New York
|
|
001-33861
|
|
11-2153962
|
(State or other jurisdiction of incorporation)
|
|
(Commission File Number)
|
|
(IRS Employer Identification No.)
|
2929 California Street, Torrance, CA
|
|
90503
|
(Address of principal executive offices)
|
|
(Zip Code)
|
☐
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
☐
|
Soliciting material pursuant to Rule l4a-12 under the Exchange Act (17 CFR 240.l4a-12)
|
☐
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
☐
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Item 2.02.
|
Results of Operations and Financial Condition
|
Item 9.01.
|
Financial Statements and Exhibits.
|
Exhibit
No.
|
Description
|
|
Press Release, dated January 8, 2019
|
MOTORCAR PARTS OF AMERICA, INC.
|
||
|
|
|
Date: January 8, 2019
|
/s/ David Lee
|
|
|
David Lee
|
|
|
Chief Financial Officer
|
CONTACT: |
Gary S. Maier
|
· |
Customer allowances related to new business of $2.2 million
|
o |
Up-front one-time costs of $1.2 million related to new business
|
o |
Core buyback premium amortization of $1.0 million related to new business (Core buyback premium amortization relates to the refundable premium paid or payable to customers
for the core value in finished goods on their shelves in connection with new business. The company previously recorded the full amount of the core buyback premiums as a reduction to revenue at the inception of a new customer
relationship. As described in “Prior Financial Information” paragraph below, this historical policy was concluded to be a misapplication of GAAP. The company has now revised the application of GAAP, resulting in the amortization of
the full amount of the premium costs over a period, typically ranging from six to eight years).
|
· |
The revaluation for cores on customers’ shelves resulted in a non-cash write-down of $6.2 million, which does not affect the reimbursable amount for the full value of cores
on the customers’ shelves should business with the customer be discontinued.
|
· |
Transition costs of $1.8 million associated with the expansion of manufacturing and distribution capacity to support increased demand for the company’s existing product
lines and its recently announced new brake product lines.
|
Three Months Ended
September 30,
|
Six Months Ended
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
(As Adjusted)
|
(As Adjusted)
|
|||||||||||||||
Net sales
|
$
|
127,939,000
|
$
|
110,261,000
|
$
|
219,607,000
|
$
|
204,956,000
|
||||||||
Cost of goods sold
|
102,228,000
|
84,234,000
|
177,544,000
|
153,077,000
|
||||||||||||
Gross profit
|
25,711,000
|
26,027,000
|
42,063,000
|
51,879,000
|
||||||||||||
Operating expenses:
|
||||||||||||||||
General and administrative
|
8,997,000
|
8,615,000
|
21,088,000
|
14,503,000
|
||||||||||||
Sales and marketing
|
4,537,000
|
3,457,000
|
8,929,000
|
6,851,000
|
||||||||||||
Research and development
|
1,784,000
|
1,240,000
|
3,520,000
|
2,242,000
|
||||||||||||
Total operating expenses
|
15,318,000
|
13,312,000
|
33,537,000
|
23,596,000
|
||||||||||||
Operating income
|
10,393,000
|
12,715,000
|
8,526,000
|
28,283,000
|
||||||||||||
Interest expense, net
|
5,699,000
|
3,522,000
|
10,774,000
|
6,836,000
|
||||||||||||
Income (loss) before income tax expense (benefit)
|
4,694,000
|
9,193,000
|
(2,248,000
|
)
|
21,447,000
|
|||||||||||
Income tax expense (benefit)
|
1,181,000
|
3,598,000
|
(266,000
|
)
|
8,032,000
|
|||||||||||
Net income (loss)
|
$
|
3,513,000
|
$
|
5,595,000
|
$
|
(1,982,000
|
)
|
$
|
13,415,000
|
|||||||
Basic net income (loss) per share
|
$
|
0.19
|
$
|
0.30
|
$
|
(0.10
|
)
|
$
|
0.72
|
|||||||
Diluted net income (loss) per share
|
$
|
0.18
|
$
|
0.29
|
$
|
(0.10
|
)
|
$
|
0.69
|
|||||||
Weighted average number of shares outstanding:
|
||||||||||||||||
Basic
|
18,878,674
|
18,718,709
|
18,887,214
|
18,687,179
|
||||||||||||
Diluted
|
19,319,465
|
19,356,809
|
18,887,214
|
19,371,144
|
September 30, 2018
|
March 31, 2018
|
|||||||
ASSETS
|
(Unaudited)
|
(As Adjusted)
|
||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
6,175,000
|
$
|
13,049,000
|
||||
Short-term investments
|
3,230,000
|
2,828,000
|
||||||
Accounts receivable — net
|
56,085,000
|
63,174,000
|
||||||
Inventory— net
|
188,287,000
|
161,210,000
|
||||||
Inventory unreturned
|
9,100,000
|
7,508,000
|
||||||
Contract assets
|
24,272,000
|
23,206,000
|
||||||
Income tax receivable
|
11,572,000
|
7,972,000
|
||||||
Prepaid expenses and other current assets
|
10,200,000
|
8,608,000
|
||||||
Total current assets
|
308,921,000
|
287,555,000
|
||||||
Plant and equipment — net
|
30,512,000
|
28,322,000
|
||||||
Long-term deferred income taxes
|
7,345,000
|
6,698,000
|
||||||
Long-term contract assets
|
230,438,000
|
222,731,000
|
||||||
Goodwill
|
2,551,000
|
2,551,000
|
||||||
Intangible assets — net
|
3,380,000
|
3,766,000
|
||||||
Other assets
|
866,000
|
804,000
|
||||||
TOTAL ASSETS
|
$
|
584,013,000
|
$
|
552,427,000
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
92,663,000
|
$
|
73,273,000
|
||||
Accrued liabilities
|
10,622,000
|
12,048,000
|
||||||
Customer finished goods returns accrual
|
19,961,000
|
17,805,000
|
||||||
Contract liabilities
|
31,488,000
|
32,603,000
|
||||||
Revolving loan
|
52,906,000
|
54,000,000
|
||||||
Other current liabilities
|
4,970,000
|
4,471,000
|
||||||
Current portion of term loan
|
3,685,000
|
3,068,000
|
||||||
Total current liabilities
|
216,295,000
|
197,268,000
|
||||||
Term loan, less current portion
|
26,032,000
|
13,913,000
|
||||||
Long-term contract liabilities
|
52,535,000
|
48,183,000
|
||||||
Long-term deferred income taxes
|
211,000
|
226,000
|
||||||
Other liabilities
|
6,776,000
|
5,957,000
|
||||||
Total liabilities
|
301,849,000
|
265,547,000
|
||||||
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;18,799,477 and 18,893,102 shares
issued and outstanding at September 30, 2018 and March 31, 2018, respectively
|
188,000
|
189,000
|
||||||
Additional paid-in capital
|
211,593,000
|
213,609,000
|
||||||
Retained earnings
|
77,274,000
|
78,510,000
|
||||||
Accumulated other comprehensive loss
|
(6,891,000
|
)
|
(5,428,000
|
)
|
||||
Total shareholders’ equity
|
282,164,000
|
286,880,000
|
||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
584,013,000
|
$
|
552,427,000
|
Reconciliation of Non-GAAP Financial Measures |
Exhibit 1
|
Three Months Ended September 30,
|
Six Months Ended September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
GAAP Results:
|
(As Adjusted)
|
(As Adjusted)
|
||||||||||||||
Net sales
|
$
|
127,939,000
|
$
|
110,261,000
|
$
|
219,607,000
|
$
|
204,956,000
|
||||||||
Net income (loss)
|
3,513,000
|
5,595,000
|
(1,982,000
|
)
|
13,415,000
|
|||||||||||
Diluted income (loss) per share (EPS)
|
0.18
|
0.29
|
(0.10
|
)
|
0.69
|
|||||||||||
Gross margin
|
20.1
|
%
|
23.6
|
%
|
19.2
|
%
|
25.3
|
%
|
||||||||
Non-GAAP Adjusted Results:
|
||||||||||||||||
Non-GAAP adjusted net sales
|
$
|
130,152,000
|
$
|
113,678,000
|
$
|
223,962,000
|
$
|
209,197,000
|
||||||||
Non-GAAP adjusted net income
|
11,540,000
|
10,100,000
|
14,557,000
|
18,602,000
|
||||||||||||
Non-GAAP adjusted diluted earnings per share (EPS)
|
0.60
|
0.52
|
0.75
|
0.96
|
||||||||||||
Non-GAAP adjusted gross margin
|
27.6
|
%
|
28.2
|
%
|
26.3
|
%
|
28.7
|
%
|
||||||||
Non-GAAP adjusted EBITDA
|
$
|
22,534,000
|
$
|
20,295,000
|
$
|
32,771,000
|
$
|
37,830,000
|
Reconciliation of Non-GAAP Financial Measures | Exhibit 2 |
Three Months Ended September 30,
|
Six Months Ended September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
(As Adjusted)
|
(As Adjusted)
|
|||||||||||||||
GAAP net sales
|
$
|
127,939,000
|
$
|
110,261,000
|
$
|
219,607,000
|
$
|
204,956,000
|
||||||||
Adjustments:
|
||||||||||||||||
Net sales
|
||||||||||||||||
Initial return and stock adjustment accruals related to new business
|
-
|
2,496,000
|
-
|
2,496,000
|
||||||||||||
Customer allowances related to new business
|
2,213,000
|
921,000
|
4,355,000
|
1,745,000
|
||||||||||||
Adjusted net sales
|
$
|
130,152,000
|
$
|
113,678,000
|
$
|
223,962,000
|
$
|
209,197,000
|
Reconciliation of Non-GAAP Financial Measures | Exhibit 3 |
Three Months Ended September 30,
|
||||||||||||||||
2018
|
2017
|
|||||||||||||||
(As Adjusted)
|
||||||||||||||||
$
|
Per Diluted
Share
|
$ |
Per Diluted
Share
|
|||||||||||||
GAAP net income
|
$
|
3,513,000
|
$
|
0.18
|
$
|
5,595,000
|
$
|
0.29
|
||||||||
Adjustments:
|
||||||||||||||||
Net sales
|
||||||||||||||||
Initial return and stock adjustment accruals related to new business
|
-
|
$
|
-
|
2,496,000
|
$
|
0.13
|
||||||||||
Customer allowances related to new business
|
2,213,000
|
$
|
0.11
|
921,000
|
$
|
0.05
|
||||||||||
Cost of goods sold
|
||||||||||||||||
New product line start-up and ramp-up costs, and transition expenses
|
1,833,000
|
$
|
0.09
|
-
|
$
|
-
|
||||||||||
Revaluation - cores on customers’ shelves and inventory step-up amortization
|
6,221,000
|
$
|
0.32
|
2,955,000
|
$
|
0.15
|
||||||||||
Cost of customer allowances and stock adjustment accruals related to new business
|
-
|
$
|
-
|
(362,000
|
)
|
$
|
(0.02
|
)
|
||||||||
Operating expenses
|
||||||||||||||||
Acquisition, financing, transition, severance, new business and other costs
|
1,144,000
|
$
|
0.06
|
236,000
|
$
|
0.01
|
||||||||||
Share-based compensation expenses
|
1,180,000
|
$
|
0.06
|
910,000
|
$
|
0.05
|
||||||||||
Mark-to-market losses (gains)
|
(1,898,000
|
)
|
$
|
(0.10
|
)
|
(690,000
|
)
|
$
|
(0.04
|
)
|
||||||
Tax effected (a)
|
(2,666,000
|
)
|
$
|
(0.14
|
)
|
(1,961,000
|
)
|
$
|
(0.10
|
)
|
||||||
Adjusted net income
|
$
|
11,540,000
|
$
|
0.60
|
$
|
10,100,000
|
$
|
0.52
|
Reconciliation of Non-GAAP Financial Measures | Exhibit 4 |
Six Months Ended September 30,
|
||||||||||||||||
2018
|
2017
|
|||||||||||||||
(As Adjusted)
|
||||||||||||||||
$
|
Per Diluted
Share
|
$
|
Per Diluted
Share
|
|||||||||||||
GAAP net (loss) income
|
$
|
(1,982,000
|
)
|
$
|
(0.10
|
)
|
$
|
13,415,000
|
$
|
0.69
|
||||||
Adjustments:
|
||||||||||||||||
Net sales
|
||||||||||||||||
Initial return and stock adjustment accruals related to new business
|
-
|
$
|
-
|
2,496,000
|
$
|
0.13
|
||||||||||
Customer allowances related to new business
|
4,355,000
|
$
|
0.23
|
1,745,000
|
$
|
0.09
|
||||||||||
Cost of goods sold
|
||||||||||||||||
New product line start-up and ramp-up costs, and transition expenses
|
3,588,000
|
$
|
0.19
|
-
|
$
|
-
|
||||||||||
Revaluation - cores on customers’ shelves and inventory step-up amortization
|
8,847,000
|
$
|
0.46
|
4,305,000
|
$
|
0.22
|
||||||||||
Cost of customer allowances and stock adjustment accruals related to new business
|
-
|
$
|
-
|
(362,000
|
)
|
$
|
(0.02
|
)
|
||||||||
Operating expenses
|
||||||||||||||||
Acquisition, financing, transition, severance, new business and other costs
|
1,675,000
|
$
|
0.09
|
501,000
|
$
|
0.03
|
||||||||||
Share-based compensation expenses
|
2,121,000
|
$
|
0.11
|
1,744,000
|
$
|
0.09
|
||||||||||
Mark-to-market losses (gains)
|
768,000
|
$
|
0.04
|
(3,035,000
|
)
|
$
|
(0.16
|
)
|
||||||||
Interest
|
||||||||||||||||
Write-off of debt issuance costs
|
303,000
|
$
|
0.02
|
-
|
$
|
-
|
||||||||||
Tax effected (a)
|
(5,118,000
|
)
|
$
|
(0.27
|
)
|
(2,207,000
|
)
|
$
|
(0.11
|
)
|
||||||
Adjusted net income
|
$
|
14,557,000
|
$
|
0.75
|
$
|
18,602,000
|
$
|
0.96
|
Reconciliation of Non-GAAP Financial Measures | Exhibit 5 |
Three Months Ended September 30,
|
||||||||||||||||
2018
|
2017
|
|||||||||||||||
(As Adjusted)
|
||||||||||||||||
$
|
Gross Margin
|
$
|
Gross Margin
|
|||||||||||||
GAAP gross profit
|
$
|
25,711,000
|
20.1
|
%
|
$
|
26,027,000
|
23.6
|
%
|
||||||||
Adjustments:
|
||||||||||||||||
Net sales
|
||||||||||||||||
Initial return and stock adjustment accruals related to new business
|
-
|
2,496,000
|
||||||||||||||
Customer allowances related to new business
|
2,213,000
|
921,000
|
||||||||||||||
Cost of goods sold
|
||||||||||||||||
New product line start-up and ramp-up costs, and transition expenses
|
1,833,000
|
-
|
||||||||||||||
Revaluation - cores on customers’ shelves and inventory step-up amortization
|
6,221,000
|
2,955,000
|
||||||||||||||
Cost of customer allowances and stock adjustment accruals related to new business
|
-
|
(362,000
|
)
|
|||||||||||||
Total adjustments
|
10,267,000
|
7.5
|
%
|
6,010,000
|
4.6
|
%
|
||||||||||
Adjusted gross profit
|
$
|
35,978,000
|
27.6
|
%
|
$
|
32,037,000
|
28.2
|
%
|
Reconciliation of Non-GAAP Financial Measures | Exhibit 6 |
Six Months Ended September 30,
|
||||||||||||||||
2018
|
2017
|
|||||||||||||||
(As Adjusted)
|
||||||||||||||||
$
|
Gross Margin
|
$ |
Gross Margin
|
|||||||||||||
GAAP gross profit
|
$
|
42,063,000
|
19.2
|
%
|
$
|
51,879,000
|
25.3
|
%
|
||||||||
Adjustments:
|
||||||||||||||||
Net sales
|
||||||||||||||||
Initial return and stock adjustment accruals related to new business
|
-
|
2,496,000
|
||||||||||||||
Customer allowances related to new business
|
4,355,000
|
1,745,000
|
||||||||||||||
Cost of goods sold
|
||||||||||||||||
New product line start-up and ramp-up costs, and transition expenses
|
3,588,000
|
-
|
||||||||||||||
Revaluation - cores on customers’ shelves and inventory step-up amortization
|
8,847,000
|
4,305,000
|
||||||||||||||
Cost of customer allowances and stock adjustment accruals related to new business
|
-
|
(362,000
|
)
|
|||||||||||||
Total adjustments
|
16,790,000
|
7.1
|
%
|
8,184,000
|
3.4
|
%
|
||||||||||
Adjusted gross profit
|
$
|
58,853,000
|
26.3
|
%
|
$
|
60,063,000
|
28.7
|
%
|
Reconciliation of Non-GAAP Financial Measures | Exhibit 7 |
Three Months Ended September 30,
|
Six Months Ended September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
(As Adjusted)
|
(As Adjusted)
|
|||||||||||||||
GAAP net income (loss)
|
$
|
3,513,000
|
$
|
5,595,000
|
$
|
(1,982,000
|
)
|
$
|
13,415,000
|
|||||||
Interest expense, net
|
5,699,000
|
3,522,000
|
10,774,000
|
6,836,000
|
||||||||||||
Income tax expense (benefit)
|
1,181,000
|
3,598,000
|
(266,000
|
)
|
8,032,000
|
|||||||||||
Depreciation and amortization
|
1,632,000
|
1,114,000
|
3,218,000
|
2,153,000
|
||||||||||||
EBITDA
|
$
|
12,025,000
|
$
|
13,829,000
|
$
|
11,744,000
|
$
|
30,436,000
|
||||||||
Adjustments:
|
||||||||||||||||
Net sales
|
||||||||||||||||
Initial return and stock adjustment accruals related to new business
|
-
|
2,496,000
|
-
|
2,496,000
|
||||||||||||
Customer allowances related to new business
|
2,213,000
|
921,000
|
4,355,000
|
1,745,000
|
||||||||||||
Cost of goods sold
|
||||||||||||||||
New product line start-up and ramp-up costs, and transition expenses (a)
|
1,736,000
|
-
|
3,430,000
|
-
|
||||||||||||
Revaluation - cores on customers’ shelves and inventory step-up amortization
|
6,221,000
|
2,955,000
|
8,847,000
|
4,305,000
|
||||||||||||
Cost of customer allowances and stock adjustment accruals related to new business
|
-
|
(362,000
|
)
|
-
|
(362,000
|
)
|
||||||||||
Operating expenses
|
||||||||||||||||
Acquisition, financing, transition (a), severance, new business and other costs
|
1,057,000
|
236,000
|
1,506,000
|
501,000
|
||||||||||||
Share-based compensation expenses
|
1,180,000
|
910,000
|
2,121,000
|
1,744,000
|
||||||||||||
Mark-to-market losses (gains)
|
(1,898,000
|
)
|
(690,000
|
)
|
768,000
|
(3,035,000
|
)
|
|||||||||
Adjusted EBITDA
|
$
|
22,534,000
|
$
|
20,295,000
|
$
|
32,771,000
|
$
|
37,830,000
|