Motorcar Parts of America (MPA) today announced results for its fiscal 2019 second quarter ended Sept. 30, 2018 – reflecting record sales for both the quarter and six months on a reported and adjusted basis.
Net sales for the fiscal 2019 second quarter increased 16 percent to $127.9 million from $110.3 million for the same period a year earlier, predominantly as a result of increases in the company’s rotating electrical business.
Adjusted net sales for the fiscal 2019 second quarter increased 14.5 percent to $130.2 million from $113.7 million a year earlier.
“We are encouraged by our new business wins and revitalization of demand for our products at the consumer level – both of which support our optimism and expectations for continued growth,” said Selwyn Joffe, chairman, president and CEO.
In addition, Joffe indicated the company expects strong sales contributions in the next fiscal year from its existing and new product offerings.
Net income for the fiscal 2019 second quarter was $3.5 million, or 18 cents per diluted share – reflecting the impact of the items listed below compared with $5.6 million, or 29 cents per diluted share, a year ago.
Adjusted net income for the fiscal 2019 second quarter was $11.5 million, or 60 cents per diluted share, compared with $10.1 million, or 52 cents per diluted share, a year earlier.
The results for the quarter and gross margin were impacted by three items totaling $10.3 million:
- Customer allowances related to new business of $2.2 million
- Up-front one-time costs of $1.2 million related to new business
- Core buyback premium amortization of $1 million related to new business. The revaluation for cores on customers’ shelves resulted in a non-cash write-down of $6.2 million, which does not affect the reimbursable amount for the full value of cores on the customers’ shelves should business with the customer be discontinued.
- Transition costs of $1.8 million associated with the expansion of manufacturing and distribution capacity to support increased demand for the company’s existing product lines and its recently announced new brake product lines.
Gross profit for the fiscal 2019 second quarter was $25.7 million compared with $26 million a year earlier. Gross profit as a percentage of net sales for the fiscal 2019 second quarter was 20.1 percent compared with 23.6 percent a year earlier.
Six-Month Results
Net sales for the fiscal 2019 six-month period increased 7.1 percent to $219.6 million from $205 million a year earlier.
Adjusted net sales for the fiscal 2019 six-month period increased 7.1 percent to $224 million from $209.2 million last year.
Net loss for the fiscal 2019 six-month period was $2 million, or 10 cents per share, compared with net income of $13.4 million, or 69 cents per diluted share, in fiscal 2018.
Adjusted net income for the fiscal 2019 six-month period was $14.6 million, or 75 cents per diluted share, compared with $18.6 million, or 96 cents per diluted share, in fiscal 2018.
Gross profit for the fiscal 2019 six-month period was $42.1 million compared with $51.9 million a year earlier. Gross profit as a percentage of net sales for the fiscal 2019 first half was 19.2 percent compared with 25.3 percent a year earlier.
Adjusted gross profit for the fiscal 2019 six-month period was $58.9 million compared with $60.1 million a year ago. Adjusted gross profit as a percentage of adjusted net sales for the six months was 26.3 percent compared with 28.7 percent a year earlier, impacted by higher freight related costs compared with the prior year, stock adjustment accruals for future update orders and lower absorption of overhead costs.
New Acquisition Pending
“In addition to the company’s recent acquisition of E&M Power, we expect to close another strategic tuck-in acquisition this week, which enhances our existing product line offerings,” Joffe said.
Updated Fiscal 2019 Guidance
Motorcar Parts of America reaffirms its annual adjusted sales guidance of between 6.5 and 8.5 percent growth year-over-year, with expectations of reaching the higher end. Adjusted gross margin for fiscal 2019 is now estimated to be at the lower end of the company’s guidance of 27 to 30 percent.
Stock Repurchase Authorization
Under the authorized share repurchase program, as of Sept. 30, 2018, $15.7 million of the $37 million common stock authorization has been purchased and $21.3 million is available to repurchase shares. Motorcar Parts of America currently has 18.8 million shares outstanding.
