Motorcar Parts of America (MPA) today announced fiscal 2019 fourth quarter and year-end results, with a favorable outlook supported by strong new business commitments in existing and expanding product lines – including improved operating cash flow and profitability.

Net sales for the fiscal 2019 fourth quarter ended March 31, 2019, increased 7.8 percent to a record $129.1 million from $119.7 million for the same period a year earlier, reflecting sales increases for both hard parts and diagnostic products.

Adjusted net sales for the fiscal 2019 fourth quarter increased 7.5 percent to a record $132.7 million from $123.4 million a year earlier.

“The company continues to benefit from a multi-pronged platform for sales growth. Our investments in infrastructure, human resources and related initiatives from the past few years are scalable and transforming the company. In addition to our expanding automotive and heavy-duty aftermarket position, our diagnostic testing business is gaining momentum, and we are uniquely positioned as electrification gains momentum within the automotive and aerospace industries. The opportunities are exciting, and we look forward to progress in the new fiscal year – with a particular focus on sales growth, margin improvement and cash flow,” said Selwyn Joffe, chairman, president and CEO.

Net loss for the fiscal 2019 fourth quarter was $2.8 million, or 15 cents per share, reflecting the impact of the items listed below, compared with net income of $8.4 million, or 43 cents per diluted share, a year ago.

Adjusted net income for the fiscal 2019 fourth quarter was $12 million, or 63 cents per diluted share, compared with $10.5 million, or 54 cents per diluted share, a year earlier.

MPA said the results for the quarter and gross margin were primarily impacted by three items totaling $12.9 million:

• Non-cash expenses of $8.5 million, including a write-down of $7.4 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 $2.5 million associated with the move into the larger consolidated distribution center to support the growth in sales.

• Customer allowances and stock adjustment costs of $1.9 million related to new business.

Gross profit for the fiscal 2019 fourth quarter was $26 million compared with $29.1 million a year earlier. Gross profit as a percentage of net sales for the fiscal 2019 fourth quarter was 20.1 percent compared with 24.3 percent a year earlier.

Adjusted gross profit for the fiscal 2019 fourth quarter was $39 million compared with $36.3 million a year ago. Adjusted gross profit as a percentage of adjusted net sales for the three months was 29.4 percent compared with 29.4 percent a year earlier.

Twelve-Month Results

Net sales for fiscal 2019 increased 10.6 percent to $472.8 million from $427.5 million a year earlier.

Adjusted net sales for fiscal 2019 increased 9.0 percent to $476.3 million from $437.1 million last year.

Net loss for fiscal 2019 was $7.8 million, or $0.42 per share, compared with net income of $19.3 million, or 99 cents per diluted share, in fiscal 2018.

Adjusted net income for fiscal 2019 was $33.3 million, or $1.73 per diluted share, compared with $37.1 million, or $1.90 per diluted share, in fiscal 2018.

Gross profit for fiscal 2019 was $89.2 million compared with $107 million a year earlier. Gross profit as a percentage of net sales for fiscal 2019 was 18.9 percent compared with 25 percent a year earlier.

Adjusted gross profit for fiscal 2019 was $128.8 million compared with $127.1 million a year ago. Adjusted gross profit as a percentage of adjusted net sales for fiscal 2019 was 27 percent compared with 29.1 percent a year earlier.

Fiscal 2020 Guidance

MPA said it expects adjusted net sales for its fiscal year 2020 ending March 31 to be between $552 million and $562 million, representing between 16 and 18 percent organic growth year over year – ramping up throughout the year.  

Adjusted gross margin for fiscal year 2020 is expected to be approximately 27 percent, impacted by product mix. Profitability and cash flow are expected to improve on a year-over-year basis. For new business, the company says it is unable to reconcile adjusted net sales and adjusted gross margin to net sales and gross margin on a GAAP basis, because GAAP to non-GAAP reconciliation is dependent upon predicting both returns and stock adjustment accruals, and customer allowances.