Motorcar Parts of America Reports Record Fiscal 2015 First Quarter

Motorcar Parts of America Reports Record Fiscal 2015 First Quarter  Expands Product Line with Brake Master Cylinder Introduction  LOS ANGELES, Aug. 11, 2014 (GLOBE NEWSWIRE) -- Motorcar Parts of America, Inc. (Nasdaq:MPAA) today reported record results for its fiscal 2015 first quarter ended June 30, 2014 – reflecting continued growth of its rotating electrical and wheel hub business.  Net sales for the fiscal 2015 first quarter increased 25.3 percent to $63.0 million from $50.2 million for the same period a year earlier. The increase in net sales was due to growth in both rotating electrical products and the benefits of a full quarter of wheel hub sales, which commenced in late June 2013. Net income for the quarter was $3.9 million, or $0.25 per diluted share, compared with a net income of $101.0 million, or $6.91 per diluted share, a year ago, which reflects a gain on the deconsolidation of the company's discontinued undercar business.  Excluding certain costs and non-cash expenses noted in the Reconciliation of Non-GAAP Financial Measures tables below, adjusted net income for the fiscal 2015 first quarter increased 45.6 percent to $4.7 million, or $0.30 per diluted share, from $3.2 million, or $0.22 per diluted share, for the same period a year earlier – based on a 9.0 percent increase in the diluted weighted average number of shares outstanding.  Gross profit for the fiscal 2015 first quarter was $17.8 million compared with $16.0 million a year earlier. Gross profit as a percentage of sales was 28.3 percent compared with 31.9 percent a year earlier. Adjusted gross profit was $19.2 million compared with $16.4 million a year ago, representing a 17.1 percent increase. Adjusted gross profit as a percentage of sales for the first quarter was 30.2 percent compared with 32.1 percent a year earlier, primarily reflecting product mix.  "Fiscal 2015 is off to an excellent start, supported by strong organic growth in all product lines, an aging vehicle population and positive operating synergies. Our team's ongoing focus on achieving the highest customer service levels continues to distinguish our organization. We look forward to solid momentum as the new fiscal year evolves – supported by strong organic growth in both the rotating electrical and wheel hub business, as well as contributions from the introduction of our most recent product line," said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America.  Brake Master Cylinders  Subsequent to the end of the fiscal first quarter, Motorcar Parts of America introduced brake master cylinders as a new product line and commenced shipments.  "The brake master cylinder product line expansion follows the introduction last June of wheel hubs. Like rotating electrical and wheel hubs, brake master cylinders are non-discretionary with strong growth dynamics. We anticipate solid sales and profit contributions from this new product line," Joffe said.  Industry sources estimate the market size for master cylinders to be approximately $500 million at the user level.  Use of Non-GAAP Measures  We define adjusted net income (loss) as net income (loss) adjusted for certain items related to the company's discontinued subsidiaries, as well as financing, consulting and other fees. We define Adjusted EBITDA as adjusted net income (loss), plus interest expense, income tax expense and depreciation and amortization. Adjusted net income (loss) does not reflect many items that affect the company's net income (loss), including many items related to company's discontinued subsidiaries. Adjusted EBITDA does not reflect the impact of a number of items that affect the company's net income, including financing costs and matters related to the company's discontinued subsidiaries. Adjusted EBITDA and adjusted net income (loss) are not measures of financial performance under GAAP, and should not be considered as alternatives to net income or income from operations as a measure of liquidity. Adjusted EBITDA and adjusted net income (loss) have significant limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of the company's results as reported under GAAP. For a reconciliation of Adjusted EBITDA and adjusted net income (loss) to net income (loss) see the financial tables included in the press release.  Teleconference and Web Cast  Selwyn Joffe, chairman, president and chief executive officer, and David Lee, chief financial officer, will host an investor conference call today at 10:00 a.m. Pacific time to discuss the company's financial results and operations.  The call will be open to all interested investors either through a live audio Web broadcast at www.motorcarparts.com or live by calling (877)-776-4016 (domestic) or (973)-638-3231 (international). For those who are not available to listen to the live broadcast, the call will be archived for seven days on Motorcar Parts of America's website www.motorcarparts.com. A telephone playback of the conference call will also be available from approximately 1:00 p.m. Pacific time today through 8:59 p.m. Pacific time on Monday, August 18, 2014 by calling (855)-859-2056 (domestic) or (404)-537-3406 (international) and using access code: 81621123  About Motorcar Parts of America  Motorcar Parts of America, Inc. is a remanufacturer, manufacturer and distributor of automotive aftermarket parts -- including alternators, starters and wheel hub assembly products utilized in imported and domestic passenger vehicles, light trucks and heavy duty applications. Motorcar Parts of America's products are sold to automotive retail outlets and the professional repair market throughout the United States and Canada, with remanufacturing facilities located in California, Mexico and Malaysia, and administrative offices located in California, Tennessee, Mexico, Singapore and Malaysia. Additional information is available at www.motorcarparts.com.  The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. The statements contained in this press release that are not historical facts are forward-looking statements based on the company's current expectations and beliefs concerning future developments and their potential effects on the company. These forward-looking statements involve significant risks and uncertainties (some of which are beyond the control of the company) and are subject to change based upon various factors.Reference is also made to the Risk Factors set forth in the company's Form 10-K Annual Report filed with the Securities and Exchange Commission (SEC) in June 2014 and in its Forms 10-Q filed with the SEC for additional risks and uncertainties facing the company. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.                            (Financial tables follow)   MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES Consolidated Statements of Income (Unaudited)                                                                                                                 Three Months Ended                                                  June 30,                                                  2014          2013                                                                Net sales                                         $62,975,000 $50,245,000 Cost of goods sold                                45,159,000   34,231,000 Gross profit                                      17,816,000   16,014,000 Operating expenses:                                             General and administrative                        5,392,000    9,632,000 Sales and marketing                               1,826,000    1,731,000 Research and development                          522,000      549,000 Total operating expenses                          7,740,000    11,912,000 Operating income                                  10,076,000   4,102,000 Interest expense, net                             3,413,000    3,925,000 Income from continuing operations before income   6,663,000    177,000 tax expense Income tax expense                                2,714,000    74,000 Income from continuing operations                 3,949,000    103,000 Income from discontinued operations               --          100,877,000                                                                Net income                                        $3,949,000  $100,980,000                                                                Basic net income per share from continuing        $0.26       $0.01 operations Basic net income per share from discontinued      --          6.97 operations Basic net income per share                        $0.26       $6.98                                                                Diluted net income per share from continuing      $0.25       $0.01 operations Diluted net income per share from discontinued    --          6.90 operations Diluted net income per share                      $0.25       $6.91                                                                Weighted average number of shares outstanding:                  Basic                                             15,082,818    14,460,979 Diluted                                           15,921,367    14,609,464    MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES Consolidated Balance Sheets                                                                                                                June 30, 2014  March 31, 2014 ASSETS                                           (Unaudited)     Current assets:                                                 Cash                                             $24,692,000  $24,599,000 Short-term investments                           549,000       521,000 Accounts receivable — net                        7,955,000     22,283,000 Inventory—net                                    47,471,000    47,246,000 Inventory unreturned                             7,328,000     7,534,000 Deferred income taxes                            18,864,000    18,767,000 Prepaid expenses and other current assets        3,532,000     4,316,000 Total current assets                             110,391,000   125,266,000 Plant and equipment — net                        11,224,000    11,025,000 Long-term core inventory — net                   149,420,000   143,476,000 Long-term core inventory deposits                29,638,000    29,375,000 Long-term deferred income taxes                  2,630,000     2,614,000 Intangible assets — net                          3,064,000     3,244,000 Other assets                                     3,910,000     3,853,000 TOTAL ASSETS                                     $310,277,000 $318,853,000 LIABILITIES AND SHAREHOLDERS'EQUITY                            Current liabilities:                                           Accounts payable                                 $51,721,000  $59,509,000 Accrued liabilities                              5,310,000     8,316,000 Customer finished goods returns accrual          15,387,000    16,251,000 Revolving loan                                   10,000,000    10,000,000 Other current liabilities                        2,499,000     1,270,000 Current portion of term loan                     7,843,000     7,843,000 Total current liabilities                        92,760,000    103,189,000 Term loan, less current portion                  77,640,000    79,434,000 Deferred core revenue                            15,115,000    15,065,000 Other liabilities                                10,443,000    11,529,000 Total liabilities                                195,958,000   209,217,000 Commitments and contingencies                                  Shareholders' equity:                                          Preferred stock; par value $.01 per share,       --            -- 5,000,000 shares authorized; none issued Series A junior participating preferred stock;                  par value $.01 per share, 20,000 shares authorized; none issued            --            -- Common stock; par value $.01 per share,                         50,000,000 shares authorized; 15,082,645 and 15,067,645 shares issued and outstanding at June 30, 2014 andMarch 31, 2014, 151,000       151,000 respectively Additional paid-in capital                       121,232,000   120,553,000 Accumulated other comprehensive loss             (822,000)     (877,000) Accumulated deficit                              (6,242,000)   (10,191,000) Total shareholders' equity                       114,319,000   109,636,000 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $310,277,000 $318,853,000  Reconciliation of Non-GAAP Financial Measures  To supplement the consolidated financial statements presented in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company has included the following non-GAAP adjusted financial measures in this press release and in the webcast to discuss the Company's financial results for the three months ended June 30, 2014 and 2013. Each of these non-GAAP adjusted financial measures is adjusted from results based on GAAP to exclude certain expenses and gains. Among other things, the Company uses such non-GAAP adjusted financial measures in addition to and in conjunction with corresponding GAAP measures to help analyze the performance of its business.  These non-GAAP adjusted financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of the Company's results of operations and the factors and trends affecting the Company's business.However, these non-GAAP adjusted financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.  Income statement information for the three months ended June 30, 2014 and 2013 are as follows:  Reconciliation of Non-GAAP Financial Measures                    Exhibit 1                                                                                                                  Three Months Ended June 30,                                                  2014           2013 GAAP Results:                                                    Net sales                                         $ 62,975,000  $ 50,245,000 Net income                                        3,949,000     100,980,000 Diluted income per share (EPS)                    0.25          6.91 Gross margin                                      28.3%          31.9% Non-GAAP Adjusted Results:                                       Non-GAAP adjusted net income                      $4,719,000   $3,242,000 Non-GAAP adjusted diluted earnings per share      0.30          0.22 (EPS) Non-GAAP adjusted gross margin                    30.2%          32.1% Non-GAAP adjusted EBITDA                          11,782,000    9,784,000                                                                                                                                Reconciliation of Non-GAAP Financial                                             Exhibit 2 Measures                                                                                        Three Months Ended June 30,                         2014                    2013                         $          Per Diluted $            Per Diluted                                       Share                      Share GAAP net income, as      $ 3,949,000 $0.25      $100,980,000 $6.91 reported Adjustments:                                                    Income from discontinued --                     (100,877,000) $(6.90) operations Net sales                                                       Customer allowance -     442,000     $0.03                     cost of new business New product line returns and stock adjustment     --                     712,000       $0.05 accruals Cost of goods sold                                              New product line         189,000     $0.01                     start-up costs Lower of cost or market revaluation - cores on   731,000     $0.05                     customers' shelves Cost of stock adjustment --                     (354,000)     $(0.02) accrual Operating expenses                                              Disc. subsidiaries legal, severance and     560,000     $0.04      2,067,000     $0.14 other costs Share-based compensation 498,000     $0.03      125,000       $0.01 expense Mark-to-market losses    (1,347,000) $(0.08)    2,303,000     $0.16 (gains) Disc. subsidiaries sales --                     21,000        $0.001 and marketing expenses Consulting fees,         --                     75,000        $0.01 research and development Interest                                                        Disc. subsidiaries supplier revolving       --                     189,000       $0.01 credit line interest Tax effected at 39% tax  (303,000)   $(0.02)    (1,999,000)   $(0.14) rate (a) Adjusted net income      $ 4,719,000 $0.30      $3,242,000   $0.22                                                                (a) Tax effect at 39% of the income from continuing operations before income tax expense (reflecting the adjustments)                                                                                                                                      Reconciliation of Non-GAAP                                        Exhibit 3 Financial Measures                                                                                                   Three Months Ended June 30,                                 2014                2013                                 $           Gross  $           Gross                                                Margin               Margin GAAP gross profit, as reported   $17,816,000 28.29%  $16,014,000 31.87% Adjustments:                                                       Net sales                                                          Customer allowance - cost of new 442,000                           business New product line returns and     --                 712,000       stock adjustment accruals Cost of goods sold                                                 New product line start-up costs  189,000                           Lower of cost or market revaluation - cores on           731,000                           customers' shelves Cost of stock adjustment accrual --                 (354,000)     Total adjustments                1,362,000    1.95%   358,000      0.26% Adjusted gross profit            $19,178,000 30.24%  $16,372,000 32.13%                                                                                                                                Reconciliation of Non-GAAP Financial Measures                  Exhibit 4                                                                                                                 Three Months Ended June 30,                                                  2014          2013 GAAP net income, as reported                      $3,949,000  $ 100,980,000 Income from discontinued operations               --          (100,877,000) Interest expense, net                             3,413,000    3,925,000 Income tax expense                                2,714,000    74,000 Depreciation and amortization                     633,000      733,000 EBITDA, as reported                               $ 10,709,000 $4,835,000                                                                Adjustments:                                                    Net sales                                                       Customer allowance - cost of new business         442,000       New product line returns and stock adjustment     --          712,000 accruals Cost of goods sold                                              New product line start-up costs                   189,000       Lower of cost or market revaluation - cores on    731,000       customers' shelves Cost of stock adjustment accrual                  --          (354,000) Operating expenses                                              Disc. subsidiaries legal, severance and other     560,000      2,067,000 costs Share-based compensation expense                  498,000      125,000 Mark-to-market losses (gains)                     (1,347,000)  2,303,000 Disc. subsidiaries sales and marketing expenses   --          21,000 Consulting fees, research and development         --          75,000 Adjusted EBITDA                                   $ 11,782,000 $9,784,000  CONTACT: Gary S. Maier          Maier & Company, Inc.          (310) 471-1288  
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