Motorcar Parts of America, Inc. Announces First Quarter of
Fiscal 2007 Results
Motorcar Parts of America, Inc. Announces First Quarter of Fiscal 2007
Results
Monday August 14, 9:00 am ET
MPA Reports Record Sales and Operating Income for First Quarter
LOS ANGELES, Aug. 14 /PRNewswire-FirstCall/ -- Motorcar Parts of
America, Inc. ("MPA") (OTC: MPAA), a leading remanufacturer of
alternators and starters for the automotive aftermarket, announced today
financial results for it's first quarter fiscal 2007 ended June 30,
2006.
Net sales for the quarter ending June 30, 2006 were $27.2 million, up
27.5% from $21.4 million in the same quarter last year. Gross profit and
gross margin were $7.0 million and 25.9%, respectively, as compared to
$3.4 million and 15.9%, respectively, in the first quarter of fiscal
2006. Sales and gross profit in last year's comparable period were
negatively impacted by marketing allowances of $5.7 million compared to
$4.5 million for the quarter ended June 30, 2006.
Operating income for the first quarter of fiscal 2007 was $2.7 million,
compared to an operating loss of $1.8 million in the same quarter of the
prior year. Operating expenses declined 15.3% in the quarter,
principally due to lower general and administrative expenses. The prior
year period includes the impact of outside professional and consulting
fees related to the SEC's review and the subsequent restatement of the
company's financial statements. These expenses declined significantly in
the first quarter of fiscal 2007. This decline was partially offset by
higher sales, marketing and research and development costs incurred in
connection with new business awarded, sales efforts in the professional
installer marketplace, the company's initial recognition of equity-based
compensation expense as well as the company's commitment to value-added
customer service. Interest expense increased in the first quarter of
fiscal 2007 due to greater utilization of the line of credit and
increases in interest rates. Net income in the first quarter of fiscal
2007 was $1.1 million, or $0.13 per diluted share, compared to a net
loss of $1.4 million, or $(0.17) per diluted share in the first quarter
of fiscal 2006.
Selwyn Joffe, MPA's Chairman, President and CEO, said, "This was a solid
quarter for MPA. We delivered 13.8% growth in our top line and improved
the gross margin by 100 basis points, after adjusting for front loaded
marketing allowances in the first quarter of last year. This increase in
gross margin reflects well on the progress of our offshore initiatives.
Production at our offshore facilities accounted for almost 60% of total
production during the quarter, and we are on track to produce 95% of our
total production needs outside the U.S. by the end of the current fiscal
year."
Financial Condition
As of June 30, 2006, the company had cash and equivalents of $97,000,
working capital of $46.2 million and total assets of $110.9 million.
Debt and capital lease obligations totaled $20.9 million and
shareholders' equity was $52.8 million. Cash used in operations was $7.1
million in the first quarter of fiscal 2007, compared to $4.0 million in
the same period last year. In August 2006, the company increased its
credit facility to $35.0 million from $25.0 million.
Mervyn J. McCulloch, MPA's Chief Financial Officer, commented, "During
the first quarter, we issued the final credit under our pay-on scan
arrangement with our largest customer, which had a negative impact on
our operating cash flow. Although our working capital requirements
remain high, we believe our recently expanded credit agreement will
provide us with sufficient liquidity to meet our currently anticipated
needs."
Business Outlook
"Despite some industry softness in sales during the first quarter of
fiscal 2007, we are off to a great start, with solid revenue growth and
profitability. We continue to execute our strategies, and the results
are encouraging. Not only have we continued to improve our cost
structure, but our commitment to quality and excellent customer service
allowed us to gain valuable new customers. Going forward, we expect
continued revenue growth from our existing customers and expect to see
additional revenue contributions from our new customer agreements
sometime in the second quarter. As we continue to transition production
to our offshore facilities, we expect our production costs to continue
to decline, but we expect to experience some additional cost
inefficiencies until our Torrance production and related support
operations are fully relocated. MPA is on the right path, and we are
beginning to see the strength of our business model and strategic
initiatives," said Mr. Joffe.
Conference Call
MPA will host a conference call at 1:00 p.m. PT (4:00 p.m. ET) on
Monday, August 14, 2006 to discuss results for the first quarter of
fiscal 2007 ended June 30, 2006. Joining Selwyn Joffe, Chairman,
President and CEO of MPA, will be Mervyn McCulloch, Chief Financial
Officer. To participate in the conference call, please dial the
following number five to ten minutes prior to the scheduled conference
call time: (800) 399-7496. International callers should dial (706)
634-6508. There is no pass code required for this call. If you are
unable to participate in the call at this time, a replay will be
available Monday, August 14 at 2:00 p.m. PT (5:00 p.m. ET), through
Monday, August 21 at 9:00 p.m. PT (midnight ET). To access the replay
dial (800) 642- 1687 and enter the conference ID number 4266072. This
conference call will be broadcast live over the Internet and can be
accessed by all interested parties on the MPA website at
www.motorcarparts.com <http://www.motorcarparts.com> . To listen to the
live call, please go to the MPA website at least fifteen minutes prior
to the start of the call to register, download, and install any
necessary audio software. For those unable to participate during the
live broadcast, a replay will be available shortly after the call on
MPA's website for 90 days.
About MPA
Motorcar Parts of America, Inc. is a leading remanufacturer of
replacement alternators and starters for imported and domestic cars and
light trucks in the United States and Canada. MPA has facilities in the
United States in Torrance, California, and Nashville, Tennessee, as well
as in Mexico, Singapore and Malaysia. MPA's websites are located at
www.motorcarparts.com <http://www.motorcarparts.com> and
www.quality-built.com <http://www.quality-built.com> .
Disclosure Regarding Private Securities Litigation Reform Act of 1995
This press release contains certain forward-looking statements with
respect to our future performance that involve risks and uncertainties.
Various factors could cause actual results to differ materially from
those projected in such statements. These factors include, but are not
limited to: concentration of sales to certain customers, changes in our
relationship with any of our customers, including the increasing
customer pressure for lower prices and more favorable payment and other
terms, the increasing strain on our cash position, our ability to
achieve positive cash flows from operations, potential future changes in
our accounting policies that may be made as a result of an SEC review of
our previously filed public reports, lower revenues than anticipated
from new and existing contracts, our failure to meet the financial
covenants or the other obligations set forth in our bank credit
agreement and the bank's refusal to waive any such defaults, any
meaningful difference between projected production needs and ultimate
sales to our customers, increases in interest rates, changes in the
financial condition of any of our major customers, the impact of high
gasoline prices, the potential for changes in consumer spending,
consumer preferences and general economic conditions, increased
competition in the automotive parts industry, difficulty in obtaining
component parts or increases in the costs of those parts, political or
economic instability in any of the foreign countries where we conduct
operations, unforeseen increases in operating costs and other factors
discussed in our filings with the SEC.
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
June 30,
March 31,
2006
2006
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $97,000
$400,000
Short term investments 681,000
660,000
Accounts receivable - net 14,698,000
13,775,000
Due from customer 2,005,000
--
Inventory - net 64,317,000
59,337,000
Deferred income tax asset 5,827,000
5,809,000
Inventory unreturned 7,333,000
7,052,000
Prepaid expenses and other current assets 1,748,000
918,000
Total current assets 96,706,000
87,951,000
Plant and equipment - net 12,766,000
12,164,000
Other assets 1,444,000
1,231,000
TOTAL ASSETS $110,916,000
$101,346,000
LIABILITIES
Current liabilities:
Accounts payable $24,467,000
$21,882,000
Accrued liabilities 1,136,000
1,587,000
Accrued salaries and wages 2,651,000
2,267,000
Accrued workers' compensation claims 3,832,000
3,346,000
Income tax payable 1,086,000
1,094,000
Line of credit 14,900,000
6,300,000
Deferred compensation 521,000
495,000
Deferred income 133,000
133,000
Other current liabilities 266,000
988,000
Credit due customer --
1,793,000
Current portion of capital lease obligations 1,499,000
1,499,000
Total current liabilities 50,491,000
41,384,000
Deferred income, less current portion 355,000
388,000
Deferred income tax liability 498,000
562,000
Deferred gain on sale-leaseback 2,248,000
2,377,000
Other liabilities 46,000
46,000
Capitalized lease obligations, less current
portion 4,520,000
4,857,000
TOTAL LIABILITIES 58,158,000
49,614,000
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,
20,000,000 shares authorized; 8,324,455 and
8,316,105 shares issued and outstanding at
June 30, 2006 and March 31, 2006, respectively 83,000
83,000
Additional paid-in capital 54,498,000
54,326,000
Accumulated other comprehensive (loss) income (155,000)
85,000
Accumulated deficit (1,668,000)
(2,762,000)
TOTAL SHAREHOLDERS' EQUITY 52,758,000
51,732,000
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $110,916,000
$101,346,000
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
Three Months
Ended
June 30,
2006
2005
Net sales $27,223,000
$21,351,000
Cost of goods sold 20,177,000
17,965,000
Gross profit 7,046,000
3,386,000
Operating expenses:
General and administrative 3,072,000
4,010,000
Sales and marketing 905,000
865,000
Research and development 416,000
314,000
Total operating expenses 4,393,000
5,189,000
Operating income (loss) 2,653,000
(1,803,000)
Interest expense - net of interest income 822,000
548,000
Income (loss) before income tax expense
(benefit) 1,831,000
(2,351,000)
Income tax expense (benefit) 737,000
(931,000)
Net income (loss) $1,094,000
$(1,420,000)
Basic net income (loss) per share $0.13
$(0.17)
Diluted net income (loss) per share $0.13
$(0.17)
Weighted average number of shares outstanding:
-- basic 8,322,920
8,183,955
-- diluted 8,582,209
8,183,955
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
June 30,
2006
2005
Cash flows from operating activities:
Net income (loss) $1,094,000
$(1,420,000)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 649,000
498,000
Amortization of deferred gain on
sale-leaseback (129,000)
--
Provision for (recovery of) inventory
reserves and stock adjustments (267,000)
24,000
Recovery of doubtful accounts (14,000)
--
Deferred income taxes (82,000)
(881,000)
Share-based compensation expense 115,000
--
Excess tax benefit from employee stock
options exercised (28,000)
--
Changes in current assets and liabilities:
Accounts receivable (446,000)
2,498,000
Due from customer (2,005,000)
--
Inventory (5,176,000)
(8,246,000)
Inventory unreturned (281,000)
(171,000)
Prepaid expenses and other current assets (830,000)
(443,000)
Other assets (213,000)
(252,000)
Accounts payable and accrued liabilities 3,004,000
6,629,000
Income tax payable (8,000)
(50,000)
Deferred compensation 26,000
18,000
Deferred income (33,000)
(33,000)
Credit due customer (1,793,000)
(2,203,000)
Other current liabilities (722,000)
54,000
Net cash used in operating activities (7,139,000)
(3,978,000)
Cash flows from investing activities:
Purchase of property, plant and equipment (1,278,000)
(1,437,000)
Change in short term investments (21,000)
(28,000)
Net cash used in investing activities (1,299,000)
(1,465,000)
Cash flows from financing activities:
Net borrowings under line of credit 8,600,000
--
Net payments on capital lease obligations (310,000)
(122,000)
Exercise of stock options 57,000
--
Excess tax benefit from employee stock
options exercised 28,000
--
Net cash provided by (used in)
financing activities 8,375,000
(122,000)
Effect of exchange rate changes on cash (240,000)
(1,000)
NET DECREASE IN CASH AND CASH EQUIVALENTS (303,000)
(5,566,000)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 400,000
6,211,000
CASH AND CASH EQUIVALENTS - END OF PERIOD $97,000
$645,000
