Motorcar Parts of America reported net sales of $109 million for its fiscal 2020 first quarter, a 19% year-over-year increase.
The results for the quarter, which ended June 30, are a company record for a fiscal first quarter. Motorcar Parts of America saw sales increases in hard parts and diagnostic products during the quarter, the company noted.
Adjusted net sales for the quarter increased nearly 16% to $108.6 million.
“We achieved record sales in our hard parts categories for a first quarter, despite relative softness throughout the industry during this period,” said Selwyn Joffe, chairman, president and chief executive officer. “The company’s sales growth for both existing and new product lines is expected to gain momentum throughout fiscal 2020, and should further accelerate later in the fiscal year. Notwithstanding the short-term impact to profitability, related to new business costs and transition expenses associated with our expansion in Mexico and Malaysia, our investment to position the company as a leading supplier of multiple non-discretionary hard parts is transformational. This will become increasingly evident as the fiscal year evolves.
“Equally exciting, we expect our emerging diagnostic and testing equipment business, which includes applications for rotating electrical, electric vehicles and aerospace, to provide further growth opportunities, with favorable economics as the business gains traction. In summary, the outlook remains favorable, our customer relationships are strong and we expect solid value creation as a result of our strategic investments.”
The results for the quarter and gross margin were primarily impacted by four items totaling $8.5 million, according to the company:
- Non-cash expenses of $5.7 million, including a write-down of $4.6 million associated with the quarterly revaluation for cores on customers’ shelves, and $1.1 million of amortization related to the premium for core buy backs
- Transition costs of $1.4 million associated with the move into the new Mexico facilities to support the growth in sales
- Net tariff costs of $1.1 million for products sold before cost increases were passed through to customers
- Cost accrual of $426,000 related to a pending resolution of a previously cancelled customer contract
Net loss for the fiscal 2020 first quarter was $6.2 million, or 33 cents per share, reflecting the impact of the items listed above, compared with net loss of $5.5 million, or 29 cents per share, a year ago.
Adjusted net income for the quarter was $1.7 million, or 9 cents per diluted share, compared to $3 million, or 16 cents per diluted share, a year earlier.
Gross profit was $17.6 million, compared to $16.4 million a year earlier.
