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Motorcar Parts of America Reports Fiscal 2014 First Quarter Results

LOS ANGELES, Aug. 9, 2013 (GLOBE NEWSWIRE) -- Motorcar Parts of America, Inc. (Nasdaq:MPAA) today reported results for its fiscal 2014 first quarter – reflecting a one-time gain on the deconsolidation of assets and liabilities of the company's previous undercar business.

Net sales for the fiscal 2014 first quarter increased 7.4 percent to $50.2 million from $46.8 million for the same period last year. Net income from continuing operations was $103,000, or $0.01 per diluted share, compared with net income from continuing operations of $2.4 million, or $0.17 per diluted share, a year ago. Net income from continuing operations in the current year was impacted by a mark-to-market non-cash loss of $2.3 million related to warrants and forward currency contracts, and approximately $2.4 million in expenses related to the company's previous subsidiaries. Excluding certain costs and non-cash expenses noted in the Reconciliation of Non-GAAP Financial Measures tables below, adjusted net income was $3.2 million, or $0.22 per diluted share, compared with $2.0 million, or $0.14 per diluted share, for the same period a year earlier.

Net income for the quarter was $101.0 million, or $6.94 per diluted share, reflecting a one-time gain from deconsolidation of $100.9 million, compared with a net loss of $9.9 million, or $0.71 per basic share, a year earlier.

Gross profit for the first fiscal quarter was $16.0 million compared with $14.8 million a year earlier. Gross profit from continuing operations as a percentage of sales was approximately 32 percent for both periods.

Excluding certain costs and non-cash expenses noted in the Reconciliation of Non-GAAP Financial Measures tables below, adjusted EBITDA from continuing operations for the first fiscal 2014 quarter was $9.8 million compared with $7.8 million for the same period a year earlier.

"The automotive aftermarket continues to be robust, particularly for rotating electrical products and other non-discretionary parts. Moving forward we anticipate continued momentum in our base business, and in our new wheel hub assembly business. We are off to an excellent start for our new fiscal year with all of our products. We expect strong growth supported by a cash position of $15.2 million and an available credit line of $18.0 million at June 30, 2013," said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America.

Joffe noted that the company expects to realize tax benefits of approximately $30 million as a result of the losses incurred through its previous subsidiary.

Use of Non-GAAP Measures

We define adjusted net loss as net loss adjusted for matters affecting net sales for our undercar product line, financing, consulting and other fees, share-based compensation expense, undercar product lines not supported, and other matters. We define Adjusted EBITDA as adjusted net income (loss), plus interest expense, income tax expense and depreciation and amortization. We calculate those measures for the entire company as well as the rotating electrical segment. Adjusted net loss does not reflect many items that affect the company's net loss, including many items related to Fenco. Adjusted EBITDA does not reflect the impact of a number of items that affect the company's net income, including financing, transition and acquisition-related costs. Adjusted EBITDA and adjusted net 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 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 net income (loss) to Adjusted EBITDA and adjusted net loss, for the company and the rotating electrical segment, 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, August 9, 2013, through 8:59 p.m. Pacific time on Friday, August 16, 2013 by calling (855)-859-2056 (domestic) or (404)-537-3406 (international) and using access code: 26091930.

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
(Unaudited)
Three Months Ended
June 30,
2013 2012
Net sales $ 50,245,000 $ 46,799,000
Cost of goods sold 34,231,000 31,980,000
Gross profit 16,014,000 14,819,000
Operating expenses:
General and administrative 9,632,000 5,914,000
Sales and marketing 1,731,000 1,772,000
Research and development 549,000 436,000
Total operating expenses 11,912,000 8,122,000
Operating income 4,102,000 6,697,000
Interest expense, net 3,925,000 2,896,000
Income from continuing operations before income tax expense 177,000 3,801,000
Income tax expense 74,000 1,434,000
Income from continuing operations 103,000 2,367,000
Income (loss) from discontinued operations 100,877,000 (12,229,000)
Net income (loss) $ 100,980,000 $ (9,862,000)
Basic net income per share from continuing operations $ 0.01 $ 0.17
Basic net income (loss) per share from discontinued operations $ 6.97 (0.88)
Basic net income (loss) per share $ 6.98 $ (0.71)
Diluted net income per share from continuing operations $ 0.01 $ 0.17
Diluted net income (loss) per share from discontinued operations $ 6.93 (0.87)
Diluted net income (loss) per share $ 6.94 $ (0.70)
Weighted average number of shares outstanding:
Basic 14,460,979 13,924,641
Diluted 14,547,565 14,012,683
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, 2013 March 31, 2013
ASSETS (Unaudited)
Current assets:
Cash $ 15,191,000 $ 19,346,000
Short-term investments 422,000 411,000
Accounts receivable — net (A) -- 3,689,000
Inventory— net 31,713,000 31,838,000
Inventory unreturned 7,532,000 6,981,000
Deferred income taxes 30,031,000 30,075,000
Prepaid expenses and other current assets 9,430,000 8,195,000
Current assets of discontinued operations -- 52,096,000
Total current assets 94,319,000 152,631,000
Plant and equipment — net 9,642,000 10,036,000
Long-term core inventory — net 122,625,000 118,211,000
Long-term core inventory deposits 27,805,000 27,610,000
Long-term deferred income taxes 11,702,000 2,546,000
Intangible assets — net 3,791,000 3,983,000
Other assets 7,487,000 7,723,000
Long-term assets of discontinued operations -- 44,334,000
TOTAL ASSETS $ 277,371,000 $ 367,074,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 34,903,000 $ 39,152,000
Accrued liabilities 8,638,000 9,326,000
Customer finished goods returns accrual 14,545,000 14,289,000
Other current liabilities 1,010,000 1,192,000
Current portion of term loan 4,650,000 3,900,000
Current liabilities of discontinued operations -- 151,914,000
Total current liabilities 63,746,000 219,773,000
Term loan, less current portion 78,792,000 80,110,000
Deferred core revenue 12,172,000 12,014,000
Other liabilities 5,004,000 3,481,000
Guaranteed loan payable 20,054,000 --
Long-term liabilities of discontinued operations -- 55,210,000
Total liabilities 179,768,000 370,588,000
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, 20,000,000 shares authorized;
14,460,979 shares issued and outstanding at June 30, 2013 and March 31, 2013, respectively 145,000 145,000
Additional paid-in capital 114,862,000 114,737,000
Accumulated other comprehensive loss (834,000) (846,000)
Accumulated deficit (16,570,000) (117,550,000)
Total shareholders' equity (deficit) 97,603,000 (3,514,000)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 277,371,000 $ 367,074,000
(A) Accounts receivable—net has been reclassified and included in accrued liabilities in the consolidated balance sheet at June 30, 2013.

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 fiscal 2014 first quarter and fiscal 2013 first quarter. Each of these non-GAAP adjusted financial measures is adjusted from results based on GAAP to exclude certain expenses and gains. Among other things, the Company uses such non-GAAP adjusted financial measures in addition to and in conjunction with corresponding GAAP measures to help analyze the performance of its business.

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

Income statement information for the three months ended June 30, 2013 and 2012 are as follows:

Reconciliation of Non-GAAP Financial Measures Exhibit 1
Three months ended June 30, 2013 (Unaudited)
Adjustment Adjusted
Income statement As Reported (Non-GAAP) (Non-GAAP)
Net sales $ 50,245,000 $ 712,000 (1) $ 50,957,000
Cost of goods sold 34,231,000 354,000 (2) 34,585,000
Gross profit 16,014,000 358,000 16,372,000
Gross margin 31.9% 32.1%
Operating expenses:
General and administrative 9,632,000 (4,495,000) (3) 5,137,000
Sales and marketing 1,731,000 (21,000) (4) 1,710,000
Research and development 549,000 (75,000) (5) 474,000
Total operating expenses 11,912,000 (4,591,000) 7,321,000
Operating income 4,102,000 4,949,000 9,051,000
Interest expense, net 3,925,000 (189,000) (6) 3,736,000 (B)
Income from continuing operations before income tax expense 177,000 5,138,000 5,315,000
Income tax expense 74,000 1,999,000 (7) 2,073,000 (B)
Income from continuing operations 103,000 3,139,000 3,242,000
Income (loss) from discontinued operations 100,877,000 (100,877,000) (8) --
Net income (loss) $ 100,980,000 $ (97,738,000) $ 3,242,000 (A)
Diluted net income per share $ 0.22
Weighted average number of shares outstanding:
Diluted 14,547,565
Depreciation and amortization 733,000 (B)
Adjusted EBITDA - Sum of (A) and (B) $ 9,784,000
(1) Warranty and stock adjustment accruals 712,000
(2) Cost of stock adjustment accrual (354,000)
(3) Discontinued subsidiaries-related, financing, severance and other fees 2,067,000
Share-based compensation expense 125,000
Mark-to-market (gain)/loss 2,303,000
Total 4,495,000
(4) Discontinued subsidiaries-related expenses 21,000
(5) Consulting fees 75,000
(6) Discontinued subsidiaries' supplier revolving credit line interest 189,000
(7) Tax effected at 39% tax rate
(8) Discontinued operations (100,877,000)
Reconciliation of Non-GAAP Financial Measures Exhibit 2
Three months ended June 30, 2012 (Unaudited)
Adjustment Adjusted
Income statement As Reported (Non-GAAP) (Non-GAAP)
Net sales $ 46,799,000 $ -- $ 46,799,000
Cost of goods sold 31,980,000 -- 31,980,000
Gross profit 14,819,000 -- 14,819,000
Gross margin 31.7% 31.7%
Operating expenses:
General and administrative 5,914,000 (339,000) (1) 5,575,000
Sales and marketing 1,772,000 -- 1,772,000
Research and development 436,000 -- 436,000
Total operating expenses 8,122,000 (339,000) 7,783,000
Operating income 6,697,000 339,000 7,036,000
Interest expense, net 2,896,000 895,000 (2) 3,791,000 (B)
Income from continuing operations before income tax expense 3,801,000 (556,000) 3,245,000
Income tax expense 1,434,000 (168,000) (3) 1,266,000 (B)
Income from continuing operations 2,367,000 (388,000) 1,979,000
Income (loss) from discontinued operations (12,229,000) 12,229,000 (4) --
Net income (loss) $ (9,862,000) $ 11,841,000 $ 1,979,000 (A)
Diluted net income per share $ 0.14
Weighted average number of shares outstanding:
Diluted 14,012,683
Depreciation and amortization 735,000 (B)
Adjusted EBITDA - Sum of (A) and (B) $ 7,771,000
(1) Financing 239,000
Mark-to-market (gain)/loss 100,000
Total 339,000
(2) Intersegment interest income 895,000
(3) Tax effected at 39% tax rate
(4) Discontinued operations 12,229,000

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