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Dec 31, 2022
MPA Q3 2023 Earnings Report
MPA's Q3 2023 financial results were impacted by reduced customer orders, increased interest expenses, and ongoing supply chain disruptions.
Key Takeaways
Motorcar Parts of America reported a decrease in net sales to $151.8 million compared to $161.8 million in the prior year, and a decrease in net income to $1.0 million, or $0.05 per diluted share, compared to $3.1 million, or $0.16 per diluted share in the prior year. The results were affected by reduced customer orders, higher interest rates, and supply chain disruptions.
Net sales decreased due to reduced orders from a major customer and delays in new business orders.
Net income decreased, impacted by increased interest expenses and non-cash items.
Gross profit decreased due to inflationary costs, lower overhead absorption, and changes in product mix.
Company is focused on improving operating efficiencies and remains optimistic about future opportunities in brake-related products and the EV market.
MPA
MPA
Forward Guidance
Motorcar Parts of America expects net sales for its fiscal year ending March 31, 2023 to be between $672 million to $680 million. Operating income is expected to be between $41 million and $46 million.
Positive Outlook
- Annualized price increases of $20 million commencing in current fourth quarter enhances cash flow and gross margin improvement
- Approximately $52 million annualized net sales have resumed in the fourth quarter as delayed business and customer order patterns normalize
- Solid new business wins in hard parts and EV emulation shipping in fiscal 2024
- Brake pad and rotor product line net sales expected to double in fiscal 2024
- Cost-saving initiatives and sales ramp up to enhance gross margins
Challenges Ahead
- Revised sales guidance $672 - $680 million, with expectations of achieving record fiscal 2023 fourth quarter sales as momentum resumes
- Net sales are expected to increase between 5.5 and 6.8 percent in fiscal year 2023, excluding $13.3 million of core revenue realized in fiscal year 2022 (which the company does not expect in fiscal 2023)
- EBITDA is expected to be between $54 million and $59 million for fiscal 2023 based on the items listed below
- Adjusted EBITDA is expected to be between $75 million and $80 million as discussed below
- The company estimates other non-cash items will be approximately $17 million, including core and finished goods premium amortization and share-based compensation, and cash expenses will be approximately $4 million for special EV-related research and development expenses and severance, impacting operating income.