10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM       TO

Commission File No. 001-33861

MOTORCAR PARTS OF AMERICA, INC.

(Exact name of registrant as specified in its charter)

New York	11-2153962
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2929 California Street, Torrance, California	90503
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (310) 212-7910

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	MPAA	The Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐	Accelerated filer ☑
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

There were 19,101,751 shares of Common Stock outstanding at February 2, 2022.

MOTORCAR PARTS OF AMERICA, INC.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
	Item 1. Financial Statements (unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Income	5
	Condensed Consolidated Statements of Comprehensive Income	6
	Condensed Consolidated Statements of Shareholders’ Equity	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	34
	Item 4. Controls and Procedures	34
PART II — OTHER INFORMATION
	Item 1. Legal Proceedings	36
	Item 1A. Risk Factors	36
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	36
	Item 5. Other Information	36
	Item 6. Exhibits	37
	SIGNATURES	39

2

MOTORCAR PARTS OF AMERICA, INC.

GLOSSARY

The following terms are frequently used in the text of this report and have the meanings indicated below.

“Used Core” — An automobile part which has previously been used in the operation of a vehicle. Generally, the Used Core is an original equipment (“OE”) automobile part installed by the vehicle manufacturer and subsequently removed for replacement. Used Cores contain salvageable parts, which are an important raw material in the remanufacturing process. We obtain most Used Cores by providing credits to our customers for Used Cores returned to us under our core exchange programs. Our customers receive these Used Cores from consumers who deliver a Used Core to obtain credit from our customers upon the purchase of a newly remanufactured automobile part. When sufficient Used Cores are not available from our customers, we purchase Used Cores from core brokers, who are in the business of buying and selling Used Cores. The Used Cores purchased from core brokers or returned to us by our customers under the core exchange programs, and which have been physically received by us, are part of our raw material and work-in-process inventory. Used Cores returned by consumers to our customers but not yet returned to us are classified as contract assets until we physically receive these Used Cores.

“Remanufactured Core” — The Used Core underlying an automobile part that has gone through the remanufacturing process and through that process has become part of a newly remanufactured automobile part. The remanufacturing process takes a Used Core, breaks it down into its component parts, replaces those components that cannot be reused and reassembles the salvageable components of the Used Core and additional new components into a remanufactured automobile part. Remanufactured Cores held for sale at our customer locations are included in long-term contract assets. The Remanufactured Core portion of stock adjustment returns are classified as contract assets until we physically receive them.

3

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

	December 31, 2021			March 31, 2021
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	7,769,000		$	15,523,000
Short-term investments		2,212,000			1,652,000
Accounts receivable — net		57,691,000			63,122,000
Inventory		358,738,000			302,913,000
Contract assets		26,609,000			26,940,000
Prepaid expenses and other current assets		11,743,000			12,706,000
Total current assets		464,762,000			422,856,000
Plant and equipment — net		50,636,000			53,854,000
Operating lease assets		82,029,000			71,513,000
Long-term deferred income taxes		20,255,000			19,381,000
Long-term contract assets		311,756,000			270,213,000
Goodwill and intangible assets — net		7,341,000			8,534,000
Other assets		1,501,000			1,531,000
TOTAL ASSETS	$	938,280,000		$	847,882,000
LIABILITIES AND SHAREHOLDERS’  EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	149,314,000		$	152,735,000
Customer finished goods returns accrual		37,333,000			31,524,000
Contract liabilities		40,190,000			41,072,000
Revolving loan		113,000,000			84,000,000
Other current liabilities		6,708,000			6,683,000
Operating lease liabilities		6,444,000			6,439,000
Current portion of term loan		3,670,000			3,678,000
Total current liabilities		356,659,000			326,131,000
Term loan, less current portion		13,951,000			16,786,000
Long-term contract liabilities		165,599,000			125,223,000
Long-term deferred income taxes		75,000			73,000
Long-term operating lease liabilities		82,287,000			70,551,000
Other liabilities		6,589,000			7,973,000
Total liabilities		625,160,000			546,737,000
Commitments and contingencies
Shareholders’ equity:
Preferred stock; par value $0.01 per share, 5,000,000 shares authorized; none issued		-			-
Series A junior participating preferred stock; par value $0.01 per share, 20,000 shares authorized; none issued		-			-
Common stock; par value $0.01 per share, 50,000,000 shares authorized; 19,100,298 and 19,045,386 shares issued and outstanding at December 31, 2021 and March 31, 2021, respectively		191,000			190,000
Additional paid-in capital		225,319,000			223,058,000
Retained earnings		93,276,000			85,593,000
Accumulated other comprehensive loss		(5,666,000	)		(7,696,000	)
Total shareholders’ equity		313,120,000			301,145,000
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	938,280,000		$	847,882,000

The accompanying notes to condensed consolidated financial statements are an integral part hereof.

4

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(Unaudited)

	Three Months Ended December 31,					Nine Months Ended December 31,
	2021		2020			2021		2020
Net sales	$	161,810,000	$	122,568,000		$	486,392,000	$	372,654,000
Cost of goods sold		129,235,000		98,327,000			394,295,000		295,300,000
Gross profit		32,575,000		24,241,000			92,097,000		77,354,000
Operating expenses:
General and administrative		14,605,000		14,005,000			41,556,000		38,210,000
Sales and marketing		6,274,000		4,698,000			17,162,000		13,224,000
Research and development		2,635,000		2,100,000			7,631,000		6,014,000
Foreign exchange impact of lease liabilities and forward contracts		385,000		(12,455,000	)		1,769,000		(21,257,000	)
Total operating expenses		23,899,000		8,348,000			68,118,000		36,191,000
Operating income		8,676,000		15,893,000			23,979,000		41,163,000
Interest expense, net		3,949,000		4,051,000			11,510,000		12,074,000
Income before income tax expense		4,727,000		11,842,000			12,469,000		29,089,000
Income tax expense		1,588,000		3,373,000			4,786,000		8,448,000
Net income	$	3,139,000	$	8,469,000		$	7,683,000	$	20,641,000
Basic net income per share	$	0.16	$	0.44		$	0.40	$	1.09
Diluted net income per share	$	0.16	$	0.44		$	0.39	$	1.07
Weighted average number of shares outstanding:
Basic		19,184,339		19,053,232			19,124,824		19,016,302
Diluted		19,544,174		19,436,793			19,604,780		19,333,758

The accompanying notes to condensed consolidated financial statements are an integral part hereof.

5

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended December 31,					Nine Months Ended December 31,
	2021			2020		2021		2020
Net income	$	3,139,000		$	8,469,000	$	7,683,000	$	20,641,000
Other comprehensive (loss) income, net of tax:
Foreign currency translation (loss) gain		(414,000	)		1,614,000		2,030,000		(90,000	)
Total other comprehensive (loss) income, net of tax		(414,000	)		1,614,000		2,030,000		(90,000	)
Comprehensive income	$	2,725,000		$	10,083,000	$	9,713,000	$	20,551,000

The accompanying notes to condensed consolidated financial statements are an integral part hereof.

6

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity

(Unaudited)

	Common Stock
	Shares			Amount			Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total
Balance at March 31, 2021		19,045,386		$	190,000		$	223,058,000		$	85,593,000	$	(7,696,000	)	$	301,145,000
Compensation recognized under employee stock plans		-			-			1,576,000			-		-			1,576,000
Exercise of stock options, net of shares withheld for employee taxes		19,837			-			354,000			-		-			354,000
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes		35,869			1,000			(543,000	)		-		-			(542,000	)
Foreign currency translation		-			-			-			-		1,833,000			1,833,000
Net income		-			-			-			861,000		-			861,000
Balance at June 30, 2021		19,101,092		$	191,000		$	224,445,000		$	86,454,000	$	(5,863,000	)	$	305,227,000
Compensation recognized under employee stock plans		-			-			1,851,000			-		-			1,851,000
Exercise of stock options, net of shares withheld for employee taxes		7,860			-			78,000			-		-			78,000
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes		63,803			1,000			(1,204,000	)		-		-			(1,203,000	)
Foreign currency translation		-			-			-			-		611,000			611,000
Net income		-			-			-			3,683,000		-			3,683,000
Balance at September 30, 2021		19,172,755		$	192,000		$	225,170,000		$	90,137,000	$	(5,252,000	)	$	310,247,000
Compensation recognized under employee stock plans		-			-			2,030,000			-		-			2,030,000
Exercise of stock options, net of shares withheld for employee taxes		1,846			-			32,000			-		-			32,000
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes		32,183			-			-			-		-			-
Repurchase and cancellation of treasury stock, including fees		(106,486	)		(1,000	)		(1,913,000	)		-		-			(1,914,000	)
Foreign currency translation		-			-			-			-		(414,000	)		(414,000	)
Net income		-			-			-			3,139,000		-			3,139,000
Balance at December 31, 2021		19,100,298		$	191,000		$	225,319,000		$	93,276,000	$	(5,666,000	)	$	313,120,000

	Common Stock
	Shares		Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at March 31,2020		18,969,380	$	190,000	$	218,581,000		$	64,117,000		$	(7,368,000	)	$	275,520,000
Compensation recognized under employee stock plans		-		-		1,043,000			-			-			1,043,000
Exercise of stock options		3,000		-		20,000			-			-			20,000
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes		29,953		-		(207,000	)		-			-			(207,000	)
Foreign currency translation		-		-		-			-			(1,263,000	)		(1,263,000	)
Net loss		-		-		-			(3,012,000	)		-			(3,012,000	)
Balance at June 30, 2020		19,002,333	$	190,000	$	219,437,000		$	61,105,000		$	(8,631,000	)	$	272,101,000
Compensation recognized under employee stock plans		-		-		1,218,000			-			-			1,218,000
Exercise of stock options		6,000		-		73,000			-			-			73,000
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes		18,254		-		(140,000	)		-			-			(140,000	)
Foreign currency translation		-		-		-			-			(441,000	)		(441,000	)
Net income		-		-		-			15,184,000			-			15,184,000
Balance at September 30, 2020		19,026,587	$	190,000	$	220,588,000		$	76,289,000		$	(9,072,000	)	$	287,995,000
Compensation recognized under employee stock plans		-		-		1,498,000			-			-			1,498,000
Exercise of stock options		5,794		-		112,000			-			-			112,000
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes		23,911		1,000		(5,000	)		-			-			(4,000	)
Foreign currency translation		-		-		-			-			1,614,000			1,614,000
Net income		-		-		-			8,469,000			-			8,469,000
Balance at December 31, 2020		19,056,292	$	191,000	$	222,193,000		$	84,758,000		$	(7,458,000	)	$	299,684,000

The accompanying notes to condensed consolidated financial statements are an integral part hereof.

7

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended December 31,
	2021			2020
Cash flows from operating activities:
Net income	$	7,683,000		$	20,641,000
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		9,591,000			8,090,000
Amortization of interest		1,189,000			1,059,000
Amortization of core premiums paid to customers		8,497,000			4,269,000
Amortization of finished goods premiums paid to customers		516,000			-
Noncash lease expense		5,533,000			5,239,000
Loss (gain) due to the change in the fair value of the contingent consideration		60,000			(45,000	)
Foreign exchange impact of lease liabilities and forward contracts		1,769,000			(21,257,000	)
Gain on short-term investments		(245,000	)		(398,000	)
Net provision for inventory reserves		9,293,000			8,937,000
Net provision for customer payment discrepancies and credit losses		1,690,000			242,000
Deferred income taxes		(877,000	)		2,866,000
Share-based compensation expense		5,457,000			3,759,000
Loss on disposal of plant and equipment		33,000			9,000
Changes in operating assets and liabilities:
Accounts receivable		3,626,000			47,066,000
Inventory		(65,303,000	)		(68,723,000	)
Prepaid expenses and other current assets		187,000			982,000
Other assets		7,000			1,067,000
Accounts payable and accrued liabilities		(877,000	)		46,198,000
Customer finished goods returns accrual		5,807,000			8,844,000
Contract assets, net		(50,225,000	)		(18,126,000	)
Contract liabilities, net		38,828,000			28,492,000
Operating lease liabilities		(4,219,000	)		(4,710,000	)
Other liabilities		(194,000	)		(2,017,000	)
Net cash (used in) provided by operating activities		(22,174,000	)		72,484,000
Cash flows from investing activities:
Purchase of plant and equipment		(5,111,000	)		(12,043,000	)
Proceeds from sale of plant and equipment		-			7,000
Change in short-term investments		(315,000	)		(259,000	)
Net cash used in investing activities		(5,426,000	)		(12,295,000	)
Cash flows from financing activities:
Borrowings under revolving loan		62,000,000			-
Repayments of revolving loan		(33,000,000	)		(93,000,000	)
Repayments of term loan		(2,813,000	)		(2,813,000	)
Payments for debt issuance costs		(1,148,000	)		-
Payments on finance lease obligations		(2,074,000	)		(1,775,000	)
Exercise of stock options		464,000			205,000
Cash used to net share settle equity awards		(1,745,000	)		(351,000	)
Repurchase of common stock, including fees		(1,914,000	)		-
Net cash provided by (used in) financing activities		19,770,000			(97,734,000	)
Effect of exchange rate changes on cash and cash equivalents		76,000			729,000
Net decrease in cash and cash equivalents		(7,754,000	)		(36,816,000	)
Cash and cash equivalents — Beginning of period		15,523,000			49,616,000
Cash and cash equivalents  — End of period	$	7,769,000		$	12,800,000
Supplemental disclosures of cash flow information:
Cash paid for interest, net	$	10,348,000		$	11,222,000
Cash paid for income taxes, net of refunds		5,987,000			2,048,000
Cash paid for operating leases		7,969,000			8,087,000
Cash paid for finance leases		2,343,000			2,049,000
Plant and equipment acquired under finance leases		601,000			3,334,000
Assets acquired under operating leases		16,141,000			15,630,000
Non-cash capital expenditures		430,000			923,000

The accompanying notes to condensed consolidated financial statements are an integral part hereof.

8

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

December 31, 2021

(Unaudited)

1. Company Background and Organization

Motorcar Parts of America, Inc. and its subsidiaries (the “Company”, or “MPA”) is a leading supplier of automotive aftermarket non-discretionary replacement parts, and test solutions and diagnostic equipment. These replacement parts are primarily sold to automotive retail chain stores and warehouse distributors throughout North America and to major automobile manufacturers for both their aftermarket programs and warranty replacement programs (“OES”). The Company’s test solutions and diagnostic equipment primarily serves the global automotive component and powertrain testing market. The Company’s products include (i) rotating electrical products such as alternators and starters, (ii) wheel hub assemblies and bearings, (iii) brake-related products, which include brake calipers, brake boosters, brake rotors, brake pads, and brake master cylinders, and (iv) other products, which include turbochargers and test solutions and diagnostic equipment used for electric vehicle powertrain development and manufacturing including electric motor test systems, e-axle test systems, advanced power emulators, charging unit test systems, test systems for alternators, starters, belt starter generators and bench-top testers used by the automotive retail segment.

Pursuant to the guidance provided under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for segment reporting, the Company has identified its chief operating decision maker (“CODM”), reviewed the documents used by the CODM, and understands how such documents are used by the CODM to make financial and operating decisions. The Company has determined through this review process that its business comprises three separate operating segments. Two of the operating segments meet all the aggregation criteria and are aggregated. The remaining operating segment does not meet the quantitative thresholds for individual disclosure and the Company has combined its operating segments into one reportable segment.

Impact of the Novel Coronavirus (“COVID-19”)

The outbreak of the COVID-19 pandemic continues to adversely impact the U.S. and global economies – creating uncertainty regarding the potential effects on the Company’s employees, supply chain, operations, and customer demand. The COVID-19 pandemic could impact the Company’s operations and the operations of its customers, suppliers, and vendors because of quarantines, facility closures, travel, and logistics restrictions. The extent to which the COVID-19 pandemic impacts the Company will depend on numerous factors and future developments, which are highly uncertain and cannot be predicted, including, but not limited to: (i) the severity of the virus, (ii) the occurrence and duration of additional spikes in infections, (iii) the effects of the pandemic on customers, suppliers, and vendors, (iv) the remedial actions and stimulus measures adopted by local, state and federal governments, (v) the availability and acceptance of vaccines, and (vi) the extent to which normal economic and operating conditions can resume. Even after the COVID-19 pandemic has subsided, the Company may continue to experience adverse impacts to its business because of an economic recession or depression that has occurred or may occur in the future.

2. Basis of Presentation and New Accounting Pronouncements

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended December 31, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2022. This report should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended March 31, 2021, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on June 14, 2021.

9

The accompanying condensed consolidated financial statements have been prepared on a consistent basis with, and there have been no material changes to, except as noted below, the accounting policies described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements that are presented in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

Recently Adopted Accounting Pronouncements

Income Taxes

In December 2019, the FASB issued guidance that simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistent application. This guidance is effective for annual and interim periods in fiscal years beginning after December 15, 2020. The adoption of this guidance on April 1, 2021 did not have any material impact on the Company’s consolidated financial statements.

3. Accounts Receivable — Net

The Company has trade accounts receivable that result from the sale of goods and services. Accounts receivable — net includes offset accounts related to allowances for credit losses, customer payment discrepancies, and returned goods authorizations (“RGAs”) issued for in-transit unit returns. The Company believes its credit risk with respect to trade accounts receivable is limited due to its credit evaluation process and the long-term nature of its relationships with its largest customers. The Company utilizes a historical loss rate method, adjusted for any changes in economic conditions or risk characteristics, to estimate its expected credit losses each period. When developing an estimate of expected credit losses, the Company considers all available relevant information regarding the collectability of cash flows, including historical information, current conditions, and reasonable and supportable forecasts of future economic conditions over the contractual life of the receivable. The historical loss rate method considers past write-offs of trade accounts receivable over a period commensurate with the initial term of the Company’s contracts with its customers. The Company recognizes the allowance for credit losses at inception and reassesses quarterly based on management’s expectation of the asset’s collectability. The Company’s accounts receivable are short-term in nature and written off only when all collection attempts have failed. The Company uses receivable discount programs with certain customers and their respective banks (see Note 10).

Accounts receivable — net is comprised of the following:

	December 31, 2021			March 31, 2021
Accounts receivable — trade	$	71,124,000		$	81,549,000
Allowance for credit losses		(292,000	)		(348,000	)
Customer payment discrepancies		(1,185,000	)		(752,000	)
Customer returns RGA issued		(11,956,000	)		(17,327,000	)
Total accounts receivable — net	$	57,691,000		$	63,122,000

10

The following table provides a roll-forward of the allowance for credit losses that is deducted from accounts receivable to present the net amount expected to be collected. During the nine months ended December 31, 2020, the Company wrote off amounts previously fully reserved for in connection with the bankruptcy filing of one of its customers.

	Nine Months Ended December 31,
	2021			2020
Balance at beginning of period	$	348,000		$	4,252,000
Provision for expected credit losses		(17,000	)		74,000
Recoveries		-			(100,000	)
Amounts written off charged against the allowance		(39,000	)		(3,898,000	)
Balance at end of period	$	292,000		$	328,000

4. Inventory

Inventory is comprised of the following:

	December 31, 2021			March 31, 2021
Inventory
Raw materials	$	159,001,000		$	128,190,000
Work-in-process		8,048,000			5,233,000
Finished goods		191,040,000			168,184,000
		358,089,000			301,607,000
Less allowance for excess and obsolete inventory		(14,857,000	)		(13,246,000	)
Inventory — net		343,232,000			288,361,000
Inventory unreturned		15,506,000			14,552,000
Total inventory	$	358,738,000		$	302,913,000

5. Contract Assets

During the three months ended December 31, 2021 and 2020, the Company reduced the carrying value of Remanufactured Cores held at customers’ locations by $846,000 and $1,304,000, respectively. During the nine months ended December 31, 2021 and 2020, the Company reduced the carrying value of Remanufactured Cores held at customers’ locations by $3,517,000 and $3,580,000, respectively.

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Contract assets are comprised of the following:

	December 31, 2021		March 31, 2021
Short-term contract assets
Cores expected to be returned by customers	$	14,172,000	$	17,657,000
Upfront payments to customers		540,000		684,000
Finished goods premiums paid to customers		613,000		405,000
Core premiums paid to customers		11,284,000		8,194,000
Total short-term contract assets	$	26,609,000	$	26,940,000
Remanufactured cores held at customers’ locations	$	257,609,000	$	229,918,000
Upfront payments to customers		231,000		486,000
Finished goods premiums paid to customers		2,926,000		2,731,000
Core premiums paid to customers		45,421,000		31,509,000
Long-term core inventory deposits		5,569,000		5,569,000
Total long-term contract assets	$	311,756,000	$	270,213,000

6. Significant Customer and Other Information

Significant Customer Concentrations

The largest customers accounted for the following percentage of net sales:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2021			2020			2021			2020
Net sales
Customer A		38	%		35	%		38	%		42	%
Customer B		15	%		26	%		17	%		24	%
Customer C		29	%		24	%		30	%		21	%

The largest customers accounted for the following percentage of accounts receivable – trade:

	December 31, 2021			March 31, 2021
Accounts receivable - trade
Customer A		38	%		50	%
Customer B		21	%		23	%
Customer C		1	%		-	%

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Geographic and Product Information

The Company’s products are sold predominantly in the U.S. and accounted for the following percentages of net sales:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2021			2020			2021			2020
Product line
Rotating electrical products		68	%		72	%		69	%		76	%
Wheel hub products		13	%		14	%		13	%		14	%
Brake related products		15	%		12	%		15	%		9	%
Other products		4	%		2	%		3	%		1	%
		100	%		100	%		100	%		100	%

Significant Supplier Concentrations

The Company had no suppliers that accounted for more than 10% of inventory purchases for the three and nine months ended December 31, 2021 and 2020.

7. Debt

The Company is party to a $268,620,000 senior secured financing, (as amended from time to time, the “Credit Facility”) with a syndicate of lenders and PNC Bank, National Association, as administrative agent, consisting of (i) a $238,620,000 revolving loan facility, subject to borrowing base restrictions, a $24,000,000 sublimit for borrowings by Canadian borrowers, and a $20,000,000 sublimit for letters of credit (the “Revolving Facility”) and (ii) a $30,000,000 term loan facility (the “Term Loans”). The loans under the Credit Facility mature on June 5, 2023. The Credit Facility currently permits the payment of up to $29,430,000 of dividends and share repurchases for fiscal year 2022, subject to pro forma compliance with financial covenants. In connection with the Credit Facility, the lenders have a security interest in substantially all of the assets of the Company.

In May 2021, the Company entered into a third amendment to the Credit Facility (the “Third Amendment”). The Third Amendment, among other things, (i) extended the maturity date to May 28, 2026 from June 5, 2023, (ii) modified the fixed charge coverage ratio financial covenant, and (iii) modified the definition of “Consolidated EBITDA”. The Company capitalized $1,148,000 of new debt issuance costs in connection with the Third Amendment.

The Term Loans require quarterly principal payments of $937,500. The Credit Facility bears interest at rates equal to either LIBOR plus a margin of 2.25%, 2.50% or 2.75% or a reference rate plus a margin of 1.25%, 1.50% or 1.75%, in each case depending on the senior leverage ratio as of the applicable measurement date. There is also a facility fee of 0.375% to 0.50%, depending on the senior leverage ratio as of the applicable measurement date. The interest rate on the Company’s Term Loans and Revolving Facility was 2.85% and 2.86% respectively, at December 31, 2021, and 2.62% at March 31, 2021.

The Credit Facility, among other things, requires the Company to maintain certain financial covenants including a maximum senior leverage ratio and a minimum fixed charge coverage ratio. The Company was in compliance with all financial covenants at December 31, 2021.

In addition to other covenants, the Credit Facility places limits on the Company’s ability to incur liens, incur additional indebtedness, make loans and investments, engage in mergers and acquisitions, engage in asset sales, redeem, or repurchase capital stock, alter the business conducted by the Company and its subsidiaries, transact with affiliates, prepay, redeem, or purchase subordinated debt, and amend or otherwise alter debt agreements.

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The following summarizes information about the Term Loans:

	December 31, 2021			March 31, 2021
Principal amount of Term Loans	$	17,812,000		$	20,625,000
Unamortized financing fees		(191,000	)		(161,000	)
Net carrying amount of Term Loans		17,621,000			20,464,000
Less current portion of Term Loans		(3,670,000	)		(3,678,000	)
Long-term portion of Term Loans	$	13,951,000		$	16,786,000

Future repayments of the Term Loans are as follows:

Year Ending March 31,
2022 - remaining three months	$	937,000
2023		3,750,000
2024		3,750,000
2025		3,750,000
2026		3,750,000
Thereafter		1,875,000
Total payments	$	17,812,000

The Company had $113,000,000 and $84,000,000 outstanding under the Revolving Facility at December 31, 2021 and March 31, 2021, respectively. In addition, $6,409,000 was outstanding for letters of credit at December 31, 2021. At December 31, 2021, after certain contractual adjustments, $99,908,000 was available under the Revolving Facility.

8. Contract Liabilities

Contract liabilities are comprised of the following:

	December 31, 2021		March 31, 2021
Short-term contract liabilities
Customer core returns accruals	$	13,089,000	$	12,710,000
Customer allowances earned		18,461,000		16,513,000
Customer deposits		3,747,000		2,234,000
Finished goods liabilities		1,609,000		1,883,000
Core bank liability		1,622,000		1,585,000
Accrued core payment		1,662,000		6,147,000
Total short-term contract liabilities	$	40,190,000	$	41,072,000
Long-term contract liabilities
Customer core returns accruals	$	146,837,000	$	103,719,000
Customer allowances earned		109,000		313,000
Finished goods liabilities		1,972,000		2,678,000
Core bank liability		15,682,000		16,903,000
Accrued core payment		999,000		1,610,000
Total long-term contract liabilities	$	165,599,000	$	125,223,000

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9. Leases

The Company leases various facilities in North America and Asia under operating leases expiring through August 2033. The Company has material nonfunctional currency leases that could have a material impact on the Company’s condensed consolidated statements of income. As required for other monetary liabilities, lessees remeasure foreign currency-denominated lease liabilities using the exchange rate at each reporting date, but the lease assets are nonmonetary assets measured at historical rates and are not affected by subsequent changes in the exchange rates. In connection with the remeasurement of these leases, the Company recorded a loss of $985,000 and a gain of $8,638,000 during the three months ended December 31, 2021 and 2020, respectively, and gains of $64,000 and $12,241,000 during the nine months ended December 31, 2021 and 2020, respectively. These amounts are included in “foreign exchange impact of lease liabilities and forward contracts” in the condensed consolidated statements of income.

Balance sheet information for leases is as follows:

Leases	Classification	December 31, 2021		March 31, 2021
Assets:
Operating	Operating lease assets	$	82,029,000	$	71,513,000
Finance	Plant and equipment		7,745,000		8,852,000
Total leased assets		$	89,774,000	$	80,365,000
Liabilities:
Current
Operating	Operating lease liabilities	$	6,444,000	$	6,439,000
Finance	Other current liabilities		2,420,000		2,640,000
Long-term
Operating	Long-term operating lease liabilities		82,287,000		70,551,000
Finance	Other liabilities		3,741,000		4,995,000
Total lease liabilities		$	94,892,000	$	84,625,000

Lease cost recognized in the condensed consolidated statements of income is as follows:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Lease cost
Operating lease cost	$	3,134,000	$	2,962,000	$	9,325,000	$	8,522,000
Short-term lease cost		361,000		373,000		1,112,000		1,027,000
Variable lease cost		225,000		183,000		716,000		556,000
Finance lease cost:
Amortization of finance lease assets		515,000		458,000		1,579,000		1,299,000
Interest on finance lease liabilities		83,000		98,000		269,000		274,000
Total lease cost	$	4,318,000	$	4,074,000	$	13,001,000	$	11,678,000

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Maturities of lease commitments at December 31, 2021 by fiscal year were as follows:

Maturity of lease liabilities	Operating Leases			Finance Leases			Total
2022 - remaining three months	$	2,449,000		$	714,000		$	3,163,000
2023		11,460,000			2,490,000			13,950,000
2024		10,014,000			1,688,000			11,702,000
2025		10,078,000			1,194,000			11,272,000
2026		10,347,000			507,000			10,854,000
Thereafter		75,113,000			51,000			75,164,000
Total lease payments		119,461,000			6,644,000			126,105,000
Less amount representing interest		(30,730,000	)		(483,000	)		(31,213,000	)
Present value of lease liabilities	$	88,731,000		$	6,161,000		$	94,892,000

Other information about leases is as follows:

	December 31, 2021			March 31, 2021
Lease term and discount rate
Weighted-average remaining lease term (years):
Finance leases		3.0			3.4
Operating leases		10.6			11.1
Weighted-average discount rate:
Finance leases		5.2	%		5.3	%
Operating leases		5.7	%		5.9	%

10. Accounts Receivable Discount Programs

The Company uses receivable discount programs with certain customers and their respective banks. Under these programs, the Company may sell those customers’ receivables to those banks at a discount to be agreed upon at the time the receivables are sold. These discount arrangements allow the Company to accelerate receipt of payment on customers’ receivables.

The following is a summary of accounts receivable discount programs:

	Nine Months Ended December 31,
	2021			2020
Receivables discounted	$	418,044,000		$	367,102,000
Weighted average days		335			333
Annualized weighted average discount rate		1.7	%		2.1	%
Amount of discount recognized as interest expense	$	6,798,000		$	7,277,000

11. Net Income per Share

Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share includes the effect, if any, from the potential exercise or conversion of securities, such as stock options, which would result in the issuance of incremental shares of common stock to the extent such impact is not anti-dilutive.

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The following presents a reconciliation of basic and diluted net income per share:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Net income	$	3,139,000	$	8,469,000	$	7,683,000	$	20,641,000
Basic shares		19,184,339		19,053,232		19,124,824		19,016,302
Effect of potentially dilutive securities		359,835		383,561		479,956		317,456
Diluted shares		19,544,174		19,436,793		19,604,780		19,333,758
Net income per share:
Basic net income per share	$	0.16	$	0.44	$	0.40	$	1.09
Diluted net income per share	$	0.16	$	0.44	$	0.39	$	1.07

Potential common shares that would have the effect of increasing diluted net income per share or decreasing diluted net loss per share are considered to be anti-dilutive and as such, these shares are not included in calculating diluted net income per share. For the three months ended December 31, 2021 and 2020, there were 1,130,694 and 1,319,937, respectively, of potential common shares not included in the calculation of diluted net income per share because their effect was anti-dilutive. For the nine months ended December 31, 2021 and 2020, there were 720,756 and 1,328,437, respectively, of potential common shares not included in the calculation of diluted net income per share because their effect was anti-dilutive.

12. Income Taxes

The Company recorded income tax expense of $1,588,000, or an effective tax rate of 33.6%, and $3,373,000, or an effective tax rate of 28.5%, for the three months ended December 31, 2021 and 2020, respectively. The Company recorded income tax expense of $4,786,000, or an effective tax rate of 38.4%, and $8,448,000, or an effective tax rate of 29.0%, for the nine months ended December 31, 2021 and 2020, respectively. Effective tax rates are based on current projections and any changes in future periods could result in an effective tax rate that is materially different from the current estimate. The effective tax rates for the three and nine months ended December 31, 2021, were primarily impacted by (i) non-deductible executive compensation under Internal Revenue Code Section 162(m), (ii) foreign income taxed at rates that are different from the federal statutory rate,  and (iii) specific jurisdictions that the Company does not expect to recognize benefit of losses.

The Company and its subsidiaries file income tax returns in the U.S. federal, various state, and foreign jurisdictions with varying statutes of limitations. At December 31, 2021, the Company is not under examination in any jurisdiction, and remain subject to examination from the years ended March 31, 2017. The Company believes no significant changes in the unrecognized tax benefits will occur within the next 12 months.

13. Financial Risk Management and Derivatives

Purchases and expenses denominated in currencies other than the U.S. dollar, which are primarily related to the Company’s overseas facilities, expose the Company to market risk from material movements in foreign exchange rates between the U.S. dollar and the foreign currencies. The Company’s primary risk exposure is from fluctuations in the value of the Mexican peso and to a lesser extent the Chinese yuan. To mitigate these risks, the Company enters into forward foreign currency exchange contracts to exchange U.S. dollars for these foreign currencies. The extent to which forward foreign currency exchange contracts are used, is modified periodically in response to the Company’s estimate of market conditions and the terms and length of anticipated requirements.

The Company enters into forward foreign currency exchange contracts in order to reduce the impact of foreign currency fluctuations and not to engage in currency speculation. The use of derivative financial instruments allows the Company to reduce its exposure to the risk that the eventual cash outflow resulting from funding the expenses of the foreign operations will be materially affected by changes in exchange rates between the U.S. dollar and the foreign currencies. The Company does not hold or issue financial instruments for trading purposes. The Company designates forward foreign currency exchange contracts for forecasted expenditure requirements to fund foreign operations.

17

The Company had forward foreign currency exchange contracts with a U.S. dollar equivalent notional value of $44,815,000 and $41,819,000 at December 31, 2021 and March 31, 2021, respectively. These contracts generally have a term of one year or less, at rates agreed at the inception of the contracts. The counterparty to this derivative transaction is a major financial institution with investment grade credit rating; however, the Company is exposed to credit risk with this institution. The credit risk is limited to the potential unrealized gains (which offset currency fluctuations adverse to the Company) in any such contract should this counterparty fail to perform as contracted. Any changes in the fair values of forward foreign currency exchange contracts are included in “foreign exchange impact of lease liabilities and forward contracts” in the condensed consolidated statements of income.

The following shows the effect of derivative instruments on the condensed consolidated statements of income:

	Gain (Loss) Recognized as Foreign Exchange Impact of Lease Liabilities and Forward Contracts
Derivatives Not Designated as	Three Months Ended December 31,				Nine Months Ended December 31,
Hedging Instruments	2021		2020		2021			2020
Forward foreign currency exchange contracts	$	600,000	$	3,817,000	$	(1,833,000	)	$	9,016,000

The fair value of the forward foreign currency exchange contracts of $404,000 is included in other current liabilities in the condensed consolidated balance sheet at December 31, 2021. The fair value of the forward foreign currency exchange contracts of $1,429,000 is included in prepaid and other current assets in the condensed consolidated balance sheet at March 31, 2021. The changes in the fair values of forward foreign currency exchange contracts are included in “foreign exchange impact of lease liabilities and forward contracts” in the condensed consolidated statements of cash flows for the nine months ended December 31, 2021 and 2020.

14. Fair Value Measurements

The following summarizes financial assets and liabilities measured at fair value, by level within the fair value hierarchy:

	December 31, 2021								March 31, 2021
			Fair Value Measurements Using Inputs Considered as								Fair Value Measurements Using Inputs Considered as
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Assets
Short-term investments
Mutual funds	$	2,212,000	$	2,212,000	$	-	$	-	$	1,652,000	$	1,652,000	$	-	$	-
Prepaid expenses and other current assets
Forward foreign currency exchange contracts		-		-		-		-		1,429,000		-		1,429,000		-
Liabilities
Accrued liabilities
Short-term contingent consideration		970,000		-		-		970,000		910,000		-		-		910,000
Other current liabilities
Deferred compensation		2,212,000		2,212,000		-		-		1,652,000		1,652,000		-		-
Forward foreign currency exchange contracts		404,000		-		404,000		-		-		-		-		-

Short-term Investments and Deferred Compensation

The Company’s short-term investments, which fund its deferred compensation liabilities, consist of investments in mutual funds. These investments are classified as Level 1 as the shares of these mutual funds trade with sufficient frequency and volume to enable the Company to obtain pricing information on an ongoing basis.

18

Forward Foreign Currency Exchange Contracts

The forward foreign currency exchange contracts are primarily measured based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers (See Note 13).

Contingent Consideration

In December 2018, the Company completed the acquisition of certain assets and assumption of certain liabilities from Mechanical Power Conversion, LLC (“E&M”). In connection with this acquisition, the Company was contingently obligated to make additional payments to the former owners of E&M up to an aggregate of $5,200,000 over a three-year period. The third and final payment of the contingent consideration obligation of $970,000 will be made in the fourth fiscal quarter ending March 31, 2022, as settlement of this obligation. This obligation is recorded in accounts payable and accrued liabilities in the Company’s condensed consolidated balance sheets at December 31, 2021.

The following table summarizes the activity for financial assets and liabilities utilizing Level 3 fair value measurements:

	Three Months Ended December 31,					Nine Months Ended December 31,
Contingent Consideration	2021			2020		2021		2020
Beginning balance	$	980,000		$	2,588,000	$	910,000	$	2,653,000
Changes in revaluations of contingent consideration included in earnings		(10,000	)		20,000		60,000		(45,000	)
Ending balance	$	970,000		$	2,608,000	$	970,000	$	2,608,000

During the three and nine months ended December 31, 2021, the Company had no other significant measurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the short-term nature of these instruments. The carrying amounts of the revolving loan, term loan and other long-term liabilities approximate their fair value based on the variable nature of interest rates and current rates for instruments with similar characteristics.

15. Share-based Payments

Stock Options

During the nine months ended December 31, 2021, no options to purchase shares of the Company’s common stock were granted. The Company granted options to purchase 345,423 shares of common stock during the nine months ended December 31, 2020.

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The following is a summary of stock option transactions:

	Number of Shares			Weighted Average Exercise Price
Outstanding at March 31, 2021		1,744,885		$	17.51
Granted		-		$	-
Exercised		(30,976	)	$	16.10
Forfeited		(5,984	)	$	19.81
Outstanding at December 31, 2021		1,707,925		$	17.52

At December 31, 2021, options to purchase 317,309 shares of common stock were unvested at a weighted average exercise price of $16.53.

At December 31, 2021, there was $1,440,000 of total unrecognized compensation expense related to unvested stock option awards. Compensation expense related to unvested stock option awards will be recognized over the weighted average remaining vesting period of approximately 1.2 years.

Restricted Stock Units and Restricted Stock (collectively “RSUs”)

During the nine months ended December 31, 2021 and 2020, the Company granted 263,703 and 251,801 shares of RSUs, respectively, based on the closing market price on the grant date.

The following is a summary of non-vested RSUs:

	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at March 31, 2021		354,484		$	17.22
Granted		263,703		$	21.90
Vested		(216,617	)	$	17.78
Forfeited		(1,832	)	$	20.15
Outstanding at December 31, 2021		399,738		$	19.98

At December 31, 2021, there was $5,402,000 of unrecognized compensation expense related to these awards, which will be recognized over the weighted average remaining vesting period of approximately 1.6 years.

Performance Stock Units (“PSUs”)

In June 2021, the Company granted performance-based PSUs to its executives, which typically cliff vest after three-years subject to continued employment. These awards are contingent and granted separately for each of the following metrics: adjusted EBITDA, net sales, and relative total shareholder return (“TSR”). Compensation cost is determined at the grant date and recognized on a straight-line basis over the requisite service period to the extent the conditions are deemed probable. The number of shares earned at the end of the three-year period will vary, based only on actual performance, from 0% to 150% of the target number of PSUs granted. PSUs are not considered issued or outstanding ordinary shares of the Company.

Adjusted EBITDA and net sales are considered performance conditions. The Company will reassess the probability of achieving each performance condition separately each reporting period. TSR is considered a market condition because it measures the Company’s return against the performance of the Russell 3000, excluding companies classified as financials and real estate, over a given period of time. Compensation cost related to the TSR award will not be adjusted even if the market condition is not met.

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The Company calculated the fair value of the PSUs for each component individually. The fair value of PSUs subject to performance conditions is equal to the closing stock price on the grant date. The fair value of PSUs subject to the market condition is determined using the Monte Carlo valuation model.

The following table summarizes the assumptions used in determining the fair value of the TSR awards:

	Nine Months Ended December 31,
	2021
Risk free interest rate		0.47	%
Expected life in years		3
Expected volatility of MPA common stock		53.70	%
Expected average volatility of peer companies		59.30	%
Average correlation coefficient of peer companies		26.70	%
Expected dividend yield		-
Grant date fair value	$	26.89

The following is a summary of non-vested PSUs:

	Number of Shares		Weighted Average Grant Date Fair Value
Outstanding at March 31, 2021		-	$	-
Granted		84,593	$	23.19
Vested		-	$	-
Forfeited		-	$	-
Outstanding at December 31, 2021		84,593	$	23.19

At December 31, 2021, there was $1,609,000 of unrecognized compensation expense related to these awards, which will be recognized over the weighted average remaining vesting period of approximately 2.5 years.

16. Commitments and Contingencies

Warranty Returns

The Company allows its customers to return goods that their consumers have returned to them, whether or not the returned item is defective (“warranty returns”). The Company accrues an estimate of its exposure to warranty returns based on a historical analysis of the level of this type of return as a percentage of unit sales. Amounts charged to expense for these warranty returns are considered in arriving at the Company’s net sales.

21

The following summarizes the changes in the warranty return accrual:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2021			2020			2021			2020
Balance at beginning of period	$	20,875,000		$	22,499,000		$	21,093,000		$	18,300,000
Charged to expense		30,282,000			26,194,000			88,380,000			80,155,000
Amounts processed		(32,425,000	)		(31,540,000	)		(90,741,000	)		(81,302,000	)
Balance at end of period	$	18,732,000		$	17,153,000		$	18,732,000		$	17,153,000

Contingencies

The Company is subject to various lawsuits and claims. In addition, government agencies and self-regulatory organizations have the ability to conduct periodic examinations of and administrative proceedings regarding the Company’s business. Following an audit in fiscal 2019, the U.S. Customs and Border Protection stated that it believed that the Company owed additional duties of approximately $17 million from 2011 through mid-2018 relating to products that it imported from Mexico. The Company does not believe that this amount is correct and believes that it has numerous defenses and intends to dispute this amount vigorously. The Company cannot assure that the U.S. Customs and Border Protection will agree or that it will not need to accrue or pay additional amounts in the future.

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17. Share Repurchases

In August 2018, the Company’s board of directors approved an increase in its share repurchase program from $20,000,000 to $37,000,000 of its common stock. During the three and nine months ended December 31, 2021, the Company repurchased 106,486 shares of its common stock for $1,914,000. During the three and nine months ended December 31, 2020, the Company did not repurchase any shares of its common stock. As of December 31, 2021, $18,745,000 was utilized and $18,255,000 remains available to repurchase shares under the authorized share repurchase program, subject to the limit in the Company’s Credit Facility. The Company retired the 837,007 shares repurchased under this program through December 31, 2021. The Company’s share repurchase program does not obligate it to acquire any specific number of shares and shares may be repurchased in privately negotiated and/or open market transactions.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis presents factors that Motorcar Parts of America, Inc. and its subsidiaries (“our,” “we” or “us”) believe are relevant to an assessment and understanding of our consolidated financial position and results of operations. This financial and business analysis should be read in conjunction with our March 31, 2021 audited consolidated financial statements included in our Annual Report on Form 10-K filed with the SEC on June 14, 2021.

Disclosure Regarding Private Securities Litigation Reform Act of 1995

This report may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our future performance that involve risks and uncertainties. Various factors could cause actual results to differ materially from those expressed or implied by such statements. These factors include, but are not limited to: the current and future impacts of the COVID-19 public health crisis; concentration of sales to a small number of customers; changes in the financial condition of or our relationship with any of our major customers; increases in the average accounts receivable collection period; the loss of sales to customers; delays in payments by customers; the increasing customer pressure for lower prices and more favorable payment and other terms; lower revenues than anticipated from new and existing contracts; the increasing demands on our working capital; the significant strain on working capital associated with large inventory purchases from customers; lower efficiency or production due to stay at home orders or other restrictions issued by governments due to COVID-19 concerns; any meaningful difference between expected production needs and ultimate sales to our customers; investments in operational changes or acquisitions; our ability to obtain any additional financing we may seek or require; our ability to maintain positive cash flows from operations; our failure to meet the financial covenants or the other obligations set forth in our credit agreement and the lenders’ refusal to waive any such defaults; increases in interest rates; the impact of high gasoline prices; consumer preferences and general economic conditions; increased competition in the automotive parts industry including increased competition from Chinese and other offshore manufacturers; difficulty in obtaining Used Cores and component parts or increases in the costs of those parts; supply chain delays or stoppages due to shipping delays; political, criminal or economic instability in any of the foreign countries where we conduct operations; currency exchange fluctuations; potential tariffs, unforeseen increases in operating costs; risks associated with cyber-attacks; risks associated with conflict minerals; the impact of new tax laws and interpretations thereof; uncertainties affecting our ability to estimate our tax rate and other factors discussed herein and in our other filings with the Securities and Exchange Commission (the “SEC”). These and other risks and uncertainties may cause our actual results to differ materially and adversely from those expected in any forward-looking statements. Readers are directed to risks and uncertainties identified below under “Risk Factors” and elsewhere in this report for additional detail regarding factors that may cause actual results to be different than those expressed in our forward-looking statements. Except as required by law, we undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Management Overview

We have a multi-pronged platform for growth within the automotive aftermarket for non-discretionary replacement hard parts and test solutions. In addition, we offer diagnostic equipment applications focused on the fast evolving electric mobility markets. Our investments in infrastructure and human resources during the past few years reflects the significant expansion of manufacturing capacity to support multiple product lines and continues to be transformative and scalable. These investments included (i) the opening of a 410,000 square foot distribution center, (ii) two buildings totaling 372,000 square feet for remanufacturing and core sorting of brake calipers, and (iii) the realignment of production at our initial 312,000 square foot facility in Mexico.

Our products include (i) rotating electrical products such as alternators and starters, (ii) wheel hub assemblies and bearings, (iii) brake-related products, which include brake calipers, brake boosters, brake rotors, brake pads, and brake master cylinders, and (iv) other products, which include turbochargers and test solutions and diagnostic equipment used for electric vehicle powertrain development and manufacturing including electric motor test systems, e-axle test systems, advanced power emulators, charging unit test systems, test systems for alternators, starters, belt starter generators and bench-top testers used by the automotive retail segment.

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Pursuant to the guidance provided under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for segment reporting, we have identified our chief operating decision maker (“CODM”), reviewed the documents used by the CODM, and understand how such documents are used by the CODM to make financial and operating decisions. We have determined through this review process that our business comprises three separate operating segments. Two of the operating segments meet all the aggregation criteria and are aggregated. The remaining operating segment does not meet the quantitative thresholds for individual disclosure and we have combined our operating segments into a single reportable segment.

Impact of the Novel Coronavirus (“COVID-19”)

The COVID-19 pandemic has spread globally and created significant volatility, uncertainty and economic disruption in many countries, including the countries in which we operate. National, state and local governments in these countries continue to implement a variety of measures in response that have the effect of restricting or limiting, among other activities, the operations of certain businesses.

We continue to experience disruptions with worldwide supply chain and logistics services. We are unable to predict accurately the ultimate long-term impact that COVID-19 will have on our business and financial condition. While the near-term outlook appears positive, any additional government shutdowns or the emergence and spread of new variants of the virus, including the Delta or Omicron variant, the likelihood of a resurgence of positive cases, the development, availability and public acceptance of effective treatments and vaccines, the speed at which such vaccines are administered, the efficacy of current vaccines against evolving strains or variants of the virus, could negatively impact our business and financial condition.

There have been no serious outbreaks in any of our production facilities; however, a serious outbreak could affect our production capabilities. We experienced inefficiencies in operations due to the implementation of additional personnel safety measures throughout our facilities. These personnel safety measures include adding an additional shift in conjunction with reducing the number of hours in the existing shift, greater spacing (less personnel) in production areas and sanitizing procedures between shifts. High-risk employees at all of our facilities have been required to remain at home; however, they continue to receive their compensation. We also implemented safe work practices across all of our facilities, including work from home rules, staggered shifts, Plexiglas barriers, and many other safety precautions. Our employees have embraced the challenges of working remotely, continuing to operate through constant communication with team members.

Enhanced levels of communication at all levels within the organization are critical to address the ever-changing landscape brought on by COVID-19, especially with most of our office staff continuing to work from home. Such efforts have included, additional board check-in meetings and executive committee meetings, as needed, and regular town hall style communications with all employees.

We continue to incur costs as a result of COVID-19, including employee costs, such as expanded benefits and frontline incentives, and other operating costs associated with the provision of personal protective equipment, which have negatively impacted our profitability. These expanded benefits, supply costs and other COVID-19 related costs resulted in total expense, included in cost of goods sold and operating expenses in the condensed consolidated statements of income, of $764,000 and $1,610,000 during the three months ended December 31, 2021 and 2020, respectively, and $2,573,000 and $5,953,000 during the nine months ended December 31, 2021 and 2020, respectively. Our Asian subsidiaries received $0 and $24,000 from their local assistance programs during the three months ended December 31, 2021 and 2020, respectively, and $71,000 and $161,000 during the nine months ended December 31, 2021 and 2020, respectively. We received payments from the Canadian Government under the Canadian Emergency Wage Subsidy program of $281,000 and $1,130,000 during the three and nine months ended December 31, 2020, respectively. These payments are recorded as a reduction of cost of goods sold and operating expenses in the condensed consolidated statements of income.

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Results of Operations for the Three Months Ended December 31, 2021 and 2020

The following discussion and analysis should be read together with the financial statements and notes thereto appearing elsewhere herein.

The following summarizes certain key operating data:

	Three Months Ended December 31,
	2021		2020
Cash flow provided by operations	$	2,165,000	$	33,154,000
Finished goods turnover (annualized) (1)		4.0		4.0

(1) Annualized finished goods turnover for the fiscal quarter is calculated by multiplying cost of goods sold for the quarter by 4 and dividing the result by the average between beginning and ending non-core finished goods inventory values for the fiscal quarter. Annualized finished goods turnover for the three months ended December 31, 2020 has been updated to conform to the current year presentation for non-core finished goods turnover. We believe this provides a useful measure of our ability to turn our inventory into revenues.

Net Sales and Gross Profit

The following summarizes net sales and gross profit:

	Three Months Ended December 31,
	2021			2020
Net sales	$	161,810,000		$	122,568,000
Cost of goods sold		129,235,000			98,327,000
Gross profit		32,575,000			24,241,000
Gross profit percentage		20.1	%		19.8	%

Net Sales. Our net sales for the three months ended December 31, 2021 were $161,810,000, which represents an increase of $39,242,000, or 32.0%, from the three months ended December 31, 2020 of $122,568,000. While our net sales for the quarter increased across all product lines due to strong demand for our products, we experienced a number of challenges related to the global COVID-19 pandemic, including disruptions with worldwide supply chain and logistics services during both periods.

Gross Profit. Our gross profit was $32,575,000, or 20.1% of net sales, for the three months ended December 31, 2021 compared with $24,241,000, or 19.8% of net sales, for the three months ended December 31, 2020. The increase in our gross profit was primarily due to: (i) growth initiatives in connection with the expansion of our new product lines, in addition to the transition costs incurred in the prior year as discussed below and (ii) inflationary costs related to the global pandemic, including disruptions with worldwide supply chain, logistics services, and related higher freight costs. During the three months ended December 31, 2021 and 2020, higher freight costs, net of certain price increases that went into effect during the current year quarter, impacted gross profit by approximately $1,338,000 and $323,000, respectively.  During the three months ended December 31, 2021, we also incurred additional expenses of $3,006,000 due to COVID-19 related costs for disruptions in the supply chain, increased salaries associated with COVID-19 vulnerable employee pay, and personal protective equipment. During the three months ended December 31, 2020, we incurred additional expenses of $1,052,000 due to increased salaries associated with COVID-19 bonuses, vulnerable employee pay, and personal protective equipment in connection with the COVID-19 pandemic.

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Our gross profit for the three months ended December 31, 2021 and 2020 was also impacted by amortization of core and finished good premiums paid to customers related to new business of $3,146,000 and $1,528,000, respectively.  During the three months ended December 31, 2020, gross profit was impacted by $4,217,000 associated with transition and ramp-up expenses in connection with the expansion of our brake-related operations in Mexico.

In addition, gross profit was impacted by (i) non-cash quarterly revaluation of cores that are part of the finished goods on the customers’ shelves (which are included in contract assets) to the lower of cost or net realizable value, which resulted in a write-down of $846,000 for the three months ended December 31, 2021 compared with  $1,304,000 for the three months ended December 31, 2020, and (ii) a $688,000 benefit for revised tariff costs recorded during the three months ended December 31, 2020.

Operating Expenses

The following summarizes operating expenses:

	Three Months Ended December 31,
	2021			2020
General and administrative	$	14,605,000		$	14,005,000
Sales and marketing		6,274,000			4,698,000
Research and development		2,635,000			2,100,000
Foreign exchange impact of lease liabilities and forward contracts		385,000			(12,455,000	)
Percent of net sales
General and administrative		9.0	%		11.4	%
Sales and marketing		3.9	%		3.8	%
Research and development		1.6	%		1.7	%
Foreign exchange impact of lease liabilities and forward contracts		0.2	%		(10.2	)%

General and Administrative. Our general and administrative expenses for the three months ended December 31, 2021 were $14,605,000, which represents an increase of $600,000, or 4.3%, from the three months ended December 31, 2020 of $14,005,000. The increase in general and administrative expense was primarily due to (i) $532,000 of increased share-based compensation due to equity grants made to employees in fiscal 2022, (ii) $486,000 of decreased gain resulting from foreign currency transactions, and (iii) $303,000 of increased professional services. These increases were partially offset by $933,000 of decreased costs at our offshore locations resulting from our expansion in Mexico and other COVID-19 related costs, such as supply costs and expanded benefits to employees in the prior year.

Sales and Marketing. Our sales and marketing expenses for the three months ended December 31, 2021 were $6,274,000, which represents an increase of $1,576,000, or 33.5%, from the three months ended December 31, 2020 of $4,698,000. These increases in sales and marketing expense during the three months ended December 31, 2021 were primarily due to (i) $501,000 of increased commissions due to higher sales, (ii) $399,000 of increased marketing in connection with new business and advertising expense, (iii) $223,000 of increased employee-related expenses, primarily due to increased headcount, (iv) $192,000 of increased trade shows expense as normal business operations resume, and (v) $160,000 of increased travel as normal business operations resume.

Research and Development. Our research and development expenses for the three months ended December 31, 2021 were $2,635,000, which represents an increase of $535,000, or 25.5%, from the three months ended December 31, 2020 of $2,100,000. These increases in research and development expenses during the three months ended December 31, 2021 were primarily due to (i) $323,000 of increased employee-related expenses, primarily due to increased headcount for our diagnostic business and (ii) $115,000 of increased samples for our core library and other research and development supplies.

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Foreign Exchange Impact of Lease Liabilities and Forward Contracts. Our foreign exchange impact of lease liabilities and forward contracts for the three months ended December 31, 2021 was a non-cash loss of $385,000, which represents an increase in expense of $12,840,000, or 103.1%, from the non-cash gain for three months ended December 31, 2020 of $12,455,000. This increase was primarily due to (i) the remeasurement of our foreign currency-denominated lease liabilities, which resulted in a non-cash loss of $985,000 compared with a non-cash gain of $8,638,000 for the three months ended December 31, 2021 and 2020, respectively, due to fluctuations in the foreign exchange rates and (ii) the forward foreign currency exchange contracts, which resulted in non-cash gains of $600,000 and $3,817,000 for the three months ended December 31, 2021 and 2020, respectively, due to the changes in their fair values.

Interest Expense

Interest Expense, net. Our interest expense for the three months ended December 31, 2021 was $3,949,000, which represents a decrease of $102,000, or 2.5%, from interest expense for the three months ended December 31, 2020 of $4,051,000. This decrease was primarily due to lower interest rates on our accounts receivable discount programs.

Provision for Income Taxes

Income Tax. We recorded income tax expense of $1,588,000, or an effective tax rate of 33.6%, and $3,373,000, or an effective tax rate of 28.5%, for the three months ended December 31, 2021 and 2020, respectively. Effective tax rates are based on current projections and any changes in future periods could result in an effective tax rate that is materially different from the current estimate. The effective tax rate for the three months ended December 31, 2021 was primarily impacted by (i) non-deductible executive compensation under Internal Revenue Code Section 162(m) and (ii) foreign income taxed at rates that are different from the federal statutory rate.

Results of Operations for the Nine Months Ended December 31, 2021 and 2020

The following discussion and analysis should be read together with the financial statements and notes thereto appearing elsewhere herein.

The following summarizes certain key operating data:

	Nine Months Ended December 31,
	2021			2020
Cash flow (used in) provided by operations	$	(22,174,000	)	$	72,484,000
Finished goods turnover (annualized) (1)		4.2			3.8

(1) Annualized finished goods turnover for the fiscal period is calculated by multiplying cost of goods sold for the period by 1.33 and dividing the result by the average between beginning and ending non-core finished goods inventory values for the fiscal period. Annualized finished goods turnover for the nine months ended December 31, 2020 has been updated to conform to the current year presentation for non-core finished goods turnover. We believe this provides a useful measure of our ability to turn our inventory into revenues.

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Net Sales and Gross Profit

The following summarizes net sales and gross profit:

	Nine Months Ended December 31,
	2021			2020
Net sales	$	486,392,000		$	372,654,000
Cost of goods sold		394,295,000			295,300,000
Gross profit		92,097,000			77,354,000
Gross profit percentage		18.9	%		20.8	%

Net Sales. Our net sales for the nine months ended December 31, 2021 were $486,392,000, which represents an increase of $113,738,000, or 30.5%, from the nine months ended December 31, 2020 of $372,654,000. While our net sales increased across all product lines due to strong demand for our products, we continued to experience a number of challenges related to the global COVID-19 pandemic, including disruptions with worldwide supply chain and logistics services during both periods. Net sales for the nine months ended December 31, 2021 and 2020 include $13,327,000 and $12,779,000, respectively, in core revenue due to a realignment of inventory at certain customer distribution centers. We expect this realignment will benefit our future sales as product mix changes.

Gross Profit. Our gross profit was $92,097,000, or 18.9% of net sales, for the nine months ended December 31, 2021 compared with $77,354,000, or 20.8% of net sales, for the nine months ended December 31, 2020. The decrease in our gross profit was primarily due to: (i) growth initiatives in connection with the expansion of our new product lines, in addition to the transition costs discussed below and (ii) inflationary costs related to the global pandemic, including disruptions with worldwide supply chain, logistics services, and related higher freight costs. During the nine months ended December 31, 2021 and 2020, higher freight costs, net of certain price increases that went into effect during the current year period, impacted gross profit by approximately $7,413,000, and $323,000, respectively.  During the nine months ended December 31, 2021, we also incurred additional expenses of $7,144,000 due to COVID-19 related costs for disruptions in the supply chain, increased salaries associated with COVID-19 vulnerable employee pay, and personal protective equipment. During the nine months ended December 31, 2020, we incurred additional expenses of $4,425,000 due to increased salaries associated with COVID-19 bonuses, vulnerable employee pay, and personal protective equipment in connection with the COVID-19 pandemic.

Our gross profit for the nine months ended December 31, 2021 and 2020 was also impacted by (i) transition expenses in connection with the expansion of our brake-related operations in Mexico of $2,744,000 and $11,572,000, respectively, and (ii) amortization of core and finished goods premiums paid to customers related to new business of $9,013,000 and $4,269,000, respectively.

In addition, gross profit was impacted by (i) non-cash quarterly revaluation of cores that are part of the finished goods on the customers’ shelves (which are included in contract assets) to the lower of cost or net realizable value and gain due to realignment of inventory at customer distribution centers, which resulted in a net gains of $1,229,000 and $811,000 for the nine months ended December 31, 2021 and 2020, respectively, (ii) customer allowances and return accruals related to new business of $307,000 recorded during the nine months ended December 31, 2020, and (iii) a $3,535,000 benefit for revised tariff costs recorded during the nine months ended December 31, 2020.

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Operating Expenses

The following summarizes operating expenses:

	Nine Months Ended December 31,
	2021			2020
General and administrative	$	41,556,000		$	38,210,000
Sales and marketing		17,162,000			13,224,000
Research and development		7,631,000			6,014,000
Foreign exchange impact of lease liabilities and forward contracts		1,769,000			(21,257,000	)
Percent of net sales
General and administrative		8.5	%		10.3	%
Sales and marketing		3.5	%		3.5	%
Research and development		1.6	%		1.6	%
Foreign exchange impact of lease liabilities and forward contracts		0.4	%		(5.7	)%

General and Administrative. Our general and administrative expenses for the nine months ended December 31, 2021 were $41,556,000, which represents an increase of $3,346,000, or 8.8%, from the nine months ended December 31, 2020 of $38,210,000, however, general and administrative expenses as a percentage of net sales decreased to 8.5% for the nine months ended December 31, 2021 from 10.3% for the prior year. The increase in general and administrative expense was primarily due to (i) $1,698,000 of increased share-based compensation due to equity grants made to employees in fiscal 2022, (ii) $1,323,000 of increased employee-related expenses, primarily due to the reinstatement of salary reductions in the prior year in response to the COVID-19 pandemic, (iii) $878,000 of decreased gain resulting from foreign currency transactions, and (iv) $454,000 of increased costs at our offshore locations. These increases in general and administrative expenses were partially offset by $1,662,000 of decreased professional services.

Sales and Marketing. Our sales and marketing expenses for the nine months ended December 31, 2021 were $17,162,000, which represents an increase of $3,938,000, or 29.8%, from the nine months ended December 31, 2020 of $13,224,000. This increase in sales and marketing expense during the nine months ended December 31, 2021 was primarily due to (i) $1,132,000 of increased commissions due to higher sales, (ii) $1,063,000 of increased marketing in connection with new business and advertising expense, (iii)  $971,000 of increased employee-related expenses, primarily due to the reinstatement of salary reductions in the prior year in response to the COVID-19 pandemic and increased headcount in the current year, (iv) $382,000 of increased travel as normal business operations resume, and (v) $193,000 of increased trade shows expense as normal business operations resume.

Research and Development. Our research and development expenses for the nine months ended December 31, 2021 were $7,631,000, which represents an increase of $1,617,000, or 26.9%, from the nine months ended December 31, 2020 of $6,014,000. This increase in research and development expenses during the nine months ended December 31, 2021 was primarily due to (i) $1,104,000 of increased employee-related expenses, primarily due to the reinstatement of salary reductions in the prior year in response to the COVID-19 pandemic and increased headcount during the current year, (ii) $300,000 of increased samples for our core library and other research and development supplies, and (iii) $159,000 of increased outside services.

Foreign Exchange Impact of Lease Liabilities and Forward Contracts. Our foreign exchange impact of lease liabilities and forward contracts for the nine months ended December 31, 2021 was a non-cash loss of $1,769,000, which represents an increase in expense of $23,026,000, or 108.3%, from the non-cash gain for nine months ended December 31, 2020 of $21,257,000. This increase was primarily due to (i) the remeasurement of our foreign currency-denominated lease liabilities which resulted in non-cash gains of $64,000 compared with $12,241,000 for the nine months ended December 31, 2021 and 2020, respectively, due to movements in foreign exchange rates and (ii) the forward foreign currency exchange contracts which resulted in a non-cash loss of $1,833,000 compared with a non-cash gain of $9,016,000 for the nine months ended December 31, 2021 and 2020, respectively, due to the changes in their fair values.

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Interest Expense

Interest Expense, net. Our interest expense, net, for the nine months ended December 31, 2021 was $11,510,000, which represents a decrease of $564,000, or 4.7%, from the nine months ended December 31, 2020 of $12,074,000. The decrease in interest expense was primarily due to lower interest rates on both our accounts receivable discount programs and credit facility.

Provision for Income Taxes

Income Tax. We recorded income tax expense of $4,786,000, or an effective tax rate of 38.4%, and $8,448,000, or an effective tax rate of 29.0%, for the nine months ended December 31, 2021 and 2020, respectively. Effective tax rates are based on current projections and any changes in future periods could result in an effective tax rate that is materially different from the current estimate. The effective tax rate for the nine months ended December 31, 2021 was primarily impacted by (i) non-deductible executive compensation under Internal Revenue Code Section 162(m), (ii) foreign income taxed at rates that are different from the federal statutory rate, and (iii) specific jurisdictions that we do not expect to recognize the benefit of losses.

Liquidity and Capital Resources

Overview

We had working capital (current assets minus current liabilities) of $108,103,000 compared with $96,725,000, a ratio of current assets to current liabilities of 1.3:1.0, at December 31, 2021 and March 31, 2021, respectively. The increase in working capital was due primarily to the buildup of our inventory to meet anticipated future demand.

We generated cash during the nine months ended December 31, 2021 from the use of our receivable discount programs and credit facility. As we manage through the impacts of the COVID-19 pandemic, we have access to our existing cash, as well as our available credit facilities to meet short-term liquidity needs. We believe our cash and cash equivalents, short-term investments, use of receivable discount programs, amounts available under our credit facility, and other sources are sufficient to satisfy our expected future working capital needs, repayment of the current portion of our term loans, and lease and capital expenditure obligations over the next 12 months.

Share Repurchase Program

In August 2018, our board of directors approved an increase in our share repurchase program from $20,000,000 to $37,000,000 of our common stock. As of December 31, 2021, $18,745,000 was utilized and $18,255,000 remains available to repurchase shares under the authorized share repurchase program, subject to the limit in our credit facility. We retired the 837,007 shares repurchased under this program through December 31, 2021. Our share repurchase program does not obligate us to acquire any specific number of shares and shares may be repurchased in privately negotiated and/or open market transactions.

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Cash Flows

The following summarizes cash flows as reflected in the condensed consolidated statements of cash flows:

	Nine Months Ended December 31,
	2021			2020
Cash flows (used in) provided by:
Operating activities	$	(22,174,000	)	$	72,484,000
Investing activities		(5,426,000	)		(12,295,000	)
Financing activities		19,770,000			(97,734,000	)
Effect of exchange rates on cash and cash equivalents		76,000			729,000
Net decrease in cash and cash equivalents	$	(7,754,000	)	$	(36,816,000	)
Additional selected cash flow data:
Depreciation and amortization	$	9,591,000		$	8,090,000
Capital expenditures		5,111,000			12,043,000

Net cash used in operating activities was $22,174,000 during the nine months ended December 31, 2021 compared with net cash provided by operating activities of $72,484,000 during the nine months ended December 31, 2020. The significant change in our operating activities was due primarily to (i) our continued investments in inventory to support anticipated future demand for our products, (ii) the timing of supplier payments compared with the prior year, and (iii) an increase in our contract assets and contract liabilities resulting from higher sales. These decreases were partially offset by increased operating results (net income plus the net add-back for non-cash transactions in earnings).

Net cash used in investing activities was $5,426,000 and $12,295,000 during the nine months ended December 31, 2021 and 2020, respectively. The significant change in our investing activities was due primarily to decreased capital expenditures in connection with the completion of our expansion of our brake-related operations in Mexico.

Net cash provided by financing activities was $19,770,000 during the nine months ended December 31, 2021 compared with net cash used in financing activities $97,734,000 during the nine months ended December 31, 2020. The significant change in our financing activities was due mainly to additional net borrowings under our credit facility during the nine months ended December 31, 2021 to support the investment in our inventory and growth initiatives compared with repayments under our credit facility during the nine months ended December 31, 2020. In addition, we repurchased 106,486 shares of our common stock for $1,914,000 during the nine months ended December 31, 2021 compared with no share repurchases during the nine months ended December 31, 2020.

Capital Resources

Credit Facility

We are party to a $268,620,000 senior secured financing, (as amended from time to time, the “Credit Facility”) with a syndicate of lenders, and PNC Bank, National Association, as administrative agent, consisting of (i) a $238,620,000 revolving loan facility, subject to borrowing base restrictions, a $24,000,000 sublimit for borrowings by Canadian borrowers, and a $20,000,000 sublimit for letters of credit (the “Revolving Facility”) and (ii) a $30,000,000 term loan facility (the “Term Loans”). The loans under the Credit Facility mature on June 5, 2023. The Credit Facility currently permits the payment of up to $29,430,000 of dividends and share repurchases for fiscal year 2022, subject to pro forma compliance with financial covenants. In connection with the Credit Facility, the lenders have a security interest in substantially all of our assets.

In May 2021, we entered into a third amendment to the Credit Facility (the “Third Amendment”). The Third Amendment, among other things, (i) extended the maturity date to May 28, 2026 from June 5, 2023, (ii) modified the fixed charge coverage ratio financial covenant, and (iii) modified the definition of “Consolidated EBITDA”. We capitalized $1,148,000 of new debt issuance costs in connection with the Third Amendment.

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The Term Loans require quarterly principal payments of $937,500. The Credit Facility bears interest at rates equal to either LIBOR plus a margin of 2.25%, 2.50% or 2.75% or a reference rate plus a margin of 1.25%, 1.50% or 1.75%, in each case depending on the senior leverage ratio as of the applicable measurement date. There is also a facility fee of 0.375% to 0.50%, depending on the senior leverage ratio as of the applicable measurement date. The interest rate on our Term Loans and Revolving Facility was 2.85% and 2.86%, respectively, at December 31, 2021, and 2.62% at March 31, 2021.

The Credit Facility, among other things, requires us to maintain certain financial covenants including a maximum senior leverage ratio and a minimum fixed charge coverage ratio. We were in compliance with all financial covenants as of December 31, 2021.

The following summarizes the financial covenants required under the Credit Facility:

	Financial covenants required under the Credit Facility		Calculation as of December 31, 2021
Maximum senior leverage ratio		3.00		1.72
Minimum fixed charge coverage ratio		1.10		1.52

In addition to other covenants, the Credit Facility places limits on our ability to incur liens, incur additional indebtedness, make loans and investments, engage in mergers and acquisitions, engage in asset sales, redeem, or repurchase capital stock, alter the business conducted by us and our subsidiaries, transact with affiliates, prepay, redeem, or purchase subordinated debt, and amend or otherwise alter debt agreements.

We had $113,000,000 and $84,000,000 outstanding under the Revolving Facility at December 31, 2021 and March 31, 2021, respectively. In addition, $6,409,000 was outstanding for letters of credit at December 31, 2021. At December 31, 2021, after certain contractual adjustments, $99,908,000 was available under the Revolving Facility.

Receivable Discount Programs

We use receivable discount programs with certain customers and their respective banks. Under these programs, we have options to sell those customers’ receivables to those banks at a discount to be agreed upon at the time the receivables are sold. These discount arrangements allow us to accelerate receipt of payment on customers’ receivables. While these arrangements have reduced our working capital needs, there can be no assurance that these programs will continue in the future. Interest expense resulting from these programs would increase if interest rates rise, if utilization of these discounting arrangements expands, if customers extend their payment to us, or if the discount period is extended to reflect more favorable payment terms to customers.

The following is a summary of the receivable discount programs:

	Nine Months Ended December 31,
	2021			2020
Receivables discounted	$	418,044,000		$	367,102,000
Weighted average days		335			333
Annualized weighted average discount rate		1.7	%		2.1	%
Amount of discount recognized as interest expense	$	6,798,000		$	7,277,000

Off-Balance Sheet Arrangements

At December 31, 2021, we had no off-balance sheet financing or other arrangements with unconsolidated entities or financial partnerships (such as entities often referred to as structured finance or special purpose entities) established for purposes of facilitating off-balance sheet financing or other debt arrangements or for other contractually narrow or limited purposes.

33

Capital Expenditures and Commitments

Capital Expenditures

Our total capital expenditures, including finance leases and non-cash capital expenditures were $5,248,000 and $14,223,000 for the nine months ended December 31, 2021 and 2020, respectively. These capital expenditures primarily include the purchase of equipment for our current operations and the expansion of our operations in Mexico. We expect to incur approximately $4,500,000 of capital expenditures for new business initiatives, production equipment, and maintenance for the remainder of our fiscal year 2022. We have used and expect to continue using our working capital and other available capital resources to fund these capital expenditures.

Litigation

There have been no material changes to our litigation matters that are presented in our Annual Report on Form 10-K for the year ended March 31, 2021, which was filed on June 14, 2021.

Critical Accounting Policies

There have been no material changes to our critical accounting policies and estimates that are presented in our Annual Report on Form 10-K for the year ended March 31, 2021, which was filed on June 14, 2021, except as discussed below.

Recently Adopted Accounting Pronouncements

Income Taxes

In December 2019, the FASB issued guidance that simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistent application. This guidance is effective for annual and interim periods in fiscal years beginning after December 15, 2020. The adoption of this guidance on April 1, 2021 did not have any material impact on our consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in market risk from the information provided in Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K as of March 31, 2021, which was filed with the SEC on June 14, 2021.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures designed to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including our chief executive officer, chief financial officer, and chief accounting officer, as appropriate to allow timely decisions regarding required disclosures.

Under the supervision and with the participation of management, including our chief executive officer, chief financial officer, and chief accounting officer, we have conducted an evaluation of the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based on this evaluation, our chief executive officer, chief financial officer, and chief accounting officer concluded that MPA’s disclosure controls and procedures were effective as of December 31, 2021.

34

Inherent Limitations on Effectiveness of Controls

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f).

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America, applying certain estimates and judgments as required.

Internal control over financial reporting includes those policies and procedures that:

1. Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

3. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) that occurred during the three months ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

35

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

There have been no material changes to our litigation matters that are presented in our Annual Report on Form 10-K for the year ended March 31, 2021, which was filed on June 14, 2021.

Item 1A. Risk Factors

There have been no material changes in the risk factors set forth in Item 1A to Part I of our Annual Report on Form 10-K for the fiscal year ended March 31, 2021, filed on June 14, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Limitation on Payment of Dividends and Share Repurchases

The Credit Facility currently permits the payment of up to $29,430,000 of dividends and share repurchases for fiscal year 2022, subject to pro forma compliance with financial covenants.

Purchases of Equity Securities by the Issuer

Shares repurchased during the three months ended December 31, 2021 were as follows:

Periods	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)
October 1 - October 31, 2021:
Open market and privately negotiated purchases		-	$	-		-	$	20,169,000
November 1 - November 30, 2021:
Open market and privately negotiated purchases		-	$	-		-		20,169,000
December 1 - December 31, 2021:
Open market and privately negotiated purchases		106,486	$	17.97		1,914,000		18,255,000
Total		106,486				1,914,000	$	18,255,000

(1) As of December 31, 2021, $18,745,000 was utilized and $18,255,000 remains available to repurchase shares under the authorized share repurchase program, subject to the limit in our Credit Facility. We retired the 837,007 shares repurchased under this program through December 31, 2021. Our share repurchase program does not obligate us to acquire any specific number of shares and shares may be repurchased in privately negotiated and/or open market transactions.

Item 5. Other Information

None.

36

Item 6. Exhibits

(a) Exhibits:

Number	Description of Exhibit	Method of Filing
3.1	Certificate of Incorporation of the Company	Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form SB-2 declared effective on March 22, 1994 (the “1994 Registration Statement”).
3.2	Amendment to Certificate of Incorporation of the Company	Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 (No. 33-97498) declared effective on November 14, 1995.
3.3	Amendment to Certificate of Incorporation of the Company	Incorporated by reference to Exhibit 3.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1997.
3.4	Amendment to Certificate of Incorporation of the Company	Incorporated by reference to Exhibit 3.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1998 (the “1998 Form 10-K”).
3.5	Amendment to Certificate of Incorporation of the Company	Incorporated by reference to Exhibit C to the Company’s proxy statement on Schedule 14A filed with the SEC on November 25, 2003.
3.6	Amended and Restated By-Laws of Motorcar Parts of America, Inc.	Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on August 24, 2010.
3.7	Certificate of Amendment of the Certificate of Incorporation of the Company	Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on April 17, 2014.
3.8	Amendment to the Amended and Restated By-Laws of Motorcar Parts of America, Inc., as adopted on June 9, 2016	Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on June 14, 2016.
3.9	Amendment to the Amended and Restated By-Laws of the Company	Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on February 22, 2017.
3.10	Third Amendment to the Amended and Restated By-Laws of Motorcar Parts of America, Inc., as adopted on January 26, 2022	Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on February 1, 2022.
4.1	2004 Non-Employee Director Stock Option Plan	Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A for the 2004 Annual Shareholders Meeting.
4.2	2010 Incentive Award Plan	Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A filed on December 15, 2010.
4.3	Amended and Restated 2010 Incentive Award Plan	Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A filed on March 5, 2013.

37

Number	Description of Exhibit	Method of Filing
4.4	Second Amended and Restated 2010 Incentive Award Plan	Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A filed on March 3, 2014.
4.5	2014 Non-Employee Director Incentive Award Plan	Incorporated by reference to Appendix B to the Proxy Statement on Schedule 14A filed on March 3, 2014.
4.6	Third Amended and Restated 2010 Incentive Award Plan	Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A filed on November 20, 2017.
4.7	Fourth Amended and Restated 2010 Incentive Award Plan	Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A filed on July 24, 2020.
10.1	Amendment No. 5 to Employment Agreement, dated as of June 18, 2021, between Motorcar Parts of America, Inc., and Selwyn Joffe	Incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q filed on August 9, 2021.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002	Filed herewith.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002	Filed herewith.
31.3	Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002	Filed herewith.
32.1	Certifications of Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002	Filed herewith.
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document).
101.SCM	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

38

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MOTORCAR PARTS OF AMERICA, INC.
Dated: February 9, 2022	By:	/s/ David Lee
		David Lee
		Chief Financial Officer
Dated: February 9, 2022	By:	/s/ Kamlesh Shah
		Kamlesh Shah
		Chief Accounting Officer

39

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Selwyn Joffe, certify that:

1. I have reviewed this report on Form 10-Q of Motorcar Parts of America, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused, such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 9, 2022	/s/ Selwyn Joffe
	Selwyn Joffe
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, David Lee, certify that:

1. I have reviewed this report on Form 10-Q of Motorcar Parts of America, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused, such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 9, 2022	/s/ David Lee
	David Lee
	Chief Financial Officer

EX-31.3

Exhibit 31.3

CERTIFICATIONS

I, Kamlesh Shah, certify that:

1. I have reviewed this report on Form 10-Q of Motorcar Parts of America, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused, such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 9, 2022	/s/ Kamlesh Shah
	Kamlesh Shah
	Chief Accounting Officer

EX-32.1

Exhibit 32.1

CERTIFICATE OF CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER AND CHIEF

ACCOUNTING OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Motorcar Parts of America, Inc. (the “Company”) on Form 10-Q for the quarter ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, Selwyn Joffe, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

1. The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

2. The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Selwyn Joffe

Selwyn Joffe

Chief Executive Officer

February 9, 2022

In connection with the Quarterly Report of Motorcar Parts of America, Inc. (the “Company”) on Form 10-Q for the quarter ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, David Lee, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

1. The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

2. The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David Lee

David Lee

Chief Financial Officer

February 9, 2022

In connection with the Quarterly Report of Motorcar Parts of America, Inc. (the “Company”) on Form 10-Q for the quarter ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, Kamlesh Shah, Chief Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

1. The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

2. The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Kamlesh Shah

Kamlesh Shah

Chief Accounting Officer

February 9, 2022

The foregoing certifications are being furnished to the Securities and Exchange Commission as part of the accompanying report on Form 10-Q. A signed original of each of these statements has been provided to Motorcar Parts of America, Inc. and will be retained by Motorcar Parts of America, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Dec. 31, 2021	Feb. 02, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Period End Date	Dec. 31, 2021
Current Fiscal Year End Date	--03-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Document Transition Report	false
Entity File Number	001-33861
Entity Registrant Name	MOTORCAR PARTS AMERICA INC
Entity Central Index Key	0000918251
Entity Incorporation, State or Country Code	NY
Entity Tax Identification Number	11-2153962
Entity Address, Address Line One	2929 California Street
Entity Address, City or Town	Torrance
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90503
City Area Code	310
Local Phone Number	212-7910
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	MPAA
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		19,101,751

XML

Condensed Consolidated Balance Sheets - USD ($)	Dec. 31, 2021	Mar. 31, 2021
Current assets:
Cash and cash equivalents	$ 7,769,000	$ 15,523,000
Short-term investments	2,212,000	1,652,000
Accounts receivable - net	57,691,000	63,122,000
Inventory	358,738,000	302,913,000
Contract assets	26,609,000	26,940,000
Prepaid expenses and other current assets	11,743,000	12,706,000
Total current assets	464,762,000	422,856,000
Plant and equipment - net	50,636,000	53,854,000
Operating lease assets	82,029,000	71,513,000
Long-term deferred income taxes	20,255,000	19,381,000
Long-term contract assets	311,756,000	270,213,000
Goodwill and intangible assets - net	7,341,000	8,534,000
Other assets	1,501,000	1,531,000
TOTAL ASSETS	938,280,000	847,882,000
Current liabilities:
Accounts payable and accrued liabilities	149,314,000	152,735,000
Customer finished goods returns accrual	37,333,000	31,524,000
Contract liabilities	40,190,000	41,072,000
Revolving loan	113,000,000	84,000,000
Other current liabilities	6,708,000	6,683,000
Operating lease liabilities	6,444,000	6,439,000
Current portion of term loan	3,670,000	3,678,000
Total current liabilities	356,659,000	326,131,000
Term loan, less current portion	13,951,000	16,786,000
Long-term contract liabilities	165,599,000	125,223,000
Long-term deferred income taxes	75,000	73,000
Long-term operating lease liabilities	82,287,000	70,551,000
Other liabilities	6,589,000	7,973,000
Total liabilities	625,160,000	546,737,000
Commitments and contingencies
Shareholders' equity:
Preferred stock	0	0
Common stock; par value $.01 per share, 50,000,000 shares authorized; 19,100,298 and 19,045,386 shares issued and outstanding at December 31, 2021 and March 31, 2021, respectively	191,000	190,000
Additional paid-in capital	225,319,000	223,058,000
Retained earnings	93,276,000	85,593,000
Accumulated other comprehensive loss	(5,666,000)	(7,696,000)
Total shareholders' equity	313,120,000	301,145,000
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	938,280,000	847,882,000
Series A Junior Participating Preferred Stock [Member]
Shareholders' equity:
Preferred stock	$ 0	$ 0

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2021	Mar. 31, 2021
Shareholders' equity:
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	5,000,000	5,000,000
Preferred stock, issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	50,000,000	50,000,000
Common stock, issued (in shares)	19,100,298	19,045,386
Common stock, outstanding (in shares)	19,100,298	19,045,386
Series A Junior Participating Preferred Stock [Member]
Shareholders' equity:
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	20,000	20,000
Preferred stock, issued (in shares)	0	0

XML

Condensed Consolidated Statements of Income - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Condensed Consolidated Statements of Income [Abstract]
Net sales	$ 161,810,000	$ 122,568,000	$ 486,392,000	$ 372,654,000
Cost of goods sold	129,235,000	98,327,000	394,295,000	295,300,000
Gross profit	32,575,000	24,241,000	92,097,000	77,354,000
Operating expenses:
General and administrative	14,605,000	14,005,000	41,556,000	38,210,000
Sales and marketing	6,274,000	4,698,000	17,162,000	13,224,000
Research and development	2,635,000	2,100,000	7,631,000	6,014,000
Foreign exchange impact of lease liabilities and forward contracts	385,000	(12,455,000)	1,769,000	(21,257,000)
Total operating expenses	23,899,000	8,348,000	68,118,000	36,191,000
Operating income	8,676,000	15,893,000	23,979,000	41,163,000
Interest expense, net	3,949,000	4,051,000	11,510,000	12,074,000
Income before income tax expense	4,727,000	11,842,000	12,469,000	29,089,000
Income tax expense	1,588,000	3,373,000	4,786,000	8,448,000
Net income	$ 3,139,000	$ 8,469,000	$ 7,683,000	$ 20,641,000
Basic net income per share (in dollars per share)	$ 0.16	$ 0.44	$ 0.40	$ 1.09
Diluted net income per share (in dollars per share)	$ 0.16	$ 0.44	$ 0.39	$ 1.07
Weighted average number of shares outstanding:
Basic (in shares)	19,184,339	19,053,232	19,124,824	19,016,302
Diluted (in shares)	19,544,174	19,436,793	19,604,780	19,333,758

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Condensed Consolidated Statements of Comprehensive Income [Abstract]
Net income	$ 3,139,000	$ 8,469,000	$ 7,683,000	$ 20,641,000
Other comprehensive (loss) income, net of tax:
Foreign currency translation (loss) gain	(414,000)	1,614,000	2,030,000	(90,000)
Total other comprehensive (loss) income, net of tax	(414,000)	1,614,000	2,030,000	(90,000)
Comprehensive income	$ 2,725,000	$ 10,083,000	$ 9,713,000	$ 20,551,000

XML

Condensed Consolidated Statements of Shareholders' Equity - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Beginning balance at Mar. 31, 2020	$ 190,000	$ 218,581,000	$ 64,117,000	$ (7,368,000)	$ 275,520,000
Beginning balance (in shares) at Mar. 31, 2020	18,969,380
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Compensation recognized under employee stock plans	$ 0	1,043,000	0	0	1,043,000
Exercise of stock options, net of shares withheld for employee taxes	$ 0	20,000	0	0	20,000
Exercise of stock options, net of shares withheld for employee taxes (in Shares)	3,000
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes	$ 0	(207,000)	0	0	(207,000)
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes (in shares)	29,953
Foreign currency translation	$ 0	0	0	(1,263,000)	(1,263,000)
Net (loss) income	0	0	(3,012,000)	0	(3,012,000)
Ending balance at Jun. 30, 2020	$ 190,000	219,437,000	61,105,000	(8,631,000)	272,101,000
Ending balance (in shares) at Jun. 30, 2020	19,002,333
Beginning balance at Mar. 31, 2020	$ 190,000	218,581,000	64,117,000	(7,368,000)	275,520,000
Beginning balance (in shares) at Mar. 31, 2020	18,969,380
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Foreign currency translation					(90,000)
Net (loss) income					20,641,000
Ending balance at Dec. 31, 2020	$ 191,000	222,193,000	84,758,000	(7,458,000)	299,684,000
Ending balance (in shares) at Dec. 31, 2020	19,056,292
Beginning balance at Jun. 30, 2020	$ 190,000	219,437,000	61,105,000	(8,631,000)	272,101,000
Beginning balance (in shares) at Jun. 30, 2020	19,002,333
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Compensation recognized under employee stock plans	$ 0	1,218,000	0	0	1,218,000
Exercise of stock options, net of shares withheld for employee taxes	$ 0	73,000	0	0	73,000
Exercise of stock options, net of shares withheld for employee taxes (in Shares)	6,000
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes	$ 0	(140,000)	0	0	(140,000)
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes (in shares)	18,254
Foreign currency translation	$ 0	0	0	(441,000)	(441,000)
Net (loss) income	0	0	15,184,000	0	15,184,000
Ending balance at Sep. 30, 2020	$ 190,000	220,588,000	76,289,000	(9,072,000)	287,995,000
Ending balance (in shares) at Sep. 30, 2020	19,026,587
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Compensation recognized under employee stock plans	$ 0	1,498,000	0	0	1,498,000
Exercise of stock options, net of shares withheld for employee taxes	$ 0	112,000	0	0	112,000
Exercise of stock options, net of shares withheld for employee taxes (in Shares)	5,794
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes	$ 1,000	(5,000)	0	0	(4,000)
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes (in shares)	23,911
Foreign currency translation	$ 0	0	0	1,614,000	1,614,000
Net (loss) income	0	0	8,469,000	0	8,469,000
Ending balance at Dec. 31, 2020	$ 191,000	222,193,000	84,758,000	(7,458,000)	299,684,000
Ending balance (in shares) at Dec. 31, 2020	19,056,292
Beginning balance at Mar. 31, 2021	$ 190,000	223,058,000	85,593,000	(7,696,000)	$ 301,145,000
Beginning balance (in shares) at Mar. 31, 2021	19,045,386				19,045,386
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Compensation recognized under employee stock plans	$ 0	1,576,000	0	0	$ 1,576,000
Exercise of stock options, net of shares withheld for employee taxes	$ 0	354,000	0	0	354,000
Exercise of stock options, net of shares withheld for employee taxes (in Shares)	19,837
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes	$ 1,000	(543,000)	0	0	(542,000)
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes (in shares)	35,869
Foreign currency translation	$ 0	0	0	1,833,000	1,833,000
Net (loss) income	0	0	861,000	0	861,000
Ending balance at Jun. 30, 2021	$ 191,000	224,445,000	86,454,000	(5,863,000)	305,227,000
Ending balance (in shares) at Jun. 30, 2021	19,101,092
Beginning balance at Mar. 31, 2021	$ 190,000	223,058,000	85,593,000	(7,696,000)	$ 301,145,000
Beginning balance (in shares) at Mar. 31, 2021	19,045,386				19,045,386
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Foreign currency translation					$ 2,030,000
Net (loss) income					7,683,000
Ending balance at Dec. 31, 2021	$ 191,000	225,319,000	93,276,000	(5,666,000)	$ 313,120,000
Ending balance (in shares) at Dec. 31, 2021	19,100,298				19,100,298
Beginning balance at Jun. 30, 2021	$ 191,000	224,445,000	86,454,000	(5,863,000)	$ 305,227,000
Beginning balance (in shares) at Jun. 30, 2021	19,101,092
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Compensation recognized under employee stock plans	$ 0	1,851,000	0	0	1,851,000
Exercise of stock options, net of shares withheld for employee taxes	$ 0	78,000	0	0	78,000
Exercise of stock options, net of shares withheld for employee taxes (in Shares)	7,860
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes	$ 1,000	(1,204,000)	0	0	(1,203,000)
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes (in shares)	63,803
Foreign currency translation	$ 0	0	0	611,000	611,000
Net (loss) income	0	0	3,683,000	0	3,683,000
Ending balance at Sep. 30, 2021	$ 192,000	225,170,000	90,137,000	(5,252,000)	310,247,000
Ending balance (in shares) at Sep. 30, 2021	19,172,755
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Compensation recognized under employee stock plans	$ 0	2,030,000	0	0	2,030,000
Exercise of stock options, net of shares withheld for employee taxes	$ 0	32,000	0	0	32,000
Exercise of stock options, net of shares withheld for employee taxes (in Shares)	1,846
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes	$ 0	0	0	0	0
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes (in shares)	32,183
Repurchase and cancellation of treasury stock, including fees	$ (1,000)	(1,913,000)	0	0	(1,914,000)
Repurchase and cancellation of treasury stock, including fees (in shares)	(106,486)
Foreign currency translation	$ 0	0	0	(414,000)	(414,000)
Net (loss) income	0	0	3,139,000	0	3,139,000
Ending balance at Dec. 31, 2021	$ 191,000	$ 225,319,000	$ 93,276,000	$ (5,666,000)	$ 313,120,000
Ending balance (in shares) at Dec. 31, 2021	19,100,298				19,100,298

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Condensed Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Cash flows from operating activities:
Net income	$ 7,683,000	$ 20,641,000
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	9,591,000	8,090,000
Amortization of interest	1,189,000	1,059,000
Amortization of core premiums paid to customers	8,497,000	4,269,000
Amortization of finished goods premiums paid to customers	516,000	0
Noncash lease expense	5,533,000	5,239,000
Loss (gain) due to the change in the fair value of the contingent consideration	60,000	(45,000)
Foreign exchange impact of lease liabilities and forward contracts	1,769,000	(21,257,000)
Gain on short-term investments	(245,000)	(398,000)
Net provision for inventory reserves	9,293,000	8,937,000
Net provision for customer payment discrepancies and credit losses	1,690,000	242,000
Deferred income taxes	(877,000)	2,866,000
Share-based compensation expense	5,457,000	3,759,000
Loss on disposal of plant and equipment	33,000	9,000
Change in operating assets and liabilities:
Accounts receivable	3,626,000	47,066,000
Inventory	(65,303,000)	(68,723,000)
Prepaid expenses and other current assets	187,000	982,000
Other assets	7,000	1,067,000
Accounts payable and accrued liabilities	(877,000)	46,198,000
Customer finished goods returns accrual	5,807,000	8,844,000
Contract assets, net	(50,225,000)	(18,126,000)
Contract liabilities, net	38,828,000	28,492,000
Operating lease liabilities	(4,219,000)	(4,710,000)
Other liabilities	(194,000)	(2,017,000)
Net cash (used in) provided by operating activities	(22,174,000)	72,484,000
Cash flows from investing activities:
Purchase of plant and equipment	(5,111,000)	(12,043,000)
Proceeds from sale of plant and equipment	0	7,000
Change in short-term investments	(315,000)	(259,000)
Net cash used in investing activities	(5,426,000)	(12,295,000)
Cash flows from financing activities:
Borrowings under revolving loan	62,000,000	0
Repayments of revolving loan	(33,000,000)	(93,000,000)
Repayments of term loan	(2,813,000)	(2,813,000)
Payments for debt issuance costs	(1,148,000)	0
Payments on finance lease obligations	(2,074,000)	(1,775,000)
Exercise of stock options	464,000	205,000
Cash used to net share settle equity awards	(1,745,000)	(351,000)
Repurchase of common stock, including fees	(1,914,000)	0
Net cash provided by (used in) financing activities	19,770,000	(97,734,000)
Effect of exchange rate changes on cash and cash equivalents	76,000	729,000
Net decrease in cash and cash equivalents	(7,754,000)	(36,816,000)
Cash and cash equivalents - Beginning of period	15,523,000	49,616,000
Cash and cash equivalents - End of period	7,769,000	12,800,000
Supplemental disclosures of cash flow information:
Cash paid for interest, net	10,348,000	11,222,000
Cash paid for income taxes, net of refunds	5,987,000	2,048,000
Cash paid for operating leases	7,969,000	8,087,000
Cash paid for finance leases	2,343,000	2,049,000
Plant and equipment acquired under finance leases	601,000	3,334,000
Assets acquired under operating leases	16,141,000	15,630,000
Non-cash capital expenditures	$ 430,000	$ 923,000

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Company Background and Organization

9 Months Ended

Dec. 31, 2021

Company Background and Organization [Abstract]

Company Background and Organization

1. Company Background and Organization

Motorcar Parts of America, Inc. and its subsidiaries (the “Company”, or “MPA”) is a leading supplier of automotive aftermarket non-discretionary replacement parts, and test solutions and diagnostic equipment. These replacement parts are primarily sold to automotive retail chain stores and warehouse distributors throughout North America and to major automobile manufacturers for both their aftermarket programs and warranty replacement programs (“OES”). The Company’s test solutions and diagnostic equipment primarily serves the global automotive component and powertrain testing market. The Company’s products include (i) rotating electrical products such as alternators and starters, (ii) wheel hub assemblies and bearings, (iii) brake-related products, which include brake calipers, brake boosters, brake rotors, brake pads, and brake master cylinders, and (iv) other products, which include turbochargers and test solutions and diagnostic equipment used for electric vehicle powertrain development and manufacturing including electric motor test systems, e-axle test systems, advanced power emulators, charging unit test systems, test systems for alternators, starters, belt starter generators and bench-top testers used by the automotive retail segment.

Pursuant to the guidance provided under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for segment reporting, the Company has identified its chief operating decision maker (“CODM”), reviewed the documents used by the CODM, and understands how such documents are used by the CODM to make financial and operating decisions. The Company has determined through this review process that its business comprises three separate operating segments. Two of the operating segments meet all the aggregation criteria and are aggregated. The remaining operating segment does not meet the quantitative thresholds for individual disclosure and the Company has combined its operating segments into one reportable segment.

Impact of the Novel Coronavirus (“COVID-19”)

The outbreak of the COVID-19 pandemic continues to adversely impact the U.S. and global economies – creating uncertainty regarding the potential effects on the Company’s employees, supply chain, operations, and customer demand. The COVID-19 pandemic could impact the Company’s operations and the operations of its customers, suppliers, and vendors because of quarantines, facility closures, travel, and logistics restrictions. The extent to which the COVID-19 pandemic impacts the Company will depend on numerous factors and future developments, which are highly uncertain and cannot be predicted, including, but not limited to: (i) the severity of the virus, (ii) the occurrence and duration of additional spikes in infections, (iii) the effects of the pandemic on customers, suppliers, and vendors, (iv) the remedial actions and stimulus measures adopted by local, state and federal governments, (v) the availability and acceptance of vaccines, and (vi) the extent to which normal economic and operating conditions can resume. Even after the COVID-19 pandemic has subsided, the Company may continue to experience adverse impacts to its business because of an economic recession or depression that has occurred or may occur in the future.

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Basis of Presentation and New Accounting Pronouncements

9 Months Ended

Dec. 31, 2021

Basis of Presentation and New Accounting Pronouncements [Abstract]

Basis of Presentation and New Accounting Pronouncements

2. Basis of Presentation and New Accounting Pronouncements

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended December 31, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2022. This report should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended March 31, 2021, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on June 14, 2021.

The accompanying condensed consolidated financial statements have been prepared on a consistent basis with, and there have been no material changes to, except as noted below, the accounting policies described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements that are presented in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

Recently Adopted Accounting Pronouncements

Income Taxes

In December 2019, the FASB issued guidance that simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistent application. This guidance is effective for annual and interim periods in fiscal years beginning after December 15, 2020. The adoption of this guidance on April 1, 2021 did not have any material impact on the Company’s consolidated financial statements.

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Accounts Receivable - Net

9 Months Ended

Dec. 31, 2021

Accounts Receivable - Net [Abstract]

Accounts Receivable - Net

3. Accounts Receivable — Net

The Company has trade accounts receivable that result from the sale of goods and services. Accounts receivable — net includes offset accounts related to allowances for credit losses, customer payment discrepancies, and returned goods authorizations (“RGAs”) issued for in-transit unit returns. The Company believes its credit risk with respect to trade accounts receivable is limited due to its credit evaluation process and the long-term nature of its relationships with its largest customers. The Company utilizes a historical loss rate method, adjusted for any changes in economic conditions or risk characteristics, to estimate its expected credit losses each period. When developing an estimate of expected credit losses, the Company considers all available relevant information regarding the collectability of cash flows, including historical information, current conditions, and reasonable and supportable forecasts of future economic conditions over the contractual life of the receivable. The historical loss rate method considers past write-offs of trade accounts receivable over a period commensurate with the initial term of the Company’s contracts with its customers. The Company recognizes the allowance for credit losses at inception and reassesses quarterly based on management’s expectation of the asset’s collectability. The Company’s accounts receivable are short-term in nature and written off only when all collection attempts have failed. The Company uses receivable discount programs with certain customers and their respective banks (see Note 10).

Accounts receivable — net is comprised of the following:

	December 31, 2021			March 31, 2021
Accounts receivable — trade	$	71,124,000		$	81,549,000
Allowance for credit losses		(292,000	)		(348,000	)
Customer payment discrepancies		(1,185,000	)		(752,000	)
Customer returns RGA issued		(11,956,000	)		(17,327,000	)
Total accounts receivable — net	$	57,691,000		$	63,122,000

The following table provides a roll-forward of the allowance for credit losses that is deducted from accounts receivable to present the net amount expected to be collected. During the nine months ended December 31, 2020, the Company wrote off amounts previously fully reserved for in connection with the bankruptcy filing of one of its customers.

	Nine Months Ended December 31,
	2021			2020
Balance at beginning of period	$	348,000		$	4,252,000
Provision for expected credit losses		(17,000	)		74,000
Recoveries		-			(100,000	)
Amounts written off charged against the allowance		(39,000	)		(3,898,000	)
Balance at end of period	$	292,000		$	328,000

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Inventory

9 Months Ended

Dec. 31, 2021

Inventory [Abstract]

Inventory

4. Inventory

Inventory is comprised of the following:

	December 31, 2021			March 31, 2021
Inventory
Raw materials	$	159,001,000		$	128,190,000
Work-in-process		8,048,000			5,233,000
Finished goods		191,040,000			168,184,000
		358,089,000			301,607,000
Less allowance for excess and obsolete inventory		(14,857,000	)		(13,246,000	)
Inventory — net		343,232,000			288,361,000
Inventory unreturned		15,506,000			14,552,000
Total inventory	$	358,738,000		$	302,913,000

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Contract Assets

9 Months Ended

Dec. 31, 2021

Contract Assets [Abstract]

Contract Assets

5. Contract Assets

During the three months ended December 31, 2021 and 2020, the Company reduced the carrying value of Remanufactured Cores held at customers’ locations by $846,000 and $1,304,000, respectively. During the nine months ended December 31, 2021 and 2020, the Company reduced the carrying value of Remanufactured Cores held at customers’ locations by $3,517,000 and $3,580,000, respectively.

Contract assets are comprised of the following:

	December 31, 2021		March 31, 2021
Short-term contract assets
Cores expected to be returned by customers	$	14,172,000	$	17,657,000
Upfront payments to customers		540,000		684,000
Finished goods premiums paid to customers		613,000		405,000
Core premiums paid to customers		11,284,000		8,194,000
Total short-term contract assets	$	26,609,000	$	26,940,000
Remanufactured cores held at customers’ locations	$	257,609,000	$	229,918,000
Upfront payments to customers		231,000		486,000
Finished goods premiums paid to customers		2,926,000		2,731,000
Core premiums paid to customers		45,421,000		31,509,000
Long-term core inventory deposits		5,569,000		5,569,000
Total long-term contract assets	$	311,756,000	$	270,213,000

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Significant Customer and Other Information

9 Months Ended

Dec. 31, 2021

Significant Customer and Other Information [Abstract]

Significant Customer and Other Information

6. Significant Customer and Other Information

Significant Customer Concentrations

The largest customers accounted for the following percentage of net sales:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2021			2020			2021			2020
Net sales
Customer A		38	%		35	%		38	%		42	%
Customer B		15	%		26	%		17	%		24	%
Customer C		29	%		24	%		30	%		21	%

The largest customers accounted for the following percentage of accounts receivable – trade:

	December 31, 2021			March 31, 2021
Accounts receivable - trade
Customer A		38	%		50	%
Customer B		21	%		23	%
Customer C		1	%		-	%

Geographic and Product Information

The Company’s products are sold predominantly in the U.S. and accounted for the following percentages of net sales:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2021			2020			2021			2020
Product line
Rotating electrical products		68	%		72	%		69	%		76	%
Wheel hub products		13	%		14	%		13	%		14	%
Brake related products		15	%		12	%		15	%		9	%
Other products		4	%		2	%		3	%		1	%
		100	%		100	%		100	%		100	%

Significant Supplier Concentrations

The Company had no suppliers that accounted for more than 10% of inventory purchases for the three and nine months ended December 31, 2021 and 2020.

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Debt

9 Months Ended

Dec. 31, 2021

Debt [Abstract]

Debt

7. Debt

The Company is party to a $268,620,000 senior secured financing, (as amended from time to time, the “Credit Facility”) with a syndicate of lenders and PNC Bank, National Association, as administrative agent, consisting of (i) a $238,620,000 revolving loan facility, subject to borrowing base restrictions, a $24,000,000 sublimit for borrowings by Canadian borrowers, and a $20,000,000 sublimit for letters of credit (the “Revolving Facility”) and (ii) a $30,000,000 term loan facility (the “Term Loans”). The loans under the Credit Facility mature on June 5, 2023. The Credit Facility currently permits the payment of up to $29,430,000 of dividends and share repurchases for fiscal year 2022, subject to pro forma compliance with financial covenants. In connection with the Credit Facility, the lenders have a security interest in substantially all of the assets of the Company.

In May 2021, the Company entered into a third amendment to the Credit Facility (the “Third Amendment”). The Third Amendment, among other things, (i) extended the maturity date to May 28, 2026 from June 5, 2023, (ii) modified the fixed charge coverage ratio financial covenant, and (iii) modified the definition of “Consolidated EBITDA”. The Company capitalized $1,148,000 of new debt issuance costs in connection with the Third Amendment.

The Term Loans require quarterly principal payments of $937,500. The Credit Facility bears interest at rates equal to either LIBOR plus a margin of 2.25%, 2.50% or 2.75% or a reference rate plus a margin of 1.25%, 1.50% or 1.75%, in each case depending on the senior leverage ratio as of the applicable measurement date. There is also a facility fee of 0.375% to 0.50%, depending on the senior leverage ratio as of the applicable measurement date. The interest rate on the Company’s Term Loans and Revolving Facility was 2.85% and 2.86% respectively, at December 31, 2021, and 2.62% at March 31, 2021.

The Credit Facility, among other things, requires the Company to maintain certain financial covenants including a maximum senior leverage ratio and a minimum fixed charge coverage ratio. The Company was in compliance with all financial covenants at December 31, 2021.

In addition to other covenants, the Credit Facility places limits on the Company’s ability to incur liens, incur additional indebtedness, make loans and investments, engage in mergers and acquisitions, engage in asset sales, redeem, or repurchase capital stock, alter the business conducted by the Company and its subsidiaries, transact with affiliates, prepay, redeem, or purchase subordinated debt, and amend or otherwise alter debt agreements.

The following summarizes information about the Term Loans:

	December 31, 2021			March 31, 2021
Principal amount of Term Loans	$	17,812,000		$	20,625,000
Unamortized financing fees		(191,000	)		(161,000	)
Net carrying amount of Term Loans		17,621,000			20,464,000
Less current portion of Term Loans		(3,670,000	)		(3,678,000	)
Long-term portion of Term Loans	$	13,951,000		$	16,786,000

Future repayments of the Term Loans are as follows:

Year Ending March 31,
2022 - remaining three months	$	937,000
2023		3,750,000
2024		3,750,000
2025		3,750,000
2026		3,750,000
Thereafter		1,875,000
Total payments	$	17,812,000

The Company had $113,000,000 and $84,000,000 outstanding under the Revolving Facility at December 31, 2021 and March 31, 2021, respectively. In addition, $6,409,000 was outstanding for letters of credit at December 31, 2021. At December 31, 2021, after certain contractual adjustments, $99,908,000 was available under the Revolving Facility.

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Contract Liabilities

9 Months Ended

Dec. 31, 2021

Contract Liabilities [Abstract]

Contract Liabilities

8. Contract Liabilities

Contract liabilities are comprised of the following:

	December 31, 2021		March 31, 2021
Short-term contract liabilities
Customer core returns accruals	$	13,089,000	$	12,710,000
Customer allowances earned		18,461,000		16,513,000
Customer deposits		3,747,000		2,234,000
Finished goods liabilities		1,609,000		1,883,000
Core bank liability		1,622,000		1,585,000
Accrued core payment		1,662,000		6,147,000
Total short-term contract liabilities	$	40,190,000	$	41,072,000
Long-term contract liabilities
Customer core returns accruals	$	146,837,000	$	103,719,000
Customer allowances earned		109,000		313,000
Finished goods liabilities		1,972,000		2,678,000
Core bank liability		15,682,000		16,903,000
Accrued core payment		999,000		1,610,000
Total long-term contract liabilities	$	165,599,000	$	125,223,000

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Leases

9 Months Ended

Dec. 31, 2021

Leases [Abstract]

Leases

9. Leases

The Company leases various facilities in North America and Asia under operating leases expiring through August 2033. The Company has material nonfunctional currency leases that could have a material impact on the Company’s condensed consolidated statements of income. As required for other monetary liabilities, lessees remeasure foreign currency-denominated lease liabilities using the exchange rate at each reporting date, but the lease assets are nonmonetary assets measured at historical rates and are not affected by subsequent changes in the exchange rates. In connection with the remeasurement of these leases, the Company recorded a loss of $985,000 and a gain of $8,638,000 during the three months ended December 31, 2021 and 2020, respectively, and gains of $64,000 and $12,241,000 during the nine months ended December 31, 2021 and 2020, respectively. These amounts are included in “foreign exchange impact of lease liabilities and forward contracts” in the condensed consolidated statements of income.

Balance sheet information for leases is as follows:

Leases	Classification	December 31, 2021		March 31, 2021
Assets:
Operating	Operating lease assets	$	82,029,000	$	71,513,000
Finance	Plant and equipment		7,745,000		8,852,000
Total leased assets		$	89,774,000	$	80,365,000
Liabilities:
Current
Operating	Operating lease liabilities	$	6,444,000	$	6,439,000
Finance	Other current liabilities		2,420,000		2,640,000
Long-term
Operating	Long-term operating lease liabilities		82,287,000		70,551,000
Finance	Other liabilities		3,741,000		4,995,000
Total lease liabilities		$	94,892,000	$	84,625,000

Lease cost recognized in the condensed consolidated statements of income is as follows:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Lease cost
Operating lease cost	$	3,134,000	$	2,962,000	$	9,325,000	$	8,522,000
Short-term lease cost		361,000		373,000		1,112,000		1,027,000
Variable lease cost		225,000		183,000		716,000		556,000
Finance lease cost:
Amortization of finance lease assets		515,000		458,000		1,579,000		1,299,000
Interest on finance lease liabilities		83,000		98,000		269,000		274,000
Total lease cost	$	4,318,000	$	4,074,000	$	13,001,000	$	11,678,000

Maturities of lease commitments at December 31, 2021 by fiscal year were as follows:

Maturity of lease liabilities	Operating Leases			Finance Leases			Total
2022 - remaining three months	$	2,449,000		$	714,000		$	3,163,000
2023		11,460,000			2,490,000			13,950,000
2024		10,014,000			1,688,000			11,702,000
2025		10,078,000			1,194,000			11,272,000
2026		10,347,000			507,000			10,854,000
Thereafter		75,113,000			51,000			75,164,000
Total lease payments		119,461,000			6,644,000			126,105,000
Less amount representing interest		(30,730,000	)		(483,000	)		(31,213,000	)
Present value of lease liabilities	$	88,731,000		$	6,161,000		$	94,892,000

Other information about leases is as follows:

	December 31, 2021			March 31, 2021
Lease term and discount rate
Weighted-average remaining lease term (years):
Finance leases		3.0			3.4
Operating leases		10.6			11.1
Weighted-average discount rate:
Finance leases		5.2	%		5.3	%
Operating leases		5.7	%		5.9	%

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Accounts Receivable Discount Programs

9 Months Ended

Dec. 31, 2021

Accounts Receivable Discount Programs [Abstract]

Accounts Receivable Discount Programs

10. Accounts Receivable Discount Programs

The Company uses receivable discount programs with certain customers and their respective banks. Under these programs, the Company may sell those customers’ receivables to those banks at a discount to be agreed upon at the time the receivables are sold. These discount arrangements allow the Company to accelerate receipt of payment on customers’ receivables.

The following is a summary of accounts receivable discount programs:

	Nine Months Ended December 31,
	2021			2020
Receivables discounted	$	418,044,000		$	367,102,000
Weighted average days		335			333
Annualized weighted average discount rate		1.7	%		2.1	%
Amount of discount recognized as interest expense	$	6,798,000		$	7,277,000

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Net Income per Share

9 Months Ended

Dec. 31, 2021

Net Income per Share [Abstract]

Net Income per Share

11. Net Income per Share

Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share includes the effect, if any, from the potential exercise or conversion of securities, such as stock options, which would result in the issuance of incremental shares of common stock to the extent such impact is not anti-dilutive.

The following presents a reconciliation of basic and diluted net income per share:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Net income	$	3,139,000	$	8,469,000	$	7,683,000	$	20,641,000
Basic shares		19,184,339		19,053,232		19,124,824		19,016,302
Effect of potentially dilutive securities		359,835		383,561		479,956		317,456
Diluted shares		19,544,174		19,436,793		19,604,780		19,333,758
Net income per share:
Basic net income per share	$	0.16	$	0.44	$	0.40	$	1.09
Diluted net income per share	$	0.16	$	0.44	$	0.39	$	1.07

Potential common shares that would have the effect of increasing diluted net income per share or decreasing diluted net loss per share are considered to be anti-dilutive and as such, these shares are not included in calculating diluted net income per share. For the three months ended December 31, 2021 and 2020, there were 1,130,694 and 1,319,937, respectively, of potential common shares not included in the calculation of diluted net income per share because their effect was anti-dilutive. For the nine months ended December 31, 2021 and 2020, there were 720,756 and 1,328,437, respectively, of potential common shares not included in the calculation of diluted net income per share because their effect was anti-dilutive.

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Income Taxes

9 Months Ended

Dec. 31, 2021

Income Taxes [Abstract]

Income Taxes

12. Income Taxes

The Company recorded income tax expense of $1,588,000, or an effective tax rate of 33.6%, and $3,373,000, or an effective tax rate of 28.5%, for the three months ended December 31, 2021 and 2020, respectively. The Company recorded income tax expense of $4,786,000, or an effective tax rate of 38.4%, and $8,448,000, or an effective tax rate of 29.0%, for the nine months ended December 31, 2021 and 2020, respectively. Effective tax rates are based on current projections and any changes in future periods could result in an effective tax rate that is materially different from the current estimate. The effective tax rates for the three and nine months ended December 31, 2021, were primarily impacted by (i) non-deductible executive compensation under Internal Revenue Code Section 162(m), (ii) foreign income taxed at rates that are different from the federal statutory rate,  and (iii) specific jurisdictions that the Company does not expect to recognize benefit of losses.

The Company and its subsidiaries file income tax returns in the U.S. federal, various state, and foreign jurisdictions with varying statutes of limitations. At December 31, 2021, the Company is not under examination in any jurisdiction, and remain subject to examination from the years ended March 31, 2017. The Company believes no significant changes in the unrecognized tax benefits will occur within the next 12 months.

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Financial Risk Management and Derivatives

9 Months Ended

Dec. 31, 2021

Financial Risk Management and Derivatives [Abstract]

Financial Risk Management and Derivatives

13. Financial Risk Management and Derivatives

Purchases and expenses denominated in currencies other than the U.S. dollar, which are primarily related to the Company’s overseas facilities, expose the Company to market risk from material movements in foreign exchange rates between the U.S. dollar and the foreign currencies. The Company’s primary risk exposure is from fluctuations in the value of the Mexican peso and to a lesser extent the Chinese yuan. To mitigate these risks, the Company enters into forward foreign currency exchange contracts to exchange U.S. dollars for these foreign currencies. The extent to which forward foreign currency exchange contracts are used, is modified periodically in response to the Company’s estimate of market conditions and the terms and length of anticipated requirements.

The Company enters into forward foreign currency exchange contracts in order to reduce the impact of foreign currency fluctuations and not to engage in currency speculation. The use of derivative financial instruments allows the Company to reduce its exposure to the risk that the eventual cash outflow resulting from funding the expenses of the foreign operations will be materially affected by changes in exchange rates between the U.S. dollar and the foreign currencies. The Company does not hold or issue financial instruments for trading purposes. The Company designates forward foreign currency exchange contracts for forecasted expenditure requirements to fund foreign operations.

The Company had forward foreign currency exchange contracts with a U.S. dollar equivalent notional value of $44,815,000 and $41,819,000 at December 31, 2021 and March 31, 2021, respectively. These contracts generally have a term of one year or less, at rates agreed at the inception of the contracts. The counterparty to this derivative transaction is a major financial institution with investment grade credit rating; however, the Company is exposed to credit risk with this institution. The credit risk is limited to the potential unrealized gains (which offset currency fluctuations adverse to the Company) in any such contract should this counterparty fail to perform as contracted. Any changes in the fair values of forward foreign currency exchange contracts are included in “foreign exchange impact of lease liabilities and forward contracts” in the condensed consolidated statements of income.

The following shows the effect of derivative instruments on the condensed consolidated statements of income:

	Gain (Loss) Recognized as Foreign Exchange Impact of Lease Liabilities and Forward Contracts
Derivatives Not Designated as	Three Months Ended December 31,				Nine Months Ended December 31,
Hedging Instruments	2021		2020		2021			2020
Forward foreign currency exchange contracts	$	600,000	$	3,817,000	$	(1,833,000	)	$	9,016,000

The fair value of the forward foreign currency exchange contracts of $404,000 is included in other current liabilities in the condensed consolidated balance sheet at December 31, 2021. The fair value of the forward foreign currency exchange contracts of $1,429,000 is included in prepaid and other current assets in the condensed consolidated balance sheet at March 31, 2021. The changes in the fair values of forward foreign currency exchange contracts are included in “foreign exchange impact of lease liabilities and forward contracts” in the condensed consolidated statements of cash flows for the nine months ended December 31, 2021 and 2020.

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Fair Value Measurements

9 Months Ended

Dec. 31, 2021

Fair Value Measurements [Abstract]

Fair Value Measurements

14. Fair Value Measurements

The following summarizes financial assets and liabilities measured at fair value, by level within the fair value hierarchy:

	December 31, 2021								March 31, 2021
			Fair Value Measurements Using Inputs Considered as								Fair Value Measurements Using Inputs Considered as
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Assets
Short-term investments
Mutual funds	$	2,212,000	$	2,212,000	$	-	$	-	$	1,652,000	$	1,652,000	$	-	$	-
Prepaid expenses and other current assets
Forward foreign currency exchange contracts		-		-		-		-		1,429,000		-		1,429,000		-
Liabilities
Accrued liabilities
Short-term contingent consideration		970,000		-		-		970,000		910,000		-		-		910,000
Other current liabilities
Deferred compensation		2,212,000		2,212,000		-		-		1,652,000		1,652,000		-		-
Forward foreign currency exchange contracts		404,000		-		404,000		-		-		-		-		-

Short-term Investments and Deferred Compensation

The Company’s short-term investments, which fund its deferred compensation liabilities, consist of investments in mutual funds. These investments are classified as Level 1 as the shares of these mutual funds trade with sufficient frequency and volume to enable the Company to obtain pricing information on an ongoing basis.

Forward Foreign Currency Exchange Contracts

The forward foreign currency exchange contracts are primarily measured based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers (See Note 13).

Contingent Consideration

In December 2018, the Company completed the acquisition of certain assets and assumption of certain liabilities from Mechanical Power Conversion, LLC (“E&M”). In connection with this acquisition, the Company was contingently obligated to make additional payments to the former owners of E&M up to an aggregate of $5,200,000 over a three-year period. The third and final payment of the contingent consideration obligation of $970,000 will be made in the fourth fiscal quarter ending March 31, 2022, as settlement of this obligation. This obligation is recorded in accounts payable and accrued liabilities in the Company’s condensed consolidated balance sheets at December 31, 2021.

The following table summarizes the activity for financial assets and liabilities utilizing Level 3 fair value measurements:

	Three Months Ended December 31,					Nine Months Ended December 31,
Contingent Consideration	2021			2020		2021		2020
Beginning balance	$	980,000		$	2,588,000	$	910,000	$	2,653,000
Changes in revaluations of contingent consideration included in earnings		(10,000	)		20,000		60,000		(45,000	)
Ending balance	$	970,000		$	2,608,000	$	970,000	$	2,608,000

During the three and nine months ended December 31, 2021, the Company had no other significant measurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the short-term nature of these instruments. The carrying amounts of the revolving loan, term loan and other long-term liabilities approximate their fair value based on the variable nature of interest rates and current rates for instruments with similar characteristics.

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Share-based Payments

9 Months Ended

Dec. 31, 2021

Share-based Payments [Abstract]

Share-based Payments

15. Share-based Payments

Stock Options

During the nine months ended December 31, 2021, no options to purchase shares of the Company’s common stock were granted. The Company granted options to purchase 345,423 shares of common stock during the nine months ended December 31, 2020.

The following is a summary of stock option transactions:

	Number of Shares			Weighted Average Exercise Price
Outstanding at March 31, 2021		1,744,885		$	17.51
Granted		-		$	-
Exercised		(30,976	)	$	16.10
Forfeited		(5,984	)	$	19.81
Outstanding at December 31, 2021		1,707,925		$	17.52

At December 31, 2021, options to purchase 317,309 shares of common stock were unvested at a weighted average exercise price of $16.53.

At December 31, 2021, there was $1,440,000 of total unrecognized compensation expense related to unvested stock option awards. Compensation expense related to unvested stock option awards will be recognized over the weighted average remaining vesting period of approximately 1.2 years.

Restricted Stock Units and Restricted Stock (collectively “RSUs”)

During the nine months ended December 31, 2021 and 2020, the Company granted 263,703 and 251,801 shares of RSUs, respectively, based on the closing market price on the grant date.

The following is a summary of non-vested RSUs:

	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at March 31, 2021		354,484		$	17.22
Granted		263,703		$	21.90
Vested		(216,617	)	$	17.78
Forfeited		(1,832	)	$	20.15
Outstanding at December 31, 2021		399,738		$	19.98

At December 31, 2021, there was $5,402,000 of unrecognized compensation expense related to these awards, which will be recognized over the weighted average remaining vesting period of approximately 1.6 years.

Performance Stock Units (“PSUs”)

In June 2021, the Company granted performance-based PSUs to its executives, which typically cliff vest after three-years subject to continued employment. These awards are contingent and granted separately for each of the following metrics: adjusted EBITDA, net sales, and relative total shareholder return (“TSR”). Compensation cost is determined at the grant date and recognized on a straight-line basis over the requisite service period to the extent the conditions are deemed probable. The number of shares earned at the end of the three-year period will vary, based only on actual performance, from 0% to 150% of the target number of PSUs granted. PSUs are not considered issued or outstanding ordinary shares of the Company.

Adjusted EBITDA and net sales are considered performance conditions. The Company will reassess the probability of achieving each performance condition separately each reporting period. TSR is considered a market condition because it measures the Company’s return against the performance of the Russell 3000, excluding companies classified as financials and real estate, over a given period of time. Compensation cost related to the TSR award will not be adjusted even if the market condition is not met.

The Company calculated the fair value of the PSUs for each component individually. The fair value of PSUs subject to performance conditions is equal to the closing stock price on the grant date. The fair value of PSUs subject to the market condition is determined using the Monte Carlo valuation model.

The following table summarizes the assumptions used in determining the fair value of the TSR awards:

	Nine Months Ended December 31,
	2021
Risk free interest rate		0.47	%
Expected life in years		3
Expected volatility of MPA common stock		53.70	%
Expected average volatility of peer companies		59.30	%
Average correlation coefficient of peer companies		26.70	%
Expected dividend yield		-
Grant date fair value	$	26.89

The following is a summary of non-vested PSUs:

	Number of Shares		Weighted Average Grant Date Fair Value
Outstanding at March 31, 2021		-	$	-
Granted		84,593	$	23.19
Vested		-	$	-
Forfeited		-	$	-
Outstanding at December 31, 2021		84,593	$	23.19

At December 31, 2021, there was $1,609,000 of unrecognized compensation expense related to these awards, which will be recognized over the weighted average remaining vesting period of approximately 2.5 years.

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Commitments and Contingencies

9 Months Ended

Dec. 31, 2021

Commitments and Contingencies [Abstract]

Commitments and Contingencies

16. Commitments and Contingencies

Warranty Returns

The Company allows its customers to return goods that their consumers have returned to them, whether or not the returned item is defective (“warranty returns”). The Company accrues an estimate of its exposure to warranty returns based on a historical analysis of the level of this type of return as a percentage of unit sales. Amounts charged to expense for these warranty returns are considered in arriving at the Company’s net sales.

The following summarizes the changes in the warranty return accrual:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2021			2020			2021			2020
Balance at beginning of period	$	20,875,000		$	22,499,000		$	21,093,000		$	18,300,000
Charged to expense		30,282,000			26,194,000			88,380,000			80,155,000
Amounts processed		(32,425,000	)		(31,540,000	)		(90,741,000	)		(81,302,000	)
Balance at end of period	$	18,732,000		$	17,153,000		$	18,732,000		$	17,153,000

Contingencies

The Company is subject to various lawsuits and claims. In addition, government agencies and self-regulatory organizations have the ability to conduct periodic examinations of and administrative proceedings regarding the Company’s business. Following an audit in fiscal 2019, the U.S. Customs and Border Protection stated that it believed that the Company owed additional duties of approximately $17 million from 2011 through mid-2018 relating to products that it imported from Mexico. The Company does not believe that this amount is correct and believes that it has numerous defenses and intends to dispute this amount vigorously. The Company cannot assure that the U.S. Customs and Border Protection will agree or that it will not need to accrue or pay additional amounts in the future.

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Share Repurchases

9 Months Ended

Dec. 31, 2021

Share Repurchases [Abstract]

Share Repurchases

17. Share Repurchases

In August 2018, the Company’s board of directors approved an increase in its share repurchase program from $20,000,000 to $37,000,000 of its common stock. During the three and nine months ended December 31, 2021, the Company repurchased 106,486 shares of its common stock for $1,914,000. During the three and nine months ended December 31, 2020, the Company did not repurchase any shares of its common stock. As of December 31, 2021, $18,745,000 was utilized and $18,255,000 remains available to repurchase shares under the authorized share repurchase program, subject to the limit in the Company’s Credit Facility. The Company retired the 837,007 shares repurchased under this program through December 31, 2021. The Company’s share repurchase program does not obligate it to acquire any specific number of shares and shares may be repurchased in privately negotiated and/or open market transactions.

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Basis of Presentation and New Accounting Pronouncements (Policies)

9 Months Ended

Dec. 31, 2021

Basis of Presentation and New Accounting Pronouncements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended December 31, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2022. This report should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended March 31, 2021, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on June 14, 2021.

The accompanying condensed consolidated financial statements have been prepared on a consistent basis with, and there have been no material changes to, except as noted below, the accounting policies described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements that are presented in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Income Taxes

In December 2019, the FASB issued guidance that simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistent application. This guidance is effective for annual and interim periods in fiscal years beginning after December 15, 2020. The adoption of this guidance on April 1, 2021 did not have any material impact on the Company’s consolidated financial statements.

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Accounts Receivable - Net (Tables)

9 Months Ended

Dec. 31, 2021

Accounts Receivable - Net [Abstract]

Accounts Receivable

Accounts receivable — net is comprised of the following:

	December 31, 2021			March 31, 2021
Accounts receivable — trade	$	71,124,000		$	81,549,000
Allowance for credit losses		(292,000	)		(348,000	)
Customer payment discrepancies		(1,185,000	)		(752,000	)
Customer returns RGA issued		(11,956,000	)		(17,327,000	)
Total accounts receivable — net	$	57,691,000		$	63,122,000

Allowance for Credit Losses

The following table provides a roll-forward of the allowance for credit losses that is deducted from accounts receivable to present the net amount expected to be collected. During the nine months ended December 31, 2020, the Company wrote off amounts previously fully reserved for in connection with the bankruptcy filing of one of its customers.

	Nine Months Ended December 31,
	2021			2020
Balance at beginning of period	$	348,000		$	4,252,000
Provision for expected credit losses		(17,000	)		74,000
Recoveries		-			(100,000	)
Amounts written off charged against the allowance		(39,000	)		(3,898,000	)
Balance at end of period	$	292,000		$	328,000

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Inventory (Tables)

9 Months Ended

Dec. 31, 2021

Inventory [Abstract]

Inventory Net

Inventory is comprised of the following:

	December 31, 2021			March 31, 2021
Inventory
Raw materials	$	159,001,000		$	128,190,000
Work-in-process		8,048,000			5,233,000
Finished goods		191,040,000			168,184,000
		358,089,000			301,607,000
Less allowance for excess and obsolete inventory		(14,857,000	)		(13,246,000	)
Inventory — net		343,232,000			288,361,000
Inventory unreturned		15,506,000			14,552,000
Total inventory	$	358,738,000		$	302,913,000

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Contract Assets (Tables)

9 Months Ended

Dec. 31, 2021

Contract Assets [Abstract]

Contract Assets

Contract assets are comprised of the following:

	December 31, 2021		March 31, 2021
Short-term contract assets
Cores expected to be returned by customers	$	14,172,000	$	17,657,000
Upfront payments to customers		540,000		684,000
Finished goods premiums paid to customers		613,000		405,000
Core premiums paid to customers		11,284,000		8,194,000
Total short-term contract assets	$	26,609,000	$	26,940,000
Remanufactured cores held at customers’ locations	$	257,609,000	$	229,918,000
Upfront payments to customers		231,000		486,000
Finished goods premiums paid to customers		2,926,000		2,731,000
Core premiums paid to customers		45,421,000		31,509,000
Long-term core inventory deposits		5,569,000		5,569,000
Total long-term contract assets	$	311,756,000	$	270,213,000

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Significant Customer and Other Information (Tables)

9 Months Ended

Dec. 31, 2021

Significant Customer and Other Information [Abstract]

Concentrations of Risk

Significant Customer Concentrations

The largest customers accounted for the following percentage of net sales:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2021			2020			2021			2020
Net sales
Customer A		38	%		35	%		38	%		42	%
Customer B		15	%		26	%		17	%		24	%
Customer C		29	%		24	%		30	%		21	%

The largest customers accounted for the following percentage of accounts receivable – trade:

	December 31, 2021			March 31, 2021
Accounts receivable - trade
Customer A		38	%		50	%
Customer B		21	%		23	%
Customer C		1	%		-	%

Geographic and Product Information

The Company’s products are sold predominantly in the U.S. and accounted for the following percentages of net sales:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2021			2020			2021			2020
Product line
Rotating electrical products		68	%		72	%		69	%		76	%
Wheel hub products		13	%		14	%		13	%		14	%
Brake related products		15	%		12	%		15	%		9	%
Other products		4	%		2	%		3	%		1	%
		100	%		100	%		100	%		100	%

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Debt (Tables)

9 Months Ended

Dec. 31, 2021

Debt [Abstract]

Information About the Term Loan

The following summarizes information about the Term Loans:

	December 31, 2021			March 31, 2021
Principal amount of Term Loans	$	17,812,000		$	20,625,000
Unamortized financing fees		(191,000	)		(161,000	)
Net carrying amount of Term Loans		17,621,000			20,464,000
Less current portion of Term Loans		(3,670,000	)		(3,678,000	)
Long-term portion of Term Loans	$	13,951,000		$	16,786,000

Future Repayments of the Amended Term Loan, by Fiscal Year

Future repayments of the Term Loans are as follows:

Year Ending March 31,
2022 - remaining three months	$	937,000
2023		3,750,000
2024		3,750,000
2025		3,750,000
2026		3,750,000
Thereafter		1,875,000
Total payments	$	17,812,000

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Contract Liabilities (Tables)

9 Months Ended

Dec. 31, 2021

Contract Liabilities [Abstract]

Contract Liabilities

Contract liabilities are comprised of the following:

	December 31, 2021		March 31, 2021
Short-term contract liabilities
Customer core returns accruals	$	13,089,000	$	12,710,000
Customer allowances earned		18,461,000		16,513,000
Customer deposits		3,747,000		2,234,000
Finished goods liabilities		1,609,000		1,883,000
Core bank liability		1,622,000		1,585,000
Accrued core payment		1,662,000		6,147,000
Total short-term contract liabilities	$	40,190,000	$	41,072,000
Long-term contract liabilities
Customer core returns accruals	$	146,837,000	$	103,719,000
Customer allowances earned		109,000		313,000
Finished goods liabilities		1,972,000		2,678,000
Core bank liability		15,682,000		16,903,000
Accrued core payment		999,000		1,610,000
Total long-term contract liabilities	$	165,599,000	$	125,223,000

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Leases (Tables)

9 Months Ended

Dec. 31, 2021

Leases [Abstract]

Balance Sheet Information for Leases

Balance sheet information for leases is as follows:

Leases	Classification	December 31, 2021		March 31, 2021
Assets:
Operating	Operating lease assets	$	82,029,000	$	71,513,000
Finance	Plant and equipment		7,745,000		8,852,000
Total leased assets		$	89,774,000	$	80,365,000
Liabilities:
Current
Operating	Operating lease liabilities	$	6,444,000	$	6,439,000
Finance	Other current liabilities		2,420,000		2,640,000
Long-term
Operating	Long-term operating lease liabilities		82,287,000		70,551,000
Finance	Other liabilities		3,741,000		4,995,000
Total lease liabilities		$	94,892,000	$	84,625,000

Lease Cost Recognized in Consolidated Statements of Income

Lease cost recognized in the condensed consolidated statements of income is as follows:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Lease cost
Operating lease cost	$	3,134,000	$	2,962,000	$	9,325,000	$	8,522,000
Short-term lease cost		361,000		373,000		1,112,000		1,027,000
Variable lease cost		225,000		183,000		716,000		556,000
Finance lease cost:
Amortization of finance lease assets		515,000		458,000		1,579,000		1,299,000
Interest on finance lease liabilities		83,000		98,000		269,000		274,000
Total lease cost	$	4,318,000	$	4,074,000	$	13,001,000	$	11,678,000

Maturity of Lease Commitments

Maturities of lease commitments at December 31, 2021 by fiscal year were as follows:

Maturity of lease liabilities	Operating Leases			Finance Leases			Total
2022 - remaining three months	$	2,449,000		$	714,000		$	3,163,000
2023		11,460,000			2,490,000			13,950,000
2024		10,014,000			1,688,000			11,702,000
2025		10,078,000			1,194,000			11,272,000
2026		10,347,000			507,000			10,854,000
Thereafter		75,113,000			51,000			75,164,000
Total lease payments		119,461,000			6,644,000			126,105,000
Less amount representing interest		(30,730,000	)		(483,000	)		(31,213,000	)
Present value of lease liabilities	$	88,731,000		$	6,161,000		$	94,892,000

Other Information about Leases

Other information about leases is as follows:

	December 31, 2021			March 31, 2021
Lease term and discount rate
Weighted-average remaining lease term (years):
Finance leases		3.0			3.4
Operating leases		10.6			11.1
Weighted-average discount rate:
Finance leases		5.2	%		5.3	%
Operating leases		5.7	%		5.9	%

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Accounts Receivable Discount Programs (Tables)

9 Months Ended

Dec. 31, 2021

Accounts Receivable Discount Programs [Abstract]

Accounts Receivable Discount Programs

The following is a summary of accounts receivable discount programs:

	Nine Months Ended December 31,
	2021			2020
Receivables discounted	$	418,044,000		$	367,102,000
Weighted average days		335			333
Annualized weighted average discount rate		1.7	%		2.1	%
Amount of discount recognized as interest expense	$	6,798,000		$	7,277,000

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Net Income per Share (Tables)

9 Months Ended

Dec. 31, 2021

Net Income per Share [Abstract]

Reconciliation of Basic and Diluted Net Income Per Share

The following presents a reconciliation of basic and diluted net income per share:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Net income	$	3,139,000	$	8,469,000	$	7,683,000	$	20,641,000
Basic shares		19,184,339		19,053,232		19,124,824		19,016,302
Effect of potentially dilutive securities		359,835		383,561		479,956		317,456
Diluted shares		19,544,174		19,436,793		19,604,780		19,333,758
Net income per share:
Basic net income per share	$	0.16	$	0.44	$	0.40	$	1.09
Diluted net income per share	$	0.16	$	0.44	$	0.39	$	1.07

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Financial Risk Management and Derivatives (Tables)

9 Months Ended

Dec. 31, 2021

Financial Risk Management and Derivatives [Abstract]

Derivative Instruments on Consolidated Statements of Income

The following shows the effect of derivative instruments on the condensed consolidated statements of income:

	Gain (Loss) Recognized as Foreign Exchange Impact of Lease Liabilities and Forward Contracts
Derivatives Not Designated as	Three Months Ended December 31,				Nine Months Ended December 31,
Hedging Instruments	2021		2020		2021			2020
Forward foreign currency exchange contracts	$	600,000	$	3,817,000	$	(1,833,000	)	$	9,016,000

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Fair Value Measurements (Tables)

9 Months Ended

Dec. 31, 2021

Fair Value Measurements [Abstract]

Financial Assets and Liabilities Measured at Fair Value Recurring Basis

The following summarizes financial assets and liabilities measured at fair value, by level within the fair value hierarchy:

	December 31, 2021								March 31, 2021
			Fair Value Measurements Using Inputs Considered as								Fair Value Measurements Using Inputs Considered as
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Assets
Short-term investments
Mutual funds	$	2,212,000	$	2,212,000	$	-	$	-	$	1,652,000	$	1,652,000	$	-	$	-
Prepaid expenses and other current assets
Forward foreign currency exchange contracts		-		-		-		-		1,429,000		-		1,429,000		-
Liabilities
Accrued liabilities
Short-term contingent consideration		970,000		-		-		970,000		910,000		-		-		910,000
Other current liabilities
Deferred compensation		2,212,000		2,212,000		-		-		1,652,000		1,652,000		-		-
Forward foreign currency exchange contracts		404,000		-		404,000		-		-		-		-		-

Change in Warrant Liability Measured at Fair Value Recurring Basis Using Significant Unobservable Inputs (Level 3)

The following table summarizes the activity for financial assets and liabilities utilizing Level 3 fair value measurements:

	Three Months Ended December 31,					Nine Months Ended December 31,
Contingent Consideration	2021			2020		2021		2020
Beginning balance	$	980,000		$	2,588,000	$	910,000	$	2,653,000
Changes in revaluations of contingent consideration included in earnings		(10,000	)		20,000		60,000		(45,000	)
Ending balance	$	970,000		$	2,608,000	$	970,000	$	2,608,000

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Share-based Payments (Tables)

9 Months Ended

Dec. 31, 2021

Share-based Payments [Abstract]

Stock Option Transactions

The following is a summary of stock option transactions:

	Number of Shares			Weighted Average Exercise Price
Outstanding at March 31, 2021		1,744,885		$	17.51
Granted		-		$	-
Exercised		(30,976	)	$	16.10
Forfeited		(5,984	)	$	19.81
Outstanding at December 31, 2021		1,707,925		$	17.52

Restricted Stock Units Activity

The following is a summary of non-vested RSUs:

	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at March 31, 2021		354,484		$	17.22
Granted		263,703		$	21.90
Vested		(216,617	)	$	17.78
Forfeited		(1,832	)	$	20.15
Outstanding at December 31, 2021		399,738		$	19.98

Monte Carlo Valuation Model Assumptions Used In Determining The Fair Value Of The TSR Awards

The following table summarizes the assumptions used in determining the fair value of the TSR awards:

	Nine Months Ended December 31,
	2021
Risk free interest rate		0.47	%
Expected life in years		3
Expected volatility of MPA common stock		53.70	%
Expected average volatility of peer companies		59.30	%
Average correlation coefficient of peer companies		26.70	%
Expected dividend yield		-
Grant date fair value	$	26.89

Performance Stock Units Activity

The following is a summary of non-vested PSUs:

	Number of Shares		Weighted Average Grant Date Fair Value
Outstanding at March 31, 2021		-	$	-
Granted		84,593	$	23.19
Vested		-	$	-
Forfeited		-	$	-
Outstanding at December 31, 2021		84,593	$	23.19

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Commitments and Contingencies (Tables)

9 Months Ended

Dec. 31, 2021

Commitments and Contingencies [Abstract]

Changes in Warranty Return Accrual

The following summarizes the changes in the warranty return accrual:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2021			2020			2021			2020
Balance at beginning of period	$	20,875,000		$	22,499,000		$	21,093,000		$	18,300,000
Charged to expense		30,282,000			26,194,000			88,380,000			80,155,000
Amounts processed		(32,425,000	)		(31,540,000	)		(90,741,000	)		(81,302,000	)
Balance at end of period	$	18,732,000		$	17,153,000		$	18,732,000		$	17,153,000

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Company Background and Organization (Details)	9 Months Ended
	Dec. 31, 2021 Segment
Company Background and Organization [Abstract]
Number of operating segments	3
Number of reportable segments	1

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Accounts Receivable - Net (Details) - USD ($)	9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Mar. 31, 2021
Components of accounts receivable [Abstract]
Accounts receivable - trade	$ 71,124,000		$ 81,549,000
Allowance for credit losses	(292,000)		(348,000)
Customer payment discrepancies	(1,185,000)		(752,000)
Customer returns RGA issued	(11,956,000)		(17,327,000)
Total accounts receivable - net	57,691,000		$ 63,122,000
Allowance for credit losses [Roll Forward]
Balance at beginning of period	348,000	$ 4,252,000
Provision for expected credit losses	(17,000)	74,000
Recoveries	0	(100,000)
Amounts written off charged against the allowance	(39,000)	(3,898,000)
Balance at end of period	$ 292,000	$ 328,000

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Inventory (Details) - USD ($)	Dec. 31, 2021	Mar. 31, 2021
Inventory [Abstract]
Raw materials	$ 159,001,000	$ 128,190,000
Work-in-process	8,048,000	5,233,000
Finished goods	191,040,000	168,184,000
Inventory, gross	358,089,000	301,607,000
Less allowance for excess and obsolete inventory	(14,857,000)	(13,246,000)
Inventory - net	343,232,000	288,361,000
Inventory unreturned	15,506,000	14,552,000
Total inventory	$ 358,738,000	$ 302,913,000

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Contract Assets (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020	Mar. 31, 2021
Contract Assets [Abstract]
Long-term contract assets, write-down	$ 846,000	$ 1,304,000	$ 3,517,000	$ 3,580,000
Short-term contract assets [Abstract]
Cores expected to be returned by customers	14,172,000		14,172,000		$ 17,657,000
Upfront payments to customers	540,000		540,000		684,000
Finished goods premiums paid to customers	613,000		613,000		405,000
Core premiums paid to customers	11,284,000		11,284,000		8,194,000
Total short-term contract assets	26,609,000		26,609,000		26,940,000
Long-term contract assets [Abstract]
Remanufactured cores held at customers' locations	257,609,000		257,609,000		229,918,000
Upfront payments to customers	231,000		231,000		486,000
Finished goods premiums paid to customers	2,926,000		2,926,000		2,731,000
Core premiums paid to customers	45,421,000		45,421,000		31,509,000
Long-term core inventory deposits	5,569,000		5,569,000		5,569,000
Total long-term contract assets	$ 311,756,000		$ 311,756,000		$ 270,213,000

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Significant Customer and Other Information (Details)	3 Months Ended		9 Months Ended		12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020	Mar. 31, 2021
Net Sales [Member] | Customer Concentration Risk [Member] | Customer A [Member]
Concentration Risk [Abstract]
Concentration risk percentage	38.00%	35.00%	38.00%	42.00%
Net Sales [Member] | Customer Concentration Risk [Member] | Customer B [Member]
Concentration Risk [Abstract]
Concentration risk percentage	15.00%	26.00%	17.00%	24.00%
Net Sales [Member] | Customer Concentration Risk [Member] | Customer C [Member]
Concentration Risk [Abstract]
Concentration risk percentage	29.00%	24.00%	30.00%	21.00%
Net Sales [Member] | Product Concentration Risk [Member]
Concentration Risk [Abstract]
Concentration risk percentage	100.00%	100.00%	100.00%	100.00%
Net Sales [Member] | Product Concentration Risk [Member] | Rotating Electrical Products [Member]
Concentration Risk [Abstract]
Concentration risk percentage	68.00%	72.00%	69.00%	76.00%
Net Sales [Member] | Product Concentration Risk [Member] | Wheel Hub Products [Member]
Concentration Risk [Abstract]
Concentration risk percentage	13.00%	14.00%	13.00%	14.00%
Net Sales [Member] | Product Concentration Risk [Member] | Brake-Related Products [Member]
Concentration Risk [Abstract]
Concentration risk percentage	15.00%	12.00%	15.00%	9.00%
Net Sales [Member] | Product Concentration Risk [Member] | Other Products [Member]
Concentration Risk [Abstract]
Concentration risk percentage	4.00%	2.00%	3.00%	1.00%
Accounts Receivable - Trade [Member] | Customer Concentration Risk [Member] | Customer A [Member]
Concentration Risk [Abstract]
Concentration risk percentage	38.00%				50.00%
Accounts Receivable - Trade [Member] | Customer Concentration Risk [Member] | Customer B [Member]
Concentration Risk [Abstract]
Concentration risk percentage	21.00%				23.00%
Accounts Receivable - Trade [Member] | Customer Concentration Risk [Member] | Customer C [Member]
Concentration Risk [Abstract]
Concentration risk percentage	1.00%				0.00%

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Debt (Details) - USD ($)	9 Months Ended
	Dec. 31, 2021	May 31, 2021	Mar. 31, 2021
Summarized information about the term loan [Abstract]
Less current portion of Term Loans	$ (3,670,000)		$ (3,678,000)
Long-term portion of Term Loans	$ 13,951,000		$ 16,786,000
Revolving Facility [Member]
Amended Credit Facility [Abstract]
Interest rate at end of period	2.86%		2.62%
Revolving Facility [Member] | Letters of Credit [Member]
Future repayments of the Term Loan, by fiscal year [Abstract]
Outstanding balance under revolving loan	$ 6,409,000
Term Loans [Member]
Amended Credit Facility [Abstract]
Quarterly principal payments	$ 937,500
Interest rate at end of period	2.85%		2.62%
Summarized information about the term loan [Abstract]
Principal amount of Term Loans	$ 17,812,000		$ 20,625,000
Unamortized financing fees	(191,000)		(161,000)
Net carrying amount of Term Loans	17,621,000		20,464,000
Less current portion of Term Loans	(3,670,000)		(3,678,000)
Long-term portion of Term Loans	13,951,000		16,786,000
Future repayments of the Term Loan, by fiscal year [Abstract]
2022 - remaining three months	937,000
2023	3,750,000
2024	3,750,000
2025	3,750,000
2026	3,750,000
Thereafter	1,875,000
Total payments	17,812,000		20,625,000
Credit Facility [Member]
Amended Credit Facility [Abstract]
Maximum borrowing capacity	$ 268,620,000
Debt instrument, maturity date	Jun. 05, 2023
Credit Facility [Member] | Minimum [Member]
Amended Credit Facility [Abstract]
Facility fee on total leverage ratio	0.375%
Credit Facility [Member] | Maximum [Member]
Amended Credit Facility [Abstract]
Dividend payments and share repurchases, annual maximum amount permitted	$ 29,430,000
Facility fee on total leverage ratio	0.50%
Credit Facility [Member] | LIBOR [Member]
Amended Credit Facility [Abstract]
Reference interest rate under option 1, floor	2.25%
Interest rate over LIBOR rate under option 1	2.50%
Interest rate above base rate under option 2	2.75%
Credit Facility [Member] | Reference Rate [Member]
Amended Credit Facility [Abstract]
Reference interest rate under option 1, floor	1.25%
Interest rate over LIBOR rate under option 1	1.50%
Interest rate above base rate under option 2	1.75%
Credit Facility [Member] | Revolving Facility [Member]
Amended Credit Facility [Abstract]
Maximum borrowing capacity	$ 238,620,000
Future repayments of the Term Loan, by fiscal year [Abstract]
Outstanding balance under revolving loan	113,000,000		$ 84,000,000
Amount available under revolving facility	99,908,000
Credit Facility [Member] | Revolving Facility [Member] | Canadian Borrowers [Member]
Amended Credit Facility [Abstract]
Maximum borrowing capacity	24,000,000
Credit Facility [Member] | Revolving Facility [Member] | Letters of Credit [Member]
Amended Credit Facility [Abstract]
Maximum borrowing capacity	20,000,000
Credit Facility [Member] | Term Loans [Member]
Amended Credit Facility [Abstract]
Maximum borrowing capacity	$ 30,000,000
Third Amended Credit Facility [Member]
Amended Credit Facility [Abstract]
Debt instrument, maturity date	May 28, 2026
Debt issuance costs		$ 1,148,000

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Contract Liabilities (Details) - USD ($)	Dec. 31, 2021	Mar. 31, 2021
Short-term contract liabilities [Abstract]
Customer core returns accruals	$ 13,089,000	$ 12,710,000
Customer allowances earned	18,461,000	16,513,000
Customer deposits	3,747,000	2,234,000
Finished goods liabilities	1,609,000	1,883,000
Core bank liability	1,622,000	1,585,000
Accrued core payment	1,662,000	6,147,000
Total short-term contract liabilities	40,190,000	41,072,000
Long-term contract liabilities [Abstract]
Customer core returns accruals	146,837,000	103,719,000
Customer allowances earned	109,000	313,000
Finished goods liabilities	1,972,000	2,678,000
Core bank liability	15,682,000	16,903,000
Accrued core payment	999,000	1,610,000
Total long-term contract liabilities	$ 165,599,000	$ 125,223,000

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Leases, General Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Leases [Abstract]
Gain (loss) in foreign currency-denominated lease liabilities	$ (985,000)	$ 8,638,000	$ 64,000	$ 12,241,000

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Leases, Balance Sheet Information (Details) - USD ($)	Dec. 31, 2021	Mar. 31, 2021
Assets [Abstract]
Operating, Operating lease assets	$ 82,029,000	$ 71,513,000
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Operating, Operating lease assets	Operating, Operating lease assets
Finance, Plant and equipment	$ 7,745,000	$ 8,852,000
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Plant and equipment - net	Plant and equipment - net
Total leased assets	$ 89,774,000	$ 80,365,000
Current [Abstract]
Operating, Operating lease liabilities	$ 6,444,000	$ 6,439,000
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Operating, Operating lease liabilities	Operating, Operating lease liabilities
Finance, Other current liabilities	$ 2,420,000	$ 2,640,000
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Other Liabilities, Current	Other Liabilities, Current
Long-term [Abstract]
Operating, Long-term operating lease liabilities	$ 82,287,000	$ 70,551,000
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Operating, Long-term operating lease liabilities	Operating, Long-term operating lease liabilities
Finance, Other liabilities	$ 3,741,000	$ 4,995,000
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Other liabilities	Other liabilities
Total lease liabilities	$ 94,892,000	$ 84,625,000

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Leases, Cost Recogized in Consolidated Statements of Income (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Lease cost [Abstract]
Operating lease cost	$ 3,134,000	$ 2,962,000	$ 9,325,000	$ 8,522,000
Short-term lease cost	361,000	373,000	1,112,000	1,027,000
Variable lease cost	225,000	183,000	716,000	556,000
Finance lease cost [Abstract]
Amortization of finance lease assets	515,000	458,000	1,579,000	1,299,000
Interest on finance lease liabilities	83,000	98,000	269,000	274,000
Total lease cost	$ 4,318,000	$ 4,074,000	$ 13,001,000	$ 11,678,000

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Leases, Maturities of Lease Commitments (Details) - USD ($)	Dec. 31, 2021	Mar. 31, 2021
Operating Leases [Abstract]
2022 - remaining three months	$ 2,449,000
2023	11,460,000
2024	10,014,000
2025	10,078,000
2026	10,347,000
Thereafter	75,113,000
Total lease payments	119,461,000
Less amount representing interest	(30,730,000)
Present value of lease liabilities	88,731,000
Finance Leases [Abstract]
2022 - remaining three months	714,000
2023	2,490,000
2024	1,688,000
2025	1,194,000
2026	507,000
Thereafter	51,000
Total lease payments	6,644,000
Less amount representing interest	(483,000)
Present value of lease liabilities	6,161,000
Total [Abstract]
2022 - remaining three months	3,163,000
2023	13,950,000
2024	11,702,000
2025	11,272,000
2026	10,854,000
Thereafter	75,164,000
Total lease payments	126,105,000
Less amount representing interest	(31,213,000)
Present value of lease liabilities	$ 94,892,000	$ 84,625,000

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Leases, Other Information (Details)	Dec. 31, 2021	Mar. 31, 2021
Weighted-average remaining lease term (years) [Abstract]
Finance leases	3 years	3 years 4 months 24 days
Operating leases	10 years 7 months 6 days	11 years 1 month 6 days
Weighted-average discount rate [Abstract]
Finance leases	5.20%	5.30%
Operating leases	5.70%	5.90%

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Accounts Receivable Discount Programs (Details) - USD ($)	9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Accounts Receivable Discount Programs [Abstract]
Receivables discounted	$ 418,044,000	$ 367,102,000
Weighted average days	335 days	333 days
Annualized weighted average discount rate	1.70%	2.10%
Amount of discount recognized as interest expense	$ 6,798,000	$ 7,277,000

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Net Income per Share (Details) - USD ($)	3 Months Ended						9 Months Ended
	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2021	Dec. 31, 2020
Reconciliation of basic and diluted net income per share [Abstract]
Net income	$ 3,139,000	$ 3,683,000	$ 861,000	$ 8,469,000	$ 15,184,000	$ (3,012,000)	$ 7,683,000	$ 20,641,000
Basic shares (in shares)	19,184,339			19,053,232			19,124,824	19,016,302
Effect of potentially dilutive securities (in shares)	359,835			383,561			479,956	317,456
Diluted shares (in shares)	19,544,174			19,436,793			19,604,780	19,333,758
Net income per share [Abstract]
Basic net income per share (in dollars per share)	$ 0.16			$ 0.44			$ 0.40	$ 1.09
Diluted net income per share (in dollars per share)	$ 0.16			$ 0.44			$ 0.39	$ 1.07
Options [Member]
Antidilutive Securities [Abstract]
Antidilutive shares excluded from computation of earnings per share (in shares)	1,130,694			1,319,937			720,756	1,328,437

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Income Taxes (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Income Taxes [Abstract]
Income tax expense (benefit)	$ 1,588,000	$ 3,373,000	$ 4,786,000	$ 8,448,000
Effective income tax rate	33.60%	28.50%	38.40%	29.00%

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Financial Risk Management and Derivatives (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020	Mar. 31, 2021
Foreign Currency Exchange Contracts [Abstract]
Forward foreign currency exchange contracts included in included other current liabilities	$ 404,000		$ 404,000
Forward foreign currency exchange contracts included in prepaid and other current assets					$ 1,429,000
Forward Foreign Currency Exchange Contracts [Member]
Foreign Currency Exchange Contracts [Abstract]
Notional amount of foreign currency derivatives	44,815,000		44,815,000		$ 41,819,000
Forward Foreign Currency Exchange Contracts [Member] | Foreign Exchange Impact of Lease Liabilities and Forward Contracts [Member]
Foreign Currency Exchange Contracts [Abstract]
Forward foreign currency exchange contracts	$ 600,000	$ 3,817,000	$ (1,833,000)	$ 9,016,000
Forward Foreign Currency Exchange Contracts [Member] | Maximum [Member]
Foreign Currency Exchange Contracts [Abstract]
Derivative, term of contract			1 year

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Fair Value Measurements (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020	Mar. 31, 2021	Dec. 31, 2018
Contingent Consideration [Member]
Change in contingent consideration measured at fair value recurring basis using significant unobservable inputs (Level 3) [Roll Forward]
Beginning balance	$ 980,000	$ 2,588,000	$ 910,000	$ 2,653,000
Changes in revaluation of contingent consideration included in earnings	(10,000)	20,000	60,000	(45,000)
Ending balance	970,000	$ 2,608,000	970,000	$ 2,608,000
Mechanical Power Conversion, LLC [Member]
Contingent Consideration [Abstract]
Aggregate contingent consideration obligation						$ 5,200,000
Contingent consideration obligations	970,000		$ 970,000
Mechanical Power Conversion, LLC [Member] | Maximum [Member]
Contingent Consideration [Abstract]
Contingent consideration payment period			3 years
Recurring [Member]
Short-term investments [Abstract]
Mutual funds	2,212,000		$ 2,212,000		$ 1,652,000
Prepaid expense and other current assets [Abstract]
Forward foreign currency exchange contracts	0		0		1,429,000
Accrued liabilities [Abstract]
Short-term contingent consideration	970,000		970,000		910,000
Other current liabilities [Abstract]
Deferred compensation	2,212,000		2,212,000		1,652,000
Forward foreign currency exchange contracts	404,000		404,000		0
Recurring [Member] | Level 1 [Member]
Short-term investments [Abstract]
Mutual funds	2,212,000		2,212,000		1,652,000
Prepaid expense and other current assets [Abstract]
Forward foreign currency exchange contracts	0		0		0
Accrued liabilities [Abstract]
Short-term contingent consideration	0		0		0
Other current liabilities [Abstract]
Deferred compensation	2,212,000		2,212,000		1,652,000
Forward foreign currency exchange contracts	0		0		0
Recurring [Member] | Level 2 [Member]
Short-term investments [Abstract]
Mutual funds	0		0		0
Prepaid expense and other current assets [Abstract]
Forward foreign currency exchange contracts	0		0		1,429,000
Accrued liabilities [Abstract]
Short-term contingent consideration	0		0		0
Other current liabilities [Abstract]
Deferred compensation	0		0		0
Forward foreign currency exchange contracts	404,000		404,000		0
Recurring [Member] | Level 3 [Member]
Short-term investments [Abstract]
Mutual funds	0		0		0
Prepaid expense and other current assets [Abstract]
Forward foreign currency exchange contracts	0		0		0
Accrued liabilities [Abstract]
Short-term contingent consideration	970,000		970,000		910,000
Other current liabilities [Abstract]
Deferred compensation	0		0		0
Forward foreign currency exchange contracts	$ 0		$ 0		$ 0

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Share-based Payments - Stock Options Activity (Details) - Stock Options [Member] - USD ($)	9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Number of Shares [Roll Forward]
Outstanding at beginning of period (in shares)	1,744,885
Granted (in shares)	0	345,423
Exercised (in shares)	(30,976)
Forfeited (in shares)	(5,984)
Outstanding at end of period (in shares)	1,707,925
Weighted Average Exercise Price [Roll Forward]
Outstanding at beginning of period (in dollars per share)	$ 17.51
Granted (in dollars per share)	0
Exercised (in dollars per share)	16.10
Forfeited (in dollars per share)	19.81
Outstanding at end of period (in dollars per share)	$ 17.52
Number of stock options unvested (in shares)	317,309
Weighted average exercise price of stock options unvested (in dollars per share)	$ 16.53
Total unrecognized compensation expense	$ 1,440,000
Weighted average remaining vesting period over which compensation expense is expected to be recognized	1 year 2 months 12 days

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Share-based Payments - Restricted Stock Units (Details) - Restricted Stock [Member] - USD ($)	9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Number of Shares [Roll Forward]
Non-vested at beginning of period (in shares)	354,484
Granted (in shares)	263,703	251,801
Vested (in shares)	(216,617)
Forfeited (in shares)	(1,832)
Non-vested at end of period (in shares)	399,738
Weighted Average Grant Date Fair Value [Roll Forward]
Non-vested at beginning of period (in dollars per share)	$ 17.22
Granted (in dollars per share)	21.90
Vested (in dollars per share)	17.78
Forfeited (in dollars per share)	20.15
Non-vested at end of period (in dollars per share)	$ 19.98
Total unrecognized compensation expense	$ 5,402,000
Weighted average remaining vesting period over which compensation expense is expected to be recognized	1 year 7 months 6 days

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Share-based Payments - Performance Stock Units (Details) - Performance Stock Units [Member]	9 Months Ended
	Dec. 31, 2021 USD ($) $ / shares shares
Performance Stock Units ("PSUs") [Abstract]
Vesting period	3 years
Monte Carlo valuation model assumptions used in determining the fair value of the TSR awards [Abstract]
Risk free interest rate	0.47%
Expected life	3 years
Expected volatility of MPA common stock	53.70%
Expected average volatility of peer companies	59.30%
Average correlation coefficient of peer companies	26.70%
Expected dividend yield	0.00%
Grant date fair value (in dollars per share)	$ 26.89
Number of Shares [Roll Forward]
Non-vested at beginning of period (in shares) | shares	0
Granted (in shares) | shares	84,593
Vested (in shares) | shares	0
Forfeited (in shares) | shares	0
Non-vested at end of period (in shares) | shares	84,593
Weighted Average Grant Date Fair Value [Roll Forward]
Non-vested at beginning of period (in dollars per share)	$ 0
Granted (in dollars per share)	23.19
Vested (in dollars per share)	0
Forfeited (in dollars per share)	0
Non-vested at end of period (in dollars per share)	$ 23.19
Total unrecognized compensation expense | $	$ 1,609,000
Weighted average remaining vesting period over which compensation expense is expected to be recognized	2 years 6 months
Minimum [Member]
Performance Stock Units ("PSUs") [Abstract]
Awards vesting target percentage	0.00%
Maximum [Member]
Performance Stock Units ("PSUs") [Abstract]
Awards vesting target percentage	150.00%

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Commitments and Contingencies (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020	Mar. 31, 2019
Change in warranty return accrual [Roll Forward]
Balance at beginning of period	$ 20,875,000	$ 22,499,000	$ 21,093,000	$ 18,300,000
Charged to expense	30,282,000	26,194,000	88,380,000	80,155,000
Amounts processed	(32,425,000)	(31,540,000)	(90,741,000)	(81,302,000)
Balance at end of period	$ 18,732,000	$ 17,153,000	$ 18,732,000	$ 17,153,000
Contingencies [Abstract]
Estimated additional import duties					$ 17,000,000

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Share Repurchases (Details) - Common Stock [Member] - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020	Aug. 31, 2018
Stock Repurchase Program [Abstract]
Stock repurchase program, approved amount	$ 37,000,000		$ 37,000,000		$ 20,000,000
Repurchase of shares (in shares)	106,486	0	106,486	0
Repurchase of shares	$ 1,914,000		$ 1,914,000
Shares utilized, amount			18,745,000
Shares available for repurchase, amount	$ 18,255,000		$ 18,255,000
Shares repurchased and retired (in shares)			837,007