Motorcar Parts of America Sales Up, Fenco Transition Continues

Motorcar Parts of America, Inc. has reported record sales its rotating electrical business and the continued impact of the Fenco undercar product line transition for its fiscal 2013 third quarter ended December 31, 2012.

Net sales for the fiscal 2013 third quarter increased to $116.3 million from $84.1 million for the same period last year. All figures in U.S. dollars.

Results for the quarter include revenue of approximately $50.8 million that was recognized as a result of the elimination of the company’s obligation to accept core returns from a customer, previously accrued for in the undercar segment. Net income for the same period was $935,000 or $0.06 per diluted share, compared with a net loss of $21.8 million, or $1.74 per share, a year earlier – reflecting gross profit recognition of $19.1 million in fiscal 2013 related to the elimination of the remanufactured core liability noted above net of recognition of related core inventory costs.

Net sales for the rotating electrical segment increased 20.2 percent to $50.7 million from $42.1 million for the prior year third quarter. Gross profit for rotating electrical was $16.3 million compared with $12.6 million a year earlier. Gross profit as a percentage of sales for the rotating electrical segment increased to 32.2 percent from 30.0 percent last year, reflecting higher sales and better absorption of manufacturing overhead.

On a non-GAAP basis, Adjusted EBITDA for the company’s rotating electrical segment was $9.0 million compared with $6.5 million for the same period a year earlier.

Consolidated gross profit for the fiscal 2013 third quarter was $24.0 million compared with negative gross profit of $1.6 million for the same period a year ago. Gross profit as a percentage of net sales for the fiscal 2013 third quarter was 20.7 percent compared with a negative 1.9 percent in the same quarter a year ago.

Net sales for the fiscal 2013 nine-month period increased to $316.9 million from $262.2 million for the same period last year. Results for the nine-month period include revenue of approximately $50.8 million that was recognized as a result of the elimination of the company’s obligation to accept core returns from a customer, previously accrued for in the undercar segment. As anticipated due to the impact of the company’s undercar product line segment transition and turnaround, the company reported a consolidated net loss for the fiscal 2013 nine-month period of $17.9 million, or $1.25 per share, compared with a consolidated net loss of $35.6 million, or $2.86 per share, for the comparable period a year earlier.

Net sales for fiscal 2013 nine-month period for the rotating electrical segment increased 20.7 percent to $155.1 million from $128.5 million for the same period last year. Gross profit for rotating electrical was $51.2 million compared with $40.5 million a year earlier. Gross profit as a percentage of sales for the rotating electrical segment for the nine months increased to 33.0 percent from 31.5 percent last year, reflecting higher sales and better absorption of manufacturing overhead. On a non-GAAP basis, Adjusted EBITDA for the company’s rotating electrical segment for the nine months was $30.8 million compared with $21.9 million for the same period a year earlier.

Consolidated gross profit for the fiscal 2013 nine months was $52.9 million compared with $20.4 million for the same period a year ago. Gross profit as a percentage of net sales for the same period was 16.7 percent compared with 7.8 percent in the same period last year.

“Results for the quarter and nine months reflect continued positive momentum in our rotating electrical segment. We have made continued progress in our transition of the company’s undercar segment — highlighted by the commencement of new undercar product shipments from Torrance, California; exiting the third-party operated distribution in Pennsylvania; the identification of further cost-reductions and streamlining opportunities; and, the relocation of accounting personnel to Torrance from Toronto along with the implementation of our new ERP system. While the transition is progressing well, we are adapting to the new challenges of a downsized Fenco,” said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts.

He noted that during the quarter and subsequent to December 31, 2012, the company repurchased an aggregate 154,447 shares and vested options at an average price of $4.89 for $754,670.