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Motorcar Parts of America Reports Record Results for Fiscal 2014

LOS ANGELES, June 16, 2014 (GLOBE NEWSWIRE) -- Motorcar Parts of America, Inc. (Nasdaq:MPAA) today reported record results for its fiscal 2014 fourth quarter and year ended March 31, 2014 – reflecting continued growth of its rotating electrical business and the third full quarter of contributions from the company's wheel hub product line.

Net sales for the fiscal 2014 fourth quarter increased 32.1 percent to $76.7 million from $58.0 million for the same period last year. Net income for the quarter was $3.1 million, or $0.19 per diluted share, compared with a net loss of $73.7 million, or $5.08 per share, a year ago, which was impacted by the company's former discontinued undercar business.

Excluding certain costs and non-cash expenses noted in the Reconciliation of Non-GAAP Financial Measures tables below, adjusted net income for the fiscal 2014 fourth quarter increased 86 percent to $6.8 million, or $0.43 per diluted share, from $3.6 million, or $0.25 per diluted share, for the same period a year earlier. Per-share results reflect a 9.2 percent increase in the diluted weighted average number of shares outstanding.

Gross profit for the fiscal 2014 fourth quarter was $23.9 million compared with $18.1 million a year earlier. Gross profit as a percentage of sales was 31.2 percent compared with 31.2 percent a year earlier.

Net sales for the full-year period increased 21.4 percent to $258.7 million from $213.2 million a year ago. Net income for fiscal 2014 was $107.4 million, or $7.01 per diluted share, compared with a net loss of $91.5 million, or $6.36 per share, a year ago. Net income (loss) for both periods was impacted by the company's former discontinued undercar business.

Excluding certain costs and non-cash expenses noted in the Reconciliation of Non-GAAP Financial Measures tables below, adjusted net income for the full-year period increased 55 percent to $21.3 million, or $1.39 per diluted share, from $13.8 million, or $0.96 per diluted share, for the same period a year earlier. Per-share results reflect a 6.5 percent increase in the diluted weighted average number of shares outstanding.

Gross profit for the full year was $81.6 million compared with $69.3 million a year earlier. Gross profit as a percentage of sales was 31.5 percent compared with 32.5 percent a year earlier, reflecting product mix.

"We anticipate our solid growth will continue on a year-over-year basis, supported by an aging vehicle population, new product introductions and further opportunities for manufacturing and distribution leverage. I appreciate our team's efforts in accomplishing industry-leading customer service levels, and their dedicated focus on excellence," said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America.

Use of Non-GAAP Measures

We define adjusted net income (loss) as net income (loss) adjusted for certain items related to the company's discontinued subsidiaries, as well as financing, consulting and other fees. We define Adjusted EBITDA as adjusted net income (loss), plus interest expense, income tax expense and depreciation and amortization. Adjusted net income (loss) does not reflect many items that affect the company's net income (loss), including many items related to company's discontinued subsidiaries. Adjusted EBITDA does not reflect the impact of a number of items that affect the company's net income, including financing costs and matters related to the company's discontinued subsidiaries. Adjusted EBITDA and adjusted net income (loss) are not measures of financial performance under GAAP, and should not be considered as alternatives to net income or income from operations as a measure of liquidity. Adjusted EBITDA and adjusted net income (loss) have significant limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of the company's results as reported under GAAP. For a reconciliation of Adjusted EBITDA and adjusted net income (loss) to net income (loss) see the financial tables included in the press release.

Teleconference and Web Cast

Selwyn Joffe, chairman, president and chief executive officer, and David Lee, chief financial officer, will host an investor conference call today at 10:00 a.m. Pacific time to discuss the company's financial results and operations.

The call will be open to all interested investors either through a live audio Web broadcast at www.motorcarparts.com or live by calling (877)-776-4016 (domestic) or (973)-638-3231 (international). For those who are not available to listen to the live broadcast, the call will be archived for seven days on Motorcar Parts of America's website www.motorcarparts.com. A telephone playback of the conference call will also be available from approximately 1:00 p.m. Pacific time today through 8:59 p.m. Pacific time on Monday, June 23, 2014 by calling (855)-859-2056 (domestic) or (404)-537-3406 (international) and using access code: 57997083.

About Motorcar Parts of America

Motorcar Parts of America, Inc. is a remanufacturer, manufacturer and distributor of automotive aftermarket parts -- including alternators, starters and wheel hub assembly products utilized in imported and domestic passenger vehicles, light trucks and heavy duty applications. Motorcar Parts of America's products are sold to automotive retail outlets and the professional repair market throughout the United States and Canada, with remanufacturing facilities located in California, Mexico and Malaysia, and administrative offices located in California, Tennessee, Mexico, Singapore and Malaysia. Additional information is available at www.motorcarparts.com.

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. The statements contained in this press release that are not historical facts are forward-looking statements based on the company's current expectations and beliefs concerning future developments and their potential effects on the company. These forward-looking statements involve significant risks and uncertainties (some of which are beyond the control of the company) and are subject to change based upon various factors. Reference is also made to the Risk Factors set forth in the company's Form 10-K Annual Report filed with the Securities and Exchange Commission (SEC) in June 2013 and in its Forms 10-Q filed with the SEC for additional risks and uncertainties facing the company. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.

(Financial tables follow)

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Three Months Ended Years Ended
March 31, March 31,
2014 2013 2014 2013
(Unaudited)
Net sales $ 76,682,000 $ 58,042,000 $ 258,669,000 $ 213,151,000
Cost of goods sold 52,761,000 39,942,000 177,103,000 143,810,000
Gross profit 23,921,000 18,100,000 81,566,000 69,341,000
Operating expenses:
General and administrative 11,766,000 6,653,000 39,684,000 25,807,000
Sales and marketing 2,059,000 1,811,000 7,838,000 7,290,000
Research and development 541,000 588,000 1,940,000 1,930,000
Total operating expenses 14,366,000 9,052,000 49,462,000 35,027,000
Operating income 9,555,000 9,048,000 32,104,000 34,314,000
Interest expense, net 3,177,000 3,951,000 18,289,000 12,324,000
Income from continuing operations before income tax expense 6,378,000 5,097,000 13,815,000 21,990,000
Income tax expense 3,311,000 1,195,000 7,333,000 7,432,000
Income from continuing operations 3,067,000 3,902,000 6,482,000 14,558,000
Income (loss) from discontinued operations -- (77,553,000) 100,877,000 (106,069,000)
Net income (loss) $ 3,067,000 $ (73,651,000) $ 107,359,000 $ (91,511,000)
Basic net income per share from continuing operations $ 0.20 $ 0.27 $ 0.45 $ 1.01
Basic net income (loss) per share from discontinued operations -- (5.36) 6.89 (7.40)
Basic net income (loss) per share $ 0.20 $ (5.09) $ 7.34 $ (6.39)
Diluted net income per share from continuing operations $ 0.19 $ 0.27 $ 0.42 $ 1.01
Diluted net income (loss) per share from discontinued operations -- (5.35) 6.59 (7.37)
Diluted net income (loss) per share $ 0.19 $ (5.08) $ 7.01 $ (6.36)
Weighted average number of shares outstanding:
Basic 14,996,959 14,462,457 14,633,946 14,327,310
Diluted 15,819,326 14,491,858 15,317,931 14,385,515
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
March 31,
2014 2013
ASSETS
Current assets:
Cash $ 24,599,000 $ 19,346,000
Short-term investments 521,000 411,000
Accounts receivable — net 22,283,000 3,689,000
Inventory— net 47,246,000 31,838,000
Inventory unreturned 7,534,000 6,981,000
Deferred income taxes 18,767,000 30,996,000
Prepaid expenses and other current assets 4,316,000 8,195,000
Current assets of discontinued operations -- 51,175,000
Total current assets 125,266,000 152,631,000
Plant and equipment — net 11,025,000 10,036,000
Long-term core inventory — net 143,476,000 118,211,000
Long-term core inventory deposits 29,375,000 27,610,000
Long-term deferred income taxes 2,614,000 2,377,000
Intangible assets — net 3,244,000 3,983,000
Other assets 3,853,000 5,618,000
Long-term assets of discontinued operations -- 44,503,000
TOTAL ASSETS $ 318,853,000 $ 364,969,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 59,509,000 $ 39,152,000
Accrued liabilities 8,316,000 9,326,000
Customer finished goods returns accrual 16,251,000 14,289,000
Revolving loan 10,000,000 --
Other current liabilities 1,270,000 1,192,000
Current portion of term loan 7,843,000 3,775,000
Current liabilities of discontinued operations -- 151,914,000
Total current liabilities 103,189,000 219,648,000
Term loan, less current portion 79,434,000 78,130,000
Deferred core revenue 15,065,000 12,014,000
Other liabilities 11,529,000 3,481,000
Long-term liabilities of discontinued operations -- 55,210,000
Total liabilities 209,217,000 368,483,000
Commitments and contingencies
Shareholders' equity:
Preferred stock; par value $.01 per share, 5,000,000 shares authorized; none issued -- --
Series A junior participating preferred stock; par value $.01 per share, 20,000 shares authorized; none issued -- --
Common stock; par value $.01 per share, 50,000,000 and 20,000,000 shares authorized; 15,067,645 and 14,460,979 shares issued and outstanding at March 31, 2014 and 2013, respectively 151,000 145,000
Additional paid-in capital 120,553,000 114,737,000
Accumulated other comprehensive loss (877,000) (846,000)
Accumulated deficit (10,191,000) (117,550,000)
Total shareholders' equity (deficit) 109,636,000 (3,514,000)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 318,853,000 $ 364,969,000

Reconciliation of Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company has included the following non-GAAP adjusted financial measures in this press release and in the webcast to discuss the Company's financial results for the three and twelve months ended March 31, 2014 and 2013. Each of these non-GAAP adjusted financial measures is adjusted from results based on GAAP to exclude certain expenses and gains. Among other things, the Company uses such non-GAAP adjusted financial measures in addition to and in conjunction with corresponding GAAP measures to help analyze the performance of its business.

These non-GAAP adjusted financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of the Company's results of operations and the factors and trends affecting the Company's business. However, these non-GAAP adjusted financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

Income statement information for the three and twelve months ended March 31, 2014 and 2013 are as follows:

Reconciliation of Non-GAAP Financial Measures Exhibit 1
Three Months Ended March 31, Years Ended March 31,
2014 2013 2014 2013
GAAP Results:
Net sales $ 76,682,000 $ 58,042,000 $ 258,669,000 $ 213,151,000
Net income (loss) 3,067,000 (73,651,000) 107,359,000 (91,511,000)
Diluted income (loss) per share (EPS) 0.19 (5.08) 7.01 (6.36)
Non-GAAP Adjusted Results:
Non-GAAP adjusted net income $ 6,778,000 $ 3,635,000 $ 21,258,000 $ 13,753,000
Non-GAAP adjusted diluted earnings per share (EPS) 0.43 0.25 1.39 0.96
Non-GAAP adjusted EBITDA 14,940,000 10,452,000 52,419,000 41,218,000
Reconciliation of Non-GAAP Financial Measures Exhibit 2
Three Months Ended March 31,
2014 2013
$ Per Diluted
Share
$ Per Diluted
Share
GAAP net income (loss), as reported $ 3,067,000 $ 0.19 $ (73,651,000) $ (5.08)
Adjustments:
(Income) loss from discontinued operations -- $ -- 77,553,000 $ 5.35
Operating expenses
Disc. subsidiaries legal, severance and other costs 670,000 $ 0.04 -- --
Financing and other fees -- -- 1,402,000 $ 0.10
Share-based compensation expense 419,000 $ 0.03 93,000 $ 0.01
Mark-to-market losses (gains) 3,645,000 $ 0.23 (878,000) $ (0.06)
Consulting fees, research and development -- -- 75,000 $ 0.01
Interest
Disc. subsidiaries related interest expense less intersegment interest income -- -- 170,000 $ 0.01
Tax effected at 39% tax rate (a) (1,023,000) $ (0.06) (1,129,000) $ (0.08)
Adjusted net income $ 6,778,000 $ 0.43 $ 3,635,000 $ 0.25
(a) Tax effect at 39% of the income from continuing operations before income tax expense (reflecting the adjustments)
Reconciliation of Non-GAAP Financial Measures Exhibit 3
Years Ended March 31,
2014 2013
$ Per Diluted
Share
$ Per Diluted
Share
GAAP net income (loss), as reported $ 107,359,000 $ 7.01 $ (91,511,000) $ (6.36)
Adjustments:
(Income) loss from discontinued operations (100,877,000) $ (6.59) 106,069,000 $ 7.37
Net sales
Return, stock adjustment and rebates accruals 1,412,000 $ 0.09 -- --
Cost of goods sold
Cost of stock adj. accrual and disc. subsidiaries costs (29,000) $ (0.002) -- --
Operating expenses
Disc. subsidiaries legal, severance and other costs 4,056,000 $ 0.26 -- --
Financing and other fees -- -- 3,384,000 $ 0.24
Share-based compensation expense 969,000 $ 0.06 1,010,000 $ 0.07
Mark-to-market losses (gains) 11,069,000 $ 0.72 (414,000) $ (0.03)
Disc. subsidiaries sales and marketing expenses 21,000 $ 0.001 -- --
Consulting fees, research and development 75,000 $ 0.005 75,000 $ 0.01
Interest
Disc. subsidiaries supplier revolving credit line interest and write-off prior deferred loan fees 3,462,000 $ 0.23 -- --
Disc. subsidiaries related interest expense less intersegment interest income -- -- (3,499,000) $ (0.24)
Tax effected at 39% tax rate (a) (6,259,000) $ (0.41) (1,361,000) $ (0.09)
Adjusted net income $ 21,258,000 $ 1.39 $ 13,753,000 $ 0.96
(a) Tax effect at 39% of the income from continuing operations before income tax expense (reflecting the adjustments)
Reconciliation of Non-GAAP Financial Measures Exhibit 4
Three Months Ended March 31, Years Ended March 31,
2014 2013 2014 2013
GAAP net income (loss), as reported $ 3,067,000 $ (73,651,000) $ 107,359,000 $ (91,511,000)
(Income) loss from discontinued operations -- 77,553,000 (100,877,000) 106,069,000
Interest expense, net 3,177,000 3,951,000 18,289,000 12,324,000
Income tax expense 3,311,000 1,195,000 7,333,000 7,432,000
Depreciation and amortization 651,000 712,000 2,742,000 2,849,000
EBITDA, as reported $ 10,206,000 $ 9,760,000 $ 34,846,000 $ 37,163,000
Adjustments:
Net sales
Return, stock adjustment and rebates accruals -- -- 1,412,000 --
Cost of goods sold
Cost of stock adj. accrual and disc. subsidiaries costs -- -- (29,000) --
Operating expenses
Disc. subsidiaries legal, severance and other costs 670,000 -- 4,056,000 --
Financing and other fees -- 1,402,000 -- 3,384,000
Share-based compensation expense 419,000 93,000 969,000 1,010,000
Mark-to-market losses (gains) 3,645,000 (878,000) 11,069,000 (414,000)
Disc. subsidiaries sales and marketing expenses -- -- 21,000 --
Consulting fees, research and development -- 75,000 75,000 75,000
Adjusted EBITDA $ 14,940,000 $ 10,452,000 $ 52,419,000 $ 41,218,000

CONTACT: Gary S. Maier Maier & Company, Inc. (310) 471-1288Source:Motorcar Parts of America