Motorcar Parts of America (MPA) has reported results for its fiscal 2021 third quarter ended Dec. 31, 2020, reflecting increased profitability, positive cash flow from operations and continued debt reduction.
Net sales for the fiscal 2021 third quarter were $122.6 million compared with $125.6 million for the same period a year earlier, impacted by continued COVID-19 related challenges.
Net income for the fiscal 2021 third quarter was $8.5 million, or 44 cents per diluted share, compared with net income of $865,000, or 4 cents per diluted share, a year ago.
“We continued to experience solid product demand for the third quarter, which was impacted by supply chain challenges due to the global pandemic – resulting in order delays of approximately $17 million, which are expected to be realized between the current fiscal fourth quarter and the first quarter of the new fiscal year. Notwithstanding, we reported significant increases in profitability for the quarter and nine-month period on a year-over-year basis, with strong positive cash flow while building inventory for increasing demand,” said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America.
“As vaccination programs gain momentum across the country, and life returns to more normal patterns, we expect further increased demand for our products,” Joffe added.
Results for the fiscal third quarter were impacted by approximately $1.6 million on a pre-tax basis, or 6 cents per share on a tax-effected basis, for cost of goods sold and operating expenses related to safety and health initiatives associated with COVID-19. Approximately $723,000 of the $1.6 million relates to incremental bonuses and wages paid to the company’s dedicated operating employees on the front line. The balance relates to the costs of personal protection equipment (PPE) and social distancing initiatives.
Cash generated from operating activities was $33.2 million for the fiscal 2021 third quarter and net debt for the same period was reduced by 29.1 percent, or $27.8 million, to $67.6 million at Dec. 31, 2020 from $95.4 million at Sept. 30, 2020.
Gross profit for the fiscal 2021 third quarter was $24.2 million compared with $27.7 million a year earlier. Gross profit as a percentage of net sales for the fiscal 2021 third quarter was 19.8 percent compared with 22.0 percent a year earlier – reflecting in part the impact of supply chain challenges due to the global pandemic mentioned above, including higher freight and handling costs.
Nine-Month Results
Net sales for the fiscal 2021 nine-month period were $372.7 million compared with $385.1 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 quarter, resulting in order delays of approximately $17 million. 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 the fiscal 2021 nine-month period was $20.6 million, or $1.07 per diluted share, compared with net income of $903,000, or 5 cents per diluted share, a year ago.
Cash generated from operating activities was $72.5 million during the nine months ended Dec. 31, 2020, and net debt was reduced by 46.6 percent, or $58.9 million, to $67.6 million at Dec. 31, 2020 from $126.5 million at March 31, 2020.
Gross profit for the fiscal 2021 nine-month period was $77.4 million compared with $81.8 million a year earlier. Gross profit as a percentage of net sales for the fiscal 2021 nine-month period was 20.8 percent compared with 21.2 percent a year earlier – reflecting in part the impact of supply chain challenges due to the global pandemic mentioned above, including higher freight and handling costs.
FISCAL 2021 OUTLOOK
“Given the ongoing global pandemic and near-term related considerations, the company believes it is still not prudent to provide annual sales and gross margin guidance for fiscal 2021. However, we are encouraged by continued strong customer demand for our aftermarket parts – notwithstanding the near-term impact to sales by supply chain and other challenges related to COVID-19.
“As I stated last quarter, our industry is 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 supplier to the fast-growing electric vehicle and aerospace market,” Joffe said.
