compared with $4.6 million, or $0.39 per diluted share, a year ago. Net income for fiscal 2009 was impacted by the items noted above.
"We expect demand for non-discretionary aftermarket parts, including the alternators and starters we sell, will continue to grow as vehicles age and consumers further delay new car purchases. From a strategic standpoint, we are focused on expanding business with current and new customers, as well as exploring appropriate acquisitions to leverage the company's low-cost manufacturing structure," said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts.
Joffe noted that the two events referenced above impacting fiscal fourth quarter sales involved an inventory reduction initiative by a large customer and an agreement with another customer to defer certain sales until this customer clarified its financial restructuring process. "Although committed new business has been slow to begin shipping due to various factors beyond the control of the company, the future looks bright given the volume of anticipated new business," Joffe said. He also highlighted that direct labor costs are declining, due in part to the weak Mexican peso, and that there will be increased absorption of fixed costs as new business begins -- which will enhance operating margins," he added.
"Despite a difficult quarter, I remain optimistic. MPA is well positioned within the industry. Statistics reflecting the fundamentals of the category continue to look favorable for the future. There are currently approximately 240 million vehicles on the road. Of these vehicles, approximately 130 million are at least eight years old, which represents the high-demand age segments for our products. The number of vehicles in these categories has been increasing in recent years and is expected to continue to grow over the next few years. Total demand is also impacted by miles driven," Joffe said.
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 for fiscal 2009. 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)-723-9502 (domestic) or (719)-325-4770 (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. A telephone playback of the conference call will also be available from approximately 1:00 p.m. Pacific time on Monday, June 15, 2009 through 10:00 p.m. Pacific time on Monday, June 22, 2009 by Calling (888)-203-1112 (domestic) or (719)-457-0820 (international) and using access code: 8714227.
About Motorcar Parts of America
Motorcar Parts of America, Inc. is a remanufacturer of alternators and starters 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 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 2009 and in its Form 10-Qs filed with the SEC thereafter 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.
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Three Months Ended Twelve Months Ended
March 31, March 31,
--------------------------- ---------------------------
2009 2008 2009 2008
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
------------ ------------
Net sales $ 29,922,000 $ 35,895,000 $134,866,000 $133,337,000
Cost of
goods
sold 23,891,000 24,608,000 95,319,000 96,117,000
------------ ------------ ------------ ------------
Gross
profit 6,031,000 11,287,000 39,547,000 37,220,000
Operating
expenses:
General
and
admini-
strative 4,845,000 4,713,000 19,479,000 19,746,000
Sales
and
marketing 1,331,000 906,000 5,242,000 3,456,000
Research
and
development 435,000 415,000 1,993,000 1,267,000
Impairment
of
goodwill 100,000 -- 2,191,000 --
------------ ------------ ------------ ------------
Total
operating
expenses 6,711,000 6,034,000 28,905,000 24,469,000
------------ ------------ ------------ ------------
Operating
income
(loss) (680,000) 5,253,000 10,642,000 12,751,000
Other expense
(income):
Interest
expense 1,027,000 1,021,000 4,215,000 5,514,000
Interest
income -- (16,000) (19,000) (66,000)
------------ ------------ ------------ ------------
Income
(loss)
before
income
tax expense
(benefit) (1,707,000) 4,248,000 6,446,000 7,303,000
Income tax
expense
(benefit) (526,000) 1,516,000 2,589,000 2,696,000
------------ ------------ ------------ ------------
Net income
(loss) $ (1,181,000) $ 2,732,000 $ 3,857,000 $ 4,607,000
============ ============ ============ ============
Basic
net
income
(loss)
per
share $ (0.10) $ 0.23 $ 0.32 $ 0.40
============ ============ ============ ============
Diluted
net
income
(loss)
per
share $ (0.10) $ 0.22 $ 0.32 $ 0.39
============ ============ ============ ============
Weighted
average
number of
shares
outstanding
Basic 11,962,021 12,061,087 11,995,622 11,522,326
============ ============ ============ ============
Diluted 11,962,021 12,200,472 12,086,126 11,808,219
============ ============ ============ ============
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 2009 and 2008
2009 2008
------------- -------------
ASSETS
Current assets:
Cash $ 452,000 $ 1,935,000
Short-term investments 335,000 373,000
Accounts receivable - net 11,121,000 2,789,000
Inventory - net 27,923,000 32,707,000
Inventory unreturned 4,708,000 4,124,000
Deferred income taxes 8,277,000 5,657,000
Prepaid expenses and other
current assets 1,355,000 1,608,000
------------- -------------
Total current assets 54,171,000 49,193,000
Plant and equipment - net 13,997,000 15,996,000
Long-term core inventory 62,821,000 50,808,000
Long-term core inventory deposit 24,451,000 22,477,000
Long-term accounts receivable -- 767,000
Long-term deferred income taxes 989,000 1,357,000
Intangible assets - net 2,564,000 --
Other assets 595,000 810,000
------------- -------------
TOTAL ASSETS $ 159,588,000 $ 141,408,000
============= =============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable $ 24,507,000 $ 32,401,000
Note payable 722,000 --
Accrued liabilities 1,451,000 2,200,000
Accrued salaries and wages 3,162,000 3,396,000
Accrued workers' compensation claims 1,895,000 2,042,000
Income tax payable 1,158,000 392,000
Line of credit 21,600,000 --
Other current liabilities 1,624,000 954,000
Current portion of capital
lease obligations 1,621,000 1,711,000
------------- -------------
Total current liabilities 57,740,000 43,096,000
Deferred income, less current portion -- 122,000
Deferred core revenue 5,934,000 2,927,000
Deferred gain on sale-leaseback 843,000 1,340,000
Other liabilities 587,000 265,000
Capitalized lease obligations,
less current portion 1,401,000 2,565,000
------------- -------------
Total liabilities 66,505,000 50,315,000
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; 11,962,021 and
12,070,555 shares issued and
outstanding at March 31,
2009 and 2008, respectively 120,000 121,000
Additional paid-in capital 92,459,000 92,663,000
Additional paid-in capital-warrant 1,879,000 1,879,000
Shareholder note receivable -- (682,000)
Accumulated other comprehensive
(loss) income (1,984,000) 360,000
Retained earnings (accumulated
deficit) 609,000 (3,248,000)
------------- -------------
Total shareholders' equity 93,083,000 91,093,000
------------- -------------
TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY $ 159,588,000 $ 141,408,000
============= =============
CONTACT: Maier & Company, Inc.
Gary S. Maier
(310) 442-9852