Motorcar Parts of America (MPA) has reported results for its fiscal 2021 fourth quarter and year ended March 31, 2021 – reflecting record sales for the quarter and fiscal year with strong profitability.
Fiscal 2021 Fourth Quarter Results
Net sales for the fiscal 2021 fourth quarter increased 11.5 percent to a record $168.1 million from $150.7 million, which was a record a year ago.
Net income for the fiscal 2021 fourth quarter was $835,000, or $0.04 per diluted share, compared with a net loss of $8.2 million, or $0.43 per share, a year ago.
“Despite the significant impact of the COVID-19 global pandemic, we achieved record sales and strong profitability for the fourth quarter and for fiscal 2021. The company is well-positioned across multiple non-discretionary product lines and we remain focused on leveraging our strength as consumer demand for automotive aftermarket parts continues to gain momentum. This is supported by vaccination availability, a return to more normal patterns in our daily lives and strong demand for used vehicles,” said Selwyn Joffe, chairman, president and CEO of Motorcar Parts of America.
“In addition, as the electric vehicle market evolves, we anticipate increasing demand for the technology offered by our wholly owned D&V subsidiary – benefitting from our ability to support the development of the electric vehicle, including battery power emulation, and the testing and development of inverters, electric motors, and high-speed battery-charging station applications,” Joffe added.
Results for the fiscal fourth quarter were impacted by COVID-19 expenses related to safety, health initiatives and incrementally higher freight costs, reflecting approximately $2.8 million on a pre-tax basis, or $0.11 per share on a tax-effected basis, for cost of goods sold and operating expenses. Approximately $603,000 of the $2.8 million was due to incremental bonuses and wages paid to the company’s dedicated operating employees on the front line. The balance reflects costs for personal protection equipment (PPE), social distancing initiatives and higher freight costs.
Net cash used in operating activities was $16.4 million for the fiscal 2021 fourth quarter and net debt was $88.9 million at March 31, 2021, compared with $67.6 million at Dec. 31, 2020, reflecting working capital requirements to support the record sales and inventory increases for anticipated business growth in fiscal 2022.
Gross profit for the fiscal 2021 fourth quarter was $32.1 million compared with $36.6 million a year earlier. Gross profit as a percentage of net sales for the fiscal 2021 fourth quarter was 19.1 percent compared with 24.3 percent a year earlier. Gross margin was primarily impacted by brake caliper start-up costs and other product relocation expenses related to the expansion in Mexico, both of which are now nearing completion; higher costs related to COVID-19; and other items, including non-cash and non-economic expenses totaling 6.4 percent.
Fiscal 2021 Full-Year Results
Net sales for fiscal 2021 were $540.8 million compared with $535.8 million a year earlier, impacted by the sharp drop in demand in April due to the global pandemic. In addition, net sales were impacted by current pandemic supply chain challenges in the third and fourth quarters. This was partially offset by the benefit of $12.8 million due to a realignment of inventory at two customer distribution centers with expected future sales benefits as product mix changes.
Net income for fiscal 2021 was $21.5 million, or $1.11 per diluted share, compared with a net loss of $7.3 million, or $0.39 per share, a year ago.
Net cash generated from operating activities was $56.1 million during the year ended March 31, 2021, and net debt was reduced to $88.9 million at March 31, 2021, from $126.5 million at March 31, 2020.
Gross profit for fiscal 2021 was $109.5 million compared with $118.4 million a year earlier. Gross profit as a percentage of net sales for fiscal 2021 was 20.2 percent compared with 22.1 percent a year earlier. Gross margin was primarily impacted by brake caliper start-up costs and other product relocation expenses related to the expansion in Mexico, both of which are now nearing completion; higher costs related to COVID-19; and other items, including non-cash and non-economic expenses totaling 5.5 percent.
FISCAL 2022 OUTLOOK
“Given the ongoing global pandemic and near-term related considerations, the company believes it is still not prudent at this time to provide specific annual sales and gross margin guidance. We will reevaluate this policy as fiscal 2022 evolves. However, we are encouraged by continued strong customer demand for our aftermarket parts.
“As I stated since the beginning of the global pandemic, our industry and our company are resilient and we are continuing to execute our strategic plans for growth and profitability. We are guardedly optimistic about the near and long-term opportunities as an essential supplier in the $125 billion hard parts industry and an evolving provider to the fast-growing electric vehicle and aerospace markets,” Joffe said.
