Motorcar Parts of America (MPA) has reported results for its fiscal 2022 third quarter ended Dec. 31, 2021. 

The company has reported record net sales of $161.8 million versus $122.6 million a year earlier, reflecting strong organic growth and favorable industry dynamics. 

Net income was $3.1 million, or 16 cents per diluted share, compared with $8.5 million, or 44 cents per diluted share a year ago. Net income for the fiscal third quarter of 2022 was impacted by $4.8 million of non-cash items, or 25 cents per diluted share, and $3.7 million, or 19 cents per diluted share, due to transitory cost pressures related to supply chain disruptions. 

MPA has reported EBITDA of $11.9 million, which was impacted by $6.4 million of non-cash items and $4.9 million of transitory cost pressures related to the aforementioned supply chain disruptions. EBITDA in the prior-year period was $18.8 million. 

“We delivered record net sales for the quarter and nine months despite continued global supply chain constraints. This is indicative of the strategic success of our organic growth initiatives and sustainable industry tailwinds from an aging car fleet, driving continuously greater demand for parts replacement. We achieved growth across all product categories and increased momentum in our emerging brake caliper business,” said Selwyn Joffe, chairman, president, and CEO. 

“While industry dynamics remain positive, we continue to operate in a challenging supply chain environment. We have taken concrete measures to mitigate increases in freight rates, inflationary costs, and wage increases by implementing freight surcharges and price increases. We expect these initiatives to be in effect in the fiscal first quarter ending June 30, 2022. In addition to these measures, we have resumed production in Malaysia – allowing for elimination of the temporary higher tariff expenses incurred during recent months due to necessary outsourcing of production to countries subject to higher import tariffs. Lastly, we are focused on the safety and well-being of our employees. It is a testament of our employees’ commitment that more than 93 percent globally have been vaccinated, helping mitigate operational risk,” Joffe said. 

“Our business is strong. We have numerous multi-year strategic growth initiatives underway, including our growth strategy in the electric vehicle market. As the EV market continues to gain momentum, we will benefit from increased demand for battery power emulation, testing and development of inverters, electric motors, and high-speed battery-charging station applications offered by our wholly owned D&V subsidiary,” Joffe added. 

Fiscal 2022 Nine-Month Results

Net sales increased 31 percent to a record $486.4 million from $372.7 million a year earlier. Net sales included $13.3 million in core revenue compared with $12.8 million in the prior-year period, due to a realignment of inventory at customer distribution centers with expected future sales benefits as product mix changes. 

Net income for the fiscal 2022 nine-month period was $7.7 million, or 39 cents per diluted share, compared with net income of $20.6 million, or $1.07 per diluted share, a year ago. Net income was impacted by approximately $14.9 million, or 76 cents per diluted share, of non-cash items – including core and finished goods premium amortization, revaluation of cores on customer shelves, share-based compensation, and foreign exchange impacts, as detailed in Exhibit 2. The company also incurred an impact of approximately $10.8 million, or 55 cents per diluted share, from supply chain disruptions, brake caliper start-up costs, and other product relocation expenses related to the expansion in Mexico. The start-up costs related to the expansion in Mexico, primarily brake calipers, were realized during the six months ended Sept. 30, 2021, and no costs were incurred during the fiscal 2022 third quarter. In addition, results for the nine-month period were impacted by other transitory cost pressures related to supply chain disruptions due to COVID-19. 

Net income for the prior-year nine months was impacted favorably by $7 million of non-cash items, or 36 cents per diluted share. Cash impacts to net income for the prior-year period totaled $8.2 million, or 42 cents per diluted share, due to brake caliper start-up costs, product relocation expenses related to the expansion in Mexico, and other costs associated with COVID-19. 

Gross Profit for the fiscal 2022 nine-month period increased 19.1 percent to $92.1 million from $77.4 million a year earlier. Gross profit as a percentage of net sales for the fiscal 2022 nine-month period was 18.9 percent compared with 20.8 percent a year earlier. Gross margin for the nine-month period ended Dec. 31, 2021, was impacted by 2.6 percent of non-cash items and 3.1 percent, primarily by the transitory supply chain disruptions that affected net income.

EBITDA for the fiscal 2022 nine-month period was $33.6 million. EBITDA was impacted by $19.9 million of non-cash items, as well as the impact of $14.2 million primarily from transitory cost pressures related to supply chain disruptions. For the comparable prior-year period, EBITDA was $49.3 million, favorably impacted by $9.3 million of non-cash items, particularly due to foreign exchange items, and unfavorably impacted by $10.6 million of cash items, primarily related to the company’s successful new brake caliper product line expansion, and other costs associated with COVID-19.

Net cash used in operating activities was $22.2 million during the nine months ended Dec. 31, 2021, reflecting working capital, including inventory increases to support business growth and strategic investments designed to address potential supply chain disruptions.