LOS ANGELES — Motorcar Parts of America (MPA) has reported financial and operating results for the first quarter of its fiscal year 2005, which ended on June 30.
Among the highlights of note, MPA reported an increase of first quarter revenues to $41.1 million, 11 percent over the first quarter of fiscal year 2004. The company reported first quarter net income of $91,000 versus $680,000 in the first quarter of fiscal year 2004.
Operating income was $493,000, or 1.2 percent of sales, in the first quarter, as compared to $1.3 million, or 3.5 percent of sales, in the first quarter of fiscal year 2004.
Net income for the first quarter was $91,000, or 1 cent per basic and diluted share, compared to $680,000, or 8 cents per basic and diluted share, in the same period in fiscal 2004.
Operating cash flow was reported at $6 million. MPA also reported a debt free balance sheet as of June 30.
“In the first quarter of fiscal 2005, we continued to make significant strides in executing on our financial, strategic and operational objectives, and the momentum in our business continues to build,” said Selwyn Joffe, MPA chairman and CEO. “While our first quarter results were negatively impacted by the transition costs we incurred to implement the ramp up for our new business with a major customer, we remain confident about our ability to produce very positive results from our new sales and operating initiatives.”
Gross margin decreased to $3.7 million, or 8.9 percent of sales, from $4.1 million, or 11 percent of sales, in the first quarter of the prior fiscal year. Gross margin was negatively impacted by a number of transition expenses associated with the implementation of new business, including the pay-on-scan (POS) program. These expenses included approximately $700,000 of overtime costs incurred to ramp-up production, approximately $460,000 of costs incurred to purchase cores as part of the expanded relationship and approximately $200,000 of costs to ship products that are being sold on a POS basis and, as a result, were not recorded as sales during the first fiscal quarter. In addition, stock adjustments provided to customers reduced gross margin by $1,753,000, an amount that exceeds the company’s currently anticipated quarterly stock adjustments by approximately $550,000. These costs reduced MPA’s gross margin percentage by 4.6 percent.
In connection with the stock adjustments, the company received an approximately $13,000,000 of update orders, substantially all of which is expected to be shipped on a POS basis by the end of the second quarter of fiscal 2005. First quarter unit shipments were up approximately 22 percent over the equivalent period last fiscal year, and shipments during the month of July were up by 46 percent from prior year levels. The company said it is also seeing strong interest in the professional installer market segment from new customers for its Quality Built product line for professional installers.
“The second quarter is off to a strong start, with record unit shipments during the month of July. We anticipate that the combination of growing share with our existing customers and our entry into the professional installer market with our Quality-Built brand will drive double-digit revenue growth for the full year 2005. In addition, as we move through the transition expenses associated with the ramp up of our new distribution opportunities, we expect our gross margins to improve,” said Joffe.
For more information about MPA, go to: www.motorcarparts.com.
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