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MPA Reports Strong Fiscal 2022 Second Quarter

Net sales for the quarter were up 13.5 percent; 29.8 percent for six months; and 25.1 percent from the pre-COVID-19 six months.

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Motorcar Parts of America Inc. (MPA) has reported results for its fiscal 2022 second quarter ended Sept. 30, 2021 – reflecting record sales for a quarter and six-month period. 

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Net sales for the fiscal 2022 second quarter increased 13.5 percent to $175.5 million from $154.7 million a year ago, and 16.7 percent from the pre-COVID-19 fiscal second quarter two years ago. Net sales for the three months ended September 30, 2021 included $13.7 million in core revenue compared with $12.8 million in the prior-year second quarter period, due to a realignment of inventory at customer distribution centers with expected future sales benefits as product mix changes. 

Net income for the fiscal 2022 second quarter was $3.7 million, or $0.19 per diluted share, compared with $15.2 million, or $0.78 per diluted share, a year ago. 

“Net sales and profitability for the fiscal second quarter benefitted from continued strong demand for non-discretionary aftermarket parts, notwithstanding global supply chain challenges and disruptions that restrained our record sales performance. The company’s ongoing success continues to benefit from our multi-year strategic footprint expansion, with additional efficiencies expected to be realized moving forward,” said Selwyn Joffe, chairman, president and CEO of Motorcar Parts of America. 

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He emphasized that the company has instituted price increases to mitigate ongoing freight and supply chain cost increases, and that the demand outlook continues to be strong. Joffe noted that the gross margins for the quarter only reflect a small portion of the price increases. 

“In addition, our presence in the electric vehicle market is continuing to gain momentum – driven by increasing demand for battery power emulation, testing and development of inverters, electric motors, and high-speed battery-charging station applications offered by our wholly owned D&V subsidiary,” Joffe added. 

Gross profit and operating expenses for the fiscal second quarter continued to be impacted by COVID-19 expenses related to safety, health initiatives, inefficiencies in the supply chain and incrementally higher freight costs totaling approximately $6 million on a pre-tax basis, or $0.23 per share on a tax-effected basis. 

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Net cash used in operating activities was $19.6 million for the fiscal 2022 second quarter and net debt was $120.6 million at Sept. 30, 2021 compared with $97.6 million at June 30, 2021, reflecting working capital requirements to support the record sales for the quarter and inventory increases for anticipated business growth. 

Gross profit for the fiscal 2022 second quarter was $36 million compared with $39.7 million a year earlier. Gross profit as a percentage of net sales for the fiscal 2022 second quarter was 20.5 percent compared with 25.7 percent a year earlier. Gross margin was primarily impacted by higher costs related to COVID-19; brake caliper start-up costs and other product relocation expenses related to the expansion in Mexico; and other items, including non-cash and non-economic expenses totaling 5.1 percent, as detailed in Exhibit 3 of the press release. In addition to the above items, gross profit was further impacted by growth initiatives in connection with the expansion of the company’s new product lines, and inflationary costs related to the global pandemic, especially disruptions with worldwide supply chain and logistics services. 

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Six-Month Results

Net sales for the fiscal 2022 six-month period increased 29.8 percent to $324.6 million from $250.1 million a year earlier, and 25.1 percent from the pre-COVID-19 fiscal six-month period two years ago. Net sales for the six months ended September 30, 2021 included $13.7 million in core revenue compared with $12.8 million in the prior-year period, as discussed above. 

Net income for the fiscal 2022 six-month period was $4.5 million, or $0.23 per diluted share, compared with net income of $12.2 million, or $0.63 per diluted share, a year ago. 

Net cash used in operating activities was $24.3 million during the six months ended September 30, 2021, and net debt was $120.6 million at September 30, 2021 compared with $88.9 million at March 31, 2021, reflecting working capital requirements to support the record sales for the six-month period and inventory increases for anticipated business growth. 

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Gross profit for the fiscal 2022 six-month period was $59.5 million compared with $53.1 million a year earlier. Gross profit as a percentage of net sales for the fiscal 2022 six-month period was 18.3 percent compared with 21.2 percent a year earlier. 

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